1. Members of an incorporated board of trade have standing to
maintain a bill against its president and directors to restrain
them from complying with an unconstitutional act of Congress
threatening seriously to impair the value of the board to its
members and the value of their memberships when the directors have
refused to bring the suit for fear of antagonizing government
officials. P.
259 U. S.
60.
2. Section 3224 of the Revised Statutes forbidding suits to
restrain collection of a tax
held inapplicable to this
case because of its exceptional and extraordinary circumstances. P.
259 U. S. 62.
Dodge v. Brady, 240 U. S. 122.
3. The Act of August 24, 1921, c. 86, 42 Stat. 187, known as the
Future Trading Act, is in purpose, in essence, and on its face a
regulation of the business of grain boards of trade, with a heavy
penalty, called a tax, imposed on sales of grain for future
delivery to coerce boards and their members into compliance with
the regulations, and therefore it cannot be sustained as an
exercise of the taxing power of Congress insofar as concerns this
so-called tax and the regulations related to it. P.
259 U. S. 66.
Child Labor Tax Case, ante, 259 U. S. 20.
4. Neither are the tax and related regulations sustainable under
the Commerce Clause. P.
259 U. S.
68.
5. Sales of grain for future delivery made at Chicago between
the members of a board of trade, to be settled there by offsetting
purchases or by delivery of warehouse receipts for grain there
stored, are not in themselves interstate commerce, and cannot come
within the regulatory power under the Commerce Clause unless they
are regarded by Congress, from the evidence before it, as
Page 259 U. S. 45
directly interfering with interstate commerce so as to obstruct
or burden it. P.
259 U. S.
68.
6. A direction in an act that, if any of its provisions or the
application thereof to any person or circumstance be held invalid,
the validity of the remainder of the act or the application of such
provision to other persons and circumstances shall not be affected
is an assurance that separable valid provisions may be enforced
consistently with legislative intent, but does not and cannot
empower the courts to amend inseparable provisions of the act by
inserting limitations which it does not contain. P.
259 U. S.
70.
7. Under § 11 of the Future Trading Act,
supra,
directing severance of valid from invalid provisions and
applications, § 9, which authorizes investigations by the Secretary
of Agriculture, and,
semble, § 3, imposing a tax on
certain kinds of options of purchase or sale of grain, are
unaffected by the conclusion that § 4, imposing the tax on sales
for future delivery, and the regulations interwoven with it in
subsequent sections, are invalid. P.
259 U. S.
71.
Reversed.
This is a suit attacking the validity of the Future Trading Act,
approved August 24, 1921. 42 Stat. 187, c. 86. The act imposes a
tax of 20 cents a bushel on all contracts for the sale of grain for
future delivery, but excepts from its application sales on boards
of trade designated as contract markets by the Secretary of
Agriculture on fulfillment by such boards of certain conditions and
requirements set forth in the act.
The bill is filed by eight members of the Board of Trade of the
City of Chicago, who sue in behalf of all other members of that
body who may wish to join and share in the relief granted, against
the Secretary of Agriculture, the Commissioner of Internal Revenue,
the United States District Attorney for the Northern District of
Illinois, the Collector of Internal Revenue for the First District
of that state, the Board of Trade of the City of Chicago, its
president, vice-presidents, and directors. The bill avers that the
appellants applied to the directors of the Board of Trade to
institute a suit to have the Future Trading Act adjudged
unconstitutional before they should comply with
Page 259 U. S. 46
it, but the board of directors refused to take any steps, and
announced that they intended to comply with the provisions of the
act; that the board refused because they feared to antagonize the
public officials whose duty it was to construe and enforce the act,
and the complainants feared that, acting under the coercion imposed
upon them by the act, the board of directors would admit to
membership on the board the representatives of the cooperative
associations of producers; that the Secretary of Agriculture would
designate such board as a contract market, and that such action by
the board of directors would cause irreparable injury to the
complainants and all the other members of the board. Complainants
set out the character of the Board of Trade of Chicago and its
organization as a corporation under a special charter of the State
of Illinois in 1859, of which certain persons engaged in the
purchase and sale of grain were created a corporation and given
power to admit members, and expel them, to adopt regulations and
bylaws for the management of the business and the mode in which it
should be transacted; to appoint committees of arbitration for the
settlement of differences between the members; to appoint persons
to examine, measure, weigh, gauge, inspect grain and other articles
of produce, with authority to issue a certificate as to quality or
quantity; to make the brand or mark thereof evidence between any
buyer and seller assenting to the employment of such person, and to
do and carry on business usual in the management of boards of
trade.
