The Chicago Board of Trade collects at its own expense
quotations of prices offered and accepted for wheat, corn and
provisions in its exchange and distributes them under contract to
persons approved by it and under certain conditions. In a suit
brought by it to restrain parties from using the quotations
obtained and used without authority of the Board, defendants
contended that, as the Board of Trade permitted, and the quotations
related to, transactions for the pretended buying of grain without
any intention of actually receiving, delivering, or paying for the
same, that the Board violated the Illinois bucket shop statute and
there were no property rights in the quotations which the court
could protect, and that the giving out of the quotations to certain
persons makes them free to all.
Held that
Even if such pretended buying and selling is permitted by the
Board of Trade, it is entitled to have its collection of quotations
protected by the law, and to keep the work which it has done to
itself; nor does it lose its property rights in the quotations by
communicating them to certain persons, even though many, in
confidential and contractual relations
Page 198 U. S. 237
to itself, and strangers to the trust may he restrained from
obtaining and using the quotation by inducing a breach of the
trust.
A collection of information, otherwise entitled to protection,
does not cease to be so because it concerns illegal acts, and
statistics of crime are property to the same extent as other
statistics, even if collected by a criminal who furnishes some of
the data.
Contracts under which the Board of Trade furnishes telegraph
companies with its quotations, which it could refrain from
communicating at all on condition that they will only be
distributed to persons in contractual relations with, and approved
by, the Board, and not to what are known as bucket shops, are not
void and against public policy as being in restraint of trade
either at common law or under the Anti-Trust Act of July 2,
1890.
The facts are stated in the opinion.
Page 198 U. S. 245
MR. JUSTICE HOLMES delivered the opinion of the Court.
These are two bills in equity brought by the Chicago Board of
Trade to enjoin the principal defendants from using and
distributing the continuous quotations of prices on sales of grain
and provisions for future delivery, which are collected by the
plaintiff, and which cannot be obtained by the defendants except
through a known breach of the confidential terms on which the
plaintiff communicates them. It is sufficient for the purposes of
decision to state the facts, without reciting the pleadings in
detail. The plaintiff was incorporated by special charter of the
State of Illinois on February 18, 1859. The charter incorporated an
existing Board of Trade, and there seems to be no reason to doubt,
as indeed is alleged by the Christie Grain & Stock Company,
that it then managed its chamber of commerce substantially as it
has since. The main feature of its management is that it maintains
an exchange hall for the exclusive use of its members, which now
has become one of the great grain and provision markets of the
world. Three separated portions of this hall are known respectively
as the wheat pit, the corn pit, and the provision pit. In these
pits, the members make sales and purchases exclusively for future
delivery, the members dealing always as principals between
themselves, and being bound practically at least, as principals to
those who employ them when they are not acting on their own
behalf.
The quotation of the prices continuously offered and accepted in
these pits during business hours are collected at the plaintiff's
expense, and handed to the telegraph companies,
Page 198 U. S. 246
which have their instruments close at hand, and by the latter
are sent to a great number of offices. The telegraph companies all
receive the quotations under a contract not to furnish them to any
bucket shop or place where they are used as a basis for bets or
illegal contracts. To that end, they agree to submit applications
to the Board of Trade for investigation, and to require the
applicant, if satisfactory, to make a contract with the telegraph
company and the Board of Trade which, if observed, confines the
information within a circle of persons all contracting with the
Board of Trade. The principal defendants get and publish these
quotations in some way not disclosed. It is said not to be proved
that they get them wrongfully, even if the plaintiff has the rights
which it claims. But as the defendants do not get them from the
telegraph companies authorized to distribute them, have declined to
sign the above-mentioned contracts, and deny the plaintiff's rights
altogether, it is a reasonable conclusion that they get, and intend
to get, their knowledge in a way which is wrongful unless their
contention is maintained.
