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all receive the quotations under a contract amount to C, and C to D, and D to A. Subnot to furnish them to any bucket shop or stituting D for B by novation, A's sale can place where they are used as a basis for be set against his purchase, on simply paybets or illegal contracts. To that end they ing the difference in price. The circuit court agree to submit applications to the board of of appeals for the eighth circuit took the trade for investigation, and to require the defendant's view of these facts, and ordered applicant, if satisfactory, to make a contract the bill to be dismissed. 61 C. C. A. 11, with the telegraph company and the board 125 Fed. 161. The circuit court of appeals of trade, which, if observed, confines the in- for the seventh circuit declined to follow this formation within a circle of persons all con- decision, and granted an injunction, as tracting with the board of trade. The prin- prayed. 64 C. C. A. 669, 130 Fed. 507. cipal defendants get and publish these quo- Thereupon writs of certiorari were granted tations in some way not disclosed. It is by this court, and both cases are here. said not to be proved that they get them As has appeared, the plaintiff's chamber wrongfully, even if the plaintiff has the of commerce is, in the first place, a great rights which it claims. But as the defend market, where, through its eighteen hundred ants do not get them from the telegraph members, is transacted a large part of the companies authorized to distribute them, grain and provision business of the world. have declined to sign the above-mentioned Of course, in a modern market, contracts contracts, and deny the plaintiff's rights al- are not confined to sales for immediate detogether, it is a reasonable conclusion that livery. People will endeavor to forecast the they get, and intend to get, their knowledge future, and to make agreements according to in a way which is wrongful unless their con- their prophecy. Speculation of this kind tention is maintained.

by competent men is the self-adjustment of It is alleged in the bills that the principal society to the probable. Its value is well defendants keep bucket shops, and the plain- known as a means of avoiding or mitigating tiff's proof on that point fails, except so far catastrophes, equalizing prices, and providas their refusal to sign the usual contracts ing for periods of want. It is true that the may lead to an inference, but, if the plain-success of the strong induces imitation by tiff has the rights which it alleges, the fails the weak, and that incompetent persons ure is immaterial. The main defense is this: bring themselves to ruin by undertaking to It is said that the plaintiff itself keeps the speculate in their turn. But legislatures greatest of bucket shops, in the sense of an and courts generally have recognized that Illinois statute of June 6, 1887, that is, the natural evolutions of a complex society places wherein is permitted the pretended are to be touched only with a very cautious buying and selling of grain, etc., without hand, and that such coarse attempts at a any intention of receiving and paying for remedy for the waste incident to every sothe property so bought, or of delivering the cial function as a simple prohibition and property so sold. On this ground it is con- laws to stop its being are harmful and vain. tended that if, under other circumstances, This court has upheld sales of stock for futhere could be property in the quotations, ture delivery and the substitution of parwhich hardly is admitted, the subject-matter ties, provided for by the rules of the Chiis so infected with the plaintiff's own illegal cago stock exchange. Clews v. Jamieson, 182 conduct that it is caput lupinum, and may U. S. 461, 45 L. ed. 1183, 21 Sup. Ct. Rep. be carried off by any one at will.

845. It appears that in not less than three

When the Chicago board of trade was inquarters of the transactions in the grain pit corporated, we cannot doubt that it was exthere is no physical handing over of any pected to afford a market for future as well grain, but that there is a settlement, either as present sales, with the necessary inciby the direct method, so called, or by what dents of such a market, and while the state is known as ringing up. The direct method of Illinois allows that charter to stand, we consists simply in setting off contracts to cannot believe that the pits, merely as places buy wheat of a certain amount at a certain where future sales are made, are forbidden time, against contracts to sell a like amount by the law. But again, the contracts made at the same time, and paying the difference in the pits are contracts between the memof price in cash, at the end of the business bers. We must suppose that from the beday. The ring settlement is reached by a ginning, as now, if a member had a concomparison of books among the clerks of the tract with another member to buy a certain members buying and selling in the pit, and amount of wheat at a certain time, and anpicking out a series of transactions which other to sell the same amount at the same begins and ends with dealings which can be time, it would be deemed unnecessary to ex. set against each other by eliminating those change warehouse receipts. We must supbetween-as, if A has sold to B 5,000 bush- pose that then as now, a settlement would els of May wheat, and B has sold the same ' be made by the payment of differences, after the analogy of a clearing house. This nois act.

