HENRY HOPKINS et al„ Appts., v.

UNITED STATES.

(See S. C. Reporter’s ed. 578-604.)

Buying and selling live stock by members of a stock exchange is not interstate com¬ merce — by-law as to commissionsstock sent from another state — by-law as to tele¬ grams — agents soliciting consignments — • stock yards partly in one state and partly in another — refusal to do business with persons not members — when agreement or combination is within the statute.

at stock yards in a city by members of a stock exchange as commission merchants is not in¬ terstate commerce, although most of the pur¬ chases and sales are of live stock s^nt from

171 U. S.

189S.

Hopkins v. United States.

579, 580

other states, and the members of the stock exchange are employed to sell by letter from the owners of the stock in other states, and send agents to other states to solicit business, and advance money to the cattle owners, and pay their drafts, and aid them in making the cattle fit for market.

i. A by-law of the Kansas City Live-Stock Ex¬ change, which regulates the commissions to be charged by members of that association for selling live stock is not in restraint of in¬ terstate commerce, or a violation of the act of July 2, 1S90. to protect commerce from un¬ lawful restraints.

their place of destination, which are sent from another state to be sold, is not engaged in interstate commerce ; nor is his agreement with others in the same business, as to the commissions to be charged for such sales, void as a contract in restraint of that com¬ merce.

the statute, the direct effect of an agreement of combination must be in restraint of trade cr commerce among the several states or with foreign nations.

or telephone messages, made by a by-law of a live-stock exchange, when these restrictions are merely for the regulation of the business of the members, and do not affect the business of the telegraph company, are not void as regulations of interstate commerce.

signments of cattle to commission merchants in another state for sale, is not interstate commerce ; and a by-law of a stock exchange restricting the number of solicitors to three does not restrain that commerce, or violate the act of Congress.

stock yards, and that sales may be made of a lot of stock in the yards which may be part¬ ly in one state and partly in another, has no effect to make the business of selling stock interstate commerce.

stock yards, by which they refuse to do busi¬ ness with those who are not members of their association, even if it is illegal, is not subject to the act of Congress of July 2, 1890, to pro¬ tect trade and commerce, since their business is not interstate commerce.

[No. 210.]

Argued February 2S, March 1, 1898. De¬ cided October 21/, 1S98.

N A WRIT OF CERTIORARI totheUnit- ed States Circuit Court of Appeals for the Eighth Circuit to bring up the whole case in which that court had certified cer¬ tain questions. The suit was brought by the United States against Henry Hopkins et al., members of the Kansas City Live Stock Ex¬ change, to obtain the dissolution of the ex¬ change and perpetually enjoin the members from entering into or from continuing in any combination of a like character. The Circuit Court of the United States for the District of Kansas, First Division, granted the in¬ junction, and from the order granting it an appeal was taken by the defendants to said Circuit Court of Appeals, and upon a. writ of certiorari the whole case was brought here 171 U. S.

for decision. Reversed, and case remitted to the said Circuit Court, with directions to dismiss the suit with costs.

See same case below, 82 Fed. Rep. 529.

Statement by Mr. Justice Peckham:

*This suit was commenced by the United

States attorney for the district of Kansas, acting under the direction and by the au¬ thority of the Attorney General of the Unit¬ ed States, against Henry Hopkins and the other defendants, residents of the state of Kansas and members of a voluntary unincor¬ porated association known and designated as the Kansas City Live Stock Exchange. The purpose of the action is to obtain the dis¬ solution of the exchange and to perpetually enjoin the members from entering into or from continuing in any combination of a like character.

As a foundation for the relief sought it was alleged in the bill that the members of this association, known as the Kansas City Live Stock Exchange, have adopted articles of association, rules, and by-lawswhich they have agreed to be bound by ; that the business of the exchange is carried on and conducted by a board of directors at the Kansas City stock yards, which are situated partly in Kansas City in the state of Missouri and partly in Kansas City in the state of Kansas, the building owned by the stock-yards company being located one half of it in the state of Missouri and the other half in the state of Kansas, and half of the defendants have of¬ fices and transact business in these stock yards and in that part of the building which is within the state of Kansas and the other half in that part of the building which is in the state of Missouri; that the Kansas City Stock Yards Company is a corporation own¬ ing the stock yards, where the business is done by the members of the exchange; that substantially all the business transacted in the matter of receiving, buying, selling and handling their live stock at Kansas City is carried on by the defendants herein and by the other members of the exchange as com¬ mission merchants, and that laige numbers of the live stock, consisting *of cattle and

hogs and sheep bought and sold and handled at the stock yards by the defendants and their fellow members in the exchange, are shipped from the states of Nebraska, Colorado, Texas, Missouri, Iowa, and Kansas and the terri¬ tories of Oklahoma, Arizona, and New 'Mex¬ ico; that when this stock is received at the stock yards it is sold by the defendants, mem¬ bers of the exchange, to the various packing houses situated at Kansas City, Missouri, and Kansas City, Kansas, and it is also sold for shipment to the various other markets, particularly Chicago, St. Louis, ana New York ; that vast numbers of cattle, hogs, and other live stock are received annually at the stock yards and handled by the members of the exchange.

