State v. Wilson

80 P. 639, 73 Kan. 334, 1906 Kan. LEXIS 256

Opinions

The opinion of the court was delivered by

Mason, J.:

Charles L. Wilson appeals from a conviction upon a charge of fraudulently obtaining property by false pretenses. The evidence of the state tended to show that in October, 1898, Wilson and one George Maris purchased a herd of 402 steers, in payment for which they executed two notes to the A. J. Gillespie Commission Company for the aggregate' amount of $13,366.80, secured by a mortgage upon the cattle; that in the following December they sold 397 of these steers to the Elk Grove Land and Cattle Company, under the representation that they were clear of all encumbrance, obtaining in payment a check for $500 and a draft for $10,547; and that the buyer was compelled to lose the cattle or pay the mortgage.

A large number of assignments of error have been made and argued, but the one most urgently presented is based upon a contention of the defendant that the cattle were in fact unencumbered because the mortgage executed by himself and Maris was rendered incapable of enforcement by various provisions of the Kansas statutes known generically as the antitrust laws. This question was raised in the trial court by an offer on the part of the defendant to prove that the A. J. Gillespie Commission Company was a member of a voluntary association known as the Kansas City Live-stock Exchange, composed of persons and corporations engaged in the business of buying and selling live stock for themselves and for others, organized for unlawful purposes, among which was that of fixing and maintaining a minimum charge for commissions for their services in buying and selling cattle for others, such minimum charge being established by a by-law at fifty cents per head; that the cattle here involved were purchased by the Gillespie company for the defendant and Maris, a commission being charged in pursuance of the by-law referred to, amounting to $201, which was included in the sum for which the notes and mortgage were given. The offer was made in greater detail than here shown, and included a tender of a copy of the articles of association, rules and by-laws of the live-stock exchange. It was rejected'by the court, and the con troversy so far as this matter is concerned turns upon the correctness of that ruling.

Defendant in support of his contention invokes three statutes, enacted in different - years — chapter 257 of the Laws of 1889 (Gen. Stat. 1901, §§2430-2438), chapter 158 of the Laws of 1891 (Gen. Stat. 1901, §§2439-2441), and chapter 26.5 of the Laws of 1897 (Gen. Stat. 1901, §§7864-7874). The first of these forbids certain contracts in restraint of trade. The second is narrow in its scope, and applies only to persons or corporations engaged in buying or selling live stock, who are prohibited by it from entering into any agreement to control the amount to be charged as compensation for services in making sales of live stock for others. The third is very sweeping in its provisions. It defines and denounces five kinds of combinations, which it denominates trusts. The definitions are couched in general terms, but cover almost every conceivablé device by which freedom of commerce might be hampered, competition restricted, or the price of commodities controlled. All acts done in pursuance of any of the arrangements interdicted by these various statutes are made misdemeanors. The act of 1897 also contains these provisions:

“Any contract or agreement in violation of any of the provisions of this act shall be absolutely void and not enforceable in any of the courts of this state; and when any civil action shall be commenced in any court ^ of this state it shall be lawful to plead in the defense' thereof that . . . the cause of action grows out of any business transaction in violation of this act.” (Gen. Stat. 1901, § 7870.)

The argument in behalf of the defendant is that, assuming the truth of the rejected evidence, the Kansas City Live-stock Exchange was an unlawful combination under each of these statutes; that in charging the defendant $201 as a commission for services in buying 402 head of cattle for him the Gillespie company acted under and in pursuance of the unlawful bond which united the members of the exchange, and thereby .was guilty of a public offense; that the mortgage was unenforceable both because $201 of its consideration was on this account illegal and because it was made in violation of the provisions of the statute of 1897, or grew out of a business transaction in violation of that statute.

It may be assumed for the purposes of the case that the live-stock exchange was a trust within the meaning of the law of 1897 by reason of a number of its rules other than those relating to the regulation of commission charges. There are provisions of that law which purport to make such fact alone a complete bar to the enforcement of a contract made in this state by one of its members. Such provisions must be interpreted, however, as applying only to contracts made pursuant to the illegal combination, and in furtherance of its unlawful purposes. (Barton v. Mulvane, 59 Kan. 313, 52 Pac. 883; The State v. Jack, 69 Kan. 387, 76 Pac. 911.) Whether this mortgage was a contract of that character is the pertinent inquiry in this connection. The mere fact that the Gillespie company was a member of a trust when it bought these cattle for Wilson, paid for them, and took his notes and mortgage for the amount, did not taint the transaction with illegality. The feature of the proceeding of which complaint is made, and which causes the doubt of its validity, is the charge of a commission for services in making such purchase at the rate of fifty cents a head — the minimum rate fixed by the unlawful association. This being true, the mortgage was void only in case an agreement to maintain a minimum rate for such services is held to be one of those forbidden by statute.

