This suit is somewhat similar to the Hopkins suit (just decided) 19 Sup. Ct. 40, and was brought by the United States against the defendants named, who were citizens and residents of the Western division of the Western district of Missouri and members of a voluntary unincorporated association known and designated as the 'Traders' Live-Stock Exchange,' the suit being brought for the purpose of obtaining a decree dissolving the exchange, and enjoining the members thereof from entering into or continuing any sort of combination to deprive any people engaged in shipping, selling, buying, and handling live stock (received from other states and from the territories, intended to be sold at the Kansas City market) of free access to the markets at Kansas City, and to the same facilities afforded by the Kansas City stock yards to defendants and their associate members of the Traders' Live-Stock Exchange.
The bill was filed under the direction of the attorney general of the United States, by the United States district attorney for the Western district of Missouri. It alleged, in substance, that the exchange was governed by a board of eight directors, who carried on the business thereof with the consent and approbation of the defendants, they personally being members of the exchange. It then made the same allegations in relation to the stock yards being partly in Kansas City, Kan., and partly in Kansas, City, Mo., that are contained in the bill in the Hopkins Case, reported in 19 Sup. Ct. 40, and also as to the sales of herds or droves of cattle which were at the time of the sale partly in one state and partly in another. It is further alleged that the Kansas City stock yards is a public market, and, next to the market at Chicago, in the state of Illinois, is the largestlive-stock market in the world, and vast numbers of cattle, hogs, and other live stock are received annually at the market, shipped from various states and from the territories, and are sold at the market to buyers who reside in other states and territories, and who reship the stock; that the stock is shipped to the market under contracts by which the shipper is permitted to unload the stock at the Kansas City stock yards, rest, water, and feed the same, and is accorded the privilege of selling the stock on the Kansas City market if the prices prevailing at the time justify the sale, and many head of such stock are so sold; that prior to the month of March, 1897, as alleged, the defendants herein were engaged as speculators at the Kansas City stock yards, and were buying upon the market, and reselling upon the same market, and reshipping to other markets, in other states, the cattle so received at the Kansas City stock yards; that all the live stock shipped to and received at these stock yards is consigned to commission merchants, who take charge of the stock when it is received, and who sell the same to packing houses located at Kansas City, Mo., and Kansas City in the state of Kansas, and they sell large numbers of cattle to the defendants herein.
The bill then alleges that the defendants 'have unlawfully entered into a contract, combination, and conspiracy in restraint of trade and commerce among the several states and with foreign nations, in this, to wit, that they have unlawfully agreed, contracted, combined, and conspired to prevent all other persons than members of the Traders' Live-Stock Exchange, as aforesaid, from buying and selling cattle upon the Kansas City market at the Kansas City stock yards as aforesaid; that the commission firm, person, partnership, or corporation to whom said cattle are consigned at Kansas City, as aforesaid, is not permitted to and cannot sell or dispose of said cattle at the Kansas City market, as aforesaid, to any buyer or speculator at the Kansas City stock yards unless said buyer or speculator is a member of the Traders' Live-Stock Exchange, and these defendants, and each of them, unlawfully and oppressively refuses to purchase cattle, or in any manner negotiate or deal with or buy from any commission merchant who shall sell or purchase cattle, from any speculator at the said Kansas City stock yards who is not a member of the said Traders' Live-Stock Exchange; that, by and through the unlawful agreement, combination, and conspiracy of these defendants, the business and traffic in cattle at the said Kansas City stock yards is interfered with, hindered, and restrained, thus entailing extra expense and loss to the owner, and placing an obstruction and embargo on the marketing of cattle shipped from the states and territories aforesaid to the Kansas City stock yards.'
It is further alleged that, acting in pursuance of the unlawful combination above described, the board of directors of the exchange have imposed fines upon certain members of the exchange 'who had traded with persons, speculators upon the markets, who were not members of the said live-stock exchange, and within three months last past have imposed fines upon members of said live-stock exchange who have traded with commission firms at said Kansas City stock yards, which said commission firms had bought from, and sold cattle to, speculators upon said market who were not members of the said live-stock exchange.'
It was further stated in the bill that in carrying out the purposes and aims of this exchange, and by the conduct of its members engaged in this alleged combination, conspiracy, and confederation, they were acting in violation of the laws of the United States, and particularly in violation of section 1 of the act of congress approved July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies,' and in the prosecution of this unlawful combination they had agreed to hinder and delay the business of buying and selling cattle at the market named, and had confederated together in restraint of trade and commerce between the states, and that the object of the defendants in organizing the exchange was to prevent the sale by any commission merchant at the Kansas City stock yards of any cattle to any person who might be a buyer and speculator upon the market who is not a member of the exchange.