It is alleged in the bills that the principal defendants keep
bucket shops, and the plaintiff's proof on that point fails, except
so far as their refusal to sign the usual contracts may lead to an
inference, but, if the plaintiff has the rights which it alleges,
the failure is immaterial. The main defense is this: it is said
that the plaintiff itself keeps the greatest of bucket shops, in
the sense of an Illinois statute of June 6, 1887, that is, places
wherein is permitted the pretended buying and selling of grain,
etc., without any intention of receiving and paying for the
property so bought, or of delivering the property so sold. On this
ground, it is contended that, if, under other circumstances, there
could be property in the quotations, which hardly is admitted, the
subject matter is so infected with the plaintiff's own illegal
conduct that it is
caput lupinum, and may be carried off
by any one at will.
It appears that, in not less than three quarters of the
transactions in the grain pit, there is no physical handing over
of
Page 198 U. S. 247
any grain, but that there is a settlement, either by the direct
method, so called, or by what is known as ringing up. The direct
method consists simply in setting off contracts to buy wheat of a
certain amount at a certain time, against contracts to sell a like
amount at the same time, and paying the difference of price in cash
at the end of the business day. The ring settlement is reached by a
comparison of books among the clerks of the members buying and
selling in the pit, and picking out a series of transactions which
begins and ends with dealings which can be set against each other
by eliminating those between -- as, if A has sold to B 5,000
bushels of May wheat, and B has sold the same amount to C, and C to
D, and D to A. Substituting D for B by novation, A's sale can be
set against his purchase, on simply paying the difference in price.
The Circuit Court of Appeals for the Eighth Circuit took the
defendant's view of these facts, and ordered the bill to be
dismissed. 125 F. 161. The Circuit Court of Appeals for the Seventh
Circuit declined to follow this decision, and granted an
injunction, as prayed. 130 F. 507. Thereupon writs of certiorari
were granted by this Court, and both cases are here.
As has appeared, the plaintiff's chamber of commerce is, in the
first place, a great market, where, through its eighteen hundred
members, is transacted a large part of the grain and provision
business of the world. Of course, in a modern market, contracts are
not confined to sales for immediate delivery. People will endeavor
to forecast the future, and to make agreements according to their
prophecy. Speculation of this kind by competent men is the
self-adjustment of society to the probable. Its value in well known
as a means of avoiding or mitigating catastrophes, equalizing
prices, and providing for periods of want. It is true that the
success of the strong induces imitation by the weak, and that
incompetent persons bring themselves to ruin by undertaking to
speculate in their turn. But legislatures and courts generally have
recognized that the natural evolutions of a complex society are to
be
Page 198 U. S. 248
touched only with a very cautious hand, and that such coarse
attempts at a remedy for the waste incident to every social
function as a simple prohibition and laws to stop its being are
harmful and vain. This Court has upheld sales of stock for future
delivery and the substitution of parties, provided for by the rules
of the Chicago stock exchange.
Clews v. Jamieson,
182 U. S. 461.
When the Chicago Board of Trade was incorporated, we cannot
doubt that it was expected to afford a market for future as well as
present sales, with the necessary incidents of such a market, and
while the State of Illinois allows that charter to stand, we cannot
believe that the pits, merely as places where future sales are
made, are forbidden by the law. But again, the contracts made in
the pits are contracts between the members. We must suppose that,
from the beginning, as now, if a member had a contract with another
member to buy a certain amount of wheat at a certain time, and
another to sell the same amount at the same time, it would be
deemed unnecessary to exchange warehouse receipts. We must suppose
that, then as now, a settlement would be made by the payment of
differences, after the analogy of a clearing house. This naturally
would take place no less that the contracts were made in good
faith, for actual delivery, since the result of actual delivery
would be to leave the parties just where they were before. Set-off
has all the effects of delivery. The ring settlement is simply a
more complex case of the same kind. These settlements would be
frequent, as the number of persons buying and selling was
comparatively small.
