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Pure Milk Ass'n v. Kraft Foods Co.

DECEMBER 30, 1955.

PURE MILK ASSOCIATION, PLAINTIFF-APPELLANT,

v.

KRAFT FOODS COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Jo Daviess county; the Hon. ROBERT L. BRACKEN, Judge, presiding. Reversed and remanded.

JUSTICE DOVE DELIVERED THE OPINION OF THE COURT.

Rehearing denied December 30, 1955.

September 27, 1955. Additional Opinion,

By this appeal, Pure Milk Association, a corporation, hereafter referred to as plaintiff or P.M.A., seeks to reverse a decree of the Circuit Court of Jo Daviess County dissolving a temporary injunction previously granted and dismissing its amended complaint for want of equity. The action sought to enjoin Kraft Foods Company from tortiously interfering with a certain contractual relationship existing between the plaintiff and its dairy farmer members who deliver milk to the defendant and also sought to recover damages for inducing the members of the P.M.A. to breach their several contracts with the plaintiff.

The issues made by plaintiff's amended complaint and defendant's answer were submitted to the chancellor upon the pleadings and upon a stipulation of facts.

The plaintiff is a corporation organized under the provisions of the Agricultural Cooperative Act of Illinois, and the defendant is a Delaware corporation, licensed to transact business in Illinois and operates a factory at Stockton, Illinois, where it manufactures cheese from nongrade A milk which it purchases from dairy farmers residing in that area. Prior to the time this action was commenced, plaintiff had entered into marketing agreements herein referred to with approximately two hundred dairy farmers who live in the vicinity of Stockton and who were then customers of the defendant, selling to the defendant nongrade A or grade B milk. Within a few days after a dairy farmer entered into a marketing agreement with the plaintiff, the plaintiff notified defendant of this fact and gave defendant the name, address, milk can number, and certain other data concerning the producer and advised the defendant that such person was authorized to deliver milk to the defendant.

This marketing agreement executed by the plaintiff and by the producer refers to the producer of milk as "member" and recites that the member owns dairy cows and desires to have the milk from such cows sold by or through the plaintiff association. The agreement then provides: "(2) Member shall deliver all milk produced by him or under his control, to Association or such other person at such time and place and in such form and manner as shall be designated by Association. Milk consumed on the farm where produced is not included herein. (3) Association agrees to handle or market and sell in its natural or processed state all milk so produced and delivered, in such form and manner as association deems best for the advantage of all persons signing agreements similar hereto and to blend the proceeds thereof with proceeds derived from milk delivered by other producers and establish returns therefor, in such manner as Association shall determine, giving consideration to quality, location of farm where produced and market in which the milk is sold. (4) Association shall pay or, at its option, authorize the buyer to remit to Member all money due for Member's milk less twenty-five cents (25¢ ) each year for a subscription to `Pure Milk' and the amount determined by its Board of Directors as required for Association, which Member authorizes to be deducted and directs the buyer to pay to Association upon its demand. The amount deducted for Association shall be limited by resolution adopted at each regular annual meeting and may be limited by resolution adopted at any special meeting called for all members of Association. (5) Member gives Association full power and authority in its own name, to collect the entire amount due for milk delivered hereunder and Association guarantees payment to Member of all sums which are due under the terms hereof."

It was stipulated that during the period here involved the amount determined as required by the plaintiff, pursuant to the provisions of section four (4) of this agreement, was three cents per hundred weight of milk marketed by its members and that all the milk received by defendant from the plaintiff's members was nongrade A milk.

On June 29, 1953, the plaintiff wrote defendant as follows: "Following our uniform marketing agreement with dairy farmers, beginning with deliveries July 1 next and continuing until changed, kindly remit all money payable for non-grade A milk received from members of this association directly to this office. The names and addresses of members are enclosed, along with copy of the contract in question. Names of other dairy farmers we direct to deliver milk to you will be sent along as contracts are accepted here in same manner we have done before. We will furnish you with a Pure Milk Association producer payroll form, a copy of which is enclosed, twice each month. We ask that you furnish us with price, patron weights, hauling rates and deductions for supplies, etc. which are customarily made by your plant. This information should be furnished us not later than the fifth and twentieth of the month immediately following the first and second half month delivery periods. Individual producer check to our member will be prepared and mailed from this office. Your cooperation in this and other matters will be appreciated. Copy of this letter is going forward to each member concerned with our letter to the group which is also enclosed for your information."

On the same day, June 29, 1953, the plaintiff wrote to each of its members delivering nongrade A milk to defendant as follows: "Because the Kraft Foods Company have refused to deduct check-off for Pure Milk Association, as authorized in your signed membership agreement, we have notified them to start to pay us for milk delivered by you starting with July 1st shipment. We, of course, in turn will pay you at regular prices less 3¢ per cwt. check-off on usual pay days." A copy of this letter was enclosed by plaintiff in its letter to defendant of the same date.

Instead of complying with this request to remit all money payable for milk received from members of the Association directly to the plaintiff, the defendant, on July 2, 1953, wrote its customers who were members of P.M.A. this letter:

"July 2, 1953

"Dear Patron:

"We find it necessary to write you regarding the most recent information received from the Pure Milk Association.

"According to the membership contract signed by some of our B patrons, members are committed to pay dues to the Pure Milk Association based upon all milk delivered to the Kraft plant at Stockton.

"The Pure Milk Association has requested us to deduct said dues (currently three cents per cwt.) from members' milk checks as such dues, and remit the funds deducted to them. After careful consideration, we have informed the Pure Milk Association officials that we prefer not to assume the responsibility and expense for this check-off of dues.

"The Association has advised us that they intend to enforce the clause in the contract requiring us to make payment to the Association for all milk delivered to Kraft by B members.

"For over forty years we at Stockton have valued the privilege of serving and working directly with our patrons, and we sincerely regret that this relationship must be changed in any respect.

"In order for us to comply with their wishes, it will be necessary for us to know if you intend to pay your P.M.A. dues directly to the Association, or if you want us to forward full payment of your milk to the Association. It will be appreciated if you will inform us which of these two methods you prefer. Please indicate your preference on the attached postal card and mail it to us as soon as possible.

"Sincerely, "Kraft Foods Company H.W. PARKINSON ...


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