Accompanying this bill were several affidavits of individuals not members of the exchange, but who were traders or speculators at the stock yards, and those persons said that they were acquainted with the association in question, and with the officers and members, and that they did everything in their power to prevent other persons who were not members from trading at the stock yards, and a number of instances were given in which the affiants, who were not members of the exchange, were endeavoring to do business with commission merchants and others at the exchange in question, when the affiants were notified that they could not continue in business unless they became members of the association, and, where partnerships were engaged in business where one partner was a member of the association, the partner who was a member was notified that he could not continue in the partnership business with the other unless such other also became a member; that they had attempted to buy cattle from a great many commission firms, and from their salesmen, at these stock yards, but as soon as they went into the yards where the cattle were that were consigned to commission firms, and attempted to purchase them, some of the defendants would appear, call the salesman aside, and, after having a conversation with such salesman, the latter would invariably return to affiant, and say that he could not price cattle to the affiant or sell the same to him, as he had been warned by members of the exchange not to do so; that the Traders' Live-Stock Exchange would not permit other traders and speculators upon the market, and that the exchange does not permit commission firms at the stock yards to sell cattle consigned to them to any trader or speculator upon the market who is not a member of the exchange, and that commission firms had been notified by the officers of the stock exchange not to sell to speculators on the market who were not members of the live-stock exchange, and, where commission firms sold cattle to traders and speculators upon the market who were not members of the exchange, the association, and members thereof, would boycott the commission firm making such sales, and refuse to purchase any cattle from them, and refuse to go into the lots and look at cattle which had been consigned to them.
Upon the bill and affidavits application was made to the circuit court for the Western division of the Western district of Missouri for an injunction as prayed for in the bill, in opposition to which application various affidavits were read on the part of the defendants, and copies of the articles of association and by-laws of the exchange were attached to the affidavit of the president of the exchange and read on the motion.
Among other affidavits was that of the general superintendent of the stock-yards company, who said that he had known the organization, the Traders' Live-Stock Exchange, since its formation, and that it had been a benefit to the live-stock market at Kansas City by furnishing constant buyers for cattle shipped to the market, no matter how large the receipts for any one day or series of days might be, and also by raising the standard of business integrity among its members, because it required every member to comply with his business promises and verbal agreements; that no embargo was placed upon any one purchasing or desiring to purchase cattle at the yards, but a free and open market was offered to all buyers and sellers; that the members of the organization were engaged in the business of buying and selling cattle on the market, and were competitors among and against each other; that their organization did not restrain or interfere with interstate or local commerce, and the members did not monopolize, or attempt to monopolize, the business of buying and selling cattle at Kansas City, nor did the organization in any manner tend to limit or decrease the number of cattle marketed at Kansas City, but that it had the contrary effect; that about 85 per cent. of the total receipts for the years 1895, 1896, and 1897 at the Kansas City market of cattle had been billed to the Kansas City market alone, for purposes of sale there.
Other affidavits were presented to the same effect. Also the affidavit of the president of the exchange. The president denied all allegations in relation to conspiracies to prevent other persons than members of the exchange from buying and selling cattle upon the Kansas City market, and, on the contrary, alleged that in buying cattle the defendants were in competition with each other, with the representative buyers of all the packing houses, with the representatives of the various commission merchants, who buy constantly on orders from a distance, and with others who buy on orders on their own account, none of whom are members of the exchange, and that with these various classes of buyers the defendants constantly deal, and that in selling cattle they compete with each other and with shippers and commission merchants offering stock for sale on the market; that the business in which these defendants are engaged is that of buying and selling cattle known as 'stockers and feeders'; that the business is purely local to that market; that the defendants do not deal in quarantine cattle subject to government inspection, or cattle shipped through to other markets, with or without the privilege of the Kansas City market, nor in fat cattle sold on the local market shipped to other states or to foreign countries; that, except in rare instances, both purchases and sales made by the defendants are made from and to persons not members of the exchange, and that, in the judgment of the president, about 99 per cent of the transactions by the defendants are with persons not members of the exchange.
A copy of the articles of association is annexed to the affidavit, which contains the following preamble:
'We, the undersigned, for the purpose of organizing and maintaining a business exchange, not for pecuniary profit or gain, but to promote and protect all interest connected with the buying and selling of live stock at the Kansas City stock yards, and to cultivate courteous and manly conduct towards each other, and give dignity and responsibility to yard traders, have associated ourselves together under the name of 'Traders' Live-Stock Exchange,' and hereby agree, each with the other, that we will faithfully observe and be bound by the following rules and by-laws, and such new rules, additions, or amendments, as may from time to time be adopted in conformity with the provisions thereof from the date of organization.'
Rules 10, 11, 12, and 13 are as follows:
'Rule 10. This exchange will not recognize any yard trader unless he is a member of the Traders' Live-Stock Exchange.
'Rule 11. When there are two or more parties trading together as partners, they shall each and all of them be members of this exchange.
'Rule 12. No member of this exchange shall employ any person to buy or sell cattle unless such person hold a certificate of membership in this exchange.
'Rule 13. No member of this exchange shall be allowed to pay any order buyer or salesman any sum of money as a fee for buying cattle from or selling cattle to such party.'
These are the rules which are specially obnoxious to the complainants, and are alleged to be in their effect in violation of the federal statute above mentioned.
John L. Peak and R. E. Ball, for appellants.
John R. Walker and Sol. Gen. Richards, for the United States.
Mr. Justice PECKHAM, after stating the facts, delivered the opinion of the court.
Notes edit
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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