COMPLAINTS AGAINST COMMISSION MERCHANTS.

STATE OF MINNESOTA,

VS.

EDWARDS, WOOD & CO.

During the legislative session of 1899 a law was enacted commonly known as the "Grindeland Law," relating to grain commission merchants or persons selling agricultural products and farm produce on commission. The act provides as follows:

Chapter 225, general laws 1899, as amended by chapter 277, general laws

1901.

An act to license and regulate and define business of commission merchants or persons selling agricultural products and farm produce on co mission, and to require them to give a bond to the state of Minnesota for the benefit of their consignors, and prescribing a penalty for the violation of any of the provisions of this act.

Be it enacted by the legislature of the state of Minnesota:

Section 1. From and after June 1st, 1899, it shall be unlawful for any person, firm or corporation to engage in the business of selling agricultural products and farm produce on commission, or to receive or solicit consignments of such agricultural products and farm produce for sale on commission in the state of Minnesota, without first obtaining a license from the railroad and warehouse commission to conduct and carry on the business of such commission merchant, and giving a bond to the state of Minnesota, with sufficient surety, for the benefit of persons entrusting such commission merchant with consignments of agricultural products and farm produce to be sold on commission, in a sum to be fixed by the railroad and warehouse commission. If such commission merchant receives grain for sale on commission, said bond shall be conditionad that he faithfully account and report to all persons entrusting him with any grain for sale on commission and pay to such persons the proceeds of any consignments of grain received by him, less the commission earned on account of the making of such sale, and necessary and actual disbursements. If he does not receive grain for sale on commission, the bond shall be conditioned for the faithful performance of his duties as such commission merchant.

Sec. 2. Whenever any grain commission merchant sells all or a portion of any grain consigned to him to be sold on commission he shall, within twentyfour hours thereafter, render a true statement to the consignor, showing what portion of such consignment has been sold, the price received therefor, the name and address of each purchaser, the date, hour and minute when such sale was made, with vouchers for all charges and expenses paid or incurred.

Sec. 3. Whenever any consignor, who has consigned agricultural products and farm produce other than grain to any commission merchant, shall have, after demand, received no remittance for the same or report of the sale thereof, and if in any case after report is made, he is dissatisfied with the sale or the report thereof, he may make a verified complaint in writing to the railroad and warehouse commission, who shall upon receipt of same investigate the sale or sales complained of, and they shall have a right to compel the commission merchant to produce his record or memoranda of such sale, and give them all information in his possession regarding the report and sale so complained of. Immediately after such investigation the railroad and warehouse commission shall render to such complainant a written report of such investigation, which report shall be prima facie evidence of the matters therein contained.

Sec. 4. * * provides how application for a license shall be made and bond filed with the commission before transacting a commission business. Sec. 5. provides that action to recover on bonds of commission merchants, in case of loss or damage, must be commenced within one year from the date when the cause of action accrued.

*

Sec. 6. For the purpose of this act a commission merchant is defined and declared to be any person, firm or corporation who may receive for sale for account of the shipper or consignor any grain, farm produce, agricultural products or fruits.

Sec. 7. Any person, persons or corporation engaged in selling any property as herein specified, who fails or neglects to comply with any of the provisions of this act shall be guilty of a misdemeanor, and on conviction thereof in any court having competent jurisdiction shall be punished by a fine of not less than twenty-five ($25.00) dollars nor more than one hundred ($100.00) dollars. Sec. 8. This act shall take effect and be in force from and after June 1st, A. D. 1899. Approved April 14th, 1899.

On Nov. 25, 1903, L. N. Freeman of Valley City, North Dakota, called upon the commission and made complaint in behalf of a large number of farmers and other shippers of grain from points in North Dakota and Minnesota, to the effect that the firm of Edwards, Wood & Co., grain commission merchants of Duluth, Minnesota, doing business by virtue of a license granted and issued by the commission, had violated the provisions of the "Commission Merchants Law" by withholding in each case a part of the proceeds accruing from sales of grain consigned to said firm by said farmers and other shippers, and that in rendering accounts of such sales the said Edwards, Wood & Co. had in each instance reported a lower price per bushel than the price at which such consignments had actually been sold, thus defrauding said shippers in amounts ranging from onehalf cent to three cents or more, per bushel.

Mr. Freeman was accompanied by his attorney, George D. Emery, Esq., of Minneapolis. A written statement duly verified. was filed by them in which about fifty separate and distinct cases

were cited of the character above described and setting forth in each instance the car number and initial, name of shipper, point of shipment, date sold at Duluth, price sold at, price reported, gross weight, gross bushels, grade, net weight, name and address of purchaser, and the amount of money alleged to be due each consignor and wrongfully withheld by said Edwards, Wood & Co.

In laying the complaint before the commission, Mr. Freeman stated that he was a dealer in farm machinery at Valley City, North Dakota, was widely acquainted with the farmers in that section of the state and heard many complaints from farmers and others expressing doubt and dissatisfaction regarding the prices they had been receiving for the grain consigned by them to said Edwards, Wood & Co. at Duluth; that he had been requested by these complainants to investigate these matters with a view of determining whether or not they had been unjustly treated and if injury had been done, to take such steps as would secure to them proper redress; that his investigations had resulted in confirming the facts stated in the complaint, and that he had concluded, with the advice of his attorney, to bring the whole matter before the commission for such action as they might deem proper and necessary in the premises.

