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minated by the trustees and the proceeds of the fund paid to the Louisville Baptist Orphans' Home. The city of Louisville attempted to tax the “Norton Trust Fund.” While it Was in the hands Of the truSteeS, and before it was paid over to the Baptist Orphans' Home. In asserting the exemption of the fund from taxation, this court said:

“While the beneficiary of the trust fund is not given the immediate care and control of it, it is the equitable owner of it, and it could not rightfully be diverted to any uses or purposes other than those designated by the testator. If the condition required it, the beneficiary could by appropriate proceedings rescue the fund from any misappropriation of it. It is the owner of the fund, though temporarily controlled by others. While Norton and Barr are designated as trustees under the will, still they are the trustees for the beneficial owner. They are accountable to it for the management of the property and the execution of the trust. The practical effect of the provision of the will under consideration is that the fund is given to the orphans' home, but it is to be managed for it for the specified time by the trustees named by the testator. If the income from the property or from its proceeds were to go to another during the five years, then it would be very clear that the property or fund should be taxed during that period. When one is the equitable owner of property and is entitled to the income from it, he has the enjoyment of every benefit that could come to any one who might own the property. To hold that the property should be taxed because it is controlled by other than the trustees of the orphans' home for a specified period is giving effect to the shadow, and not the substance, of things. * * * In the case at bar it is admitted that the entire proceeds of the property sought to be taxed, and the income arising therefrom, will go to the orphans' home under the will. In our opinion, the property is exempt from taxation.”

We consider the Norton Case, Supra, as concluding the case before uS. Judgment affirmed.

AVEY V. BURNLEY. (Court of Appeals of Kentucky. Nov. 24, 1915.)


A receiver cannot be sued individually upon

a contract made by him as a receiver.

[Ed. Note.—For other cases, see Receivers, Cent. Dig. §§ 321, 322; Dec. Dig. 3:168.]

Appeal from Circuit Court, Carlisle County. Action by E. W. Avey against J. R. Burnley. From a judgment for defendant Sustaining a demurrer to the petition, plaintiff appeals. Affirmed.

E. T. Bullock, of Clinton, for appellant. John E. Kane, of Bardwell, for appellee.

MILLER, C. J. The appellant Avey prosecutes this appeal from a judgment of the circuit court which Sustained a demurrer to his petition seeking a judgment against Burnley for $312.40.

The petition alleges that in a suit pending in the Carlisle Circuit Court betWeen E. W.

Avey and S. W. Ables, involving a settlement of accounts between them, the defendant, J. R. Burnley, was appointed receiver, with instructions to take charge of certain property, including Some growing corn, in which Avey and Ables had an interest, and to gather the corn and crib and sell it and report his acts as receiver to the court; that Burnley qualified as receiver, and at his sale of the property the plaintiff, E. W. Avey, bought the corn, which was in two cribs on the place, for 55 cents per bushel, at the crib; that Burnley represented to Avey there were 1,791 buShels Of corn in the two Cribs, and that AVey was to pay him $985.05 therefor, which was at the agreed price of 55 cents per bushel; and that Avey paid said sum to Burnley. . The petition further states that there Were only 1,223 bushels of corn in the two Cribs, and that Avey demanded of Burnley that he repay him $312.40 for the shortage, Which amounted to 568 bushels, and that Burnley refused to repay any part of it. The petition alleges that Avey bought the corn from Burnley as receiver, while Burnley is sued individually. There is no allegation of bad faith upon the part of Burnley; and it does not appear whether he has turned the purchase money he received for the corn into court, or still has it. Passing the question whether a petition against a receiver should affirmatively show that permission to Sue the receiver had been granted by the court appointing him, there Can be n0 doubt that the petition in this case is insufficient, because Avey sues Burnley individually On a COntract made With him as receiver. Judgment affirmed.


(Court of Appeals of Kentucky. Nov. 23, 1915.)

