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KELLY v. ILLINOIS BELL TELEPHONE COMPANY

October 23, 1962

THOMAS F. KELLY, SR., THOMAS F. KELLY, JR., AND GEORGE L. KELLY, CO-PARTNERS, DOING BUSINESS UNDER THE NAME AND STYLE OF ILLINOIS SPORTS NEWS, PLAINTIFFS,
v.
ILLINOIS BELL TELEPHONE COMPANY, AN ILLINOIS CORPORATION, THE WESTERN UNION TELEGRAPH COMPANY, A NEW YORK CORPORATION, DEFENDANTS, AND UNITED STATES OF AMERICA, DEFENDANT-INTERVENOR.



The opinion of the court was delivered by: Will, District Judge.

The Court, having examined the pleadings, the Stipulations of Facts, and the documents admitted as evidence in this case, and having heard the arguments of and examined the briefs filed by counsel, makes the following Findings of Fact and Conclusions of Law:

Findings of Fact

1. Thomas F. Kelly, Sr., Thomas F. Kelly, Jr. and George L. Kelly are residents of the State of Illinois and are copartners in and sole owners of the business known as "ILLINOIS SPORTS NEWS" (hereinafter referred to as "Illinois"). Their principal office is located at 906-08 South Wabash Avenue, Chicago, Illinois.

2. Illinois publishes the publication known as "Illinois Sports News", various editions of which are printed daily, except Sunday, in the English language, and circulated and displayed for sale to the public generally throughout the midwest and as far south as Florida and Louisiana. The publication is printed on a semi-stiff sheet of hard paper approximately 12 1/2, by 19 inches in overall dimensions, and double folded so as to make eight pages each approximately 61/4 by 9 1/2, inches.

4. Illinois, which has a bona fide list of actual prepaid subscribers, has been published regularly since 1947 at the same address, under the same name and style.

5. Illinois has continuously utilized the facilities of the defendant Illinois Bell Telephone Company, an Illinois corporation (hereinafter referred to as "Telephone Company"), and The Western Union Telegraph Company, a New York corporation (hereinafter referred to as "Western Union") as well as the facilities of the UNITED PRESS INTERNATIONAL (hereinafter referred to as "United") since the following dates:

  Telephone Company              1947
  Western Union                  1951
  United                         1947

In addition, Illinois has had and used second class mail privileges granted by the United States Post Office Department since 1947.

6. Certain of the employees of Illinois, including linotypers and drivers, are members of various unions and Illinois has contracts with such unions.

7. Since 1947 Illinois has used the facilities provided it by the Telephone Company in carrying out its everyday business and, in addition, receives by telephone each morning, except Sundays, certain information concerning horse racing, more particularly described as follows:

  (a) "Scratches" means the names of horses which
  have been withdrawn from the horse racing events
  in which they had been entered to compete.
  (b) "Jockeys and Weights" means the names of the
  jockeys who will ride specified horses in that
  day's racing events and the weights of said
  jockeys.
  (c) "Track Condition", meaning whether or not the
  track is wet, fast, muddy, or slow.
  (d) "Program Selections", the selections by the
  track handicapper, which appear in the official
  printed program, constituting the truck
  handicapper's estimate of the winner, place
  (second) and show (third) horses as they will
  finish in each particular racing event.
  (e) "Post Position of Horses", meaning the
  relative position from the inside to the outside
  of the track in which the horses will start the
  race.

8. The foregoing information, after receipt, is studied by so-called handicappers employed by Illinois at its place of business, who prepare their own estimates of the respective abilities of each of the horses entered in the various racing events, and their own estimates of the possibilities of each horse winning in the event in which he is entered. The information received by telephone, as previously set forth, together with the handicappers' estimates or forecasts of what the wagering through the parimutuel machines at the track is likely to be, which is called the "morning line", as well as the handicappers' own selection or estimate of the order in which the horses will finish in each event, is published in certain of the editions of the Illinois Sports News. In addition, certain information concerning the past performances of the various horses is published in the same editions.