The bill also alleges that large numbers of the live stock sold at the stock yards by the defendants are encumbered by mortgages thereon, executed by their owners in the vari¬ ous states and territories, which mortgages have been given to various defendants as se-

680-583

Supreme Court of the United States.

Out. Term,

curity for money advanced by them to the different owners to enable them to feed and prepare the cattle for market, and that when the live stock so mortgaged are ready for shipment, they are sent to the defendants who have advanced the money and received the mortgages, and on the sale of the stock the amount of these advances and interest is deducted from the proceeds of the sale of the cattle by the commission merchants owning the mortgages; that ninety per cent of the members of the exchange make such ad¬ vances, and that the market is largely sus¬ tained by means of the money thus advanced to the cattle raisers by the defendants, and that Kansas City is the only place for many miles about which constitutes an available market for the purchase and sale of live stock from the large territory located in the states and territories already named; that it is the custom of the owners of the cattle, many of them living in different states, and who consign their stock to the Kansas City stock yards for sale, to draw drafts on the commission merchants to whom the live stock is consigned, which the consignors attach to the bill of lading issued by the carrier, and the money on these drafts is advanced by the local banks throughout the western states

‘and territories. These drafts are paid by the consignees and the proceeds remitted to the various owners through the banks.

The business thus conducted is alleged to be interstate commerce, and it is further al¬ leged that if the person to whom the live stock is consigned at Kansas City is not a member of the exchange, he is not permitted to and cannot sell or dispose of the stock at the Kansas City market, for the reason that the defendants, and all the other commission merchants, members of the exchange, refuse to buy live stock or in any manner negotiate or deal with or buy from a person or com¬ mission merchant who is not a member of the exchange, and thus the owner of live stock shipped to the Kansas City market is com¬ pelled to reship the same to other markets, and by reason of the unlawful combination existing among the defendants and the other members of the exchange the owner is pre¬ vented from delivering this stock at the Kan¬ sas City stock yards, and the sale of stock is thereby hindered and delayed, entailing extra expense and loss to the shipper, and placing an obstruction and embargo on the market¬ ing of all live stock shipped from the states and territories to the Kansas City market which is not consigned to the stock-yards company or to the defendants, or some of them, members of the stock exchange.

It is alleged that the defendants, as mem¬ bers of the exchange, have adopted certain rules, among them being rules 9 and 16, which are particularly alleged to be in re¬ straint of trade and commerce between the states, and intended to create a monopoly, in contravention of the laws of the United States in that behalf.

Rule 9 provides as follows:

“Section 1. Commissions charged by mem¬ bers of this association for selling live stock shall not be less than the following named rates.”

292

Sections 2, 3, 4, 5, 6, and 7 relate to the amounts of such commissions, and it is al¬ leged that in some instances the commissions are greater than had theretofore been paid.

Section 8 permits the members to handle the business of ‘nonresident commission firms

when the stock is consigned directly to or from such firm, at half the rates fixed by the rule, provided the nonresident commission firms are established at the markets named in the section.

Section 10 prohibits the employment of any agent, solicitor, or employee except upon a stipulated salary not contingent upon the commissions earned, and it provides that not more than three solicitors shall be employed at one time by a commission firm or corpora¬ tion, resident or nonresident of Kansas City.

Section 11 forbids any member of the ex¬ change from sending or causing to be sent a prepaid telegram or telephone message quoting the markets or giving information as to the condition of the same, under the penalty of a fine as therein s£ated. The rule, however, permits prepaid messages to be sent to shippers quoting actual sales of their stock on the date made; also to parties de¬ siring to make purchases on the market.

Rule 16 provides, in section 1, “that no member of the exchange shall transact busi¬ ness with any persons violating any of the rules or regulations of the exchange, or with an expelled or suspended member after no¬ tice of such violation, suspension, or expul¬ sion shall have been issued by the secretary or board of directors of the exchange.”

It is alleged that the defendants in adopt¬ ing these rules and in forming the exchange and carrying out the same have violated and are violating the statute of the United States, approved July 2, 1890, entitled “An Act to Protect Trade and Commerce against Unlawful Restraints and Monopolies,’1 and it is charged that it was the purpose of the defendants, in organizing the exchange and in adopting the rules mentioned, to prevent the shipment or consignment of any live stock to the Kansas City market unless it was shipped or consigned to the Kansas City stock yards and to some one or other of the defendants, members of the exchange, and to compel the shippers of live stock from other states and from the territories to pay to the defendants the commissions and charges provided for in rule 9, and to prevent such shippers ‘from placing their property on sale

at the Kansas City market unless these com¬ missions were paid.

