Gray v. Central Warehouse Co. , 181 N.C. 166 ( 1921 )

Clark, O. J.

The only question presented is whether under the allegations of the complaint and admissions in the answer, and on the facts found by him, his Honor was justified in entering the order appealed from.

The Kinston Board of Trade is a voluntary organization, and they had the right to exclude or expel the plaintiff from membership therein with or without cause,, and his Honor properly held that he did not pass upon that question, but inasmuch as the defendant warehouse companies were operating tbeir property “affected with the public use,” he rightly held that they had no power to exclude the plaintiff from buying because he was or was not a member of that organization.

The plaintiff’s cause of action is not because of his exclusion from the board of trade, but because he was forbidden to buy on the floor of the warehouses, and damages for such interference with his business and because of the humiliation and damages to his business by the publicity given to the allegation that he had been expelled for improper conduct. This raises issues of fact for the jury on the question of damages, and whether the allegation by the board of trade that he had been guilty of “nesting” tobacco was truthful or not. These issues were continued to the trial to be passed on by the jury. But the court held that whether he was a member of the board of trade or not did not entitle the defendants to exclude him as a buyer, and his Honor properly continued the order restraining the defendants from excluding the plaintiff as a buyer until the hearing. The order appealed from provides that “the plaintiff is to be accepted as a buyer only when his is the highest bid and on payment.”

If any one applies to a railroad or a ferry for the transportation of himself or the carriage of freight, or to an inn-keeper, or sends his corn to a public mill, or his tobacco to a public warehouse, or applies to the owners of a gas or electric power plant, or any other business “affected with a public use,” it has always been a principle of the common law, and never more necessary than now, that he is entitled to absolute impartiality as to the charges and treatment. If a passenger misconducts himself, those in charge of the train can put him off, and the same is true as to any other business affected with the public use. If in this case at the trial it shall be found that the plaintiff as a seller “nested” his tobacco it would prevent any recovery for damages on the charge of humiliation caused by the publicity given by the defendants in making public that matter, for the truth is a defense to libel. Whether, if true, such conduct authorized the defendants to exclude the plaintiff as a buyer is a matter which may come up on appeal from the verdict at the trial, but we hold that his Honor was eminently correct in holding that as long as that matter was undecided, the defendants had no power to exclude the plaintiff from being a buyer at their public sales, and the injunction until the hearing was properly granted.

In Nash v. Page, 80 Ky., 359, the duty imposed upon public ware-housemen for sale of tobacco is thus summed up: “When a warehouseman for the public sale and purchase of tobacco undertakes to sell at auction and to conduct the business of a public warehouseman he assumes an obligation to serve the entire public. He has no right to select his own bidders, nor can he refuse to receive the tobacco of producers when shipped to him. He can no more refuse to sell the tobacco of the producer at auction, or deny the right of any to bid when offered, than the owner of a stage or steamboat line may decline to take passengers or the owners of wine houses refuse to take the wine of others for storage. He cannot escape this obligation imposed by reason of the statute, and the common law by changing his appellation from public warehouseman to commission merchant.” There is stated as authority for this the principles of the common law, “The sale of tobacco at auction at tobacco warehouses is a business affected with the public interest, and those carrying it on are under duties and obligations by common law to carry it on in a way that is reasonable and beneficial to the tobacco trade, and therefore they cannot discriminate or exclude buyers or sellers.” This proposition is sustained by Cooley Const. Lim. (7 ed.), 870, et seq., and notes. The same subject is thoroughly discussed by Waite, Chief Justice, in Munn v. Illinois, 94 U. S., 125, where it is held that: “It has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, inn-keepers, etc., and in so doing to fix a maximum charge to be made for services rendered, accommodations furnished, and articles sold,” and the doctrine is there traced back to Chief Justice Hale. It is there also stated that it was held to apply to warehouses in Aldnut v. Inglis, 12 East., 527.

The same statement as to the common law as to the many different businesses where property is affected with a public use forbidding discrimination in prices or otherwise, is to be found in Bacon’s Abridgement, Wait’s Actions and Defenses, and Aldnut v. Inglis, 12 East., 527 (already quoted), and Freund on Police Power, secs. 372-394.

In Head v. Mfg. Co., 113 U. S., 17, Munn v. Illinois was reaffirmed as to a water mill and milldam being affected with a public use, forbidding any discrimination as to the patrons or charges, and at pp. 17 and 18 are given the states which have by statute enlarged the common-law power in this respect, and among them this State.