The bill avers that the Board has 1,610 members, of whom the
complainants are members in good standing; that its memberships are
salable for more than $7,000 apiece; that, in recent years, there
have been organized in most of the grain-producing states, among
so-called farmers, cooperative societies who desire to market their
crops at actual cost, and to market them through the exchanges
Page 259 U. S. 47
at actual cost, and without paying the commissions charged by
the members of such exchange, the plan being to sell all grain
through an authorized member of such organization admitted to the
exchange who shall charge the prescribed commission and ultimately
rebate back to the members of such organization the aggregate of
such commissioners after paying his salary and incidental expenses,
on the basis of the number of bushels of grain which each producer
has sold through said organization; that the admission of such
representatives of cooperative societies to the Chicago Board of
Trade would destroy the business of its members, and the value of
the memberships, and make it difficult for the Board to maintain
sufficient members to pay the assessments to meet the expenses of
its maintenance; that many of its members engage in making
contracts with other members for the purchase and sale of grain for
future delivery; that, during the years from 1884 to 1913, wheat of
the grade contemplated in the contracts for future delivery on the
Board sold as low as 48 7/8 cents per bushel, and never for more
than $2 per bushel, and that, during most of said time, its price
was below $1; that, during the same years, corn sold as low as 19
1/2 cents a bushel, and never higher than $1, and most of the time
sold below 60 cents; that oats sold as low as 14 3/4 cents per
bushel and never higher than 62 1/2 cents, and much the greater
part of said period under 40 cents per bushel; that, at the time of
the filing of the bill, contract wheat was selling for $1.05 per
bushel, and that no member of the Board could afford to make
contracts for future delivery and pay the tax thereon imposed by
the Future Trading Act of 20 cents a bushel; that the law in effect
prohibits all those who are not members of a Board of trade, which
has been designated by the Secretary of Agriculture a contract
market under said act, from making any contracts of sales for
future delivery.
Page 259 U. S. 48
The bill charges that the Future Trading Act violates the
Constitution of the United States (1) in depriving the members of
the Board of their property without due process of law, in the
compulsory admission to membership on said Board of representatives
of the cooperative associations of producers, in accord with § 5 of
the act; (2) in that it attempts to regulate commerce, which is not
commerce with foreign governments or among several states, but is
commerce wholly between persons contracting within the State of
Illinois respecting the purchase or sale of grain which forms a
part of the common property of that state, and is intrastate, and
not interstate; (3) in that it violates the Tenth Amendment to the
Constitution by interfering with the right of the State of Illinois
to provide for and regulate the maintenance of grain exchanges
within its borders upon which is conducted the making of contracts
which are merely intrastate transactions.
The bill avers the complainants are not in collusion with
defendants or any of them to confer on a court of the United States
jurisdiction of a cause of which it would not otherwise have
jurisdiction, and that the amount involved in the matters in
dispute is, exclusive of interest and costs, more than $3,000.
The decrees prayed for are:
To enjoin the Secretary of Agriculture from taking any steps to
induce or compel the Board of Trade or its directors to comply with
the provisions of the act;
To enjoin the Commissioner of Internal Revenue, the Collector of
Internal Revenue and the district attorney named as parties from
attempting to collect by suits or prosecutions or otherwise, any
tax, penalty, or fine, under the act; and
To enjoin the Board of Trade and each of its officers and
directors from applying to the Secretary of Agriculture to have the
Board designated as a contract market
Page 259 U. S. 49
under the act, and from admitting to membership into such Board
any representative or any cooperative association of producers in
compliance with § 5 of the act, or from taking any other steps to
comply with the act.