The answer of the defendants admitted their forming the exchange and becoming members thereof, and adopting, among others, the rules specially mentioned in com¬ plainant’s bill. They denied that the ex¬ change itself engaged in any business what¬ ever, and alleged that it existed simply in order to prescribe rules and provide facilities for the transaction of business by the mem¬ bers thereof, and to govern them by such rules and regulations as have been evolved and sanctioned by the developments of com¬ merce, and which are universally recognized to be just and fair to all concerned.

.It was further set up in the answer that

171 TJ. S.

Hopkins v. United States.

688-586

each member of the organization was in fact left free to compete in every manner and by all means recognized to be fair and just for his share of the business which comes to the point at which the members of the organi¬ zation do business; that in adopting their rules they followed in all substantial re¬ spects the provisions which had been made upon the same subject respectively by the exchanges theretofore established at Chicago and East St. Louis, Illinois, and which have been since established at St. Louis, Omaha, Indianapolis, Buffalo, Sioux City, and Fort Worth. That the exchange at no time re¬ fused to admit as a member any reputable person who was willing to comply with the conditions of membership and to abide by the rules of the organization.

Various allegations in the bill as to the ef¬ fect of the organization in precluding any sales or purchases of cattle other than by its members are denied.

The defendants also deny that the exercise of their occupation as commission merchants, doing business as members of the exchange, constitutes or amounts to interstate com¬ merce within the meaning of the Constitu¬ tion or laws of the United States. They al¬ lege that they have no part in or control over the disposition of the live stock sold by them to others, nor of live stock purchased by them as commission merchants acting for others. They allege that the stock-yards company permits any person whatsoever to [>584] transact business at its yards who *will pay the established charges of that company for its services, and that in point of fact a very large part of the business done at said yards is transacted by persons who are not mem¬ bers of the exchange and without the interpo¬ sition of such members. It is also alleged in their answer that they are under no obliga¬ tions to extend the privileges of the exchange to a person who is not a member thereof, who has violated its rules and been suspended from membership, and who has voluntarily withdrawn therefrom and announced his pur¬ pose to carry on his business as a competitor of the members of such exchange to the de¬ struction of said organization and its rules and to the injury of his competitors.

It is also set up that defendants cannot be compelled to deal with a nonmember of their organization, or a person violating its rules, or with one who has been suspended for such violation, or who has withdrawn therefrom, or who has announced his intention to de¬ stroy said organization and to compete with the members thereof, and the defendants al¬ lege that they cannot be compelled to deal with any person whatsoever, and that they had a right to establish said exchange, and now have the right to maintain the same, and to require the observance of its rules and regulations on the part of their associ¬ ates so long as they desire to retain the privi¬ leges of membership in the body. They allege that their rules are in harmony with the rules and regulations of commercial ex¬ changes which have existed for more than a hundred years, and which are now to be found in every state almost in the United States and throughout the world, and that 171 U. S.

such rules and regulations are in all respects legal and binding. They deny all general and special allegations of illegal agreements, combinations, or conspiracies to violate any law of the United States or of the state of Kansas.

The complainants, in addition to their bill, used several affidavits, the tendency of which was to show that by virtue of the adoption of rules 9 and 16, the members of the ex¬ change refused to deal with one who had violated a rule and had been suspended by reason thereof, and that by reason of this refusal to do business, the member thus sus¬ pended was 'substantially incapacitated from [585} carrying on his business as a commission merchant, and that by this combination de¬ fendants, in forming such rule and in adher¬ ing to it, have greatly injured the business of such member.

The defendants read counter-affidavits for the purpose of sustaining their answer, which were replied to by the complainants filing affidavits in rebuttal, and upon these affidavits and the pleadings above described an application for an injunction was made to the circuit court of the United States for the district of Kansas, first division. That court, after argument, granted an injunction restraining the defendants from combining by contract, express or implied, so as by their acts, conduct, or words to interfere v'ith, hinder, or impede others in shipping, trading, selling, or buying live stock that is re¬ ceived from the states and territories at the stock yards in Kansas City, Missouri, and Kansas City, Kansas; also enjoining them from acting under the rules of the exchange known as rules 9 and 16, and from attempt¬ ing to impose any fines or penalties upon members for trading or offering to trade with any person respecting the purchase and sale of any live stock; and also from discriminat¬ ing in favor of any member of the exchange because of such membership, and especially from discriminating against any person trad¬ ing at the stock yards, and from refusing, by united or concerted action, or by word, per¬ suasion, threat, or by other means, to deal or trade with persons with respect to such live stock who are not members of the associa¬ tion, because they are not members of such association, or in any manner from interfer¬ ing with the right and freedom of all and any persons trading or desiring to trade in such live stock at the stock yards, the same as if the exchange did not exist. The defend¬ ants were also enjoined from agreeing or at¬ tempting to limit the right of any person in business at the Kansas City stock yards to employ labor or assistance in soliciting shipments of live stock from other states or territories, and from enforcing any agree¬ ment not to send prepaid telegrams from the stock yards to any other state or terri¬ tory.

