House v. Mayes

Background

A buyer purchased a carload of wheat on the Kansas City Board of Trade floor and, following a Board rule, deducted one hundred pounds from the car weight when paying the seller. Missouri had passed a law making any such deduction unlawful and voiding contracts that rely on Board of Trade customs. The buyer was charged under that state law and argued he was deprived of rights protected by the Fourteenth Amendment (federal protection against being deprived of property without due process).

Reasoning

The Court asked whether Missouri could forbid a private trading rule that led buyers to keep part of a seller’s grain without separate payment. Relying on long-standing principles, the Court explained that states may regulate private practices that closely affect the public and that the law aimed to prevent unfair or fraudulent market practices. The Court concluded the statute had a real relationship to protecting sellers and public fairness and did not violate the federal Constitution, so the state law was valid and the conviction stands.

Real world impact

The decision means sellers cannot lose value from an automatic deduction imposed by a trade association rule in Kansas City; states may curb private customs that unfairly shift property without compensation. The ruling enforces that membership rules cannot override state protections for fair market dealings.

Dissents or concurrances

Two Justices concurred in the judgment but noted more narrowly that the State may declare such Board rules ineffective when the owner is not party to any express contract.