United States v. American Bond & Mortgage Co.

• Decision Date: 01 March 1929
• Docket Number: No. 8704.,8704.
• Citation: 31 F.2d 448
• Parties: UNITED STATES v. AMERICAN BOND & MORTGAGE CO. et al.
• Court: U.S. District Court — Northern District of Illinois

31 F.2d 448 (1929)

UNITED STATES v. AMERICAN BOND & MORTGAGE CO. et al.

No. 8704.

District Court, N. D. Illinois, E. D.

March 1, 1929.

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John G. Sargent, Atty. Gen., George E. Q. Johnson, U. S. Atty., of Chicago, Ill., William J. Donovan, Asst. to Atty. Gen., and Bethuel M. Webster, Jr., and Louis G. Caldwell, Sp. Assts. to Atty. Gen., and Allan Healy, Asst. U. S. Atty., of Chicago, Ill., for the United States.

Scott, Bancroft, Martin & MacLeish, of Chicago, Ill., for defendants.

WILKERSON, District Judge.

The bill is for an injunction against radio broadcasting by the defendants without a federal license. It alleges that defendants who were refused a license by the Radio Commission threaten to operate a radio apparatus, for the transmission of energy in interstate and foreign commerce, in such a manner as to interfere with transmission and reception by others duly authorized thereto. Defendants answer and assert the invalidity of the Radio Act of 1927 (47 USCA § 81 et seq.) and the order of the commission refusing the license. The United States applies for a temporary injunction. The record consists of the pleadings, affidavits and proceedings before the commission.

In 1924, defendants constructed and commenced the operation of a station in Chicago under a license issued pursuant to the Radio Act of 1912 (47 USCA §§ 51-60). In 1927, in order to avoid interference with receiving sets in Chicago, defendants moved their station to Homewood, Ill., and consolidated with another station which was first licensed in 1925. The Homewood transmitter, operating under the call letters WMBB — WOK, was built during the months of August and September, 1927, under a construction permit issued by the commission. On Sept. 28, 1927, the commission issued a license to defendants authorizing them to operate the station for 60 days on a frequency of 1,190 kilocycles per second, and with a 5,000 watt power. This license was renewed from time to time for 60-day periods. On May 25, 1928, defendants were notified that after an examination of their application for renewal of license, the commission was not satisfied that public interest, convenience or necessity would be served by granting the application, that there would be a hearing on the application on July 9, 1928, and that unless defendants made an affirmative showing that public interest, convenience, or necessity would be served the application would be denied finally. After the hearing the application for renewal was denied and the license expired September 1, 1928.

If the statute relied on is a valid exercise of the regulatory power over interstate and foreign commerce granted by the Constitution, the right of the United States to invoke the remedy in equity here sought is clear. The bill is to redress wrongs which affect the public at large and are in respect of matters which, if interstate and foreign commerce are involved, are intrusted to the care of the nation and concerning which the nation owes the duty to all the citizens of securing them their common rights. The persons affected are numerous and widely separated and their injuries severally may be small. The interference complained of amounts to a public nuisance and is within the jurisdiction of equity because of the irreparable damage to individuals and the great public injury which are likely to ensue. That the acts of the defendants may be violations of the criminal law also does not destroy the jurisdiction of equity.

The Attorney General, by virtue of his office, may bring this proceeding, and no statute is necessary to authorize the suit. In re Debs, 158 U. S. 564, 15 S. Ct. 900, 39 L. Ed. 1092; Sanitary District v. U. S., 266 U. S. 405, 425, 426, 45 S. Ct. 176, 69 L. Ed. 352; Heckman v. United States, 224 U. S. 413, 438, 442, 32 S. Ct. 424, 56 L. Ed. 820; United States v. Rickert, 188 U. S. 432, 23 S. Ct. 478, 47 L. Ed. 532; United States v. American Bell Telephone Co., 128 U. S. 315, 367, 9 S. Ct. 90, 32 L. Ed. 450; United States v. San Jacinto Tin Co., 125 U. S. 273, 285, 8 S. Ct. 850, 31 L. Ed. 747.

We come then to consider the nature of the subject-matter which Congress has sought to subject to regulation, the statutes enacted to that end and the proceedings before the commission resulting in refusal to renew the license of defendants.

Radio transmission is one of the great scientific achievements of all time. It has become one of the main factors in the life and civilization of the world. Its importance is increasing. The protection of the public in the enjoyment of its benefits is a most important function of government.