The fact that contracts are satisfied in this way by set-off and
the payment of differences detracts in no degree from the good
faith of the parties, and if the parties know when they make such
contracts that they are very likely to have a chance to satisfy
them in that way, and intend to make use of it, that fact is
perfectly consistent with a serious business purpose, and an intent
that the contract shall mean what it says. There is no doubt, from
the rules of the Board of Trade or the evidence,
Page 198 U. S. 249
that the contracts made between the members are intended and
supposed to be binding in manner and form as they are made. There
is no doubt that a large part of those contracts is made for
serious business purposes. Hedging, for instance, as it is called,
is a means by which collectors and exporters of grain or other
products, and manufacturers who make contracts in advance for the
sale of their goods, secure themselves against the fluctuations of
the market by counter contracts for the purchase or sale, as the
case may be, of an equal quantity of the product, or of the
material of manufacture. It is nonetheless a serious business
contract for a legitimate and useful purpose that it may be offset
before the time of delivery in case delivery should not be needed
or desired.
Purchases made with the understanding that the contract will be
settled by paying the difference between the contract and the
market price at a certain time,
Embrey v. Jemison,
131 U. S. 336;
Weare Commission Co. v. People, 209 Ill. 528, stand on
different ground from purchases made merely with the expectation
that they will be satisfied by set-off. If the latter might fall
within the statute of Illinois, we would not be the first to decide
that they did when the object was self-protection in business, and
not merely a speculation entered into for its own sake. It seems to
us an extraordinary and unlikely proposition that the dealings
which give its character to the great market for future sales in
this country are to be regarded as mere wagers or as "pretended"
buying or selling, without any intention of receiving and paying
for the property bought, or of delivering the property sold, within
the meaning of the Illinois act. Such a view seems to us hardly
consistent with the admitted fact that the quotations of prices
from the market are of the utmost importance to the business world,
and not least to the farmers -- so important, indeed, that it is
argued here and has been held in Illinois that the quotations are
clothed with a public use. It seems to us hardly consistent with
the obvious purposes of the plaintiff's charter, or indeed with the
words of the statute invoked. The
Page 198 U. S. 250
sales in the pits art not pretended, but, as we have said, are
meant and supposed to be binding. A set-off is, in legal effect, a
delivery. We speak only of the contracts made in the pits, because
in them the members are principals. The subsidiary rights of their
employers where the members buy as brokers we think it unnecessary
to discuss.
In the view which we take, the proportion of the dealings in the
pit which are settled in this way throws no light on the question
of the proportion of serious dealings for legitimate business
purposes to those which fairly can be classed as wagers, or
pretended contracts. No more does the fact that the contracts thus
disposed of call for many times the total receipts of grain in
Chicago. The fact that they can be and are set off sufficiently
explains the possibility, which is no more wonderful than the
enormous disproportion between the currency of the country and
contracts for the payment of money, many of which in like manner
are set off in clearing houses without anyone's dreaming that they
are not paid, and for the rest of which the same money suffices in
succession, the less being needed the more rapid the circulation
is.
But suppose that the Board of Trade does keep a place where
pretended and unlawful buying and selling are permitted, which, as
yet, the Supreme Court of Illinois, we believe, has been careful
not to intimate, it does not follow that it should not be protected
in this suit. The question whether it should be involves several
elements which we shall take up in turn.
In the first place, apart from special objections, the
plaintiff's collection of quotations is entitled to the protection
of the law. It stands like a trade secret. The plaintiff has the
right to keep the work which it has done, or paid for doing, to
itself. The fact that others might do similar work, if they might,
does not authorize them to steal the plaintiff's.
Compare
Bleistein v. Donaldson Lithographing Co., 188 U.
S. 239,
188 U. S.
249-250. The plaintiff does not lose its rights by
communicating the result to persons, even if many, in confidential
relations
Page 198 U. S. 251
to itself, under a contract not to make it public, and strangers
to the trust will be restrained from getting at the knowledge by
inducing a breach of trust, and using knowledge obtained by such a
breach.
Exchange Telegraph Co. v. Gregory & Co.
