New York Cotton Exch. v. Hunt

• Decision Date: 14 March 1906
• Docket Number: 601,602.
• Citation: 144 F. 511
• Parties: NEW YORK COTTON EXCH. v. HUNT. SAME v. DUNCAN et al.
• Court: U.S. District Court — Western District of Tennessee

144 F. 511

NEW YORK COTTON EXCH. v. HUNT.

SAME v. DUNCAN et al.

Nos. 601, 602.

United States Circuit Court, W.D. Tennessee, Eastern Division.

March 14, 1906

The bill in this case was filed January 25, 1906, by the New York Cotton Exchange, against Clarence P. Hunt. On January 27 1906, a notice was given to the defendant that the bill had been filed, and that the complainant desired to make application for the issuance of a preliminary injunction as prayed for in the bill, and an order was issued, directing that said defendant appear at the chambers of this court, in the city of Memphis, Tenn., at 9 o'clock, February 6 1906, and show cause, if any he had, why the preliminary injunction should not be granted as prayed for. The defendant appeared accordingly, and the hearing of the application for preliminary injunction was entered upon. And, without completing the hearing, an adjournment was taken until March 5th, when the defendant again appeared in response to said order, and filed his answer to the bill of complaint, wherein he sets up various and sundry reasons why, in his judgment the application for the preliminary injunction should be refused.

Briefly stated, the bill sets out, as the grounds for its application for an injunction, that it is a private corporation organized under a special charter by the state of New York on the 8th day of April, 1871, which was amended by the Legislature on the 8th day of May, 1880, and that it is a citizen of the state of New York, and has its principal office and place of business in that state, and that the defendant Clarence P. Hunt is a citizen of the state of Tennessee, and is a resident of the Western district of said state, doing business in the city of Memphis. The bill further alleges that the complainant has provided, within its Exchange Building in the city of New York, for the exclusive use of its own members, an Exchange Hall, where members meet to buy and sell for themselves, or as brokers for their customers, for present and future delivery, cotton. That the knowledge of the prices thus made in said transactions has become a species of property of such large value to complainant that telegraph companies are willing to pay large sums of money for the privilege of receiving instantaneously such quotations, and distributing the same to their customers, and that many persons throughout the United States who are engaged in the cotton and commission business are willing to, and do, pay said telegraph companies therefor. And that complainants realize from the distribution of said quotations through said telegraph companies large sums of money annually. That such quotations are such a peculiar kind of property that their value depends upon complainant's power to confide the transmission and distribution thereof to such telegraph companies and other distributing agencies as will contract therefor with complainants, and that if individuals or corporations are permitted to improperly acquire said quotations surreptitiously, or by theft, or without the approval of complainant, such person or corporation can promptly give the same to numerous other persons, and that the telegraph companies contracting with complainant for said quotations will be put to a disadvantage in competition with such persons so obtaining said quotations without paying complainant therefor, and the telegraph companies would thereby be deterred from continuing to pay the complainant the prices provided in said contract between the complainant and the telegraph companies.

The bill alleges that the expense of collecting these quotations is more than $4,500 annually. It is alleged that prior to July 14, 1903, certain telegraph companies were permitted to gather such quotations through their own employes from the exchange floor of complainant, and to distribute the same to their customers without any effective restrictions upon the persons entitled thereto. And for reasons set out in the bill, which it is not necessary here to state, complainant alleges that it found it necessary to, and it did, on the 14th day of July, 1903, terminate the right or license of telegraph companies to collect complainant's said quotations, and that complainant adopted certain reasonable regulations, calculated to prevent the promiscuous sale and distribution of said quotations, and, to this end, entered into a written contract with the Western Union Telegraph Company, and with the Postal Telegraph Company. That on the 14th day of July, 1903, the Western Union Telegraph Company was required by complainant to, and it did, in the name of the Gold & Stock Telegraph Company, which is the name of the company through which the Western Union Telegraph Company transacts its business relating to market news and quotations, execute with the complainant an agreement in writing, a copy of which is set out in the bill. The Postal Telegraph Company, it may be stated, entered into the same written agreement with complainants. That part of the contract or agreement, which need be stated, is, briefly, as follows: The cotton exchange agrees, at its own cost and expense, to collect, furnish, and transmit to the telegraph company, full and continuous quotations of the current transactions in cotton which originate and are consummated on the floor of the exchange during the hours of trading prescribed by its rules, and also the changes which may occur in the same from time to time. For the privilege of receiving and serving the said quotations, the Western Union Telegraph Company, known in this contract as the Gold & Stock Telegraph Company, agrees to pay to the cotton exchange the sum of $13,584 per annum, in equal monthly installments of $1,132 each. And for like privilege and service, the Postal Telegraph Company agrees to pay to the cotton exchange $3,396 in cash. This agreement provides that the telegraph company may serve said quotations to members of the cotton exchange at their offices and branch offices, and shall charge said members of the exchange for the use of 'tickers' in their offices in New York City not exceeding $20 per month for each 'ticker.' It is further provided that the said telegraph companies shall have the right to serve continuous quotations to all persons, firms, corporations, and organizations in New York City and elsewhere, wherever the telegraph company may desire to serve them, but not to persons, firms, or corporations which may be directly or indirectly engaged in the formation or maintenance of bucket shops, or other places where such continuous quotations are used as a basis for bets or illegal contracts based on fluctuation in the price of cotton dealt in on said exchange, together with the right to collect its tolls and charges therefor; all tolls and charges so collected to belong to and be retained by the telegraph companies. The said contract and agreement contains the further limitation on the right of the telegraph company to distribute these quotations, and, since it is this clause in the contract which gives rise to the present litigation, I quote it verbatim: 'But the telegraph company shall not, under any circumstances, directly or indirectly, furnish said continuous quotations to any person, firm, corporation, or organization, whether members of the exchange or not, until such person, firm, corporation, or organization shall have submitted an application in writing to the said exchange, in such form as the exchange shall provide, and until said exchange has approved the said application. ' A copy of the written application to be made under the foregoing paragraph is set out in the bill, but it is not necessary to repeat it here.

Complainants charge that all persons, directly after the making of said contracts, who were receiving said quotations from either of said telegraph companies prior to July 14, 1903, have executed and delivered an application substantially in the form set out in the bill, which application, before the delivery of any quotations thereunder, was approved and accepted by complainant, except in a few instances; but the complainant charges that the defendant has never delivered to either of said telegraph companies, or to complainant, any application as required under the contract, nor has the complainant consented that the defendant should receive its quotations.

It is charged that on July 14, 1903, the defendant Clarence P. Hunt was receiving from the Western Union Telegraph Company said continuous quotations of complainant, and that the Western Union Telegraph Company notified the defendant of the making of said contract between the complainant and the telegraph company, and that thereunder the telegraph company would be required to, and would, cease furnishing to defendant said quotations, unless and until said Hunt should apply for said quotations, and such application should have been approved by complainant, as in said contract provided. And that thereupon defendant declined and refused to make such application, but in lieu thereof, and on July 31, 1903, said Hunt, with others, filed in the chancery court of Shelby county, Tenn., a petition against the Western Union Telegraph Company to enjoin it from removing its tickers from defendant's office, or ceasing to furnish said petitioners complainant's said quotations.

An ex parte injunction was issued against said telegraph company and thereafter it filed its answer to said petition, setting up the contract with complainant, and denying the right of said petitioners to the relief in said petition prayed, and a judgment was entered in the state court for the defendants on the petition and answer thereto. An appeal was taken from said judgment to the Supreme Court of Tennessee, and on the 15th of June, 1905, said Supreme Court...