In re Lurman ( 1895 )

O’BRIEN, J.

From the outset of the controversy which resulted in the suspension of the petitioner, he consistently took the position that he could not be required to accept a delivery of the coffee, because it was artificially colored or adulterated. If this position could be maintained, then, notwithstanding any by-law or rule of the exchange to the contrary, he could not be forced to accept a delivery of such coffees, for the reason that the trading in such contravenes the express statute of this state (Laws 1893, c. 661, § 41), which provides:

“No person shall within the state * * * have, sell or offer for sale any adulterated food or drug. * * * An article shall be deemed to be adulterated within the meaning of this act, * * * in the case of food, * * * if it be colored or coated or polished or powdered, whereby damage is concealed or it is made to appear better than it really is or of greater value.”

Although the exchange, through its various committees, as shown, was appealed to, and though graders were appointed pursuant to the terms of the contract, it is insisted by the petitioner that this claim was never considered or heard upon the merits; the position taken by the exchange being that the contract between the parties called for a grading by arbitration, and that, such graders having decided that the coffee tendered was up to the grade fixed by the contract, the petitioner should accept and pay for the coffee. The petitioner appealed originally to the exchange. They refused to consider the question of whether the coffee was adulterated or not, and compelled the petitioner to name a grader, and thereafter persisted in refusing to make any examination of the question of fact as to the adulteration on its merits, taking the stand that they would not review the original decision of the graders. As contended by the petitioner, therefore, the practical result is that the vendees named a grader under compulsion; that they have attempted, by every procedure open under the by-laws of the exchange, to get a review of the decision of the graders, but that they have failed; and that this failure has been in the face of the uncontroverted fact of artificial coloration.

If we assume, as did the exchange, that the coffee was up to grade, the question remains whether or not the petitioner was entitled to have a determination on the merits upon his claim that the coffee was adulterated; and, if he was entitled to such a hearing upon the merits, whether it was extended or had in any of the procedure adopted. We think ife requires a mere reference to the statute quoted from to sustain the proposition that neither the exchange nor its members could engage in trading in adulterated coffee, and that such coffee, though it might be equal to the grade of that called for by a contract, could not be made the subject of a lawful delivery. This-is but another way of stating that the penal statutes of the state cannot be disregarded, either by individuals or corporations. That this coffee, or some portion of it, was colored, is conceded by all who examined it; but whether this was a natural or artificial coloring .underlies the question as to whether it was adulterated. If a suit had been brought after tender against the vendees to recover damages for refusal to accept, it would have been a good defense, if proven, to show that the coffee tendered was adulterated. If, instead of «suing, a vendor sets in motion the machinery of an exchange, and the question of whether one of its members has made a tender of goods which it is unlawful to trade in is submitted to them, there must, in such exchange, be some hearing on the merits at some point before a person is deprived of nights within a private corporation to which prima facie he is entitled. Nor do we think that such exchange could relegate the determination of such a question to a lay tribunal called “graders,” and, because of their report that the goods are not unlawful, refuse to give one of its members the benefit of a review or a hearing on the merits before depriving him of his membership.

We are thus to determine the second question suggested, as to whether there was a hearing, either by the graders or by any committee of the exchange or by the exchange itself, upon the merits as to whether this coffee was or was not adulterated. We do not think it is claimed that before any committee of the exchange, or in all the procedure that was taken by that body, the merits of the controversy as to,the adulteration were inquired into; the whole machinery of the exchange being seemingly brought to support the proposition that it would allow no investigation of any kind of an official character upon the question of fact as to whether the coffees tendered to the petitioner, for his refusal to receive which he was suspended, were or were not, as alleged by him, adulterated,—in other words, were or were not goods contravening the express statute of the state. As shown by the affidavit of the superintendent of the exchange, the adjudicators did not consider any evidence of the unlawful coloring of the coffee, “because it was expressly provided by the contract that the question of the grade of coffee should be considered by another tribunal.” It will thus be seen that the exchange begged and overlooked the real question, and, because the graders had decided that the coffee was up to grade, they refused to enter upon an examination of the question as to whether it was or was not adulterated, or to assume the obligation and responsibility which rested upon it or its board of managers of determining whether one of their members was right in refusing to do what the law says he should not do, viz. trade in adulterated coffees. Throughout, the exchange and its different committees and managers place themselves upon the technical regularity of the proceed-togs which remitted to the persons who had the right to pass upon the grade the question whether the coffees tendered were coffees which the petitioner should receive under his contract; and upon their conclusion that the coffee was up to grade thé exchange set in motion its whole machinery, even to expelling the petitioner, to order to enforce the decision thus made by such outside tribunal. In this connection it must not be overlooked that, apart from the money involved, the petitioner had at stake his membership in the exchange, and because he would not give up an amount of money which, if he were right, he could not legally be required to do, he was, without any hearing by the exchange itself, deprived of his membership. Thinking, as we do, that, regardless of what may have been done by the graders, the exchange could not deprive one of its members of his membership for refusing to do what he claimed to be an unlawful act without inquiry, investigation, and decision upon whether this claim was justified, this of itself would be sufficient to warrant a reversal of the order, and a reinstatement of the member, and a remission of the whole question again to the exchange, to the end that the member should have a hearing upon the merits. It is doubtful, to say the least, if even the graders, upon whose decision so much reliance was placed by the exchange, ever considered the petitioner’s claim as to adulteration, they seemingly being as anxious to avoid this question as the exchange itself; and, as shown by their affidavits, they confined their attention to determining whether or not the coffee was or was not up to grade. Just what they considered to be their duty-and their view of the controversy, and what questions they considered, are well set forth in the affidavit of one of the graders, who states:

“In grading coffee, the graders and grade arbitrators consider the grade, quality, and condition of the coffee. If the coffee contain black beans, or imperfect beans, an allowance for such is made. So if the coffee contains stones or sticks or foreign substance of any kind, a proper allowance for that defect is made. So if there be any foreign substances adhering to or contained in the beans of coffee, whether coloring it or not, or if it appear that the coffee has been manipulated or treated in any way, that is an element which the graders and grade arbitrators must consider. Indeed, it is the duty of the graders and grade arbitrators to consider every element of grade, quality, or condition.”

It will thus be seen that they were giving little or no attention to the question of whether the coffee was adulterated,_ and were confining their attention, as they deemed it their duty to do, to a consideration of whether it was or was not up to grade. That this particular lot had coloring matter upon it is conceded by all who saw the coffee, thus raising at least a fair presumption that the claim advanced by the petitioner was placed upon some foundation, and was made in apparent good faith. Notwithstanding this, the record shows that the graders and the exchange were seemingly fearful of the issue, and studiously avoided ever giving a hearing on the merits to the claim advanced, and devoted their time to a consideration of the question as to whether the tender of the coffees was according to the contract, and regardless of whether it was adulterated or not, and as to whether it was unlawful or not; and the exchange endeavored, by the strongest means within their power,—by the act of expulsion,—to cornu el the petitioner to do what, if his claim is right, would be a criminal act, and subject him to the penalties prescribed by the statute. It is unnecessary to say that this the exchange have no power to do, because it requires no array of legal authorities to support the proposition that neither by private contract nor by the by-laws of any exchange can the laws of a state be abrogated or disregarded. We think, upon an examination of the entire record, that the petitioner is entitled to a hearing upon the merits, which he has never obtained; and to that end, that he should be restored to his membership, and that then the whole subject should be referred to the exchange, who should in some appropriate manner, before suspending or expelling the petitioner, give him a hearing upon the merits of his claim, to which by law he is entitled.

Order reversed accordingly, with costs and disbursements. All concur.