Fenner v. Boykin

Decision Date22 January 1925
PartiesFENNER et al. v. BOYKIN et al.
CourtU.S. District Court — Northern District of Georgia

Little, Powell, Smith & Goldstein and Thomas W. Hardwick, all of Atlanta, Ga., for plaintiffs.

Hooper Alexander, James W. Austin, and John A. Boykin, all of Atlanta, Ga., for defendants.

Before BRYAN, Circuit Judge, and BARRETT and SIBLEY, District Judges.

SIBLEY, District Judge.

The defendants Boykin and Lowry are the Solicitor General and sheriff in Fulton county, Ga., charged respectively with the general duty of prosecuting crimes and arresting offenders. The petitioners, according to the petition and proof submitted, are citizens of other states, brokers and members of the cotton and other exchanges in New York, New Orleans, and Chicago, who operate in Fulton county, Ga., a branch office in which are solicited and received for execution on these exchanges orders which are generally margined to secure the broker against loss in executing them. Transactions in "future cotton" are here particularly in question, and the discussion will be limited to them.

In this branch office a "board" is maintained whereon are posted the fluctuations in the market price of commodities as obtained by private wire from the exchanges. All transactions are for execution in the exchanges, whose operation is so far regulated by law and of general knowledge as to require no detailed statement. There each order results in a contract with another broker. No contracts are made in Georgia, and no cotton under them is to be delivered in Georgia, but only in the state where the contract is made and out of warehouses located there. In point of fact, the customer in Georgia rarely makes or receives delivery of the cotton contracted for, but the contracts are mostly closed as to the customer by a counter contract, and are offset or rung out by the brokers in the exchanges finally. The customer is settled with by charging to his margins or paying to him the difference between the price of the commodity in his two contracts. The Georgia statute, passed in 1906 and before petitioners began business in Georgia, generally stated, prohibits and punishes, in section 1, "the establishment, maintenance or operation in the state of a place for the purpose of carrying on or engaging in the business forbidden by this act, commonly called dealing in futures on margins." Section 2 defines more fully the contracts and transactions constituting the forbidden business. Section 3 punishes any person becoming a party to, furthering, effectuating, or aiding in the making of such a contract. Section 4 gives immunity to persons testifying. Sections 5 and 6 make proof of certain facts presumptive evidence of guilt under section 3. And section 7 makes an office or place where the fluctuations of prices of commodities are posted or published presumptively a violation of section 1. Section 8 prohibits the act being so construed as to apply to commercial exchanges or other bona fide trade organizations where no sales for future delivery on margins are permitted.

The Solicitor General was preparing to bring prosecutions in Fulton superior court against the petitioners and their local employees, had subpœnaed certain employees and customers to appear as witnesses before the grand jury then in session and to bring certain records and papers with them, and arrests by the sheriff were likely to ensue.

This bill was filed to enjoin the prosecution of petitioners and their employees and the arrest of the latter on the ground that there was no law to authorize the proceedings; that their business was a lawful one, and constituted interstate commerce, and would be wholly destroyed in consequence of repeated prosecutions of employees and customers; that the Georgia statute, under color of which the petitioners were about to be prosecuted, if construed not to apply to petitioners' business, did not justify the defendants who were thus acting in excess of their lawful authority; and if construed to apply to petitioners' business was unconstitutional as taking their right of property in their business without due process of law; as regulating interstate commerce; and in the matter of the presumptions raised by it, unduly burdening interstate commerce and denying the equal protection of the laws.

The answer challenges the power of the court to enjoin both because of the Eleventh Amendment of the Constitution, in that the suit is substantially against the state of Georgia; and because of Judicial Code, § 265 (Comp. St. § 1242), forbidding injunction of proceedings in a state court. It sets up that the grand jury, pending this hearing, a restraining order having been refused, had actually indicted the petitioners and one of their agents for violation of section 1 and for the offense of keeping a gaming house, but that further indictment of them was not contemplated unless they should continue unlawful practices after conviction. It is also averred that while the presumptions raised by the act will be relied on, full and direct evidence of the crimes charged will also be presented.