One of the most informing decisions oh this subject is Publishing Co. v. Asso. Press, 184 Ill., 438, which held: “The obligation of a corporation charged with a public interest does not arise from, nor rest upon, contracts made by it in conducting its business, but grows out of the fact that the corporation is discharging a public duty or private duty, which has been so conducted that it has become affected with a public interest.”

To the same purport is S. v. Edwards, 86 N. C., 666, as to grist mills. In Brass v. N. Dak., 153 U. S., 391, the doctrine was applied to public warehouses and Munn v. Illinois was reaffirmed. It had already been reaffirmed as to elevators in Budd v. N. Y., 117 N. Y., 1, affirmed on writ of error, 143 U. S., 517.

Tbe same principle as to all agencies “affected with, a public use” was restated in Mill Dam Corp. v. Newman, 12 Pickering, 477; the same rule was applied to gas companies, Shepard v. Gas Co., 6 Wis., 546; and to stock yards, Chicago v. Rumpff, 45 Ill., 90; to market houses, Gale v. Kalamazoo, 23 Mich., 345, 355, in a learned opinion by Chief -Justice Cooley. That an auction house was held for public use was laid down in 70 E. C. L., 54.

The application of this doctrine to common carriers and other public utilities has been too often and too fully recognized to require any citations.

We have recently applied it to electric power companies, Public Service Co. v. Power Co., 179 N. C., 18; R. R. v. Power Co., 180 N. C., 422; Griffin v. Water Co., 122 N. C., 208, and other cases.

Tobacco warehouses are public warehouses under the laws of North Carolina. Since 1895 the Legislature of North Carolina has regulated the warehouse charges, requiring that the tobacco shall be weighed by a person duly sworn; that every warehouse proprietor shall render to each seller of tobacco a bill of charges or fees for the same, and subjecting said proprietors to penalties for violations of the provisions of said statute. C. S., 5124, 5125, 5126; and since 1907 has required them to keep an account of the sales upon the floors and report the number of pounds sold each month to the Commissioner of Agriculture at Raleigh, who is required to keep record thereof and publish same in a bulletin, with penalty for failure to observe the statute both as to the warehouses and the Commissioner of Agriculture. C. S., 4926, 4927, 4928, 4929, 4930; and since then, Laws 1919, ch. 90, now C. S., 7839, requires that every tobacco warehouse shall take out a license, “Which shall be a personal privilege and shall not be transferable,” specifying also the amount of tax and the duty of the Commissioner of Agriculture and the appointment of traveling auditors and making violations of the statute a misdemeanor, thus taking over the supervision of the business by ‘the State.

Indeed, as far back as the history of the State extends the business of tobacco warehouses has been, if not a public duty, it has always been “affected with a public use.” The laws of North Carolina from 1669 to 1790 have been compiled as State Records, Yols. XXIII, XXIY, and XXY, by the writer of this opinion, and in the index thereto, in the last named volume, it appears that no less than 75 statutes were enacted prior to 1790 in regard to tobacco warehouses requiring inspection, regulation, and fixing charges in such business. To the fullest extent, therefore, their regulation and control by the public has been recognized and enforced in this State.

In fact there is no subject in which the protection of the producers against extortion and combinations to reduce prices is more important. It appears from the official reports of the United States and State Governments that North Carolina in 1919 was the fourth State in the Union in the value of its agricultural products, coming after Illinois, Iowa, and Texas only. In that year the cotton crop of this State was 857,000 bales, bringing approximately $154,000,000 at the current price of 36 cents; the tobacco crop for the same year was 326 million pounds, bringing, at an average price of 50 cents, $163,000,000, being in excess óf the value of the cotton crop of the State. Iii 1920, according to the Government and State reports, the cotton crop of the State was 936,000 bales, which at 15 cents brought only approximately $70,200,000, while the tobacco crop of 421 million pounds (in which North Carolina led all the other States) at an average price of 21% cents brought in $90,515,-000. It thus appears that the tobacco crop of the State exceeds in value even the cotton crop, and whether the charge is true or not that the excessive reduction in the price of tobacco was caused by combinations among the largest buyers, it is easy to see that if the conduct of warehouses is left to their owners, and either on their own motion or upon pressure from the large tobacco manufacturing companies they can exclude nay one from being.a buyer either upon the charge of some previous moral delinquency, especially before conviction in court, or by requiring buyers to become members of a board of trade at high cost, or in any other manner, the result will be to place the tobacco farmers of the State absolutely at the mercy of these gigantic corporations, and would reduce the farmers, while nominally owners of their land, to become in reality mere tenants at will of these great monopolies, and practically peasants. The entire history of the State, and the statutes on this subject, as well as our present statutes, place the regulation of tobacco warehouses not under private control as defendants have assumed in this case, but under the control of the public authority. If they can exclude any one from being a buyer, upon one pretext or reason, they could do so upon any other, but being public warehouses they cannot forbid any one to be a buyer or seller any more than a gwsi-public corporation, like a railroad, could refuse any one from being a shipper or a traveler over their lines upon an allegation of moral delinquency or failure to belong to some prescribed association. The matter, however, does not need discussion, as it has been fully decided.