9. With the exception of the "morning line" and "past performance" information, all of the foregoing is also transmitted by telephone each morning, except Sundays, to the Detroit Sports News of Detroit, Michigan, Harvey A. Junior of Miami, Florida, and The Toronto Daily Sports News of Toronto, Ontario, Canada. Each of these publications contains horse racing information and they have been published for 19, 32 and 28 years respectively.

10. In addition, the telephone facilities are also used to obtain information from race tracks in the Chicago, Illinois; Detroit, Michigan; New Orleans, Louisiana; and Hot Springs, Arkansas areas when such tracks are running. The information received from the tracks in question consists of the names of the horses entered and their anticipated jockeys for the following day's races.

11. For many years Illinois has used the facilities of Western Union each day, except Sunday, for the transmission of racing information and other information of a general character to Chicago's American of Chicago, Illinois formerly the Chicago Herald-American, the Chicago Turf Bulletin of Chicago, Illinois, The Pierce News Company of St. Louis, Missouri, and, prior to July 20, 1962, a business owned by plaintiffs as co-partners and known as the Louisville Daily Sports News (hereinafter referred to as "Louisville"). Each of the foregoing publishes publications containing horse racing information and information of a general character.

12. Illinois uses the facilities of United for the receipt of information of a public and sporting character. Some of such information is published by Illinois in its publications and some is transmitted by Western Union teleprinter facilities as hereinbefore set forth.

13. Neither Illinois nor Louisville have, since September 13, 1961, furnished any information, other than by means of their publications, to any person or business except as set forth in paragraphs 9 and 11 hereof.

14. Neither plaintiffs nor their employees accept bets or wagers either by telephone or telegraph or otherwise.

15. The various editions of Illinois' publications may generally be described as follows:

  (a) Harness Track Edition — sold in Chicago at
  newsstands and at the harness track when harness
  racing events are being held in the Chicago area
  containing entries, morning line, post position,
  handicap order, jockeys, weights and past
  performances. This publication is published and
  available for purchase at approximately 3 P.M. on
  racing days.
  (b) Early "Overnight" Edition — sold in Chicago at
  newsstands, in the local tracks and out of town and
  in other states to news distributors, containing
  entries, overnight line, handicap order, jockeys,
  weights, past performances, post position, and
  information of a general nature, and is published
  and available for purchase after 3:30 P.M. daily,
  except Sundays.
  (c) Late "Overnight" Edition — sold out of town,
  and in other states, to newsdealers and newsstands,
  except on Saturday night, when part of this edition
  is sold in Chicago, containing entries, overnight
  line, handicap order, jockeys weights, past
  performances, post position, results and
  information of a general nature, and is published
  and available for purchase after 6 P.M. daily,
  except Sundays.
  (d) Latest Turf Edition — sold in Chicago at
  newsstands and within 40 miles thereof and to news
  distributors in nearby states, containing entries,
  jockeys, post position, weights, morning line,
  scratches, past performances, results and
  information of a general nature, and is published
  and available for purchase after 9 P.M. daily,
  except Sundays.
  (e) Race Track Edition — sold at newsstands in the
  Chicago area and in the local tracks and containing
  entries, jockeys, weights, morning line, post
  position, scratches, past performances and results
  of horses entered in events at the local tracks and
  is published and available for purchase after 10
  A.M. daily, except Sundays.
  (f) Weekly Edition — published once weekly, giving
  "selections" of outstanding horses entered at
  various race tracks which might participate in
  racing events scheduled for the succeeding week.

16. The last edition published by Illinois for a particular day's racing events is printed, published and distributed before 10:30 A.M. of that day and the first edition for the following day's racing events is printed, published and distributed after 3:30 P.M. Prior to July 20, 1962, Louisville printed, published and distributed only one edition daily, except Sundays, which was distributed before 10:00 A.M. The Louisville office then closed until the following morning at about 6 A.M. Since July 20, 1962, Louisville has suspended publication.