Radio waves travel in all directions for great distances into other states and foreign countries. One may turn the dial of the receiver and hear sounds resulting from energy transmitted from widely separated places in the United States, Canada, and other countries. More than one station can transmit at the same time in the same geographical region (the extent of which depends upon the power used) only because radio waves having sufficiently different frequencies (wave lengths) can be detected separately to the exclusion of other waves by receiving apparatus. In the present state of the art, a difference of 10 kilocycles is considered the smallest practical separation of frequencies. The frequencies or carrier waves thus separated are known as channels. There are 96 channels in the broadcast band set aside by the commission for use by broadcasting stations, extending from 550 to 1500 kilocycles (corresponding to wave lengths extending from 545.1 to 199.9 meters). A station transmits intelligibly for what may be called a service area, and causes interference with other stations operating on the same wave length in what may be called a nuisance area. A low-power station, even if it does not of itself transmit into other states, will cause interference with reception of other stations broadcasting on the same wave length into the state in which the low power station is located.

Radio, on account of its nature, early received national and international consideration. 24 Op. Attys. Gen. 1902, page 100; Treaty of Berlin, 37 Stat. 1565; Treaty of London, 38 Stat. 1672, 1707. The United States, to carry out the treaty provisions for avoiding interference, enacted the Radio Law of 1912. 37 Stat. 302 (47 USCA §§ 51-60). That act required licenses from the Secretary of Commerce for operation of all radio apparatus and made the licenses subject to the regulations contained in the act and all subsequent acts and treaties. The act was directed mainly to the problems then existing which had to do with radio telegraphy and not broadcasting, although the language was broad enough to include radio telephony.

As the number of radio stations increased, the courts found in the act limitations upon the authority of the government to deal adequately with questions of interference. Hoover v. Intercity Radio Co., 286 F. 1003, 52 App. D. C. 339; United States v. Zenith Radio Corporation (D. C.) 12 F.(2d) 614.

When the Attorney General ruled (35 Op. Attys. Gen. 126) that the act did not give the Secretary of Commerce authority to assign channels, fix hours of operation, limit use of power, or grant licenses of limited duration, there resulted a condition of general confusion. There was a scramble for preferred channels. The Secretary was required to issue licenses to all. Many new stations were built and assertions of property rights in wave lengths and the ether were made. On December 8, 1926, Congress passed a joint resolution limiting license periods and requiring waiver of claims to wave lengths or the use of the ether as a condition precedent to licenses. 44 Stat. 917.

On February 23, 1927, the Radio Act of 1927 was approved. 44 Stat. 1162 (47 USCA § 81 et seq.). It asserts government control over all channels of radio transmission, provides a license system for radio stations and prohibits radio transmission, under penalty, except with a license in that behalf granted under the provisions of the act. For the purposes of the act the United States is divided into five zones, Illinois being in the fourth. A Radio Commission is created whose duty it is, from time to time, as public convenience, interest, or necessity requires, to classify stations, regulate nature of service, assign wave lengths, regulate apparatus, prevent interference, establish station areas, and regulate chain broadcasting. Section 4, 44 Stat. 1163 (47 USCA § 84). By section 9 of the act (44 Stat. 1166) it is provided that the licensing authority, if public convenience, interest or necessity will be served, subject to the limitations of the act, shall grant licenses, and in so doing, when and in so far as there is demand for the same "shall make such a distribution of licenses, bands of frequency or wave lengths, periods of time for operation, and of power among the different states and communities as to give fair, efficient, and equitable radio service to each of the same." By amendment of March 28, 1928 (45 Stat. 373, § 3 47 USCA § 89, note), the term of licenses granted or renewed is limited to three months. The amendment provides more specifically for equality of radio service among the zones and requires that the licensing authority "shall as nearly as possible make and maintain an equal allocation of broadcasting" facilities to each of the zones and shall carry into effect the equality directed, "whenever necessary or proper, by granting or refusing licenses or renewals of licenses." 45 Stat. 373, § 5, amending section 9 of act 1927 (47 USCA § 89). Section 10 of the act states the requirements of applications for license. 44 Stat. 1166 (47 USCA § 90). In this connection it is to be noted that in an earlier section (section 5, 44 Stat. 1164 47 USCA § 85) it is provided that no station license shall be granted until the applicant therefor shall have signed a waiver of any claim to the use of...