The Board of Trade and its president, its officers, and
directors moved to dismiss the bill of complaint on the ground that
it was without equity on its face and did not state facts
sufficient to constitute a cause of action in a court of
equity.
The Secretary of Agriculture appeared specially to move the
court to dismiss the suit as to him because he was not a resident
of the Northern District of Illinois and had not been served with
process, and the court had no jurisdiction over him.
The United States Attorney for the Northern District of Illinois
and the Collector of Internal Revenue moved the court to dismiss on
the grounds that the suit was to restrain the collection of a tax
contrary to § 3224 of the Revised Statutes, and that the bill
sought to restrain the enforcement of a criminal statute without
showing that the complainants suffered irreparable injury. The
district court denied the motion for a temporary injunction and
ordered that the bill be dismissed as to all the defendants for
want of equity.
Page 259 U. S. 60
MR. CHIEF JUSTICE TAFT, after making the foregoing statement of
the case, delivered the opinion of the Court.
The first question for our consideration is whether, assuming
the act to be invalid, the complainants, on the
Page 259 U. S. 61
face of their bill, state sufficient equitable grounds to
justify granting the relief they ask. We think it clear that,
within the cases of
Smith v. Kansas City Title Co.,
255 U. S. 180,
Brushaber v. Union Pacific R. Co., 240 U. S.
1,
240 U. S. 10,
Pollock v. Farmers' Loan & Trust Co., 157 U.
S. 429, and
Dodge v.
Woolsey, 18 How. 331,
59 U. S. 341,
59 U. S. 346,
the averments of the bill entitle them to relief against the Board
of Trade of Chicago, its president, and its directors. The bill
shows that the act, if enforced, will seriously injure the value of
the Board of Trade to its members, and the pecuniary value of their
memberships. If the law be unconstitutional, then it was the duty
of the Board of directors to bring an action to resist its
enforcement. It is quite like the case of
Dodge v.
Woolsey, in which the Court said with respect to a similar
refusal:
"Now, in our view, the refusal upon the part of the directors by
their own showing partakes more of disregard of duty than of an
error of judgment. It was a nonperformance of a confessed official
obligation amounting to what the law considers a breach of trust,
though it may not involve intentional moral delinquency. It was a
mistake, it is true, of what their duty required from them,
according to their own sense of it, but, being a duty by their own
confession, their refusal was an act outside of the obligation
which the charter imposed upon them to protect what they
conscientiously believed to be the franchises of the bank. A sense
of duty, and conduct contrary to it, is not 'an error of judgment
merely,' and cannot be so called in any case."
The averments of the bill are that the Board of directors
refused the request to bring the suit because they feared to
antagonize the public officials whose duty it was to construe and
enforce the act, and not because they thought the act was
constitutional. They must be taken to have admitted this by the
motion to dismiss.
Page 259 U. S. 62
In
Wathen v. Jackson Oil Co., 235 U.
S. 635, and in
Corbus v. Gold Mining Co.,
187 U. S. 455,
thought to cast doubt upon the sufficiency of the averments made
herein to sustain complaints' right to file the bill, there had
been no request made of the corporation or the Board of directors
to bring suit and no refusal, both of which are present in the case
at bar.
A further question arises as to whether this is a suit for an
injunction against the collection of the tax in violation of § 3224
Rev.Stats. insofar as it seeks relief against the District Attorney
and Collector of Internal Revenue. Were this a state act,
injunction would certainly issue against such officers under the
decisions in
Ex parte Young, 209 U.
S. 123;
Ohio Tax Cases, 232 U.
S. 576,
232 U. S. 587;
McFarland v. American Sugar Refining Co., 241 U. S.
79,
241 U. S. 82.
Does § 3224 Rev.Stats. prevent the application of similar
principles to a federal taxing act? It has been held by this Court,
in
Dodge v. Brady, 240 U. S. 122,
240 U. S. 126,
that § 3224 of the Revised Statutes does not prevent an injunction
in a case apparently within its terms in which some extraordinary
and entirely exceptional circumstances make its provisions
inapplicable.