The district judge delivered an opinion upon granting the ’injunction, which will be

found reported in 82 Fed. Rep. 529. From the order granting it an appeal was taken by the defendants to the United States circuit court of appeals for the eighth circuit, which court certified to this court certain questions

293

586-589

Supreme Court of the United States.

Oct. Term.

under the provisions of section 6 of the act of I March 3, 1891, and thereupon a writ of cer¬ tiorari was issued from this court, and the whole case brought here for decision.

Messrs, h. C. Krauthoff, Gustavus A. Koerner, and John S. Miller, for appellants.

Messrs. Samuel W. Moore, Special As¬ sistant to the Attorney General, and John K. Richards, Solicitor General, for appellees.

[586] *Mr. Justice Peckham, after stating the facts, delivered the opinion of the court:

The relief sought in this case is based ex¬ clusively on the act of Congress approved July 2, 1890, chap. 647, entitled “An Act to Protect Trade and Commerce against Un¬ lawful Restraints and Monopolies,” common¬ ly spoken of as the anti-trust act. 26 Stat. at L. 209.

The act has reference only to that trade or commerce which exists, or may exist, among the several states or with foreign na¬ tions, and has no application whatever to any other trade or commerce.

The question meeting us at the threshold, therefore, in this case is. What is the nature of the business of the defendants, and are the by-laws, or any subdivision of them above referred to, in their direct effect in restraint of trade or commerce among the several states or with foreign nations; or does the case made by the bill and answer show that any one of the above defendants has monop¬ olized, or attempted to monopolize, or com¬ bined or conspired with other persons to mo¬ nopolize, any part of the trade or commerce among the several states or with foreign na¬ tions?

*That part of the bill which alleges that no one is permitted to do business at the cat¬ tle market at Kansas City unless he is a member of this exchange, does not mean that there is any regulation at the stock yards by which one who is not a member of the ex¬ change is prevented from doing business, al¬ though reauy to pay the established charges of the stock-yards company for its services ; but it simply means that by reason of the members of the exchange refusing to do busi¬ ness with those who are not members the nonmember cannot obtain the facilities of a market for his cattle such as the members of the exchange enjoy. It is unnecessary at present to discuss the question whether there is any illegality in a combination of business men who are members of an exchange not to do business with those who are not members thereof, even if the business done were in re¬ gard to interstate commerce. The first in¬ quiry to be made is as to the character of the business in which defendants are engaged, and if it be not interstate commerce, the va¬ lidity of this agreement not to transact their business with nonmembers does not come be¬ fore us for decision.

We come, therefore, to the inquiry as to the nature of the business or occupation that the defendants are engaged in. Is it inter¬ state commerce in the sense of that word as it has been used and understood in the deci¬ sions of this court? Or is it a business which is an aid or facility to commerce, and 294

which, if it affect interstate commerce at all, does so only in an indirect and incidental manner ?

As set forth in the record, the main facts are that the defendants have entered into a voluntary association for the purpose of thereby the better conducting their business, and that after they entered into such asso¬ ciation they still continued their individ¬ ual business in full competition with each other, and that the association itself, as an association, does no business whatever, but is simply a means by and through which the individual members who have become thus associated are the better enabled to transact their business ; to maintain and uphold a proper way of doing it ; and to create the means for preserving business integrity in the transaction *of the business itself. The

business of defendants is primarily and sub¬ stantially the buying and selling, in their character as commission merchants, at the stock yards in Kansas City, live stock which has been consigned to some of them for the purpose of sale, and the rendering of an ac¬ count of the proceeds arising therefrom.

The sale or purchase of live stock as commis¬ sion merchants at Kansas City is the busi¬ ness done, and its character is not altered because the larger proportion of the pur¬ chases and sales may be of live stock sent in¬ to the state from other states or from the territories. Where the stock came from or where it may ultimately go after a sale or purchase, procured through the services of one of the defendants at the Kansas City stock yards, is not the substantial factor in the case. The character of the business of defendants must, in this case, be determined by the facts occurring at that city.

If an owner of cattle in Nebraska accom¬ panied them to Kansas City and there per¬ sonally employed one of these defendants to sell the catue at the stock yards for him on commission, could it be properly said that such defendant in conducting the sale for his principal was engaged in interstate com¬ merce? Or that an agreement between him¬ self and others not to render such services for less than a certain sum was a contract in restraint of interstate trade or commerce?

We think not. On the contrary, we regard the services as collateral to such commerce and in the nature of a local aid or facility provided for the cattle owner towards the accomplishment of his purpose to sell them; and an agreement among those who render the services relating to the terms upon which they will render them is not a contract in re¬ straint of interstate trade or commerce.