TAXATION C+241–EXEMPTIONS—HOSPITALCONSTITUTIONAL PROVISIONS—‘‘INSTITUTION OF PURELY PUBLIC CHARITY.” Under Const. § 170, exempting institutions of purely public charity from taxation, a hospital incorporated by trustees as a charitable corporation, having no capital stock and holding property for the maintenance of a hospital for the treatment of sick and disabled persons and for medical and surgical treatment and the maintenance of poor persons not able to provide it for themselves, maintained without pecuniary profit, and having funds invested the income of which was used solely in meeting its necessary expenses, was an “institution of purely public charity,” whose invested fund was exempt from taxation. [Ed. Note.—For other cases, see Taxation, Cent. Dig. §§ 389–393; Dec. Dig. <>241 For other definitions, see Words and Phrases, First and Second Series, Institution of Public Charity.]

Appeal from Circuit Court, Mason County. Action for injunction by the Hayswood Hospital of Maysville against Mason County and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Q: For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

W. H. Rees, of Maysville, for appellants. Worthington, Cochran & Browning, of MaysVille, for appellee.

NUNN, J. Upon the plea that it is an institution of purely public charity appellee brought this action to restrain the sheriff and assessor of Mason county from listing for taxation, or levying upon, or Selling any Of its property for taxes. Appellants demurred to the petition. The demurrer being overruled they bring this appeal, having declined to plead further. Only two questions are raised for decision: (1) Is the appellee an institution of purely public charity within the meaning of section 170 of the Kentucky Constitution? (2) If an institution of purely public charity does the exemption from taxation apply to its property which is not directly connected with the hospital and not used for hospital purposes, although the income therefrom is used solely in meeting the necessary expense of the hospital? The idea of this hospital originated in 1907, with Mrs. Mary W. Wilson, an elderly widow residing in Maysville. She conceived the idea of founding the hospital and conveyed the property now used as a hospital to Dr. Thos. E. Pickett, J. Foster Barbour, Clarence L. Sallee, and A. M. J. Cochran, as trustees, and gave them powers of SuccesSion. The trust imposed was: “The establishment and maintenance and Operation on said premises of a hospital for the treatment of sick and disabled persons.” The trustees were directed to adopt and put in force such rules and regulations as would best carry out the trust. If need be they might incorporate, and if the incorporation issued. Stock then, “if any returns arise from said stock they will apply them in providing treatment in Said hospital for the Worthy poor of Maysville.” The conveyance further stipulated that the trustees “are to render their Services Without compensation.” The trust was accepted, and, in 1908, the trustees formed a corporation under the provisions of sections 879 to 883, inclusive, of the Kentucky Statutes. The trustees were the incorporators “as a charitable corporation having no capital stock, under the corporate name of ‘Hayswood Hospital.’” In 1911 the corporation accepted from Mrs. Fannie A. Hays a conveyance of a tract of land situated five miles from Maysville, containing about 150 acres. The trust expressed in the deed was to provide at the hospital “medical and Surgical treatment, and for necessary maintenance While undergoing treatment, to poor persons in need of same, and not able in whole or part to provide the Same for themselves.” This conveyance also stipulated that the trustees shall serve without compensation. In 1912, McIlvaney de

vised $1,000 and his residuary estate to the hospital in trust for the purpose of establishing a “free Ward for the treatment Of chil- . dren Whose parents or friends are not able to pay for their treatment, the trustees to be the Sole judges of who may receive free treatment.” Since then the trustees have received upon substantially the same terms two other bequests aggregating $4,800. The above is all the property owned by the hospital. It is alleged in the petition that the trustees have maintained and Operated the hospital pursuant to the trust provisions Of the deeds referred to and from which “no private pecuniary profit has ever been, or can ever be derived”; they have made valuable and permanent improvements on the hospital property, and equipped it with medical and Surgical appliances, and employed trained nurses and attendantS. The funds with which the hospital has been equipped and operated “have been derived in part from private donations * * * and in part from the moneys received from Sick and disabled perSons who have been treated therein * * * the receipt from patients at plaintiff's hospital have never been sufficient to defray the expense thereof and keep up and maintain the hospital, nor is it the purpose of plaintiff ever to make it a paying institution. It has kept the balance Of the money SO given it, after paying for needed improvements and repairs, invested So as to yield an income to be applied to the making up of the deficiency in the necesSary running expenses; in other words, as an endowment fund. This fund amounts to about $11,500. * * * The purpose of plaintiff is as Soon as it can be done to make other improvements on said hospital building.” We are of opinion that the petition sufficiently shows that the hospital is an institution of purely public charity. It is not Operated for profit. It is unnecessary to enter into an extended discussion of the questions raised, for both have many times been passed on by this court. The recent cases of City of Dayton v. Speer’s Hospital, 165 Ky. 56, 176 S. W. 361; Commonwealth V. Board of Education of Methodist Episcopal Church, 166 Ky. 610, 179 S. W. 596, and many other cases therein cited, conclusively settle the question. Since the opinion of the lower court is in harmony With the law as Set forth in these Opinions, the judgment is affirmed.