The state of Georgia is not a party on the face of this bill, but is a party to the criminal case sought to be enjoined. The indictment alleges the thing done to be contrary to the laws of said state, the good order, peace, and dignity thereof, and the vindication of these is the state's interest in the prosecution. This bill seeks to enjoin the prosecuting and arresting officers of the state who have and claim no interest in the controversy, save in behalf of the state. The statute sought to be enforced by them is not like a rate statute made without hearing, whose validity must depend on its reasonableness, and so involve a judicial question from its outset, but is about a matter of police which is within the general power of the state. A distinction may exist between the two classes of statutes, but it goes rather to the propriety than to the power of interference. Because the petition claims that the statute is being so construed as to make it an unconstitutional interference with interstate commerce and is about to be used to destroy a valuable and lawful business, with no adequate remedy by test in the criminal courts, in consequence of which the defendants are not really representing and acting for the state of Georgia, there being no direct and special mandate to them to do the particular thing they are about to do, we assume jurisdiction of the inquiry. Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764; Truax v. Raich, 239 U. S. 33, 36 S. Ct. 7, 60 L. Ed. 131, L. R. A. 1916D, 545, Ann. Cas. 1917B, 283.

Judicial Code, § 265, does not prohibit the inquiry. Neither the grand jury nor the court of which it is a part will ever be enjoined. Ex parte Young, supra, at page 163 (28 S. Ct. 441). Nothing will prevent their action save a regard for the harmony of the judiciary. Though the injunction of solicitor and sheriff would be a substantial injunction of the prosecution, it is not prevented by section 265 because of the well-recognized exception whereby the federal court may thus protect the jurisdiction first acquired by it. The investigation entered upon by the grand jury was not a prosecution. When this bill was filed no indictment had been prepared by the Solicitor General and laid before the grand jury. This court may prevent his making one since the filing of this bill, or prosecuting one since found, until it shall have fully exhausted its jurisdiction in the premises. Ex parte Young, supra, at pages 161, 162 (28 S. Ct. 441); Kline v. Burke Construction Co., 260 U. S. 226, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077.

Passing to the merits, we do not think the business alleged to be interfered with and burdened is interstate commerce. If the Georgia act prohibits in Georgia the business which petitioners claim to be doing, the commerce clause of the Constitution is not offended. The cotton or other property bought and sold in the New York and New Orleans exchanges is deliverable there. While this may have moved in commerce from state to state, no such movement occurs in pursuance of these sales. The exchanges themselves may be an aid or an obstruction to interstate commerce and so regulable by Congress. Hill v. Wallace, 259 U. S. 44, 42 S. Ct. 453, 66 L. Ed. 822; Board of Trade v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839; Stafford v. Wallace, 258 U. S. 495, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229. But the particular transactions of the brokers in them are not, nor is correspondence from Georgia to New York or New Orleans, whereby these contracts are brought about,...

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3 cases
  • State v. Langley, 2058
    • United States
    • Wyoming Supreme Court
    • December 5, 1938
    ... ... Wells, 136 ... Ga. 681, 686, 71 S.E. 1052, 1055; Simpkins v. State, ... 35 Okla. Crim. 143, 150, 249 P. 168, 171; Fenner v ... Boykin, 3 F.2d 674, 678. See, also, Wholesale Tobacco ... Dealers Bureau v. National Candy Co., supra; Balzer v ... Caler, 82 P.2d 19, ... ...
  • Oldroyd v. Kugler
    • United States
    • U.S. Court of Appeals — Third Circuit
    • June 2, 1972
    ...from Fenner v. Boykin, 271 U.S. 240, 46 S.Ct. 492, 70 L.Ed. 927 (1926), for in that case in the Three-Judge Court it appears, 3 F.2d 674, 676 (N.D.Ga.1926), that an indictment was handed down against Fenner and others while the proceedings seeking restraint of the state authorities were pen......
  • Browder v. City of Montgomery, Alabama, Civ. A. No. 1234-N.
    • United States
    • U.S. District Court — Middle District of Alabama
    • November 14, 1956
    ...they will not do so except under extraordinary circumstances where the danger of irreparable injury is great and imminent. Fenner v. Boykin, 5 Cir., 3 F.2d 674, affirmed 271 U.S. 240, 46 S.Ct. 492, 70 L.Ed. 927, cited at 21 C.J.S., Courts, § 543, p. As expressed by Justice Cardozo in Hawks ......
1 books & journal articles
  • THE STRANGE CAREER OF THE THREE-JUDGE DISTRICT COURT: FEDERALISM AND CIVIL RIGHTS, 1954-1976.
    • United States
    • Case Western Reserve Law Review Vol. 72 No. 4, June 2022
    • June 22, 2022
    ...(202.) See, e.g., three decisions cited and quoted in Younger, 401 U.S. at 45-46 (first citing Fenner v. Boykin, 271 U.S. 240 (1926), aff'g 3 F.2d 674 (N.D. Ga. 1925) (three-judge court); then citing Spielman Motor Sales Co. v. Dodge, 295 U.S. 89 (1935) (affirming three-judge district court......

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