nois act. Such a view seems to us hardly naturally would take place no less that the consistent with the admitted fact that the contracts were made in good faith, for ac- quotations of prices from the market are tual delivery, since the result of actual de- of the utmost importance to the business livery would be to leave the parties just world, and not least to the farmers; so where they were before. Set-off has all the important, indeed, that it is argued here and effects of delivery. The ring settlement is has been held in Illinois that the quotations simply a more complex case of the same are clothed with a public use. It seems to kind. These settlements would be frequent, us hardly consistent with the obvious puras the number of persons buying and sell poses of the plaintiff's charter, or indeed ing was comparatively small.

with the words of the statute invoked. The The fact that contracts are satisfied in this sales in the pits art not pretended, but, as way by set-off and the payment of differ- we have said, are meant and supposed to be ences detracts in no degree from the good binding. A set-off is, in legal effect, a defaith of the parties, and if the parties know livery. We speak only of the contracts made when they make such contracts that they in the pits, because in them the members are are very likely to have a chance to satisfy principals. The subsidiary rights of their them in that way, and intend to make use employers where the members buy as brokof it, that fact is perfectly consistent with a ers we think it unnecessary to discuss. serious business purpose, and an intent that In the view which we take, the proportion the contract shall mean what it says.

mean what it says. of the dealings in the pit which are settled There is no doubt, from the rules of the in this way throws no light on the question board of trade or the evidence, that the con of the proportion of serious dealings for tracts made between the members are in- legitimate business purposes to those which tended and supposed to be binding in man- fairly can be classed as wagers, or pretendner and form as they are made. There is ed contracts. No more does the fact that no doubt that a large part of those contracts the contracts thus disposed of call for many is made for serious business purposes. Hedg. times

times the total receipts of grain in Chicago. ing, for instance, as it is called, is a means The fact that they can be and are set off by which collectors and exporters of grain sufficiently explains the possibility, which or other products, and manufacturers who is no more wonderful than the enormous make contracts in advance for the sale of disproportion between the currency of the their goods, secure themselves against the country and contracts for the payment of fluctuations of the market by counter con- money, many of which in like manner are tracts for the purchase or sale, as the case set off in clearing houses without any one may be, of an equal quantity of the product, dreaming that they are not paid, and for or of the material of manufacture. It is the rest of which the same money suffices none the less a serious business contract for in succession, the less being needed the more a legitimate and useful purpose that it may rapid the circulation is. be offset before the time of delivery in case But suppose that the board of trade does delivery should not be needed or desired. keep a place where pretended and unlawful

Purchases made with the understanding buying and selling are permitted, which, as that the contract will be settled by paying yet, the supreme court of Illinois, we believe, the difference between the contract and the has been careful not to intimate, it does not market price at a certain time (Embrey v. follow that it should not be protected in this Jemison, 131 U. S. 336, 33 L. ed. 172, 9 Sup. suit. The question whether it should be Ct. Rep. 776; Weare Commission Co. v. Peo- involves several elements which we shall ple, 209 Ill. 528, 70 N. E. 1076), stand on take up in turn. different ground from purchases made mere- In the first place, apart from special obly with the expectation that they will be jections, the plaintiff's collection of quotasatisfied by set-off. If the latter might fall tions is entitled to the protection of the law. within the statute of Illinois, we would not It stands like a trade secret. The plaintiff be the first to decide that they did when has the right to keep the work which it the object was self-protection in business, has done, or paid for doing, to itself. The and not merely a speculation entered into fact that others might do similar work, if for its own sake. It seems to us an ex- they might, does not authorize them to steal traordinary and unlikely proposition that the plaintiff's. Compare Bleistein v. Donthe dealings which give its character to the aldson Lithographing Co. 188 U. S. 239, 249, great market for future sales in this coun- 250, 47 L. ed. 460, 462, 23 Sup. Ct. Rep. try are to be regarded as mere wagers or as 298. The plaintiff does not lose its rights “pretended” buying or selling, without any by communicating the result to persons, even intention of receiving and paying for the if many, in confidential relations to itself, property bought, or of delivering the prop- under a contract not to make it public, and erty sold, within the meaning of the Illi- strangers to the trust will be restrained from getting at the knowledge by inducing | submission to reasonable rules or an offer a breach of trust, and using knowledge ob- of payment. It is a claim of independent tained by such a breach. Exchange Teleg. rights and a denial that the plaintiff has Co. v. Gregory [1896] 1 Q. B. 147; F. W. any right at all. The supreme court of Dodge Co. v. Construction Information Co. Illinois gave no sanction to such a claim as 183 Mass. 62, 60 L. R. A. 810, 97 Am. St. that. Rep. 412, 66 N. E. 204; Board of Trade v. Finally it is urged that the contracts C. B. Thomson Commission Co. 103 Fed. with the telegraph companies violate the 902; Board of Trade v. Haddon-Krull Co. act of July 2, 1890, chap. 647 (26 Stat. 109 Fed. 705; National Teleg. News Co. v. at L. 209, U. S. Comp. Stat. 1901, p. 3200). Western Union Teleg. Co. 60 L. R. A. 805, The short answer is that the contracts are 56 C. C. A. 198, 119 Fed. 294; Illinois Com- not relied on as a cause of action. They are mission Co. v. Cleveland Teleg. Co. 56 C. stated simply to show that the only comC. A. 205, 119 Fed. 301.