See also Dodge v. Osborn, 240 U.
S. 118,
240 U. S. 122. In
the case before us, a sale of grain for future delivery without
paying the tax will subject one to heavy criminal penalties. To pay
the heavy tax on each of many daily transactions which occur in the
ordinary business of a member of the exchange and then sue to
recover it back would necessitate a multiplicity of suits, and
indeed would be impracticable. For the Board of Trade to refuse to
apply for designation as a contract market in order to test the
validity of the act would stop its 1,600 members in a branch of
their business most important to themselves and to the country. We
think these exceptional and extraordinary circumstances with
respect to the operation of this act make § 3224 inapplicable. The
right to sue for an injunction against the
Page 259 U. S. 63
taxing officials is not, however, necessary to give us
jurisdiction. If they were to be dismissed under § 3224, the bill
would still raise the question here mooted against the Board of
Trade and its directors. The Solicitor General has appeared on
behalf of the government and argued the case in full on all the
issues. Our conclusion as to the validity of the act will therefore
have the same effect as did the judgment of the Court in respect to
the income tax law in
Pollock v. Farmers' Loan & Trust
Company, 157 U. S. 429, to
which the government was not a party, but in which the Attorney
General on its behalf was heard as
amicus curiae.
The act whose constitutionality is attacked is entitled:
"An act taxing contracts for the sale of grain for future
delivery, and options for such contracts, and
providing for the
regulation of Boards of trade, and other purposes."
(Italics ours.)
Section 4 imposes a tax, in addition to any imposed by law, of
20 cents a bushel involved in every contract of sale of grain for
future delivery, with two exceptions. The first exception is where
the seller holds and owns the grain at the time of sale, or is the
owner or renter of land on which the grain is to be grown, or is an
association made of such owners or renters. The second exception is
where such contracts are made by or through a member of the Board
of Trade designated by the Secretary of Agriculture as a contract
market, and are evidenced by a memorandum containing certain
particulars, to be kept for a period of three years or as much
longer as the Secretary of Agriculture shall direct, and to be open
to official inspection. This tax on sale contracts for future
delivery is in addition to a tax now imposed by the Revenue Act of
February 24, 1919, 40 Stat. 1057, 1136, Title XI, Schedule A, of 2
cents on every $100 in value of such sales.
Section 5 authorized the Secretary of Agriculture to designate
Boards of trade as contract markets when and
Page 259 U. S. 64
only when such Boards comply with certain conditions and
requirements, as follows:
a. When located at a terminal market where cash grain
is sold in sufficient amount and under such conditions as to
reflect the value of the grain in its different grades, and where
there is recognized official weighing and inspection service.
b When the governing body of the Board adopts rules and
enforces them, requiring its members to make and keep the
memorandum of all transactions in grain, whether cash or for future
delivery, as directed by the Secretary.
c When the governing body prevents the dissemination by
the Board or any member thereof of false misleading, or inaccurate
report concerning crop or market information or conditions that
affect or tend to affect the price of commodities.
d When the governing Board provides for the prevention
of manipulation of prices, or the cornering of any grain by the
dealers or operators upon such Board.
e When the governing body admits to membership on the
Board and all its privileges any authorized representative of any
lawfully formed and conducted cooperative associations of producers
having adequate financial responsibility:
Provided, that
no rule of the contract market against rebating commissions shall
apply to the distribution of earnings among
bona fide
members of any such associations.
f When the governing body of the Board shall make
effective the orders and decisions of the commission appointed
under § 6.
Section 6 provides that any Board of trade desiring to be
designated as a contract market shall apply to the Secretary of
Agriculture, with a showing that it complies with the conditions
already stipulated in § 5, and a sufficient assurance of future
compliance. The section appoints
Page 259 U. S. 65
a commission of the Secretary of Agriculture, the Secretary of
Commerce, and the Attorney General, who may, after due notice to
the officers of the Board, suspend for six months or revoke the
designation of any Board as a contract market upon a showing of
failure to comply with the requirements of § 5.
