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U.S. Supreme Court

Liberty Warehouse Co. v. Burley Growers' Cooperative, 276 U.S. 71 (1928)

Liberty Warehouse Company v. Burley Growers'

Cooperative Marketing Association

No. 18

Argued February 23, 1927

Decided February 20, 1928

276 U.S. 71


1. A party challenging a judgment of a state court must show that its enforcement would deprive him, not another, of some right arising under the Constitution or laws of the United States properly asserted below. P. 276 U. S. 88.

2. The power lodged in state courts to conform their proceedings to reasonable requirements of local law was not abused in this case by an order striking a part of the answer, based apparently upon the Kentucky Declaratory Judgment Law, asking the court to determine the validity of the statute here in question and to declare defendant's rights and duties, and advancing a counterclaim. P. 276 U. S. 88.

3. Semble that the Kentucky Declaratory Judgment Law does not authorize a defendant to ask judgment by counterclaim. P. 276 U. S. 88. chanrobles.com-red

Page 276 U. S. 72

4. This Court has no jurisdiction to review a mere declaratory judgment. P. 276 U. S. 89.

5. An answer alleging that the plaintiff is a trust or combination organized for the purpose of creating and carrying out restrictions of trade unlawfully and contrary to the common law, without mentioning the Constitution or any statute of the United States, does not raise a federal question. Id.

6. A corporation does not possess the privileges and immunities of a citizen of the United States within the meaning of the Constitution. Id.

7. The Cooperative Marketing Act of Kentucky, aiming, in the public interest, to assist agricultural producers in the orderly marketing of their products and to protect them and consumers from manipulation of prices by middlemen, authorizes the incorporation of nonprofit associations, with membership confined to such producers and with power to contract with their respective members only for the sale to the corporation of their respective crops of the products dealt in, during a period of not more than ten years, and for marketing thereof by the corporation and disposition of the proceeds, less expenses, among the members according to the quantity and quality of their deliveries. It declares that such an association shall not be deemed a conspiracy, illegal combination, or monopoly; that such contracts shall not be illegal; that any person knowingly inducing a breach of such a contract by a member shall be guilty of a misdemeanor, subject to fine and liable to the association in a civil suit in the penal sum of $500 for each offense, and that any warehouseman shall be liable to the association in the same penalty who, having knowledge or notice of such a contract, persuades or permits the member who made it to break it by accepting or receiving his products for sale or auction contrary to the terms of such contract.


(1) No right of a warehouse company guaranteed by the Fourteenth Amendment is impaired by merely authorizing corporations, with membership limited to agriculturalists, and permitting contracts for purchase and resale of farm products. P. 276 U. S. 89.

(2) This is also true of the declaration that such associations shall not be deemed monopolies, combinations, etc., in restraint of trade, and that contracts with members shall be deemed legal. The state may declare its own policy in such matters. Id.

(3) There is nothing to show that, in Kentucky, since the passage of the Act, other producers may not form voluntary associations and make and enforce contracts like those which the Act expressly authorizes. P. 276 U. S. 90. chanrobles.com-red

Page 276 U. S. 73

(4) As the statute does not prescribe more rigorous penalties for warehousemen than for others who willingly solicit, persuade, or induce a member to break his marketing contract with his association, a claim that the provision in that regard deprives warehousemen of the equal protection of the laws is without substantial basis. Connolly v. Union Pipe Co., 184 U. S. 540, distinguished. P. 276 U. S. 91.

(5) Qaere whether the liberty protected by the Constitution includes the right to induce a breach of contract between others for the aggrandizement of the intermeddler. P. 276 U. S. 91.

(6) The statute is of a kind that promotes the common interest, and provision for protecting the marketing contracts between an association and its members is essential to its plan; the legislature was within its powers in providing against probable interference, and to that extent limiting the liberty of contract previously enjoyed by warehousemen. Pp. 276 U. S. 92, 276 U. S. 96.

8. The liberty of contract guaranteed by the Constitution is freedom from arbitrary restraint, not immunity from reasonable regulation to safeguard the public interest. The question is whether the restrictions of the statute have reasonable relation to a proper purpose. P. 276 U. S. 97.

9. A provision for a penalty to be received by the aggrieved party as punishment for the violation of a statute does not invalidate it. Id.,

10. The pleadings in this case allege no burden upon interstate commerce amounting to regulation, nor do they properly and definitely advance any claim under a federal statute. P. 276 U. S. 89.

208 Ky. 643 affirmed.

Error to a judgment of the Court of Appeals of the Kentucky which affirmed a judgment for a penalty and attorney's fees recovered by the above-named defendant in error from the plaintiff in error in an action by the former under the Kentucky Cooperative Marketing Act. chanrobles.com-red

Page 276 U. S. 83


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