[1896], 1 Q.B. 147;
F. W. Dodge Co. v. Construction Information
Co., 183 Mass. 62;
Board of Trade v. C. B. Thomson
Commission Co., 103 F. 902;
Board of Trade v. Haddon-Krull
Co., 109 F. 705;
National Tel. News Co. v. Western Union
Tel. Co., 119 F. 294;
Illinois Commission Co. v. Cleveland
Tel. Co., 119 F. 301.
The publications insisted on in some of the arguments were
publications in breach of contract, and do not affect the
plaintiff's rights. Time is of the essence in matters like this,
and it fairly may be said that, if the contracts with the plaintiff
are kept, the information will not become public property until the
plaintiff has gained its reward. A priority of a few minutes
probably is enough.
If, then, the plaintiff's collection of information is otherwise
entitled to protection, it does not cease to be so, even if it is
information concerning illegal acts. The statistics of crime are
property to the same extent as any other statistics, even if
collected by a criminal who furnishes some of the data. The Supreme
Court of Illinois has recognized, in the fullest terms, the value
and necessity of the knowledge which the plaintiffs control. It
must have known, even if it did not have the evidence before it, as
to which we cannot tell from the report, what was the course of
dealing on the exchange. Yet it was so far from suggesting that the
plaintiff's work was unmeritorious that it held it clothed with a
public use.
New York & Chicago Grain & Stock Exchange
v. Board of Trade, 127 Ill. 153.
The defendants lay hold of the declaration in the case last
cited, and say, with doubtful consistency, that this information is
of such importance that it is clothed with a public use, and that
therefore they are entitled to get and use it. In the case referred
to, it was held that the plaintiff, which had been receiving
Page 198 U. S. 252
the continuous quotations, was entitled still to receive them on
paying for them, and submitting to all reasonable requirements in
relation to the same. Perhaps the right of the plaintiff would have
been more obvious if it had demanded an opportunity, on reasonable
conditions, of collecting the information for itself, especially if
the legislature had seen fit to provide by law for its doing so.
But it is not necessary to consider whether we are bound by that
decision, or, if not, should follow it, since in these cases the
claim is not qualified by submission to reasonable rules or an
offer of payment. It is a claim of independent rights and a denial
that the plaintiff has any right at all. The Supreme Court of
Illinois gave no sanction to such a claim as that.
Finally, it is urged that the contracts with the telegraph
companies violate the Act of July 2, 1890, c. 647, 26 Stat. 209.
The short answer is that the contracts are not relied on as a cause
of action. They are stated simply to show that the only
communication of its collected facts by the plaintiff is a
confidential communication, and does not destroy the plaintiff's
rights. But so far as these contracts limit the communication of
what the plaintiff might have refrained from communicating to
anyone, there is no monopoly or attempt at monopoly, and no
contract in restraint of trade, either under the statute or at
common law.
Bement v. National Harrow Co., 186 U. S.
70;
Fowle v. Park, 131 U. S.
88;
Elliman v. Carrington [1901], 2 Ch. 275. It
is argued that the true purpose is to exclude all persons who do
not deal through members of the Board of Trade. Whether there is
anything in the law to hinder these regulations being made with
that intent we shall not consider, as we do not regard such a
general scheme as shown by the contracts or proved. A scheme to
exclude bucket shops is shown and proclaimed, no doubt, and the
defendants, with their contention as to the plaintiff, call this an
attempt at a monopoly in bucket shops. But it is simply a restraint
on the acquisition for illegal purposes of the fruits of the
plaintiff's work.
Central Stock & Grain Exchange
v.
Page 198 U. S. 253
Board of Trade, 196 Ill. 396. We are of opinion that
the plaintiff is entitled to an injunction, as prayed.
Decree in No. 224 reversed. Decree in No. 280
affirmed.
MR. JUSTICE HARLAN, MR. JUSTICE BREWER, and MR. JUSTICE DAY
dissent.