The New York Stock Exchange, for lump sums, contracted with
telegraph companies to furnish them continuous stock quotations, to
be furnished by them in turn to their subscribers by ticker
service; each subscriber's application must be subject in terms to
his being approved by the Exchange before it became effective, and
must authorize the company to discontinue his service whenever so
directed by the Exchange, the contract declaring that the Exchange
reserved these rights to prevent improper use of the facts. Under
this arrangement, the quotation, a received from the Exchange in
New York, were wired in Morse code to Boston, where they were
Page 247 U. S. 106
decoded and wired to the tickers, the wire of other companies
being in part used in the process.
Held, that the
transmission of the quotations remained interstate commerce until
completed in the subscribers' offices, and that an order of a
Massachusetts commission, requiring the companies to cease
discriminating against a would-be subscriber whom the Exchange
disapproved was a direct interference with such commerce not
sanctioned under the police power of the state or its power over
streets crossed by the telegraph which infringed the constitutional
right of the companies and those of the Exchange.
224 Mass. 365 reversed.
The cases are stated in the opinion.
Page 247 U. S. 110
MR. JUSTICE HOLMES delivered the opinion of the court.
Four cases were argued together in this Court. The first two
were suits in the Supreme Judicial Court of Massachusetts, one a
statutory petition by the telegraph companies to have an order of
the Public Service Commission annulled, the other a bill by the
Commission to have the same order enforced. The cases were
consolidated and reserved on the pleadings for determination by the
full court, which decreed that the petition of the plaintiffs in
error should be dismissed and the order of
Page 247 U. S. 111
the Commission obeyed. 224 Mass. 365. The order recited that the
Gold and Stock Telegraph Company, by the Western Union Telegraph
Company, lessee, and the United Telegram Company had, without just
cause, refused to supply to Calvin H. Foster the continuous
quotations of the New York Stock Exchange by means of ticker
service then supplied to others, declared the refusal an unlawful
discrimination, and required the two companies to remove the
discrimination forthwith.
The material facts may be abridged as follows: the New York
Stock Exchange, having a monopoly of the information collected by
it on the floor of the Exchange concerning the prices quoted in
transactions there, made contracts with the plaintiffs in error of
the same general character as those before the court in
Board
of Trade v. Christie Grain & Stock Co., 198 U.
S. 236,
198 U. S. 246,
and
Hunt v. New York Cotton Exchange, 205 U.
S. 322. By these contracts for specified lump sums, the
Exchange agreed to furnish to the Telegraph Companies
simultaneously full and continuous quotations of prices made in
transactions upon the Exchange. The Telegraph Companies "may," in
their turn, furnish quotations to their "patrons" at intervals of
more than fifteen minutes subject to discontinuance upon objection
of the Exchange, and may furnish continuous service by ticker to
subscribers, provided the latter sign applications in duplicate,
one of which is to go to the Exchange, the application not to be
effectual until the subscriber is approved by the Exchange,
agreeing that the Telegraph Company may discontinue the service
"whenever directed so to do by said new York Stock Exchange." The
application recognizes that the quotations are furnished under
contract with the Exchange, and agrees not to furnish the
quotations to branch offices or correspondents unless first
approved by the Exchange and also signing agreements, one of which
is to be delivered to the Exchange. The contract states
Page 247 U. S. 112
that the intent of the Exchange in reserving the right to
disapprove, etc., is only to prevent improper and unlawful use of
the facts.
The Gold and Stock Telegraph Company's business is carried on by
the Western Union Telegraph Company in the name of the former. The
quotations are furnished to the latter in New York, telegraphed by
it to the office of the Gold and Stock Company in Boston,
translated from the Morse code into English, and thence transmitted
by an operator to the tickers in the offices of the brokers who
have subscribed and have been approved. The United Telegram
Company, a New Jersey corporation, receives quotations for Boston
alone, where is its principal office outside of New Jersey. They
are furnished by the Exchange in New York, telegraphed to the
Boston office over a wire of the Postal Telegraph Cable Company,
and thence transmitted as in the other case. On these facts, the
plaintiffs in error say that the order is an unwarranted
interference with commerce among the states, and takes property
without due process of law, setting up the Constitution of the
United States.
We shall not discuss the bearing of the Fourteenth Amendment nor
yet how far an order simply to remove a discrimination could be
effectual when, if Mr. Foster were let in on the same terms as
those now accepted as subscribers, he would agree that the
Telegraph Company might discontinue its service without notice
whenever directed so to do by the New York Stock Exchange. It is
enough that, in our opinion, the transmission of the quotations did
not lose its character of interstate commerce until it was
completed in the brokers' offices, and that the interference with
it was of a kind not permitted to the states. The supposed analogy
that has prevailed is that of a receiver of a package breaking bulk
and selling at will in retail trade. But it appears to us
misleading. We also think it unimportant that the contracts between
the Exchange
Page 247 U. S. 113
and the Telegraph Companies emphasize the element of
quasi-sale for lump sum, and leave it to the interest of
the Telegraph Companies to find subscribers. Neither that nor the
intervention of an operator, or of another company, are in the
least degree conclusive. Unlike the case of breaking bulk for
subsequently determined retail sales, in these, the ultimate
recipients are determined before the message starts, and have been
accepted as the contemplated recipients by the Exchange. It does
not matter if they have no contract with the Exchange directly. It
does not matter that, if the Telegraph Companies did not deliver to
any given one, the Exchange could not complain. If the normal,
contemplated, and followed course is a transmission as continuous
and rapid as science can make it from Exchange to broker's office,
it does not matter what are the stages or how little they are
secured by covenant or bond.
