Moore v. New York Cotton Exchange

• Decision Date: 17 December 1923
• Docket Number: 40.
• Citation: 296 F. 61
• Parties: MOORE v. NEW YORK COTTON EXCHANGE et al.
• Court: U.S. Court of Appeals — Second Circuit

296 F. 61

MOORE v. NEW YORK COTTON EXCHANGE et al.

No. 40.

United States Court of Appeals, Second Circuit.

December 17, 1923

John M Coleman, of New York City (Oscar B. Bergstrom, of New York City, of counsel), for appellant.

Cadwalader Wickersham & Taft, of New York City (Henry W. Taft, of New York City, Henry S. Robbins, of Chicago, Ill., and George Coggill, of New York City, of counsel), for appellee New York Cotton Exchange.

Francis R. Stark, of New York City, for appellees Western Union Telegraph Company and Gold & Stock Telegraph Co.

This cause comes here on appeal from the United States District Court for the Southern District of New York.

The Odd-Lot Cotton Exchange, for whose benefit and that of its members this action was brought, is an unincorporated association organized and operating under the laws of the state of New York. Its president is authorized by the laws of that state to bring suits in his own name on its and its members' behalf. It has a membership of 100 or more and maintains an Exchange in the city of New York wherein its members buy and sell cotton for future delivery without limit as to quantity, except that no lot bought or sold shall be less than 10 bales, nor more than 100 bales. It is otherwise unlimited as to the quantity dealt in.

The New York Cotton Exchange is a corporation created by special legislative enactment of the state of New York. It has a membership of more than 400 and maintains an Exchange in the city of New York for the purchase, sale, and exchange of cotton, and to facilitate dealings and transactions in that commodity, and to diffuse information as to prices, quotations, and such other matters as relate to the trade and business of dealing in said commodity. It is unlimited as to the quantity of cotton dealt in, except that no lot shall be less than 100 bales.

The Western Union Telegraph Company is also a New York corporation, and it has its principal office in the city of New York. It is a public service corporation engaged in interstate commerce by transmitting messages by means of telegraph and cable wires between the various states and territories of the United States, and between such states and territories and foreign countries.

The Gold & Stock Telegraph Company is also a New York corporation, and it likewise has its principal office in the city of New York. It also is engaged in interstate commerce and in disseminating market news and the continuous and instant quotations of cotton prices by means of ticker service located in Exchanges and Brokerage Houses and with cotton dealers throughout the United States.

This suit was brought for a violation of the Anti-Trust Laws of the United States.

It is alleged that the Odd-Lot Cotton Exchange opened its Exchange in New York City in August, 1922, and that in order to serve promptly and efficiently its members, brokers, and customers, it is necessary that it have what is known as a continuous ticker service owned and operated by defendants, the Western Union Telegraph Company and the Gold & Stock Telegraph Company, and in order to procure same, complainant made application, as is required by the said two companies for said ticker service, said application being dated on or about July 1, 1922, and being the printed application required by defendants to be signed by all applicants for their continuous quotations as set forth in the contract between the New York Cotton Exchange and the Western Union Telegraph Company. In making its application it alleges that it was then able, willing, and offered to pay whatever charges might be made and exacted therefor and to comply with all requirements of defendants, and is now ready, able, and willing and offers to pay said charges, and to comply with all requirements of defendants. That at the time when it made its application to the manager of the Western Union Telegraph Company, its representative was informed that said application could not be granted, except upon the express consent of the New York Cotton Exchange. That since the making of said application, the said Western Union Telegraph Company and the Gold & Stock Telegraph Company have failed and refused to install a ticker for the use of complainant giving continuous cotton quotations, as called for in the application, and the New York Cotton Exchange has failed and refused to give its consent to the installation of said ticker service for continuous cotton quotations.