munication of its collected facts by the plainThe publications insisted on in some of tiff is a confidential communication, and the arguments were publications in breach does not destroy the plaintiff's rights. But of contract, and do not affect the plaintiff's so far as these contracts limit the communirights. Time is of the essence in matters cation of what the plaintiff might have relike this, and it fairly may be said that, if frained from communicating to anyone, there the contracts with the plaintiff are kept, is no monopoly or attempt at monopoly, and the information will not become public prop- no contract in restraint of trade, either unerty until the plaintiff has gained its re- der the statute or at common law. E. Beward. A priority of a few minutes prob- ment & Sons v. National Harrow Co. 186 ably is enough.

U. S. 70, 46 L. ed. 1058, 22 Sup. Ct. Rep. If, then, the plaintiff's collection of in- | 747; Fowle v. Park, 131 U. S. 88, 33 L. ed. formation is otherwise entitled to protection, 67, 9 Sup. Ct. Rep. 658; Elliman v. Carit does not cease to be so, even if it is in- rington [1901] 2 Ch. 275. It is argued that formation concerning illegal acts. The sta- the true purpose is to exclude all persons tistics of crime are property to the same ex- who do not deal through members of the tent as any other statistics, even if collect- board of trade. Whether there is anything ed by a criminal who furnishes some of the in the law to hinder these regulations being data. The supreme court of Illinois has made with that intent we shall not consider, recognized, in the fullest terms, the value as we do not regard such a general scheme and necessity of the knowledge which the as shown by the contracts or proved. A plaintiffs control. It must have known, even scheme to exclude bucket shops is shown and if it did not have the evidence before it, as proclaimed, no doubt, and the defendants, to which we cannot tell from the report, with their contention as to the plaintiff, call what was the course of dealing on the ex- this an attempt at a monopoly in bucket change. Yet it was so far from suggesting shops. But it is simply a restraint on the that the plaintiff's work was unmeritorious acquisition for illegal purposes of the fruits that it held it clothed with a public use.

of the plaintiff's work. Central Stock New York & C. Grain de Stock Exch. v. Grain Ewch. v. Board of Trade, 196 Ill. 396, Board of Trade, 127 Ill. 153, 2 L. R. A. 63 N. E. 740. We are of opinion that the 411, 19 N. E. 855.

plaintiff is entitled to an injunction, as The defendants lay hold of the declaration prayed. in the case last cited, and say, with doubtful

Decree in No. 224 reversed. consistency, that this information is of such Decree in No. 280 affirmed. importance that it is clothed with a public use, and that, therefore, they are entitled to Mr. Justice Harlan, Mr. Justice Brewget and use it. In the case referred to it er, and Mr. Justice Day dissent. was held that the plaintiff, which had been receiving the continuous quotations, was entitled still to receive them on paying for

(198 U. S. 177) them, and submitting to all reasonable re- W. L. WELLS COMPANY, Petitioner. quirements in relation to the same. Perhaps the right of the plaintiff would have GASTONIA COTTON MANUFACTURING been more obvious if it had demanded an op

COMPANY portunity, on reasonable conditions, of collecting the information for itself, especially

Corporations-creation-citizenship for the if the legislature had seen fit to provide by law for its doing so. But it is not necessary

purpose of Federal jurisdiction. to consider whether we are bound by that

Incorporators under a charter which declares decision, or, if not, should follow it, since

that they “are hereby created a body politic in these cases the claim is not qualified by and corporate” become a corporation under

V.