In Nash v. Page, 44 Am. Rep.; S. c., 80 Ky., 539, it is held: “One who assumes to carry on the business of a public warehouse for the purchase of tobacco and the public sale thereof at auction is bound to serve as such without discrimination, and cannot select bidders nor reject any producers.” In the course of that opinion the Court says: “Since the formation of the State Government, the sale of this great staple has been fostered and protected by legislation. The rights and duties of the warehousemen, the buyers and «ellers, and all the officers connected with the warehouses, have been defined by statute, and no other commodity has received the same protection in the way of either general or special legislation. Nine-tenths of the tobacco is sold at auction, with the right unquestioned, until the present controversy, of all parties to enter the warehouse as buyers or as sellers, by their warehousemen as their agents, and competition left unrestricted, save the option on the part of the owner to approve or reject the bid. There is no provision, it is true, in any of the statutes now in force, or that existed prior to the law as we now find it, compelling the producer of tobacco to take it to the warehouses in the city of Louisville, or to expose it for sale at public auction; but such warehouses have been always regulated by law for the benefit of the producer, as well as those who are the proprietors of these warehouses, and the latter have assumed an obligation to the public that exists so long as they continue public warehousemen. They have assumed a qtictói-public character under the protection of the law, and will not be allowed to exercise all the privileges that have heretofore belonged to warehousemen, and evade all the duties and responsibilities of their position by the passage of a resolution disclaiming that they are operating their houses in the capacity of warehousemen, but as commission merchants.”

This opinion from Kentucky, which is second only to this State in the production of tobacco, further says: “The case of Munn v. Illinois, 94 U. S., 113, bears directly upon the question raised in this case. In that case it was claimed that the exercise of the legislative power of the State of Illinois was in violation of the Constitution of the United States in attempting to regulate by statute the maximum charges for the storage of grain in warehouses at Chicago and other places in the State, in which grain is stored in bulk, and the grain of different owners mingled together. The right of private property, and to deal and trade as these warehousemen might see proper with those who applied to them to store their grain, was insisted upon in that case; but it was there held by Waite, G. J., quoting Sir Matthew Hale in England, that 'property becomes clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use, but so long as he maintains the use, he must submit to the control.’ There is manifest distinction between the manner in wbicb the business of selling tobacco at these warehouses is conducted and that of those who are engaged in the ordinary business of commission merchants. These warehousemen now have, and always did have, in this State, public duties to perform, and to attempt to control by legislation the ordinary business of mercantile establishments in the same manner as the duties of these warehousemen are defined and regulated, would be in violation of both the Federal and State Constitutions. If the fourteen warehouses in Chicago can be regulated in their charges because of their relation to the public, the ten warehouses in the city of Louisville can be regulated in the same manner, and because the statute of this State is more liberal in its provisions toward the owners of these public warehouses than that of the State of Illinois is no argument in favor of the right of the appellants to relieve themselves of the duty they owe the public. It is conceded fact that more than five millions in value annually find its way from the producer to the warehouses in that city.. The great part of this product is grown within the State, and the producer almost of necessity is compelled to place his tobacco under the control of and for sale by these several warehousemen at public auction. All this tobacco must necessarily pass through these warehouses, subject to such charges as are reasonable and proper, and to say that the proprietors, with such relations to the public, can forbid buyers to enter their auction room, and to deny to any but members of the board of trade or applicants for membership the. right to make purchases, is a palpable disregard of the duty they owe to the individual patrons as well as to the public, and in the absence of any statute, is in violation of the rule of the common law. Such .a public duty may be imposed on these warehousemen in express terms or by implication, but whether so imposed or not, it arises from the facts of this case. This doctrine has been discussed and in effect settled long before the rule established in Munn v. Illinois, and upon the doctrine of the common law in reference to common carriers, such as steamboats, railroads, express companies, stage lines, warehouses, etc. If a public warehouseman can refuse to sell the tobacco of the producer at auction, or deny the right of any one to bid for it when offered but those whom he selects or permits to bid, why may not the owner of a steamboat or stage line, without excuse, decline to take the passenger, or the owner of the wine warehouse to receive the wine of others on storage? The steamboat is the private property of the owner; but he has engaged in a public employment, and so is the warehouseman, although not of the same character; but the undertaking of each is affected with the public interest, and for that reason the steamboat is compelled to take freight and passengers, and the warehousemen to receive and store and sell at auction the tobacco of the owner, and all are allowed to enter and compete as bidders.”

