This Court will not inquire whether the finding of the jury in
the state court is against the evidence; it will take the facts as
found and consider only whether the state statute involved is
violative of the federal Constitution.
The power in the state court to determine the meaning of a state
statute carries with it the power to prescribe its extent and
limitations, as well as the method by which they shall be
determined.
Where the highest court of a state has held that the acts of a
person convicted of violating a state statute defining and
prohibiting trusts were clearly within both the statute and the
police power of the state, and that the statute can be sustained as
a prohibition of those acts irrespective of the question whether
its language was broad enough to include acts beyond legislative
control, this Court will accept such construction, although the
state court may have ascertained the meaning, scope and validity of
the statute by pursuing a rule of construction different from that
recognized by this Court.
While there is a certain freedom of contract which the states
cannot destroy by legislative enactment, in pursuance whereof
parties may seek to further their business interests, the police
power of the states extends to, and may prohibit a secret
arrangement by which, under penalties, and without any merging of
interests through partnership or incorporation, an apparently
existing competition among all the dealers in a community in one of
the necessaries of life is substantially destroyed.
The Act of the Legislature of Kansas of March 8, 1897, defining
and prohibiting trusts, is not in conflict with the Fourteenth
Amendment to the federal Constitution as to a person convicted
thereunder of combining with others to pool and fix the price,
divide the net earnings, and prevent competition in the purchase
and sale of grain.
On March 8, 1897, the Legislature of Kansas passed an act, the
first section of which is as follows:
"SEC. 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
Page 196 U. S. 448
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 agree 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
competition 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 commodity, that its price may in any manner be
affected. And any such combinations are hereby declared to be
against public policy, unlawful, and void."
Laws of Kansas, 1897, p. 481.
Subsequent sections prescribe penalties, and provide procedure
for enforcing the act. On September 27, 1901, the county attorney
filed in the District Court of Rush county, Kansas, an information
charging that the defendant did, on November 20, 1900,
"then and there unlawfully enter into an agreement, contract,
and combination, in the County of Rush
Page 196 U. S. 449
and the State of Kansas, with divers and sundry persons,
partnerships, companies, and corporations of grain dealers and
grain buyers in the Town of Bison, in the said county and state
aforesaid, to-wit, Humburg & Ahrens, the La Crosse Lumber &
Grain Company, the Bison Milling Company, and George Weicken, who
were at the said time and place competitive grain dealers and
buyers, to pool and fix the price the said grain dealers and buyers
should pay for grain at the said place, and to divide between them
the net earnings of the said grain dealers and buyers, and to
prevent competition in the purchase and sale of grain among the
said dealers and buyers."
A trial was had, the defendant was found guilty, and sentenced
to pay a fine of $500, and to imprisonment in the county jail for
three months. On appeal to the supreme court of the state, the
judgment was affirmed. 65 Kan. 240. Whereupon this writ of error
was sued out.
Page 196 U. S. 453
MR. JUSTICE BREWER delivered the opinion of the Court.
The verdict of the jury settles all questions of fact.
In
Missouri, Kansas &c. Ry. Co. v. Haber,
169 U. S. 613,
169 U. S. 639,
it is said:
"Much was said at the bar about the finding of
Page 196 U. S. 454
the jury's being against the evidence. We cannot enter upon such
an inquiry. The facts must be taken as found by the jury, and this
Court can only consider whether the statute, as interpreted to the
jury, was in violation of the federal Constitution.
Chicago,
Burlington & Quincy Railroad v. Chicago, 166 U. S.
226,
166 U. S. 242,
166 U. S.
246."
We pass, therefore, to a consideration of the questions of law.
It is contended that the act of 1897 is in conflict with the
Fourteenth Amendment to the federal Constitution in that it unduly
infringes the freedom of contract; that it is too broad, and not
sufficiently definite, and that, while some things are denounced
which may be within the police power of the state, yet its language
reaches to and includes matters clearly beyond the limits of that
power, and that there is no such separation or distinction between
those within and those beyond as will enable the courts to declare
one part valid and another part void. We quote from the brief of
counsel for plaintiff in error:
"Section one goes entirely too far, and is an unwarranted
attempt upon the part of the legislature to limit the rights of the
individual in the matter of contracting and dealing with his fellow
men. The liberty to contract is as much protected by the
constitutional provisions above referred to as is the liberty of
person, and any attempt to abridge or limit that right will be held
void unless such abridgment or limitation is necessary to preserve
the peace and order of the community, or the life, liberty, and
morals of individuals, in which cases it is held to be the proper
exercise of the police power of the state."
It may be conceded, for the purposes of this case, that the
language of the first section is broad enough to include acts
beyond the police power of the state, and the punishment of which
would unduly infringe upon the freedom of contract. At any rate, we
shall not attempt to enter into any consideration of that question.