GAY et al. v. BRENT. (Court of Appeals of Kentucky. Nov. 23, 1915.)

1. CoNSTITUTIONAL LAw @->240 – MonoPoLIES <>10-EQUAL PROTECTION OF LAW Pools AND COMBINEs. Ky. St. §§ 3915–3921, providing that it shall be unlawful for any association or person to become a member of, or in any way interested in, any pool, trust, combine, agreement, or confederation for the purpose of regulating, controlling, or fixing the price of any merchandise, manufactured article, or property, fixing a penalty for violation thereof, and making void agreements contrary, thereto, is not unconstitutional as being discriminatory.

[Ed. Note.—For other cases, see Constitutional Law, Cent. Dig. §§ 688, 692, 693,697–699; Dec. Dig. Q=240; Monopolies, Cent. Dig. § 9; Dec. Dig. 3:10.] 2. CONSTITUTIONAL LAW & 30–CoNSTRUC


Const. § 198, providing that it shall be the

duty of the General Assembly from time to time to enact such laws as may be necessary to prevent all trusts, pools, combinations, or other organizations “from combining to depreciate below its real value any article or to enhance the value of any article above its real value,” does not contravene any provision of the federal Constitution, since it is not self-executing.

[Ed. Note.—For other cases, see Constitutional Law, Cent. Dig. § 32; Dec. Dig. 3:30.]

3. CONSTITUTIONAL LAW &296 — MONOPOLIES @->10—DUE PROCESS—VALIDITY. Ky. St. § 3941a, providing in substance that it shall be lawful for any number of persons to combine, unite, or pool crops of wheat, tobacco, and other farm products raised by them for the purpose of classifying, holding, and disposing of the same in order to obtain a higher price than they could by selling separately, is void, since it is in conflict with the fourteenth amendment of the federal Constitution; it not being possible when such section is construed in connection with Const. § 198, forbidding combinations to enhance or depreciate values of merchandise, and Ky. St. §§ 3915–3921 forbidding combinations in regulation of trade, to determine with reasonable certainty when the price of an article has been enhanced above or depreciated below its real value.

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5. CONTRACTS (32116—VALIDITY-CONTRACTS IN RESTRAINT OF TRADE. Since the common-law doctrine of restraint of trade is in force in this state, unaffected by Const. § 198, providing that it shall be unlawful to form combinations to depreciate below or enhance above real value, the value of any article, or Ky. St. § 3941a, legalizing pools of farm products, an executory contract for the purchase of blue grass seed, pursuant to a private agreement to form a pool to restrain trade in such commodity, was unenforceable when it appeared that the parties seeking the enforcement of the contract did so to secure a monopoly in the commodity by controlling the market and suppressing competition. [Ed. Note:—For other cases, see Contracts, Cent. Dig. §§ 542–552; Dec. Dig. 3:116.]

Appeal from Circuit Court, Clark County.

Action by David S. Gay and others against N. Ford Brent. From a judgment dismissing the petition, plaintiffs appeal. Affirmed.

Shelby, Northcutt & Shelby, of Lexington, Talbott & Whitley, of Paris, E. S. Jouett, of Louisville, and B. R. Jouett and J. M. StevenSon, both of Winchester, for appellants. Pendleton, Bush & Bush, of Winchester, and Harmon Stitt and Reuben Hutchcraft, both of Paris, for appellee.