A public warehouse company cannot discriminate by rejecting any one as seller or buyer. This is an obligation imposed on public warehouse-men both by common law as well as by statute, 40 Cyc., 404; 27 R. C. L., 951. Up until Munn v. Illinois, 94 U. S., 113, the railroads contested the right of the Government to fix their rates, prescribe their schedules, or otherwise regulate their operations, but that case settled the contest in favor of the public and since then regulation has been extended and it is now undisputed. An examination of that case will show that the doctrine was derived by analogy from the common-law right to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeepers, and the like; to regulate their charges, prescribe the accommodation to be furnished, and the articles to be sold, and, above all, the prohibition of any discrimination in' the facilities to be furnished to all alike and the charges to be made.

The correctness of his Honor’s continuance of the injunction is no wise affected, - as he properly held, by the consideration whether the plaintiff was justly expelled from the board of trade or not, and it is not a matter- of consideration, even at the trial, except upon the issue as to damages for the humiliation caused by making the charge public if it .was untrue. The injunction was continued for the valid reason that the defendants could not exclude him from being a buyer because he was not a member of the board of trade, which is entirely independent upon his having been properly excluded or not. The injunction was continued upon the ground that the warehouses being affected with a public use the owners could not require any discrimination by rejecting those who were not members of a certain organization, or requiring that such bidders should have paid a specified sum before they could join that organization, which would be a further hindrance to a numerous body of buyers. It is to the public interest that buying shall be a privilege open to all the public. If the warehouse owners could require that the bidder must belong to a board of trade to entitle him to be a buyer they could require that he should belong to any other organization or be a member of any church that they might designate.. If they could require him to pay $500 to become a buyer, they could require him to pay $5,000. In short, if the public warehouses could make any requirements which are a discrimination they could so narrow and so restrict the number of buyers that the competition would amount to nothing, and the farmers who raise and offer tobacco for sale would be compelled to take whatever was offered. In this lies the vital importance of this principle of the common law in its application to this case, and all other cases of public utilities or where private property is “affected by a public use.”

Many principles of tbe common law have been eliminated or modified by tbe experience of tbe ages, witb tbe advance of civilization, but those tbat bave stood tbis test bave preserved tbe standing of tbe common law as tbe foundation of mucb of our liberty. Among these last there is nO' principle more important to tbe public’welfare than to preserve to every individual, however bumble, tbe right tbat in dealing witb public utilities and businesses “affected witb a public use,” there can be no discrimination against any individual in regard to uniformity of charges and impartial treatment. Tbis principle is more important now than ever, and has been widened and not restricted by tbe courts and by statute. Its assertion by every one is as commendable (and even more necessary to tbe public welfare) as tbe resistance of Hampden to tbe collection of ship money or of tbe Colonists to tbe Stamp Tax. In this, particular matter we know tbat tbe great tobacco companies bave been exceedingly profitable, and tbat their methods were declared illegal by tbe. Supreme Court of tbe United States by an unanimous opinion, U. S. v. American Tobacco Co., 221 U. S., 106, quoted in Public Service Co. v. Power Co., 179 N. C., 32-38. One of them, upon a capital beginning witb $350,000, gathered in a very few years an aggregation of $350,000,000, in addition to heavy dividends all along, being $1,000 collected from tbe public for every $ tbe owners of tbe company bad put into tbe business; and we know tbat even now more than one of them has been recently declaring 200 per cent dividends and more, while at tbe same time those who produced tbe tobacco are in tbe direst straits, in many instances not being able to defray even tbe expenses for tbe cultivation, and tbe fertilizer, for their product. ' If tbe tobacco warehouses can make discrimination of tbe kind used against tbis plaintiff, tbe producers' of tobacco are henceforth hopelessly and absolutely in the power of these-great corporations who control tbe warehouses, and can prescribe, as in this case, regulations tbat will rule out “independent” buyers and prevent tbe organization of small competing companies.