In view of the grave nature of the charges, an immediate and thorough investigation was decided upon by the commission, and for this purpose Commissioner Staples proceeded to Duluth and commenced an examination of the books and accounts of the different firms who had been named in the complaint as the purchasers of the consignments enumerated therein. As a result of such investigation, and after consultation with the attorney general, it was decided by the commission to institute criminal proceedings against the said Edwards, Wood & Co.

Subsequent to the filing of the original complaints against the defendant firm, additional complaints were filed until the number aggregated seventy in all. In the meantime papers had been prepared covering six specific cases for immediate prosecution, and it was decided to take up the complaint of Victor Carlson of Hallock, Minn., as the first one for trial. It was sworn to by Commissioner C. F. Staples of the Railroad and Warehouse Commission, and, briefly stated, contained the following allegations: That Victor Carlson of Hallock, Minn., on or about Jan. 14th, 1903, consigned to Edwards, Wood & Co., of Duluth, a carload of flax to be sold on commission; that said carload of flax arrived at Duluth and was sold on Jan. 19th, 1903, to the Hall Elevator Company, members of the Board of Trade,

Duluth, at $1.20 per bushel; that in rendering an account of sale of the consignment to said Victor Carlson the consignor, said defendant firm reported $1.191⁄2 per bushel as the price received instead. of $1.20 per bushel, the actual sale price, thus violating the provisions of section 2, chapter 225, General Laws 1899, by failing to "render a true statement to the consignor."

Warrants were issued, and on Dec. 8th, 1903, the several members of the defendant firm were arraigned in the Duluth municipal court, Judge W. L. Windom presiding, where they entered a plea of "not guilty." The state case was under the direction of Oscar Mitchell, city attorney of Duluth, assisted by Hon. W. J. Donahower, assistant attorney general, and the defendants were represented by Attorneys Freeman P. Lane of Minneapolis and Alexander Marshall of Duluth. The court decided to continue the hearing to Jan. 5th, 1904, at 10 o'clock in the forenoon, and the defendants were released on bail.

On the adjourned day the case came on for trial before the court and jury, and resulted in a verdict of guilty.

In this case Mr. Carlson consigned a carload of flax to Edwards, Wood & Co. for sale on commission; the car arrived in Duluth on Jan. 19th, 1903. On that day flax opened at $1.18%, went up to $1.192. Edwards, Wood & Co. claim that they offered it on the the Duluth board at $1.191⁄2, but failed to make a sale, and then purchased it themselves. On the next day they sold the flax to the Hall Elevator Company for $1.20, and reported to Mr. Carlson the sale of the day before at $1.19%. The court instructed the jury:

The offense charged against the defendants in this proceeding is that of failing to make a true report within twenty-four hours, stating the true price of the sale of the car of flax, which it is claimed was consigned by Carlson to defendants to be sold on commission.

The offense charged is that of omitting to perform a positive duty enjoined upon commission merchants by the law of the state.

When grain is consigned to a commission merchant to be sold on commission, it is the duty of the commission merchant to sell it in the open market for the best price obtainable, and to remit to the shipper the amount of the same, less his commission and the necessary disbursements. The commission merchant has no right in law, when grain has been consigned to him to be sold on commission, to purchase the grain himself; an attempt by him to make a purchase of such grain is not binding upon the shipper; and if any such attempt is made, and thereafter the grain is sold to an actual purchaser, the law requires the commission merchant to make a true report of the amount received at the sale to the actual purchaser within twenty-four hours thereafter.

A motion for a new trial was made before the trial court, and denied. The case was then appealed to the supreme court of the state where it is still pending.

To allow the position taken by the commission merchant in this case to go unchallenged and establish the principle that a commission merchant can purchase for himself, his consignor's grain, sell it the next day at an advanced price, opens such a wide door for fraud on the shipper, that the commission deemed it its duty to assume the responsibility for the prosecution of this case.

ADDITIONAL COMPLAINTS AGAINST COMMISSION

MERCHANTS.

The numerous complaints which had been filed against Edwards, Wood & Co. had covered consignments to Duluth only, but the publicity given by the daily press to the trial of the Hallock. case brought out a number of additional complaints relating to consignments made to different commission merchants at Minneapolis. In these cases, however, no specific charges of improper returns were preferred, but were rather expressions of dissatisfaction with the prices reported, coupled with the request that the "Account Sales" in each case be verified by an investigation of the books of the purchasers.

In the case of but one firm was any difficulty encountered by the commission in securing the information required, and in that case the facts desired were promptly furnished when the attention of Secretary G. D. Rogers, of the Minneapolis Chamber of Commerce, had been called to the attitude of the firm in question. There were altogether twenty-seven of these complaints regarding consignments to Minneapolis, but careful investigation failed to discover in any instance that there was reasonable cause for dissatisfaction, the correctness of the returns being fully confirmed.

It is just and proper in this connection to state that there has been thus far exhibited a manifest disposition by the officials and members of the Minneapolis and Duluth Boards of Trade to assist the commission in its investigations of reported irregularities and infractions of the law, and to maintain the long established reputation of these great commercial bodies for integrity and fair dealing.

THE COMMISSION MERCHANT'S LAW.

One of the results of the trial of the case of Victor Carlson, of Hallock, Minn., against Edwards, Wood & Co., hereinbefore reported, in which the questions of the relations between consignors and con