Is the true character of the transaction altered when the owner, instead of coming from Nebraska with his cattle, sends them by a common carrier consigned to one of the defendants at Kansas City with directions to sell the cattle and render him an account of the proceeds? The services rendered are the same in both instances, only in one case they are rendered under a verbal • contract made at Kansas *City personally, while in

the other they are rendered under written instructions from the owner given in another

171 U. S.

.898.

Hopkins v. United States.

589-591

state. This difference in the manner of mak¬ ing the contract for the services cannot alter the nature of the services themselves. If the person, under the circumstances stated, who makes a sale of the cattle for the owner by virtue of a personal employment at Kansas City, is not engaged in interstate commerce when he makes such sale, we re¬ gard it as clear that he is not so engaged, al¬ though he has been employed by means of a written communication from the owner of the cattle in another state.

The by-laws of the exchange relate to the business of its members who are commission merchants at Kansas City, and some of these by-laws, it is claimed by the government, are in violation of the act of Congress because they are in restraint of that business which is in truth interstate commerce. That one of the by-laws which relates to the commis¬ sions to be charged for selling the various kinds of stock, is particularly cited as a violation of the act. In connection with that by-law it will be well to examine with some detail the nature of defendants’ busi¬ ness.

It is urged that they are active promoters of the business of selling cattle upon con¬ signment from their owners in other states, and that in order to secure the business the •defendants send their agents into other states to the owners of the cattle to solicit the business from them; that the defendants also lend money to the cattle owners and take back mortgages upon the cattle as se¬ curity for the loan ; that they make advances of a portion of the purchase price of the cat¬ tle to be sold, by means of the payment of drafts drawn upon them by the shippers of the cattle in another state at the time of the shipment. All tnese things, it is said, con¬ stitute intercourse and traffic between the citizens of different states, and hence the by¬ law in question operates upon and affects commerce between the states.

The facts stated do not, in our judgment, in any degree alter the nature of the services performed by the defendants, nor do they render that particular by-law void as in re-

straint *of interstate trade or commerce be¬ cause it provides for a minimum amount of commissions for the sale of the cattle.

Objections are taken to other parts of the by-laws which we will notice hereafter.

Notwithstanding these various matters undertaken by defendants, we must keep our attention upon the real business transacted by them, and in regard to which the section of the by-law complained of is made. The section amounts to an agreement, and it re¬ lates to charges made for services, per¬ formed in selling cattle upon commission at Kansas City. The charges relate to that business alone. In order to obtain it the defendants advance money to the cattle own¬ er: they pay his drafts, and they aid him to keep his cattle and make them fit for the market. All this is done as a means towards an end ; as an inducement to the cattle owner to give one ol the defendants the business of selling the cattle for him when the owner shall finally determine to sell them. That business is not r’tered in character because 171 U. S.

of the various things done by defendants for the cattle owner in order to secure it. The competition among the defendants and others who may be engaged in it, to obtain the busi¬ ness, results in their sending outside the city, to cattle owners, to urge them by dis¬ tinct and various inducements to send their cattle to one of the defendants to sell for them. In this view it is immaterial over how many states the defendants may them¬ selves or by their agents travel in order to thereby secure the business. They do not purchase the cattle themselves; they do not transport them. They receive them at Kan¬ sas City, and the complaint made is in re¬ gard to the agreements for charges for the services at that point in selling the cattle for the owner. Thus everything at last cen¬ ters at the market at Kansas City, and the charges are for services there, and there only, performed.

The selling of an article at its destination, which has been sent from another state, while it may be regarded as an interstate sale and one which the importer was enti¬ tled to make, yet the services of the individ¬ ual employed at the place where the article is sold are not so connected with the subject sold as to make them a portion of interstate commerce, and a ‘combination in regard to

the amount to be charged for such service is not, therefore, a combination in restraint of that trade or commerce. Granting that the cattle themselves, because coming from another state, are articles of interstate com¬ merce, yet it does not therefore follow that before their sale all persons performing serv¬ ices in any way connected with them are themselves engaged in that commerce, or that their agreements among each other relative to the compensation to be charged for their services are void as agreements made in restraint of interstate trade, 'the commission agent in selling the cattle for their owner simply aids him in finding a market; but the facilities thus afforded the owner by the agent are not of such a nature as to thereby make that agent an individual engaged in interstate commerce, nor is his agreement with others engaged in the same business, as to the terms upon which they would provide these facili¬ ties, rendered void as a contract in restraint of that commerce. Even all agreements among buyers of cattle from other states are not necessarily a violation of the act, al¬ though such agreements may undoubtedly affect that commerce.