ON

the laws of Mississippi for the purpose of swer put in issue the allegations of the comsuing and being sued in the Federal courts as plaint touching the plaintiff's claim against a citizen of that state upon the approval of the defendant. such charter by the governor, and the certification of such approval by the secretary of

There was another action in the same state, under the great seal of the state, al court brought by the W. L. Wells Company though there has been no compliance with the against the Avon mills on account of transsubsequent provision of the charter confer- actions like those involved in the other case. ring the power to commence business when a

By consent of the parties, and pursuant to certain proportion of the capital stock shall be subscribed and paid for.

an order of court, the two cases were consol

idated and tried together. In answer to [No. 237.]

questions propounded by the court the jury

found that the W. L. Wells Company was, Argued April 28, 1905. Decided May 8, as alleged in the complaint, a corporation 1905.

and a citizen and resident of Mississippi,

and entitled to recover the sum of $39,313.N WRIT of Certiorari to the United 88. A judgment was rendered for that

States Circuit Court of Appeals for the amount against the Gastonia Cotton ManuFourth Circuit to review a judgment which facturing Company; the circuit court holdreversed the judgment of the Circuit Court ing, upon a review of the evidence in connecfor the Western District of North Carolination with the findings of the jury, that the on the ground that the incorporation of the W. L. Wells Company was a corporation of plaintiff under the laws of Mississippi was Mississippi, and as such entitled to invoke not established so as to entitle it to sue in the jurisdiction of that court as against the its alleged corporate name, and remanded defendant corporation of North Carolina. the cause, with liberty to amend by insert- 118 Fed. 190. ing the individual names of those constitut- The case was then carried to the circuit ing the company in whose name the action court of appeals, which adjudged that the was brought. Reversed and remanded for plaintiff had failed to establish the allegafurther proceedings.

tions of the complaint as to its corporate See same case below, 63 C. C. A. 111, 128 capacity, and, therefore, was not entitled to Fed. 369.

sue in the circuit court in its alleged corpoThe facts are stated in the opinion.

rate name. Without considering the merits Messrs. Joseph Hirsh, Charles W. of the case, that court reversed the judgTillett, Murray F. Smith, and H. C. Jones ment for want of jurisdiction in the circuit for petitioner.

court, and the cause was remanded, with libMessrs. Augustus H. Price, Charles erty to the plaintiffs, if it was so advised, to Price, Armistead Burwell, and Edwin Cans- amend the complaint by inserting the indiler for respondent.

vidual names of those constituting the com

pany in whose name the action was brought, Mr. Justice Harlan delivered the opinion which being done a new trial should be of the court:

granted; and if the plaintiff declined to The plaintiff, the W. L. Wells Company, amend, then the case was to be dismissed seeks in this action to recover a balance al- without prejudice. 63 C. C. A. 111, 128 leged to be due from the defendant, the Fed. 369. Subsequently, the present writ of Gastonia Cotton Manufacturing Company, certiorari was granted. on account of certain sales of cotton in the

As the plaintiff was not entitled to mainyears 1899 and 1900.

tain its action in the circuit court unless it The complaint averred that the plaintiff was a corporation of Mississippi (Great and defendant were, respectively, created Southern Fire Proof Hotel Co. v. Jones, 177 and duly organized as corporations,—the U. S. 449, 454, 456, 44 L. ed. 842, 844, 845, former, under the laws of Mississippi; the 20 Sup. Ct. Rep. 690, and the authorities latter, under the laws of North Carolina. there cited), the denial in the answer of

