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Moore v. Chicago Mercantile Exchange

June 10, 1937

MOORE
v.
CHICAGO MERCANTILE EXCHANGE ET AL.; BENNETT ET AL. V. BOARD OF TRADE OF CITY OF CHICAGO ET AL.



Appeals from the District Court of the United States for the Northern District of Illinois, Eastern Division.

Author: Evans

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

EVANS, Circuit Judge.

These appeals are from decrees of dismissal in separate suits involving the Commodity Exchange Act (7 U.S.C.A. § 1 et seq.). Said decrees denied motions seeking preliminary injunctions to restrain the enforcement of said Act, and, on the courts' own motion, dismissed the bills for want of equity. The oral arguments in this court were consolidated, and the appeals may be best disposed of in one opinion. The District Courts' rulings were based solely upon the bills of complaint and motions for preliminary injunction.There were no pleadings filed by the defendants, some of whom appeared specially.

The respective suits are by members of the Chicago Board of Trade and the Chicago Mercantile Exchange, to enjoin those bodies from complying with the Act; and to enjoin the Secretaries of Commerce and Agriculture and the Attorney General, constituting the Commodity Exchange Commission, and the local Administrator of the Act, from enforcing the statute; to enjoin the District Attorney from enforcing the penal provisions of the Act; and to restrain the postmaster from forbidding the mailing of matter not in accord with the Act.

The relief sought is based upon the unconstitutionality of the Act, which regulates, both generally and in detail, transactions in futures in butter, eggs, Irish potatoes, etc.

The challenge of unconstitutionality rests upon the following legal contentions:

(1) The transactions sought to be regulated are wholly intrastate in character and do not burden interstate commerce and so are beyond the control or supervision of the Congress of the U.S. If not wholly intrastate, the effect upon interstate commerce is negligible, and less than was presented by the facts in the Schechter Case, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570, 97 A.L.R. 947, and the Carter Case, 298 U.S. 238, 56 S. Ct. 855, 80 L. Ed. 1160.

(2) The Supreme Court has impliedly overruled the Olsen Case (Board of Trade of City of Chicago v. Olsen, 262 U.S. 1, 43 S. Ct. 470, 67 L. Ed. 839), which held the Grain Futures Act (7 U.S.C.A. § 1 et seq.) valid. Even if it be conceded that the Olsen et al. Case still correctly defines the field of interstate commerce over which Congress may legislate, the Commodity Exchange Act is nevertheless invalid.In other words, a specific objection to this Act which applies to butter, eggs, and Irish potatoes, is a want of evidence before Congress to support the finding set forth in section 3 of the Act (7 U.S.C.A. § 2) to the effect that future tradings in these commodities obstruct interstate commerce. Without a valid finding of this import, Congress is without power to enact regulatory legislation.

(3) Particular sections of the statute are in any event unconstitutional -- even though the remainder of the Act be found to be constitutional. These particular sections of the Act are: (a) section 4d(2) as added to Act Sept. 21, 1922, 42 Stat. 998, by section 5 of Act June 15, 1936*fn1 which provides for investment of margin funds; (b) section 4c as added by section 5 of Act June 15, 1936,*fn2 which prohibits trading in indemnities; (c) sections 4d(1),*fn3 4e and 4g as added by section 5 of Act June 15, 1936, n.4 (FOOTNOTE OMITTED.) which require futures commission merchants and floor brokers to register as condition precedent to engaging in business, and which make such registrations revocable. These subsections are unconstitutional because violative of section 8, article 1, and the Tenth Amendment of the Federal Constitution; sections 4a(1), 5a(4), 5a(5), 8a (5), as added by sections 5, 7, 10 of Act June 15, 1936 (7 U.S.C.A. § 6a(1), 7a(4, 5), 12a (5) are unconstitutional because of an unauthorizied delegation of legislative powers.

Answering specific objections aimed at the Act or at individual sections, appellees take the position (a) that no evidence is necessary to support the findings which appear in the Act in question, and (b) that evidence persuasive and convincing was before the Congress upon which the finding was based. They also argue that the regulation of investments and the prohibition of trading in indemnities were necessary and proper and reasonably related to and consonant with the general purposes of the legislation.

A number of Supreme Court decisions defining intrasatate and interstate commerce and Congressional regulation thereof are elaborately discussed by appellants' counsel. He insists the holdings of these cases can not be reconciled. These cases are: Hill v. Wallace, 259 U.S. 44, 42 S. Ct. 453, 66 L. Ed. 822; Stafford v. Wallace, 258 U.S. 495, 42 S. Ct. 397, 66 L. Ed. 735, 23 A.L.R. 229; Board of Trade of City of Chicago v. Olsen, 262 U.S. 1, 43 S. Ct. 470, 67 L. Ed. 839; Schechter Poultry Corporation v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570, 97 A.L.R. 947; Carter v. Carter Coal Co., 298 U.S. 238, 56 S. Ct. 855, 80 L. Ed. 1160; and National Labor Relations Board v. Jones & Laughlin Steel Corporation, 57 S. Ct. 615, 624, 81 L. Ed. --, decided April 12, 1937. Appellants also insist that the Olsen decision is overruled by the Schechter and Carter Cases. In fact, to a large degree appellants are compelled to maintain this position because of the pertinence of the opinion in the Olsen et al. Case.

Appellees argue that the Olsen Case was not overruled by either the Carter or the Schechter Cases, as is shown by its approval in the later Jones & Laughlin decision.

We agree with appellees. The above cases are all reconcilable. Each case is authority for its holding on the facts therein appearing. No two cases are based upon similar facts. The differences in facts ...


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