Wilson v. Israel

Laughlin, J.: This is an action by the Commissioner of Agriculture of the State of New York, pursuant to the provisions of section 55 of the Agricultural Law (Consol. Laws, chap. 1 [Laws of 1909, chap. 9], added by Laws, of 1913, chap. 408, as amd. by Laws of 1915, chap. 651), to collect, for the benefit of the defendant, appellant, the amount of an indebtedness owing to it by the defendant Israel for milk and cream sold and delivered to him. Said section of the Agricultural Law renders it unlawful for any person, firm, association or corporation to buy milk or cream within the State from producers for the purpose of shipping it to any city for consumption or for manufacture unless duly licensed therefor and unless the business be regularly transacted at a designated office or station within the State; and it is therein provided that a license shall not be issued for such purpose unless the applicant shall file with the application a good and sufficient surety bond in a sum not less than $5,000 or shall be relieved from such requirement as therein provided, and that the bond shall run to the Commissioner of Agriculture in his official capacity and shall be conditioned for the faithful compliance by the licensee with the provisions of the Agricultural Law, as thereby amended, in which said section 55 is found, and for “ the payment of all amounts due to persons who have sold milk or cream to such licensee, during the period that the license is in force.” The defendant Israel was desirous of engaging in the business of buying milk and cream from producers for the purpose of shipping it to the city of New York for consumption and to that end filed with the Commissioner of Agriculture his bond dated August 30, 1915, with the defendant Globe Indemnity Company as surety, in which it is recited that he had [818] applied or was about to apply for a license to engage in the business of buying milk pursuant to the provisions of said section for the year commencing September 1, 1915, and ending August 31, 1916, at-34 Norfolk street in the city of New York, and conditioned, among other things, that if the commissioner should issue a license and if the licensee should faithfully comply with the provisions of the Agricultural Law “ and promptly make payment to the proper person or persons, of all amounts due to persons who have sold milk or cream ” to him during the period covered by the license, then the obligation should be void, but otherwise it was to remain in full force and virtue. A license was duly issued to Israel on his application and on said bond and thereafter and during the period covered by the license he bought at Roxbury milk and cream of the defendant, appellant, the purchase price of which aggregated $1,577.70, no part of which he paid. The statute provides that upon default by the licensee “ in the payment of any money due for the purchase of milk or cream, * * * the creditor may file with the Commissioner of Agriculture * * * a verified statement of his claim,” and that after ninety days from the termination of any license period the Commissioner shall bring an action to determine the amount due each such creditor and that all creditors and the surety on the bond of the licensee and the licensee shall be parties, and that the judgment recovered therein shall be enforced ratably for the creditors against the surety on the bond. No other creditor filed a verified statement of claim with the Commissioner. The evidence is uncontroverted. The complaint has been dismissed on the theory that the defendant, appellant, was not a producer of milk within the provisions of said section of the Agricultural Law. The defendant, appellant, is a domestic corporation and was incorporated on the 1st of April, 1899, by farmers who were milk producers residing in the vicinity of Roxbury, N. Y. At that time the farmers, many of whom were obliged to carry the milk several miles, were receiving only one and a half cents per quart for milk. The chief industry in the town of Roxbury, which is in Delaware county, was the production of milk for the New York city market. The company was organized for the purpose of enabling the [819] farmers by thus co-operating to obtain a better market for their milk. Its original by-laws provided that the object of the incorporation was to carry on the manufacturing of butter and cheese and the sale of milk “ in such a manner as will conduce to the greatest convenience and profit of the producers over the greatest amount of territory,” and they have not been changed. The capital stock of the company was $5,000, consisting of shares of $50 each, and thirty-seven shares were issued and outstanding and all of them, with the exception of one-half of one share, were owned by producers of milk. It is further provided in the by-laws that the association should be co-operative and that from the gross receipts for each month there should be deducted the running expenses and after the first year six per cent per annum on the capital stock issued, and that the balance,, less one cent per pound of butter fat furnished during the month, which was to be reserved as a sinking fund, should be divided among the patrons in proportion to the amount of butter fat in the milk delivered by them as shown by the Babcock test. Any person directly interested in agricultural pursuits was eligible to membership, as it is described, and entitled to one vote for each share of stock owned by him, but according to the by-laws the ownership of the stock was to remain in persons directly interested in agricultural pursuits: The corporation was not organized for profit and, with the exception of the return of six per cent on capital invested after the first year, the entire net proceeds, excepting said amount reserved for the sinking fund to maintain the plant, is distributed to the stockholders for their milk and cream. The company also marketed milk and cream for patrons who were not stockholders but made no charge therefor, and ninety per cent of the patrons were stockholders. The defendant, appellant, owned no cows itself. If that part of the statute relating to producers were to be construed strictly and technically, doubtless it might be held that the defendant, appellant, was not a producer of milk; but I am of opinion that it should be liberally construed to accomplish the purpose intended by the Legislature, which was to secure to those engaged in dairy pursuits pay for the milk and cream sold to a licensee to be consumed or manufactured in a distant city, and that such protection may be [820] afforded the farmers in the vicinity of Roxbury who united in the formation of this corporation on the plan stated for the purpose of jointly marketing their milk and cream. It is to be inferred from the statute that the Legislature recognized that those who sell milk and cream extend credit to the purchasers who market it, and that it was essential that they should have the protection afforded by such a bond. The court in People v. Beakes Dairy Co. (179 App. Div. 942) recognized these facts and stated, in effect, that the statute was enacted with a view to encourage the production and the sale of milk for the benefit of the consumers in cities rather than to have it manufactured into cheese at home. I am, therefore, of opinion that the defendant, appellant, was a producer of milk and cream within the purview of the statute and that the same reason exists for affording it the protection of the bond that exists for protecting the individual farmers of whom it is composed. But if the defendant, appellant, be not a producer of milk, still I think it comes within the statute for it is within the express provisions thereof, which are general, to the effect that the bond is conditioned for the prompt payment of all amounts due for milk or cream sold to the licensee during the period covered by the license. The word “ persons ” as used in the statute, of course, under the General Construction Law (Consol. Laws, chap. 22 [Laws of 1909, chap. 27], § 37) includes corporations, and since a corporation may lawfully be formed for the purpose of dealing in milk, I see no reason why it should not come within the protection of the statute. If a corporation may lawfully be formed for the purpose of collecting milk from the farmers and selling and delivering it at a station in the vicinity to a licensee for shipment and consumption in a city, the protection of the farmers in dealing with such a corporation will be subserved by holding that the corporation is entitled to the benefits of the statute for that tends to enable it to pay the farmers for the milk thus marketed for them, and, therefore, I think such a corporation fairly comes within the intent of the statute, even though it does not come within the letter thereof with respect to being a producer and the statute should be construed as embracing it. (People ex rel. Wood v. Lacombe, 99 N. Y. 43.) [821] There is no force in the contention that the defendant, appellant, required a license under the statute, for the reason that it was a producer, and if not a producer, it was a co-operative creamery association engaged in marketing milk for the producers at a station in the vicinity of where the milk was produced, and not in shipping milk to cities for consumption. It follows that the findings of fact and conclusions of law inconsistent with these views should be reversed and appropriate findings and conclusions in accordance therewith made, and the judgment should be reversed, with separate bills of costs to appellants and judgment granted in' favor of plaintiff, appellant, with costs against the principal and surety on the bond. Dowling and Smith, JJ., concurred; Page and Shearn, JJ., dissented.