The charges of the agent on account of his services are nothing more than charges for aids or facilities furnished the owner whereby his object may be the more easily and readily accomplished. Charges for the transportation of cattle between different states are charges for doing something which is one of the forms of and which it¬ self constitutes interstate trade or com¬ merce, while charges or commissions based upon services performed for the owner in ef¬ fecting the sale of the cattle are not direct¬ ly connected with, as forming part of, inter¬ state commerce, although the cattle may have come from another state. Charges for

295

591-594

Oct. Teem,

Supreme Court of 1

services of this nature do not immediately touch or act upon, nor do they directly af¬ fect, the subject of the transportation. In¬ directly and as an incident, they may en¬ hance the cost to the owner of the cattle in finding a market, or they may add to the price paid by a purchaser, but they are not charges which are directly laid upon the ar¬ ticle in the course of transportation, and which are charges upon the commerce itself;

[692] they are charges for the ‘facilities given or provided the owner in the course of the movement from the home situs of the ar¬ ticle to the place and point where it is sold.

The contract condemned by the statute is one whose direct and immediate effect is a restraint upon that kind of trade or com¬ merce which is interstate. Charges for such facilities as we have already mentioned are not a restraint upon that trade, although the total cost of marketing a subject thereof may be thereby increased. Charges for fa¬ cilities furnished have been held not a regu¬ lation of commerce, even when made for services rendered or as compensation for ben¬ efits conferred. Sands v. Manistee River Improvement Company, 123 U. S. 288 [31: 149]; Monongahela Navigation Company v. United States, 148 U. S. 312, 329, 330 [37 : 463,469] ; Kentucky £ I. Bridge Company v. Louisville £ N. Railroad Company, 37 Fed. Rep. 567 [2 L. It. A. 289, 2 Inters. Com. Rep. 351].

To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased would enlarge the application of the act far beyond the fair meaning of the language used. There must be some direct and immediate effect upon interstate commerce in order to come within the act. The state may levy a tax upon the earnings of a commission merchant which were realized out of the sales of prop¬ erty belonging to nonresidents, and such a tax is not one upon interstate commerce be¬ cause it affects it only incidentally and re¬ motely, although certainly. Ficklen v. Shelby County Taxing Dist. 145 C. S. 1 [36:601, 4 Inters. Com. Rep. 79], Many agreements suggest themselves which relate only to facilities furnished commerce, or else touch it only in an indirect Avav, while pos¬ sibly enhancing the cost of transacting the business, and which at the same time we would not think of as agreements in re¬ straint of interstate trade or commerce. They are agreements which in their effect operate in furtherance and in aid of com¬ merce by providing for it facilities, con veniences, privileges, or services, but which do not directly relate to charges for its transportation, nor to any other form of interstate commerce. To hold all such agreements void would in our judgment im¬ properly extend the act to matters which are not of an interstate commercial nature.

[693] *It is not difficult to imagine agreements of the character above indicated. For ex¬ ample, cattle, when transported long ■ dis-> tances by rail, require rest, food, and water. To give them these accommodations it is necessary to take them from the car and put 296

■he United States.

them in pens or other places for their safe reception. Would an agreement among the landowners along the line not to lease their lands for less than a certain sum be a con¬ tract within the statute as being in restraint of interstate trade or commerce? Would it be such a contract even if the lands, or some of them, were necessary for use in furnish¬ ing the cattle with suitable accommodations?

Would an agreement between the dealers in corn at some station along the line of the road not to sell it below a certain price be covered by the act, because the cattle must have corn for food? Or would an agreement among the men not to perform the service of watering the cattle for less than a cer¬ tain compensation come within the restric¬ tion of the statute? Suppose the railroad company which transports the cattle itself furnishes the facilities, and that its charges for transportation are enhanced because of an agreement among the landowners along the line not to lease their lands to the com¬ pany for such purposes for less than a named sum, could it be successfully con¬ tended that the agreement of the landowners among themselves would be a violation of the act as being in restraifit of interstate trade or commerce? Would an agreement between builders of cattle cars not to build them un¬ der a certain price be void because the effect might be to increase the price of transporta¬ tion of cattle between the states? Would an agreement among dealers in horse blank¬ ets not to sell them for less than a certain price be open to the charge of a violation of the act because horse blankets are necessary to put on horses to be sent long journeys by rail, and by reason of the agreement the ex¬ pense of sending the horses from one state to another for a market might be thereby enhanced? Would an agreement among cat¬ tle drivers not to drive the cattle after their arrival at the railroad depot at their place of destination, to the cattle yards where sold, for less than a minimum sum. come within the statute? Would an agreement among themselves *bv locomotive engineers, firemen,

or trainmen engaged in the service of an in¬ terstate railroad not to work for less than a certain named compensation be illegal be¬ cause the cost of transporting interstate freight would be thereby enhanced? Agree¬ ments similar to these might be indefinitely suggested.

In our opinion all these queries should be answered in the negative. The indirect ef¬ fect of the agreements mentioned might be to enhance the cost of marketing the cattle, but the agreements themselves would not necessarily for that reason be in restraint of interstate trade or commerce. As their ef¬ fect is either indirect or else they relate to charges for the use of facilities furnished, the agreements instanced would be valid pro¬ vided the charges agreed upon were reasona¬ ble. The effect upon the commerce spoken of must be direct and proximate. New York,

Lake Erie £ W. Railroad Company v. Penn¬ sylvania, 158 U. S. 431, at 439 [39: 1043, 1045].