There are general expressions in the law of 1897 which, if given a liberal construction, might be held to prohibit such an agreement; for instance, those directed against combinations intended “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,” or “to increase or reduce the price of merchandise, produce, or commodities,” or “to prevent competition in the . . . sale or purchase of merchandise, produce, or commodities, or to prevent competition in aid to commerce,” or “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.” (Gen. Stat. 1901, § 7864.) The statute being penal, however, requires a strict rather than a free construction. Moreover, its interpretation is affected by another consideration. The act of 1897 is so similar in many respects to that of 1889 as to give plausibility to the suggestion that it was intended to cover the whole of the subject-matter of the earlier statute and entirely to supersede it. (The State v. Smiley, 65 Kan. 240, 69 Pac. 199.) On the other hand, the act of 1891 is so specific in its terms, and there is such a lack of any apparent attempt to accomplish its precise purpose by the later enactment, that there is little room for a contention that it has been repealed by implication, and we regard it as still in force. This being decided, the two acts, since they relate to the same general subject, must be construed together, as though parts of the same enactment. (Wren & Clawson v. Comm’rs of Nemaha Co., 24 Kan. 301.) The precise scope of the earlier one is indicated by its title, which is “An act prohibiting combinations to prevent competition among persons engaged in buying or selling live stock,” etc. In the later enactment there is no reference to this subject by any terms more definite than those already quoted. In this situation, it is to the specific statute, and not to the general one, that we must look for an expression of the intent of the legislature with regard to the matter of regulating the business of buying and selling cattle upon commission, and the prohibition against the transaction complained of by defendant must be found, if at all, in the statute of 1891, and not in that of 1897. (Long v. Culp, 14 Kan. 412.)

Upon a cursory inspection the act of 1891 may seem abundantly sufficient to stamp as illegal any agreement for the control of the commission to be charged for services either in buying or selling live stock. A careful reading, however, discloses that while the persons against whom it is directed are described as those engaged in the business of buying or selling live stock upon commission, the agreements declared to be illegal are in every instance those relating to the establishment of fixed or minimum charges for services in the sale, but not in the purchase, of live stock for others. This cannot be deemed the result of a mere error, clerical or otherwise, for the expression occurs no less than four times. Why the legislature should have made a distinction between agreements relating to commissions for selling and those relating to commissions for buying is not a matter of inquiry here; that it has done so admits of no doubt.' We cannot insert in the law an inhibition against the establishment of minimum charges for services in buying cattle, nor can we ignore the effect of the omission of the legislature so to do. As the commission charged to the defendant by the Gillespie company was for the purchase of cattle for him, not for their sale, it was not under the ban of the statute and did not invalidate the mortgage. If the law of 1889 is to be considered still in force the application of its general provisions to the matter here involved must be denied, upon the reasoning already employed with regard to 'the act of 1897. It results from these conclusions that the trial ■court committed no error in rejecting the evidence under consideration.

The matter of defense just discussed was advanced under singular. circumstances. There is no pretense that the defendant informed the Elk Grove company, or that it was otherwise notified, of any claim that the mortgage was void because based upon an unlaw ful consideration, .either before the cattle were sold or in time to have enabled the company to raise the question against the holder of the mortgage when the cattle were demanded under it. Selling property under the representation that the title is clear when in fact there is in existence a mortgage against it which is valid except for some latent defect unknown to the purchaser, and in virtue of which the property is successfully replevied from him, may be an offense in law, as it assuredly is in morals. But we have assumed that it was necessary for the state in order to convict in this case to prove the existence of a valid mortgage.

The defendant challenged the sufficiency of the information on the ground that it did not show whether - the A. J. Gillespie Commission Company was a corporation or a partnership. Such an omission in laying the ownership of the stolen property in a prosecution for larceny would be fatal. (The State v. Suppe, 60 Kan. 566, 57 Pac. 106.) The same degree of particularity is not required, however, in the description of the mortgagee in a case of this kind.