The defendant admitted that it was a cor- | knowledge or information sufficient to form poration, duly organized under the laws of a belief on that point put in issue the plainNorth Carolina, and a citizen and resident tiff's corporate character, within the meanof that state, but averred that it had “no ing of the rule, no longer to be questioned, knowledge or information sufficient to form that for purposes of suing and of being sued a belief as to the truth of the allegation con- in the courts of the United States the memtained in the 1st section of the complaint, to bers of a corporation are to be deemed citi. wit, that the plaintiff is a corporation or- zens of the state by whose laws it was creganized under the laws of the state of Mis-ated; and as the jurisdiction of the courts sissippi, and a citizen and resident of that of the United States must always appear afstate, and, therefore, it denies the said alle-firmatively, of record, it became necessary, gation.” The other paragraphs of the an- 'under existing statutes, and under the rules of practice and pleading in North Carolina, 1 of the Annotated Code of 1892 necessary and for the plaintiff to prove that it was a cor- requisite to carry out the purpose of said poration of Mississippi. Roberts v. Lewis, corporation. § 4. The board of directors of 144 U. S. 653, 656, 36 L. ed. 579, 582, 12 said corporation shall consist of three perSup. Ct. Rep. 781; act of June 1st, 1872 (17 sons, whose numbers may be increased at Stat. at L. 197, chap. 255, Rev. Stat. § 914, any time by a majority vote of the stockU. S. Comp. Stat. 1901, p. 684); act of holders, and said directors shall have power March, 1875 (18 Stat. at L. 470, chap. 137, to elect all necessary officers, and prescribe U. S. Comp. Stat. 1901, p. 508); N. C. Code the duties, salaries, and tenure of such offiCiv. Proc. $$ 133, 243, 260, 276; Southern P. cers." Co. v. Denton, 146 U. S. 202, 36 L. ed. 943, The attorney general having certified that 13 Sup. Ct. Rep. 44. It was so held, and the proposed charter of incorporation was correctly, by the circuit court of appeals. not repugnant to the Constitution or laws of 63 C. C. A. 111, 128 Fed. 369.

25 S. C.-41.

the state, it was approved by the governor, Was the plaintiff a corporation of Missis- and such approval was attested by the secsippi within the meaning of the above rule? retary of state, the great seal of the state beIn that state individuals may become incor- ing thereto affixed. The secretary thereupon porated for certain purposes under general certified under the great seal that the charlaws. The first step there towards incorpo- ter "incorporating the W. L. Wells Company ration is to apply to the governor for a char- was, pursuant to the provisions of chapter ter, stating the purposes for which the cor- 25 of the Annotated Code, 1892, recorded in poration is to be created. That officer then the book of incorporations in this office." takes the advice of the attorney general as It was also recorded in the office of the clerk to the constitutionality and legality of the of the proper chancery court. provisions of the proposed charter. If the The contention of the defendants in the governor approves the charter, and causes court below was—and their contention here the great seal of the state to be affixed there is—that the subscription of $10,000 to the to by the secretary of state, it would seem capital stock of the W. L. Wells Company, that the process of incorporation then be and the payment thereof, was a condition comes complete. Charters of incorporation precedent to the company's becoming a corin that state are required to be recorded in poration; that is, it could not become a corthe office of the secretary of state and in the poration de jure until such subscription and office of the clerk of the chancery court of payment. And this view was sustained by the county in which the corporation does the circuit court of appeals, which said in business. Miss. Anno. Code 1892, chap. 25. its opinion: “It is very clear from this that

It appeared in evidence that W. L. Wells, having a charter like this, conditioned upon John T. Wells, and George Butterworth sub- the payment of $10,000 in subscriptions, mitted to the governor of Mississippi, to be then these men undertook to exercise powers referred to the attorney general of the state, in the charter without fulfilling or attemptthe following form of charter:

ing to fulfil the conditions precedent in the "§ 1. Be it known and remembered that charter; that even when they had made W. L. Wells, John T. Wells, and George But- money in the business they ignored the corterworth, their associates and assigns, are poration altogether, and drew the money out hereby created a body politic and corporate, of the business as if it belonged to them, and under the name and style of W. L. Wells not to the corporation. The charter never Company, and by that name shall have suc- went into operation, and the corporation cession for fifty years, shall have power to never became a legal entity. More than sue and be sued, contract and be contracted this, these assumed corporators went on in with, may have a corporate seal, and break business, and contracted obligations in the and alter the same at pleasure. § 2. The name of the so-called corporation which did capital stock of said corporation shall be not possess a dollar of property, or have any $50,000, divided into shares of $500 each, mode of meeting a debt, thus seeking to and as soon as $10,000 of said stock is sub-cloak their transactions under an assumed scribed and paid for, said corporation shall corporate name, and avoid in this way all have power to commence business. § 3. personal responsibility. At the same time Said corporation is formed for the purpose two of them were, in a business sense, irreof conducting a general cotton business, and sponsible. It would seem that this transacmay buy and sell cotton, and may transacttion was an abuse of, and in fraud of, the a cotton factorage business, may advance law, and that the Wells Company had never money or supplies for the purpose of control and could not have any legal existence. ling shipments of cotton, may take and re- When a corporation is formed under an enaceive mortgages or deeds of trust upon prop- bling act, all the mandatory provisions of erty to secure said advances, and generally the statute must be complied with.” 63 C. may have all powers conferred by chapter 25 C. A. 111, 114, 128 Fed. 369, 372.

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