The supreme court of the state held that the acts charged and
proved against the defendant were
Page 196 U. S. 455
clearly within the terms of the statute, as well as within the
police power of the state, and that the statute could be sustained
as a prohibition of those acts irrespective of the question whether
its language was broad enough to include acts and conduct which the
legislature could not rightfully restrain.
It is well settled that, in cases of this kind, the
interpretation placed by the highest court of the state upon its
statutes is conclusive here. We accept the construction given to a
state statute by that court.
St. Louis, I.M. & St.P. Ry.
Co. v. Paul, 173 U. S. 404,
173 U. S. 408;
M., K. & T. Ry. Co. v. McCann, 174 U.
S. 580,
174 U. S. 586;
Tullis v. Lake Erie & W. R. Co., 175 U.
S. 348. Nor is it material that the state court
ascertains the meaning and scope of the statute as well as its
validity by pursuing a different rule of construction from that we
recognize. It may be that the views of the Kansas court in respect
to this matter are not in harmony with those expressed by us in
United States v. Reese, 92 U. S. 214;
Trade-Mark Cases, 100 U. S. 82;
United States v. Harris, 106 U. S. 629, and
Baldwin v. Franks, 120 U. S. 678. We
shall not stop to consider that question, nor the reconciliation of
the supposed conflicting views suggested by the chief justice of
the state. The power to determine the meaning of a statute carries
with it the power to prescribe its extent and limitations, as well
as the method by which they shall be determined.
The transaction, as shown by the testimony, was practically
this: there were four dealers in wheat in Bison, a small village in
Rush County, situated on the Missouri Pacific Railroad. Three of
them owned elevators and one a mill. They were competitors in the
purchase of grain. The defendant was secretary of the state Grain
Dealers' Association. He was not himself in the grain business, nor
interested in that of either of the four dealers. He came to Bison
for the purpose of investigating some claims of Bison firms against
the Missouri Pacific Railroad. While there, he induced these
dealers to enter into an arrangement by which, if one bought and
shipped more grain than the others, that excess purchaser would
pay
Page 196 U. S. 456
them a certain percent. As security for such agreement, the
parties deposited their checks for $100 each with the defendant.
They made to him weekly reports of the amount of grain purchased.
If one had purchased more than his share, he paid the defendant
three cents a bushel for the excess, and that amount was then
divided among the other dealers. Upon these facts, under
appropriate instructions, the jury found the defendant guilty.
That the transaction was within the letter of the statute, in
that it tended to prevent competition in the purchase of
merchandise, is not open to doubt. It is also within the spirit of
the statute. It imposed an unreasonable restraint upon competition.
It is stated by counsel for plaintiff in error in his brief that,
not far from Bison, were a number of other small towns at which the
principal commercial business was the buying and selling of wheat.
But where there were four buyers, as in Bison, apparently
competing, farmers nearer to Bison than to other villages, if not
farmers more remote, would naturally seek that place in order to
benefit by the competition. They would find an apparent
competition, and yet each buyer was restrained by this contract
from seeking to purchase more than his fourth of the wheat coming
to the market, or, if he purchased more, must necessarily, in order
to make his profit, buy his wheat, pay at least three cents a
bushel less than what he might otherwise pay, that being the
penalty for an excess purchase. It was not an open agreement in
respect to price, nor one that enabled sellers to know in advance
exactly what they could get for their wheat.
Undoubtedly there is a certain freedom of contract which cannot
be destroyed by legislative enactment. In pursuance of that
freedom, parties may seek to further their business interests, and
it may not be always easy to draw the line between those contracts
which are beyond the reach of the police power and those which are
subject to prohibition or restraint. But a secret arrangement, by
which, under penalties, an apparently existing competition among
all the dealers
Page 196 U. S. 457
in a community in one of the necessaries of life is
substantially destroyed, without any merging of interests through
partnership or incorporation, is one to which the police power
extends. That is as far as we need to go in sustaining the judgment
in this case. That is as far as the supreme court of the state
went. If other transactions are presented in which there is an
absolute freedom of contract beyond the power of the legislature to
restrain, which come within the letter of any of the clauses of
this statute, the courts will undoubtedly exclude them from its
operation. As said by the supreme court of the state concerning the
defendant's criticism of the breadth of this statute (p. 247):
"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 wrongfully 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, affirmed under the title
Clark v. Kansas City,
176 U. S.
114;
Albany County v. Stanley, 105 U. S.
305,
105 U. S. 311;
Pittsburgh &c. R. Co. v. Montgomery, 152 Ind. 1."
We see no error in the judgment of the Supreme Court of Kansas,
and it is
Affirmed.