17. Illinois has a total daily net paid circulation which varies from a low of approximately 6,725 copies per day in December to a high of approximately 29,000 copies per day in August when horse racing meetings are being held in Chicago, Illinois. The daily average net circulation is approximately 17,000 copies per day. During the low month of December, the total of 6,725 copies sold daily is made up of approximately 4,300 Latest Turf Editions, 2,300 Overnight Editions, and 125 Weekly Editions, all as hereinbefore described. During the month of August the total of approximately 29,000 copies sold daily is made up of approximately 2,850 Harness Track Editions, 2740 Early Overnight Editions, 1,500 Late Overnight Editions, 17,260 Latest Turf Editions, 4,618 Race Track Editions and 125 Weekly Editions. Louisville had a total daily net paid circulation which varied from a low of approximately 1,000 copies per day during December to a high of approximately 2,500 copies per day during May when Churchill Downs conducts a horse race meeting in the vicinity of Louisville, Kentucky, the average daily sales and distribution being approximately 1,729 copies.

18. Illinois advertises in all editions of its publications of the Illinois Sports News, except its race track and harness editions, without charge, that racing information can be obtained by calling Chicago telephone number Webster 9-1900, a facility leased by Telephone News System, Inc. from the Telephone Company, and Illinois pays Telephone News System, Inc., $600.00 weekly for advertising Illinois by spot announcements on the telephone service maintained by Telephone News System, Inc.

19. Information pertaining to the same races as are carried in the publications of Illinois is reported in varying degrees in newspapers of general circulation in the City of Chicago including The Chicago American, The Chicago Tribune, The Chicago Sun-Times, and The Chicago Daily News. The "Racing Special" edition of Chicago's American carries substantially similar information with respect to races at various race tracks around the country as is carried in the "Lastest Turf Edition" of the Illinois Sports News (see Court's exhibits 2 and 3).

20. The general regulations of the Illinois Bell Telephone Company applicable to general local exchange tariffs provide in part as follows:

  "USE OF SERVICE FOR UNLAWFUL PURPOSES — The
  service is furnished subject to the condition that
  it shall not be used for the purpose of making or
  accepting bets, furnishing information, or for any
  other purposes in connection with any gambling
  scheme, business or device, or for any similar
  unlawful purpose. Any subscriber whose service is
  to be discontinued or any applicant to whom service
  is to be denied under this regulation will be
  notified by the Telephone Company of his right to a
  hearing by the Illinois Commerce Commission to
  determine whether or not such service is being used
  or will be used in violation of this rule. Upon
  complaint to the Commission by any applicant or
  subscriber who is affected by the refusal or
  discontinuance of service in accordance with this
  rule, such service

  will be provided, continued or restored if the
  Commission shall determine that the service has
  not been used or is not intended to be used in
  violation of this rule."

21. The general regulations of the American Telephone and Telegraph Company applicable to message toll telephone service provide, in part, as follows:

  "USE OF SERVICE FOR UNLAWFUL PURPOSES — The
  service is furnished subject to the condition that
  it will not be used for an unlawful purpose."

22. The facilities of the Telephone Company and Western Union are indispensable to the operations of the plaintiffs' business, which grosses in excess of $10,000 per week, and the discontinuance of the services of the Telephone Company and Western Union to Illinois would force plaintiffs out of business.

23. Under date of April 25, 1962, the United States Department of Justice, over the signature of Herbert J. Miller, Jr., Assistant Attorney General, wrote to the Telephone Company as follows:

"Mr. Floyd Brown "Security Department "Illinois Bell Telephone Company "212 West Washington Street "Chicago 6, Illinois

"Dear Mr. Brown:

"Information in the files of the Department of Justice reveals that the telephone facilities located at the following place are being and will be used for the transmission and receiving of gambling information in interstate commerce in violation of Federal law:

  "Illinois Sports News
  "906-08 South Wabash Avenue
  "Chicago 5, Illinois
  "(WEbster 9-5900)

"Pursuant to the provisions of subsection (d) of Section 1084 of Title 18, United States Code, you are therefore required to discontinue the leasing of said facilities, after reasonable notice to the subscriber.

"In my judgment five days notice constitutes reasonable notice under the circumstances."

24. Under date of April 27, 1962, the Telephone Company, over the signature of F.H. Brown, Chief Special Agent, wrote to Illinois as follows:

"Illinois Sports News "906-08 South Wabash ...


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