An agreement may in a variety of wavs

171 U. S.

Hopkins v. United States.

59t-6»7

affect interstate commerce, just as state leg¬ islation may, and yet, like it, be entirely valid, because the interference produced by the agreement or by the legislation is not direct. Sherlock v. Ailing, 93 U. S. 99-103 [23: 819,820] ; United States v. E. C. Knight Company, 156 U. S. 1, 16 [39: 325, 330]; Pittsburg & S. Coal Co. v. Louisiana, 156 U. S. 590-597 [39 : 544-547, 5 Inters. Com. Rep. 18] ; Parkersburg d 0. Itiver Transporta¬ tion Company v. Parkersburg , 107 U. S. 691 [27 : 584] ; Ficlclen v. Shelby County Taxing Dist. supra. Reasonable charges for the use of a facility for the transportation of inter¬ state commerce have heretofore been regard¬ ed as valid in this court, even though such charges might necessarily enhance the cost of doing the business. Northwestern U. Packet Company v. St. Louis, 100 U. S. 423 [25 : 688] ; Cincinnati, P. B. S. & P. Packet Company v. Catlettsburg Trustees, 105 U. S. 559 [26:1169]; Parkersburg & O. River Transportation Company v. Parkersburg, 107 U. S. 691 [27:584]; Euse v. Clover, 119 U. S. 543 [30: 487]; Ouachita & M. R. Packet Company v. Aiken, 121 U. S. 444 [30: 976, 1 Inters. Com. Rep. 379]; St. Louis v. Western U. Telegraph Company, 148 U. S. 92 [37: 380]. An agreement among the own¬ ers of such facilities, to charge not less than a minimum rate for their use, cannot be con¬ demned as illegal under the act of Congress.

The fact that the above-cited cases relate fo tangible property, the use of which was [695] harged for, does not alter the ‘reasoning upon which the decisions were placed. The charges were held valid because they related to facilities furnished in aid of the commerce and which did not constitute a regulation thereof. Facilities may consist in privileges or conveniences provided and made use of, or in services rendered in aid of commerce, as well as in the use of tangible property, and so long as they are facilities and the charges not unreasonable an agreement '■elating to their amount is not invalid. The cattle owner has no constitutional right to the serv¬ ices of the commission agent to aid him in the sale of his cattle, and the agent has the right to say upon what terms he will render them, and he has the equal right, so far as the act of Congress is concerned, to agree with others in his business not to render those services unless for a certain charge. The services are no part of the commerce in the cattle.

In Brown v. Maryland, 12 Wheat. 419 [6: 67S], Chief Justice Marshall, while main¬ taining the right of an importer to sell his article in the original package, free from any tax, recognized the distinction between the importer selling the article himself and employing an auctioneer to do it for him, and he said that in the latter case the im¬ porter could not object to paving for such services as for any other, and that the right to sell might very well be annexed to impor¬ tation without annexing to it also the privi¬ lege of using auctioneers, and thus to make the sale in a peculiar way. In such case a tax upon the auctioneer’s license would be valid.

The same view is enforced in Emert v. 171 U. S.

Missouri, 156 U. S. 296 [39:430, 5 Inters.

Com. Rep. OS] .

The right of the cattle owners themselves to sell their own cattle is not affected or touched by the agreement in question, while the privilege of having their cattle sold for them at the market place frequented by defendants, and with the aid of one of them, is a privilege which they are charged for, and which is not annexed to their right to sell their own cattle.

It is possible that exorbitant charges for the use of these facilities might have similar effect as a burden on commerce that a charge upon commerce itself might have. In a case ‘like that the remedy would probably

be forthcoming. Parkersburg <£ O. River Transportation Company v. Parkersburg,

107 U. S. 691 [27 :584]. As was said by Mr. Justice Field, in Sands v. Manistee River Improvement Company, supra, “should there be any gross injustice in the rate of tolls fixed, it would not in our system of govern¬ ment remain long uncorrected.” Pages 294,

295 [31:151].

But whether the charges are or are not ex¬ orbitant is a question primarily of local law, at least in the absence of any superior or paramount law providing for reasonable charges. (107 U. S. [27:] supra.) This case does not involve that question.

ff charges of the nature described do not amount to a regulation of interstate trade or commerce because they touch it only in an indirect and remote way, or else because they are in the nature of compensation for the use of property or privileges as a mere facility for that commerce, it would for a like reason seem clear that agreements re¬ lating to the amounts of such charges among those who furnish the privileges or facilities are not in restraint of that kind of trade.

While the indirect effect of the agreements may be to enhance the expense to those en¬ gaged in the business, yet as the agreements are in regard to compensation for privileges accorded for services rendered as a facility to commerce or trade, they are not illegal as a restraint thereon.