Provisions are made for an appeal from this order to the circuit
court of appeals, and appeal is granted to the commission from the
refusal of the Secretary of Agriculture, upon application, to
designate any Board as a contract market.
Section 6 also provides that, if the Secretary of Agriculture
has reason to believe that any person is violating any provisions
of the act or is attempting to manipulate the market price of grain
in violation of the provisions of § 5, or any of the rules or
regulations made pursuant to its requirements, he may have served
upon such persons a complaint for a hearing before a referee, to
take evidence, to be transmitted to the Secretary as chairman of
the commission, and the commission may, after a finding of guilt,
issue an order requiring all contract markets to refuse such person
trade or privileges. This order may be revised in the circuit court
of appeals.
Section 7 provides that the tax imposed shall be paid by the
seller and shall be collected either by affixing stamps or by such
other method as may be prescribed by the published regulations of
the Secretary of the Treasury.
Section 10 provides a penalty for any person who shall fail to
evidence the contract of sale he makes by memorandum or to keep the
record of it, or to pay the tax as provided in §§ 4 and 5, with a
penalty of 50 percent of the tax and a punishment as a misdemeanor
and a fine of $10,000, with imprisonment for one year or both and
the costs of the prosecution.
Page 259 U. S. 66
It is impossible to escape the conviction, from a full reading
of this law, that it was enacted for the purpose of regulating the
conduct of business of Boards of Trade through supervision of the
Secretary of Agriculture and the use of an administrative tribunal
consisting of that Secretary, the Secretary of Commerce, and the
Attorney General. Indeed, the title of the act recites that one of
its purposes is the regulation of Boards of Trade. As the bill
shows, the imposition of 20 cents a bushel on the various grains
affected by the tax is most burdensome. The tax upon contracts for
sales for future delivery under the Revenue Act is only 2 cents
upon $100 of value, whereas this tax varies according to the price
and character of the grain from 15 percent of its value to 50
percent. The manifest purpose of the tax is to compel Boards of
Trade to comply with regulations, many of which can have no
relevancy to the collection of the tax at all. Even if we conceded,
as we do not, that the keeping of a memorandum and of the
particulars of each sale as a record for three years or more, not
only of contracts for future delivery, but also of cash sales,
neither of which are subject to tax in designated Boards of Trade,
would help taxing officers in any way to detect the evasions of
this tax outside of such Boards, no such construction can be put
upon the provisions which require the Board of Trade to prevent a
dissemination of false or misleading reports or to prevent the
manipulation of prices or the cornering of grain or which enforce
the admission to membership in the Board of the representatives of
cooperative associations of producers or the abrogation of rules
against rebate as applied to such representatives. The act is, in
essence and on its face, a complete regulation of Boards of Trade,
with a penalty of 20 cents a bushel on all "futures" to coerce
Boards of Trade and their members into compliance. When this
purpose is declared in the title to the bill, and is so clear from
the effect of the provisions
Page 259 U. S. 67
of the bill itself, it leaves no ground upon which the
provisions we have been considering can be sustained as a valid
exercise of the taxing power. The elaborate machinery for hearings
by the Secretary of Agriculture and by the commission of violations
of these regulations with the withdrawal by the commission of the
designation of the Board as a contract market and of complaints
against persons who violate the act or such regulations and the
imposition upon them of the penalty of requiring all Boards of
Trade to refuse to permit them the usual privileges only confirm
this view.
Our decision, just announced, in the
Child Labor Tax Case,
ante, 259 U. S. 20,
involving the constitutional validity of the Child Labor Tax Law,
completely covers this case. We there distinguish between cases
like
Veazie Bank v.