The amended bill of complaint is of great length covering more than 20 printed pages. It is not necessary for present purposes to set forth its various allegations. But it is alleged that by reason of various matters which are set forth the 'New York Cotton Exchange can and does influence and control all dealing, trading and commerce in cotton in the United States and to a large extent in foreign countries and therefore has thereby monopolized the cotton commerce in the United States, and that the free competitive flow of interstate commerce in such product is hampered, restrained, and monopolized by the said defendants.'

It is also alleged that 'the New York Cotton Exchange is a monopoly, having complete domination and control of the cotton market for the purchase and sale for future delivery, as hereinbefore alleged; that it has complete control over the receipt and dissemination of the market quotations from foreign markets, and of the establishment and dissemination of the quotations in the city of New York, and of the manner, and to whom, same may be disseminated from the city of New York and to other exchanges in the United States.' It is further alleged that the contract 'hereinbefore alleged between the New York Cotton Exchange and the Western Union Telegraph Company and the Gold & Stock Telegraph Company is in restraint of trade and commerce among the several states, and was made and entered into pursuant to a conspiracy on the part of the New York Cotton Exchange and its members, constituting said exchange, in restraint of trade and commerce among the states.'

It is further alleged that the 'contract between the New York Cotton Exchange and the Western Union Telegraph Company and the Gold & Stock Telegraph Company, and the refusal of the New York Cotton Exchange to allow the Odd-Lot Cotton Exchange of New York to install a cotton ticker, and have the continuous cotton quotations, while allowing same to its competitors as hereinbefore alleged, constitute an unfair method of competition in commerce contrary to the acts of Congress in such cases made and provided.'

The amended bill of complaint asked a decree:

(1) Adjudging the New York Cotton Exchange to be a monopoly.

(2) That the contract existing between the defendants be canceled and declared void, concerning the installation of tickers and the giving of continuous cotton quotations.

(3) That the defendants be perpetually restrained from carrying out the said contract, and be restrained from refusing to install in the exchange of the Odd-Lot Cotton Exchange of New York a ticker for the purpose of receiving continuous cotton quotations, and from further refusing to give and disseminate to the Odd-Lot Cotton Exchange of New York, and its members, the continuous cotton quotations, the same as is furnished to and disseminated by the New York Cotton Exchange, through the said two telegraph companies, defendants, to other exchanges, individuals, corporations, and brokers.

(4) That the New York Cotton Exchange, its agents, servants, officers, attorneys, and legal representatives, be further enjoined from in any manner discriminating against the Odd-Lot Cotton Exchange of New York, or any of the members thereof, and that it be enjoined from instructing its members not to deal with the members of the Odd-Lot Cotton Exchange of New York, and from refusing to allow its said members to so deal, and from refusing to allow its members to furnish to the members of the Odd-Lot Cotton Exchange, with whom they deal, the cotton quotations, continuous and otherwise, as may be requested from time to time by the members of the Odd-Lot Cotton Exchange for their use in their transactions with members of the New York Cotton Exchange.

The defendants in their answers admitted that they have refused to install a ticker in complainant's Exchange to supply it with continuous quotations. They also admit that they have entered into a contract by which the Western Union Telegraph Company is allowed to furnish the quotations of the New York Cotton Exchange to any one of whom said Exchange approves but deny that the purpose or effect of the contract is to restrain trade or commerce or prevent competition. The New York Cotton Exchange also alleges that when it received the application of the complainant for a ticker it made a careful investigation of the character and purposes of appellant and of its members and found that it had been organized to succeed the American Cotton Exchange; that many of the active members of the appellant Exchange had been active members of the American Cotton Exchange, which had been convicted in the Supreme Court of the State of New York of conducting a bucket shop under sections 390 and 393 of the Penal Law; that the Odd-Lot Exchange was organized for the purpose of permitting its members to conduct bucket shops under the guise of being members of an Exchange; that for this reason the New York Cotton Exchange refused to permit its quotations to be furnished to appellant and for the further reason that there is no commercial necessity or reason for the existence of a cotton exchange such as appellant's, whereon contracts for the future delivery of cotton in less than 100-bale lots are made and that such an exchange is conducive to improper speculation by persons of small means...