CARROLL, J. Briefly, the facts of this Case are these : Previous to 1906 DaVid S. Gay, J. S. Wilson, E. F. Spears & Son, and N. Ford Brent were dealers in Kentucky blue graSS Seed, each of them doing business in Competition With and independent of the others. About 90 per cent. Of the blue grass Seed of the World is produced in Kentucky, and in the years previous to 1906 Clean blue grass seed had been selling at from 80 cents to $1.35 a bushel, the usual price being $1.25 a bushel. In June, 1906, Gay, Wilson, and Spears & Son conceived the purpose of securing control of the blue grass seed market, and in execution of this plan they entered into a private, Written contract, which is set out in full in the opinion written in this case when it was here before and that may be found in 149 Ky. 615, 149 S.W. 915, 41 L. R. A. (N. S.) 1034.

After this agreement was entered into, and pursuant to its terms, and to accomplish the intended object, the parties to the agreement at once commenced to buy all of the blue graSS Seed available, their purchases including the seed OWned by farmers as Well as dealers. Among the purchases of Seed SO made was a large quantity bought from Brent at $1.30 per bushel. When the time arrived for the delivery of this seed by Brent he refused to perform the contract, and thereupon Gay, Wilson, and Spears & Son, who are doing business under the name of the Kentucky Blue Grass Seed Company, brought suit against Brent to recover damages for a breach of the contract, alleging in the petition that betWeen the time the Contract WaS entered into and the time Specified for the delivery of the seed, it had advanced 38 cents per bushel, and had he performed his contract they would have realized a profit of this Sum.

In the answer to this petition, which is set out at length in the former opinion, Brent charged that the purpose of the agreement between Gay, Wilson, and Spears & Son, of which agreement he was ignorant When he contracted to deliver the seed, Was to control the blue grass Seed market and Create a monopoly in unreasonable and unlawful restraint of trade, and to thereby increase the cost of blue grass seed to the public. He further averred that in entering into this agreement Gay, Wilson, and Spears & Son intended to and did form and Create a trust, COmbine and pool in Violation of the Statute law of the state for the purpose of enhancing the price of blue grass seed above its real Value, and that immediately after one object of the pool had been accomplished in practically Securing control of the blue graSS market, they did arbitrarily raise the price of blue grass seed above its real value. To this answer a general demurrer was sustained, and from the judgment of the lower court holding that his answer did not present a defense, Brent prosecuted an appeal to this Court.

Q: For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

In the course of the opinion of this court holding that the answer presented a good defense on which Brent Was entitled to go to trial, it was said:

“Nor do we find it necessary in disposing of the case to consider at all the anti-trust statutes of the state. Leaving out of view entirely the applicability of the anti-trust statutes, we think the controlling and decisive question in the case is: Did the averments of the answer, which must be treated as true, state the defense of an unlawful and unreasonable restraint of trade upon which Brent was entitled to introduce evidence and have a decision on the merits? * * * It will also be noticed that the answer in substance charged that the partnership or agreement entered into between Gay and his associates had for its purpose the creation of a trust and monopoly to control the blue grass seed market of the country, and to fix and regulate the price at which the seed should be sold; and that in pursuance of this purpose and to carry it into effect the purchase of the carload of seed from Brent was one of many purchases undertaken in execution of the plan to control and monopolize the market and fix and regulate the price of the seed.”

In answer to the argument that the purchase of the Seed from Brent involved Only a small part of the blue grass seed then on the market, and therefore it should not be treated as an illegal arrangement, Or aS an unreasonable or unlawful agreement in restraint of trade, the court said, quoting with approval from the opinion in Merchants' Ice & Cold Storage CO. V. Rohrman, 138 Ky. 530, 128 S. W. 599, 30 L. R. A. (N. S.) 973, 137 Am. St. Rep. 390; and applying it to the facts Of the Brent Case:

“But the validity of this particular contract cannot be determined by looking at it alone. It must be considered in connection with the others of which it was and is a part, and when so considered in connection with the circumstances under which it was entered into and the conditions that gave rise to its execution, we find that it was only one of a number of like contracts secured about the same time by the Merchants’ Refrigerating Company in furtherance of the purpose to obtain control of the ice market and effectually destroy substantial competition. In short, we think it is plain that the purpose in the minds of the parties to this transaction was to purchase the National Ice & Cold Storage Company and Rohrman's interest therein, as a link in the chain that would finally bind all the consumers of ice in Louisville to the wheels of a single concern, thereby creating a condition that would enable the purchaser to control the market and stifle, if not suppress, competition. * * * If a contract is made that suppressés competition, and controls the market, and that contract is entered into between those who have theretofore engaged in competition in the market sought to be controlled, it is a contract in restraint of trade. It may be more. It may amount to a trust or conspiracy or a monopoly, but it is nevertheless a contract in restraint of trade. To restrain trade is the essential feature of the contract—the reason why it was made.

restrained, the promoters would not go into the scheme; and when such a contract is made, whatever form it may assume, or by whatever name it may be called, and although it may be reached under the law of monopolies, trusts, and conspiracies, it will be declared void as being in unreasonable restraint of trade.”

It Was further Said in the Opinion:

“Nor do we think that in ruling that the scheme of Gay and Company was an agreement in restraint of trade, we have unduly extended the scope of the principle upon which the doc- . trine rests. It is true that by the common-law contracts treated as being in restraint of trade were limited to contracts having for their purpose the purchase of some trade or business, as a part of which the seller agreed not to engage in the trade or business he had disposed of. But, in dealing with conditions brought about by modern business methods, it has been found necessary for the public good to extend the common-law prohibition against contracts in restraint of trade to states of case involving more than the mere purchasing and selling of a trade or business, so as to give the courts for the good of the public authority to prevent as much as possible combinations and arrangements having for their purpose the creation of a monopoly, the control of prices, and the suppression of competition. Addyston Pipe & Stéel Co. v. United #." U. S. 211 [20 Sup. Ct. 96], 44 L.

“The restraint of trade may be accomplished in more ways than one. Every business scheme that has for its purpose the control of the market and the fixing of prices, necessarily tends to restrain trade and suppress competition in the article sought to be controlled. But when the doctrine was first recognized conditions were such that the public good only required that it be applied to contracts of sale and between the parties to the contract. It is, however, manifest that if this wholesome principle of the common law should be confined to the narrow limits that were sufficient in its origin, it would be wholly inadequate to correct the evils that modern trade conditions have produced. And so, taking for a foundation the principle that illegal and unreasonable restraint of trade is obnoxious to the spirit of the law, the range of this principle will be extended to meet the requirements of to-day and to embrace every condition in which an unlawful attempt is made to restrain trade and control the market and suppress competition by whatever means these ends are sought to be accomplished.”

On the trial of the case, after it was remanded, the law and facts, by agreement, Were Submitted to the trial Court, and in a judgment and an opinion holding that Gay, Wilson, and Spears & Son could not maintain the action, the trial court Said, in his findings of law, that:

“The Kentucky statutes against pools, trusts, and conspiracies do not apply to contracts in restraint of trade. Contracts in restraint of trade are controlled by the common law, and when they are unreasonable, they are declared to be Void. A contract entered into between those who have theretofore engaged in competition With reference to any particular product or commodity, which suppresses competition and controls the market with reference to that product or commodity, is in unreasonable restraint of trade; and this suppression is not required to be total in order to bring it within the condemnation of the law. When the enforcement of an executory contract would be a step in the perfection of a scheme to restrain trade in a product or commodity, the law, will not aid the perfection of such a scheme by enforcing such an

In his findings of fact the court said:

“It was not the purpose of the plaintiffs in entering into the written agreement of June 1, 1906, to fix the price of blue grass seed above its real value. The purpose of the parties in entering into that agreement was to establish a stable market for blue grass seed, and thereby enable the producers to realize a fair and reasonable price for it. The effect of that agreement and what was done under it by the plaintiffs was to substantially suppress competition in the purchase of blue grass seed. The purchase of the carload of seed from defendant was a part of a scheme of plaintiffs to control the blue grass seed market and make effective the agreement of June 1, 1906. It follows from these views and these findings of law and fact that the defense of unreasonable restraint of trade has been sustained by the defendant, and it is #efore adjudged that the petition be dismisseCl. From that judgment this appeal is proseCuted. In the argument on this appeal counsel for appellants do not contend that the purpose of the agreement between Gay, Wilson, and Spears & Son was not to secure control of the blue grass seed market and thereby SuppreSS COmpetition. They rest their claim for reversal on the ground that the common law doctrine invalidating executory contracts in restraint of trade, has been abrogated by the Constitution and statutes of this state, and therefore, assuming the correctness of the finding of the trial court, that “it was not the purpose Of the plaintiffs in entering into the Written agreement of June 1, 1906, to fix the price of blue grass seed above its real value,” but Only to “establish a stable market for blue grass Seed, and thereby enable the producer'S to realize a fair and reasonable price for it,” they insist that the judgment should be reversed with directions to enter a judgment in favor of Gay, Wilson, and Spears & Son for the amount Of damages they sustained by reason of the breach Of the COntract. We do not find Ourselves quite able to agree with the finding of the lower court that the purpose of the agreement was not to enhance the price of blue grass seed above its real value; but not regarding this question as a material One in the disposition of the case, we will not extend the opinion in stating the reasons why we have reached, on this issue of fact, a different conclusion from that arrived at by the lower Court. For entertaining the View that the Contract between Brent and Gay, Wilson, and Spears & Son Was in restraint Of trade We Will at once go to a consideration of the main question, which is whether the common-law doctrine of restraint Of trade, as Set forth in the opinion from which we have quoted, is yet in force in this state and available as a defense in the attempted enforcement of an executory contract, when the facts Show that the parties seeking the enforcement of the contract are doing SO With the purpose of securing a monopoly in a commodity by controlling the market and suppressing com

petition in the article that is the Subjectmatter of the executory contract. An understanding and disposition of this question makes it necessary that we should set forth at some length the state of the Constitution and statutory law in this state On the Subject of pools, trustS, and monopolies, and the construction that has been put On these laws by this court as well as by the Supreme Court of the United States. The first statute enacted by the Legislature of this state prohibiting the formation of trusts, pools, and monopolies for the purpose of regulating, controlling, or fixing the price of an article became a law in 1890, and may be found in Sections 3915–3921, incluSive, of the Kentucky Statutes. The Substance of this act was that it should be unlawful for any corporation, partnership, asSociation, or person to become a member of or in any way interested in any pool, trust, combine, agreement, or confederation with any other Corporation, partnership, aSSociation, or person for the purpose of regulating, controlling, or fixing the price of any merchandise, manufactured article, or property. Another provision fixed a penalty for a Violation of this statute. Another made any contract or agreement violating its proviSions void; and there was a further provision that the purchasers of any property or article from a corporation, partnership, or persons transacting business contrary to the provisions of the act should not be liable for the price of or payment for such article or property. It will be observed that the illegality of the transactions prohibited by the Statute did not depend on the fact that the purpose of the combination was to enhance the price of an article above its real value, or depreciate its Value below its real value. It was made unlawful to enter into Or become a party to any agreement or arrangement “for the purpose of regulating or controlling or fixing the price of any merchandise, manufactured article, or property of any kind” without regard to whether the price of the article, merchandise, or property WaS enhanced or diminished. This statute stood until 1906 as the only declaration of the Legislature of the state dealing or attempting to deal with the subject set forth in the Statute. However, in the new Constitution of the state, adopted in 1891, it was provided, in section 198, that: “It shall be the duty of the General Assembly from time to time, as necessity may require, to enact such laws as may be necessary to prevent all trusts, pools, combinations, or other organizations, from combining to depreciate below its real value any article, or to enhance the cost of any article above its real value.” Subsequent to the adoption of this constitutional provision, and in 1900, there came to this court the case of Commonwealth W. Grinstead, 108 Ky. 59, 55 S. W. 720, 57 S. W. 471, 21 Ky. Law Rep. 1444, 22 Ky. Law Rep. 377.

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