Fenno, 8 Wall. 533, and
McCray v. United
States, 195 U. S. 27, in
which it was held that this Court could not limit the discretion of
Congress in the exercise of its constitutional powers to levy
excise taxes because the court might deem the incidence of the tax
oppressive or even destructive. It was pointed out that in none of
those cases did the law objected to show on its face, as did the
Child Labor Tax Law, detailed regulation of a concern or business
wholly within the police power of the state, with a heavy exaction
to promote the efficacy of such regulation. We there say:
"Out of a proper respect for the acts of a coordinate branch of
the government, this Court has gone far to sustain taxing acts as
such, even though there has been ground for suspecting from the
weight of the tax, it was intended to destroy its subject. But in
the act before us, the presumption of validity cannot prevail,
because the proof of the contrary is found on the very face of its
provisions. Grant the validity of this law, and all that Congress
would need to do hereafter in seeking to take over to its control
any one of the great number of subjects of
Page 259 U. S. 68
public interest, jurisdiction of which the states have never
parted with, and which are reserved to them by the Tenth Amendment,
would be to enact a detailed measure of complete regulation of the
subject and enforce it by a so-called tax upon departures from it.
To give such magic to the word 'tax' would be to break down all
constitutional limitation of the powers of Congress and completely
wipe out the sovereignty of the states."
This has complete application to the act before us, and requires
us to hold that the provisions of the act we have been discussing
cannot be sustained as an exercise of the taxing power of Congress
conferred by § 8, Article I.
We come to the question, then: can these regulations of Boards
of trade by Congress be sustained under the commerce clause of the
Constitution? Such regulations are held to be within the police
powers of the state.
House v. Mayes, 219 U.
S. 270;
Broadnax v. Missouri, 219 U.
S. 285. There is not a word in the act from which it can
be gathered that it is confined in its operation to interstate
commerce. The words "interstate commerce" are not to be found in
any part of the act from the title to the closing section. The
transactions upon which the tax is to be imposed, the bill avers,
are sales made between members of the Board of Trade in the City of
Chicago for future delivery of grain, which will be settled by the
process of offsetting purchases or by a delivery of warehouse
receipts of grain stored in Chicago. Looked at in this aspect, and
without any limitation of the application of the tax to interstate
commerce, or to that which the Congress may deem from evidence
before it to be an obstruction to interstate commerce, we do not
find it possible to sustain the validity of the regulations as they
are set forth in this act. A reading of the act makes it quite
clear that Congress sought to use the taxing power to give validity
to the act. It did not have the exercise of its power under the
commerce clause in mind, and so did not
Page 259 U. S. 69
introduce into the act the limitations which certainly would
accompany and mark an exercise of the power under the latter
clause.
In
Ware & Leland v. Mobile County, 209 U.
S. 405, it was held that contracts for the sales of
cotton for future delivery which do not oblige interstate shipments
are not subjects of interstate commerce, and that a state tax on
persons engaged in buying and selling cotton for future delivery
was held not to be a regulation of interstate commerce or beyond
the power for the state.
It follows that sales for future delivery on the Board of Trade
are not, in and of themselves, interstate commerce. They cannot
come within the regulatory power of Congress as such, unless they
are regarded by Congress, from the evidence before it, as directly
interfering with interstate commerce so as to be an obstruction or
a burden thereon.
United States v. Ferger, 250 U.
S. 199. It was upon this principle that, in
Stafford
v. Wallace, 258 U. S. 495, we
held it to be within the power of Congress to regulate business in
the stockyards of the country, and include therein the regulation
of commission men and of traders there, although they had to do
only with sales completed and ended within the yards, because
Congress had concluded that through exorbitant charges, dishonest
practices, and collusion they were likely, unless regulated, to
impose a direct burden on the interstate commerce passing
through.
So, too, in
United States v. Patten, 226 U.
S. 525, it was held that, though this Court, as we have
seen, had decided in the
Ware & Leland case that mere
contracts for sales of cotton for future delivery which did not
oblige interstate shipments were not interstate commerce, an
indictment charging the defendants with having cornered the whole
cotton market of the United States by excessive purchases of cotton
for future delivery and thus conspired to restrain, obstruct, and
monopolize interstate
Page 259 U. S. 70
commerce in cotton was sustained under the first and second
sections of the Sherman Anti-Trust Law. This case, like
Stafford v. Wallace, followed the principles of
Swift
& Co. v. United States, 196 U. S. 375. But
the form and limitations of the act before us form no such basis as
those cases presented for federal jurisdiction and the exercise of
the power to protect interstate commerce. Our conclusion makes it
necessary for us to hold § 4, and those parts of the act which are
regulations affected by the so-called tax imposed by § 4, to be
unenforceable.