Thus, lumber purchased in Texas for the purpose of filling
foreign orders was held to be carried in interstate commerce,
although no contract prevented the purchaser from giving it a
different destination.
Texas & New Orleans R. Co. v. Sabine
Tram Co., 227 U. S. 111,
227 U. S. 126.
Practice, intent, and the typical course, not title or niceties of
form, were recognized as determining the character, and other cases
to the same effect were cited. The principle was reaffirmed in
Railroad Commission of Louisiana v. Texas & Pacific Ry.
Co., 229 U. S. 336, and
is too well settled to need to be further sustained.
Western
Oil Refining Co. v. Lipscomb, 244 U.
S. 346,
244 U. S. 349.
See Swift & Co. v. United States, 196 U.
S. 375,
196 U. S.
398-399. It is admitted that the transmission from New
York to Massachusetts by the Telegraph Company was interstate
commerce. If so, it continued such until it reached "the point
where the parties originally intended that the movement should
finally end."
Illinois Central R. Co. v. Louisiana R. Co.
Commission, 236 U. S. 157,
236 U. S.
163.
Page 247 U. S. 114
If the transmission of the quotations is interstate commerce,
the order in question cannot be sustained. It is not like the
requirement of some incidental convenience that can be afforded
without seriously impeding the interstate work. It is an attempt to
affect in its very vitals the character of a business generically
withdrawn from state control -- to change the criteria by which
customers are to be determined, and so to change the business. It
is suggested that the state gets the power from its power over the
streets which it is necessary for the telegraph to cross. But if we
assume that the plaintiffs in error under their present charters
could be excluded from the streets, the consequence would not
follow. Acts generally lawful may become unlawful when done to
accomplish an unlawful end,
United States v. Reading Co.,
226 U. S. 324,
226 U. S. 357,
and a constitutional power cannot be used by way of condition to
attain an unconstitutional result.
Western Union Telegraph Co.
v. Kansas, 216 U. S. 1;
Pullman Co. v. Kansas, 216 U. S. 56;
Sioux Remedy Co. v. Cope, 235 U.
S. 197,
235 U. S. 203.
The regulation in question is quite as great an interference as a
tax of the kind that repeated decisions have held void. It cannot
be justified "under that somewhat ambiguous term of police powers."
Western Union Telegraph Co. v. Pendleton, 122 U.
S. 347,
122 U. S. 359;
Leisy v. Hardin, 135 U. S. 100;
Savage v. Jones, 225 U. S. 501,
225 U. S. 520;
Western Union Telegraph Co. v. Brown, 234 U.
S. 542,
234 U. S. 547.
Without going into further reasons, we are of opinion that the
decree of the Supreme Judicial court must be reversed.
The other two cases were suits brought by the New York Stock
Exchange against the Telegraph Companies severally, and Foster. The
bills set forth the respective contracts with the companies, allege
that Foster made applications to them in the prescribed form, was
given a full hearing before a committee of the Exchange, and that
as a result, the Exchange reached the conclusion that
Page 247 U. S. 115
Foster had been conducting bucket shops and wanted the
quotations in aid of such shops, and therefore disapproved the
applications. They set forth the order of the state commission, the
decree of the state court, and the intent of the telegraph
companies to comply with the order, and allege that it is void as
beyond the jurisdiction of the state commission under the
Constitution and Acts of Congress, and also as depriving the
plaintiff of its property without due process of law. Injunctions
are prayed against delivery of continuous quotations to Foster or
receipt of them by him unless and until he shall have acquired the
right by contract with the approval of the Exchange. Subsequently,
the members of the Public Service Commission were made parties, and
then, upon their motion, the bills were dismissed by the district
court, the judge accepting the reasoning of the supreme court of
the state. The decision seems to have been upon the merits, but the
question is certified whether the bill presents a controversy which
arises under the Constitution or laws of the United States within
the meaning of ยง 24 of the Judicial Code. In view of the decision
in the state cases, probably it will not be necessary to prosecute
these suits farther. But it follows from what we have said that the
decision of the district court was wrong, and that the decrees in
these cases also must be reversed. It is suggested, to be sure,
that the Exchange would be barred by the state decree against the
Telegraph Companies if it stood, because the Exchange, by its
contracts, reserved the right to intervene in such suits. It did
not intervene, and therefore would not have been bound.
Decrees reversed.