In tbe early history of tbis State, as set out in tbe compilation of our early laws, 23, 24, and 25 State Records, tbe tobacco warehouses were operated under .State ownership. Tbe present regulation is tbat of supervision of a business “affected witb tbe public use.” Should any seller or buyer misconduct himself as by fake sales or fake purchases or otherwise, bis conduct is a matter to be settled by prosecution for disorderly conduct or other misdemeanor in tbe courts. Tbe public warehouseman himself has no such power, and cannot punish him by prohibiting any seller or buyer from taking part in tbe sales conducted in said warehouse. To permit tbis would be to lay wide open tbe road to tbe exercise of an undue restriction upon trade, which, always forbidden by tbe common law, is now indictable under both State and Federal laws. Whether in this ease there has been a combination attempted to restrict the number of buyers is a matter which can be settled only by proceedings under the State or Federal statutes, and is not before us.

This matter has been too often discussed, and is too fully settled to require an extension of this discussion. In Munn v. Illinois, supra, the question was the application of the principles of the common law to elevators which had a monopoly of the grain business as the public warehouses have in this State a monopoly of the sales of tobacco, and if the warehouses in Kinston can exclude any one, at their will, from buying or selling, all could do so. It is not necessary that there should be statutes regulating, on the part of the public, the conduct of these public warehouses further than the common law or the statutes have already done. It is sufficient to say that those operating them cannot impose rules or regulations which will exclude any one from selling or buying thereon equally with every one else, and on the same terms. They cannot make different charges to any one, nor exclude any one.

This action is brought for damages. The allegations that the plaintiff’s expulsion was upon an unjust and unproven charge of misconduct, causing humiliation, and that being prevented from buying has caused him pecuniary loss in his business and humiliation, are denied, and are issues of fact to be settled by the jury at the trial. The judge, however, properly granted an injunction against restraining the plaintiff from being a buyer on the floor of any warehouse operated by the defendants, and in doing so he has rendered a distinct service not only to the largest agricultural interest in the State, but to the State at large.

The defendants rely upon Godwin v. Tel. Co., 136 N. C., 258, where the Court upheld the refusal of an application for mandamus to place a telephone in a house where unlawful business was carried on, if an aid in carrying on the illegal business, but otherwise the corporation could not refuse the applicant. The Court in that case was chreful to say that while a common carrier was not required to carry a passenger to aid in an illegal escape, or to do an illegal act, it could not refuse to convey him because he had done an illegal act. In this case the buying by the plaintiff was a perfectly lawful act in which any one was entitled to share, especially one who held, as the plaintiff did, a Federal license. The defendants could not reject or refuse any one the right to sell or to buy at a public warehouse sale dr require any qualification such as membership in a board of trade or any other that would not be valid if required by a public mill or a common carrier. It is true a railroad company is a qwasi-public corporation, and a telephone company is a public utility, but a public warehouse is at least “affected by a public use,” like public mills, inn-keepers, and others. It is not necessary that there shall be statutory regulations, but it is essential that there shall not be regulations by those operating public utilities or business “affected by the qrablic use” which will permit discrimination against any one. These requirements are based upon the principle, "Solus populi suprema est lex”j that is, that the public welfare is the highest law.

The question here presented is one of the utmost importance, not only because it presents a principle that has been recognized as settled law for centuries, but because of its great importance from a Politico-Economic standpoint, and that proposition is that public utilities, and wherever private property, by the nature of its employment, has become “affected with a public use,” the owners thereof cannot discriminate as to charges or treatment of the public, who are, from the nature of the business, invited to make use thereof. There is probably no principle of the law whose maintenance in its integrity is more important to the welfare of the public than this, or whose disregard will bring greater disaster.

Government is instituted for the protection of all men and all legitimate businesses, especially the weak against the strong. One buyer could not successfully contend against a combination of buyers, or of the owners of the warehouses, which is the only place where tobacco can be sold or bought, and to permit discrimination would be to place this great agricultural industry in the absolute power of any combination, which, by reducing the number of buyers and admitting only those acceptable to great combinations, would place the producers of tobacco at their mercy.

For the same purpose of protecting the producer in the sale of the cotton crop, the General Assembly enacted the Cotton Warehouse Act, Laws 1919, ch. 168, now Ch S., 4907-4925, which was held valid. Bickett v. Tax Commission, 177 N. C., 433.

Affirmed.