Section 11 of this act directs that
"if any provision of this Act or the application thereof to any
person or circumstances is held invalid, the validity of the
remainder of the Act and of the application of such provision to
other persons and circumstances shall not be affected thereby."
Section 4, with its penalty to secure compliance with the
regulations of Boards of Trade, is so interwoven with those
regulations that they cannot be separated. None of them can stand.
Section 11 did not intend the court to dissect an unconstitutional
measure and reframe a valid one out of it by inserting limitations
it does not contain. This is legislative work beyond the power and
function of the court. In
United States v. Reese,
92 U. S. 214,
92 U. S. 221,
presenting a similar question as to a criminal statute, Chief
Justice Waite said:
"We are not able to reject a part which is unconstitutional and
retain the remainder, because it is not possible to separate that
which is unconstitutional, if there be any such, from that which is
not. The proposed effect is not to be attained by striking out or
disregarding words that are in the section, but by inserting those
that are not now there. Each of the sections must stand as a whole
or fall altogether. The language is plain. There is no room for
construction, unless it be as to the effect of the Constitution.
The question, then, to be determined
Page 259 U. S. 71
is whether we can introduce words of limitation into a penal
statute so as to make it specific, when, as expressed, it is
general only. . . . To limit this statute in the manner now asked
for would be to make a new law, not to enforce an old one. This is
no part of our duty."
Trade-Mark Cases, 100 U. S. 82;
Butts v. Merchants Transportation Co., 230 U.
S. 126.
To be sure, in the cases cited, there was no saving provision
like § 11, and undoubtedly such a provision furnishes assurance to
courts that they may properly sustain separate sections or
provisions of a partly invalid act without hesitation or doubt as
to whether they would have been adopted, even if the legislature
had been advised of the invalidity of part. But it does not give
the court power to amend the act.
There are sections of the act to which, under § 11, the reasons
for our conclusion as to § 4 and the interwoven regulations do not
apply. Such is § 9, authorizing investigations by the Secretary of
Agriculture and his publication of results. Section 3, too, would
not seem to be affected by our conclusion. It provides:
"That in addition to the taxes now imposed by law, there is
hereby levied a tax amounting to 20 cents per bushel on each bushel
involved therein, whether the actual commodity is intended to be
delivered or only nominally referred to, upon each and every
privilege or option for a contract either of purchase or sale of
grain, intending hereby to tax only the transactions known to the
trade as 'privileges,' 'bids,' 'offers,' 'puts and calls,'
'indemnities,' or 'ups and downs.'"
This is the imposition of an excise tax upon certain
transactions of a unilateral character in grain markets which
approximate gambling or offer full opportunity for it and does not
seem to be associated with § 4. Such a tax, without more, would
seem to be within the congressional
Page 259 U. S. 72
power.
Treat v. White, 187
U. S. 264;
Nicol v. Ames, 173 U.
S. 509;
Thomas v. United States, 192 U.
S. 363. But these are questions which are not before us
and upon which we wish to express no definite opinion.
The injunction against the Board of Trade and its officers, and
the injunction against the Collector of Internal Revenue and the
District Attorney, should be granted so far as § 4 is concerned and
the regulations of the act interwoven within it. The court below
acquired no personal jurisdiction of the Secretary of Agriculture
and the Commissioner of Internal Revenue by proper service, and the
dismissal as to them was right.
The decree of the district court is reversed, and the cause
is remanded for further proceedings in conformity to this
opinion.
MR. JUSTICE BRANDEIS concurring.
I agree that the Future Trading Act is unconstitutional, but I
doubt whether the plaintiffs are in a position to require the court
to pass upon the constitutional question in this case. It seems
proper to state the reasons for my doubt.