Another objection made was that the information did not state that the mortgage was unpaid. It did allege that at the time of the sale to the Elk Grove company the cattle were encumbered by the mortgage, and this was equivalent to an allegation that the mortgage at that time remained unsatisfied. (Keyes v. The People, 197 Ill. 638, 64 N. E. 730.)

The information described the mortgage given by the defendant and Maris to the Gillespie company as one securing an indebtedness of $13,336.80. The proof showed that the mortgage debt was $13,356.80. This is claimed to be a fatal variance. It would not be profitable to review the great number of authorities cited in support of this contention. Whether or not it is possible to distinguish this case from those relied upon by the defendant, it is not necessary to do so. Notwithstanding anything that may have been said to the contrary by courts of eminent respectability, it is so manifest that the defendant could not by the most remote possibility have been misled by the inaccurate statement of the amount for which the mortgage was given that we have no hesitancy in holding that there is nothing substantial in the objection made.

The information alleged that the mortgage had been by the mortgagee assigned and transferred to, and was then owned by, the Central Savings Bank, of St. Joseph, Mo., and Louis Hax. The evidence was that the mortgagee sold the notes under a blank indorsement, that the buyer sold them to the St. Joseph bank, delivering them without further writing, and that the bank sold one of the notes to Louis Hax, retaining the other. This is also' complained of as a variance. Granting that for some purposes the description of the notes as having been assigned to, and as being owned by, the bank and Hax was inapt, this is likewise a matter by which no prejudice could result to the defendant and for which it would be folly to set aside the conviction.

. The draft which the defendant (jointly with Maris) was charged with having fraudulently obtained was issued by a bank cashier to the order of John Wilson & Co., and by the payees indorsed to “Maris & Wilson, for the use of Elk Grove Land and Cattle Company.” It is urged that because of this restrictive indorsement Maris and Wilson acquired no beneficial title to the draft, but took it only in trust for the Elk Grove company. This might be deemed the effect of the indorsement in the absence of any explanation, but the evidence warrants the conclusion that it was intended to mean simply that the draft, although transferred by John Wilson & Co. direct to Maris and Wilson, was delivered to them on account of the Elk Grove company.

Other assignments of error have been argued with regard to the admission of evidence, the giving and refusing of instructions, and the denying of the motion for a new trial. It is not thought that they require separate statement or discussion. They have all been examined, and we reach the conclusion that the record is free from material error. The judgment is therefore affirmed.

SYLLABUS BY THE COURT. 1. Statutory Construction — Statute Prohibiting Combinations — Repeal by Implication. Chapter 158 of the Laws of 1891 (Gen. Stat. 1901, §§2439-2441), prohibiting combinations to prevent competition among persons engaged in buying and selling live stock, is superseded by the general antitrust law of 1897 (Laws 1897, eh. 265; Gen. Stat. 1901, §§ 7864-7874), and is no longer in force. 2. Monopolies- — Dealing in Live Stock — Violation of Antitrust Law. An association of persons and corporations engaged in • the business of buying and selling live stock, and practically controlling that business at the place of operation, which has a by-law forbidding its members to buy or sell live stock for others without charging a commission therefor of at least fifty cents a head, is a combination to carry out restrictions in the full and free pursuit of a lawful business, and in virtue of that fact is ’a trust within the terms of chapter 265 of the Laws of 1897. 3. Contracts — Commission—Void Because Made in Violation of Law. The charging of a commission for services in the purchase of live stock for another, by a member of such a trust, in pursuance of the by-law referred to, is an act made a misdemeanor by that statute, arid a contract to pay a commission exacted under such circumstances is void because made in violation of law. 4. -Illegal Consideration — Case Disapproved. A note and mortgage given for a consideration, a part of which is unlawful because based .upon a transaction made criminal by the statute, are wholly void. The language of the second paragraph of the syllabus in Rathbone v. Boyd, 30 Kan. 485, 2 Pac. 664, and of the corresponding portion of the opinion, is disapproved. 5. - Consideration iñ Part Unlawful. Where two notes secured by a mortgage are given for a consideration in part unlawful, although the unlawful portion of the consideration is less than either of the notes, both of the notes and the mortgage are wholly void. All the Justices concurring.