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    WARE & LELAND v. MOBILE COUNTY, 209 U.S. 405 (1908)

    U.S. Supreme Court

    WARE & LELAND v. MOBILE COUNTY, 209 U.S. 405 (1908)

    209 U.S. 405

    WARE & LELAND, a Copartnership, and J. H. Ware, E. F. Leland, Charles W. Lee, and F. J. Fahey, Plffs. in Err.,
    No. 173.

    WARE & LELAND, a Copartnership, and J. H. Ware, E. F. Leland, Charles W. Lee, and F. J. Fahey, Plffs. in Err.,

    No. 174.

    Nos. 173, 174.
    Submitted March 10, 1908.
    Decided April 6, 1908.

    Mr. Burwell B. Boone for plaintiffs in error. [209 U.S. 405, 406]   No appearance for defendants in error.

    Mr. Justice Day delivered the opinion of the court:

    These cases were submitted together, and are in all respects similar, and involve the constitutional validity of subd. 40 of an act of the legislature of Alabama imposing license taxes, 'to better provide for the revenue of the state,' General Acts 1903, p. 207, which reads as follows:

    In case No. 173 the action was brought by Mobile county for the recovery of the defendants' license tax for the year 1903, for engaging in the business of buying and selling futures on commission for other persons in the city of Mobile. The other case (174) was an action by the state. Plaintiffs recovered in the circuit court and both judgments were affirmed by the supreme court. 146 Ala. 163, 41 So. 153.

    The cases were submitted upon an agreed statement of the facts as follows:

    Upon the trial of the action, in addition to the foregoing agreed facts, the counsel for the plaintiff admitted that the rules and regulations of the New York cotton exchange, New Orleans cotton exchange, and Chicago board of trade, respectively, provided 'that contracts executed therein should be in writing; and also provided that in every cotton or grain contract for future delivery, executed and entered into in said exchange or board of trade, it should be stipulated, agreed, and understood that an actual receipt and delivery of the cotton or grain was to be had, and that said contracts were transferable and assignable.'

    The sole question here presented is whether the statute in question is an attempt to regulate interstate commerce; for, if the plaintiffs in error are shown by the foregoing agreed facts to be engaged in interstate commerce, then the statute is void, as an attempt by a state to regulate the commerce which the Constitution of the United States places within the exclusive control of Federal authority.

    Interstate commerce must be such as takes place between states, as differentiated from commerce wholly within a state. It must have reference to interstate trade or dealing; and if the regulation is not such, and comprehends only commerce which is internal, the state may legislate concerning it. In each case the recurring question is, On which side of the line does the commerce under investigation fall?

    It is unnecessary to review the former decisions of this court, [209 U.S. 405, 410]   as that has been done in very recent cases, such as the Lottery Case ( Champion v. Ames) 188 U.S. 321 , 47 L. ed. 492, 23 Sup. Ct. Rep. 321, where it was held that the transportation of lottery tickets was interstate commerce, and, as such, subject to regulation by act of Congress. In that case the Federal act prohibiting the transmission of lottery tickets was sustained because of the actual carriage in interstate traffic of the tickets themselves; and, in concluding the opinion of the majority of the court, Mr. Justice Harlan said:

    And in Leloup v. Mobile, 127 U.S. 640 , 32 L. ed. 311, 2 Inters. Com. Rep. 134, 8 Sup. Ct. Rep. 1380, it was held that a telegraph company whose business is the transmission of messages from one state to another, invested with the powers and privileges conferred by Congress, could not be compelled to pay a license tax by the state. And in Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U.S. 1 , 24 L. ed. 708, it was helf that interstate telegraphic communications, conducted by companies organized for that purpose, was commerce within the regulating power of Congress. The Pensacola Case was affirmed in Western U. Teleg. Co. v. Texas, 105 U.S. 460 , 26 L. ed. 1067, in which case Mr. Chief Justice Waite, speaking for the court, said, p. 464: 'A telegraph company occupies the same relation to commerce, as [209 U.S. 405, 411]   a carrier of messages, that a railroad company does as a carrier of goods.'

    While the general principles applied in these cases are not be denied, there is a class of cases which hold that contracts between citizens of different states are not the subjects of interstate commerce simply because they are negotiated between citizens of different states, or by the agent of a company in another state, where the contract itself is to be completed and carried out wholly within the borders of a state, although such contracts incidentally affect interstate trade.

    As in the cases involving insurance policies, it has been held that issuing them in one state and sending them to another, to be there delivered to the insured upon payment of premium, is not a transaction of interstate commerce. Paul v. Virginia, 8 Wall. 168, 19 L. ed. 357; Hooper v. California, 155 U.S. 648 , 39 L. ed. 297, 5 Inters. Com. Rep. 610, 15 Sup. Ct. Rep. 207; New York L. Ins. Co. v. Cravens, 178 U.S. 389 , 44 L. ed. 1116, 20 Sup. Ct. Rep. 962.

    In Paul v. Virginia, Mr. Justice Field, delivering the opinion of the court, said:

    In Hooper v. California, supra, it was said:

    These cases are not in conflict with those in which it is held that the negotiation of sales of goods in a state by a person employed to solicit for them in another state, the goods to be shipped from the one state to the other, is interstate commerce. Robbins v. Taxing District, 120 U.S. 489 , 30 L. ed. 694, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592; similar cases are Rearick v. Pennsylvania, 203 U.S. 507 , 51 L. ed. 295, 27 Sup. Ct. Rep. 159, and Caldwell v. North Carolina, 187 U.S. 622 , 47 L. ed. 336, 23 Sup. Ct. Rep. 229. In these cases goods in a foreign state are sold upon orders for the purpose of bringing them to the state which undertakes to tax them, and the transactions are held to be interstate commerce, because the subject-matter of the dealing is goods to be shipped in interstate commerce; to be carried between states and delivered from vendor to purchaser by means of interstate carriage.

    But how stands the present case upon the facts stipulated? The plaintiffs in error are brokers who take orders and transmit them to other states for the purchase and sale of grain or cotton upon speculation. They are, in no just sense, common carriers of messages, as are the telegraph companies. For that part of the transactions, merely speculative and followed by no actual delivery, it cannot be fairly contended that such contracts are [209 U.S. 405, 413]   the subject of interstate commerce; and concerning such of the contracts for purchases for future delivery as result in actual delivery of the grain or cotton, the stipulated facts show that, when the orders transmitted are received in the foreign state, the property is bought in that state and there held for the purchaser. The transaction was thus closed by a contract completed and executed in the foreign state, although the orders were received from another state. When the delivery was upon a contract of sale made by the broker, the seller was at liberty to acquire the cotton in the market where the delivery was required or elsewhere. He did not contract to ship it from one state to the place of delivery in another state. And though it is stipulated that shipments were made from Alabama to the foreign state in some instances, that was not because of any contractual obligation so to do. In neither class of contracts, for sale or purchase, was there necessarily any movement of commodities in interstate traffic because of the contracts made by the brokers.

    These contracts are not, therefore, the subjects of interstate commerce any more than in the insurance cases, where the policies are ordered and delivered in another state than that of the residence and office of the company. The delivery, when one was made, was not because of any contract obliging an interstate shipment, and the fact that the purchaser might thereafter transmit the subject-matter of purchase by means of interstate carriage did not make the contracts as made and executed the subjects of interstate commerce.

    We are of the opinion that the Supreme Court of Alabama correctly held that the transactions of the plaintiffs in error were not interstate commerce, and the judgments in both cases are affirmed.

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