In essence, this is a suit by eight members of the Chicago Board
of Trade to prevent its directors and officers from accepting the
offer of the government to designate it a "contract market." The
act does not require the corporation to become a "contract market."
If -- and only if -- it elects to become such, must its rules and
the conduct of its business conform to requirements prescribed by
the act of the Secretary of Agriculture. In that event, its members
may likewise be subjected individually to some slight additional
trouble and expense, for the Secretary of Agriculture may require a
more detailed record of transactions than is ordinarily kept and
may require that the records be preserved three years. Members may,
in that event, also suffer individually some loss of business
Page 259 U. S. 73
through the competition of representatives of producers'
cooperative organizations, who were to be admitted to the
privileges of the exchange if it becomes a "contract market." On
the other hand, by acceptance of the designation as a "contract
market," members of the Board of Trade would be relieved from all
danger of liability for taxes on their future trading, and if the
act is enforced generally, the profits of the individual members
may increase largely, because the general public, being debarred by
the act from gambling on futures in bucket shops, will naturally
turn to the few "contract markets" when desiring to speculate in
futures.
To decide whether the corporation and its members will be
benefited or injured by its becoming a "contract market" is a
matter calling for the exercise of business judgment. The charter
vests in the directors and managers broad powers, and, so far as
appears, there is nothing in the bylaws or in the nature of the
action proposed which prevents their exercising freely their
judgment in this, as in other matters affecting the business. No
radical or fundamental change in the object, character, or methods
of the business of the corporation or of its members is involved.
There is no allegation that the directors and managing officers are
incapacitated from acting because their interests are adverse to
the corporation or its members, or that their action should be
interfered with because they are purposing to exercise their powers
fraudulently or otherwise in violation of their trust. Nor is it
alleged that efforts have been made to control their action by
calling a meeting of the 1,600 members, or that such efforts would
be vain, or that there is an emergency requiring interposition of a
court of equity. The requirements of Equity Rule 27 are not
complied with by alleging simply that plaintiffs requested the
Board of directors "to institute a suit to have said Future Trading
Act adjudged unconstitutional," and that the plaintiffs
"are informed and
Page 259 U. S. 74
believe that said Board of directors refused said request
because they fear to antagonize the public officials whose duty it
is to construe and enforce said Act."
That under such circumstances a stockholder's bill is fatally
defective, although it was brought to restrain the enforcement of a
statute alleged to be unconstitutional, is well settled, and the
rule has been recently applied.
Wathen v. Jackson Oil &
Refining Co., 235 U. S. 635;
Corbus v. Gold Mining Co., 187 U.
S. 455. In the case at bar, plaintiffs' case is still
weaker than it was in those cited. For aught that appears, most of
the members of the exchange, as well as its directors and managing
officers, may be of opinion that they will be benefited by the
enforcement of the act. Nothing is better settled than that an
individual may acquiesce in or waive an admitted infringement of a
constitutional right, and I am not aware of any rule of law which
requires a corporation, upon request of a minority stockholder, to
play the knight-errant and tilt at every statute affecting it which
he believes to be invalid. A corporation, like an individual, may
refrain from embarking in litigation to enforce even a clear right
of action, if litigation is deemed inadvisable, and it is
immaterial in this respect whether the right of action arises at
common law or under a statute or under a constitutional provision.
Nor do I know of any reason why the disadvantages which may flow
from "antagonizing public officials" may not properly be considered
by directors and managing officers of a corporation in determining
whether to embark in litigation. The fear of antagonizing customers
or other business connections or the public is a motive which quite
commonly and properly influences the conduct of men.
If, after the corporation has become a "contract market," its
directors and managing officers should seek to subject the
plaintiffs as members to unauthorized restrictions, or should
attempt to deprive them of vested rights,
Page 259 U. S. 75
relief may, of course, be had in a proper proceeding. And
likewise, if the plaintiffs now have, as individuals, rights
entitled to protection, there are appropriate remedies. But this is
not such a suit. Here, members of a corporation seek to enforce
alleged derivative rights, and I doubt whether they have shown that
they are in a position to do so.