The facilities or privileges offered by the defendants are apparent and valuable The cattle owner has the use of a place for his cattle furnished by the defendants and all the facilities arising from a market where the sales and purchases are conducted under the auspices of the association of which the defendants are members, and in a manner the least troublesome to the owners and at the same time the most expeditious and ef¬ fective. Each of these defendants has the right to have the cattle which are consigned to him taken to the cattle yards, where, by virtue of the arrangements made by defend¬ ants with the owners of the yards, the cattle are placed in pens, watered and fed, if neces¬ sary, and a sale effected at the earliest mo¬ ment. It is these facilities and services which are paid for by a commission on the sale ef¬ fected by the commission men. ‘If, as is

claimed, the commission men sometimes own the cattle they sell, then the rules do not ap¬ ply, for they relate to charges made for sell-

•697-599

Supreme Court of the United States.

Oot. Term,

ing cattle upon commission and not at all to sales of cattle by their owners.

Definitions as to what constitutes inter¬ state commerce are not easily given so that they shall clearly define the full meaning of the term. We know from the cases decided in this court that it is a term of very large significance. It comprehends, as it is said, intercourse for the purposes of trade in any and all its forms, including transportation, purchase, sale, and exchange of commodities between the citizens of different states, and the power to regulate it embraces all the in¬ struments by which such commerce may be conducted. Welton v. Missouri, 91 U. S. 275 [23: 347] ; County of Mobile v. Kimball, 102 U. S. 691 [26: 238] ; Gloucester Ferry Com¬ pany v. Pennsylvania, 114 U. S. 196 [29: 158, 1 Inters. Com. Rep. 382] ; Hooper v. Califor¬ nia, 155 U. S. 648, at 653 [39: 297, 300, 5 Inters. Com. Rep. 610] ; United States v. E. C. Knight Company, 156 U. S. 1 [39: 325].

But in all the cases which have come to this court there is not one which has denied the distinction between a regulation which directly affects and embarrasses interstate trade or commerce, and one which is nothing more than a charge for a local facility pro¬ vided for the transaction of such commerce. On the contrary, the cases already cited show the existence of the distinction and the va¬ lidity of a charge for the use of the facility.

The services of members of the different stock and produce exchanges throughout the country in effecting sales of the articles they deal in are of a similar nature. Members of the New York Stock Exchange buy and sell shares of stock of railroads and other corporations, and the property represented by such shares of stock is situated all over the country. Is a broker whose principal lives outside of New York state, and who sends him the shares of stock or the bonds of a corporation created and doing business in another state, for sale, engaged in inter¬ state commerce? If he is employed to pur¬ chase stock or bonds in a like corporation un¬ der the same circumstances, is he then en¬ gaged in the business of interstate commerce? It may, perhaps, be answered that stocks or {698] * bonds are not commodities, and that dealers therein are not engaged in commerce. Whether it is an answer to the question need not be considered, for we will take the case of the New York Produce Exchange. Is a member of that body to whom a cargo of grain is consigned from a western state to be sold engaged in interstate com¬ merce when he performs the service of selling the article upon its arrival in New York and transmitting the proceeds of the sale less his commissions? Is a New Or¬ leans cotton broker who is a member of the Cotton Exchange of that city, and who receives consignments of cotton from differ¬ ent states and sells them on ’change in New Orleans, and accounts to his consignors for the proceeds of such sales less his commis¬ sion, engaged in interstate commerce? Is the character of the business altered in either case by the fact that the broker has advanced moneys to the owner of the article and taken a mortgage thereon as his security? We un- .298

derstand we are in these queries assuming substantially the same facts as those which are contained in the case before us, and if these defendants are engaged in interstate commerce because of their services in the sale of cattle which may come from other states, then the same must be said in regard to the members of the other exchanges above re¬ ferred to. We think it would be an entirely novel view of the situation if all of the mem¬ bers of these different exchanges throughout the country were to be regarded as engaged in interstate commerce, because they sell things for their principals which come from states different from the one in which the ex¬ change is situated and the sale made.

The theory upon which we think the by¬ law or agreement regarding commissions is not a violation of the statute operates also in the case of the other provisions of the by-laws. The answer in regard to all ob¬ jections is, the defendants are not engaged in interstate commerce.

But special weight is attached to the objec¬ tion raised to section 11 of rule 9 of the by¬ laws, which provides against sending pre¬ paid telegrams, as set forth in the statement of facts herein. It is urged that the purpose of this section is to prevent the sending of prepaid telegrams by the defendants* to their

various customers in the different states tributary to the Kansas City market, and that the section is a part of the contract between the members of the exchange, and is clearly an attempt to regulate and restrict the sending of messages by telegraph and telephone between citizens of the various states and territories, and operates upon and directly affects the interstate business of communicating between points in different states by telegraph or telephone.

An agreement among the defendants to ab¬ stain from telegraphing in certain circum¬ stances and for certain purposes is so clearly not an attempt to regulate or restrain the general sending of telegrams that it would seem unnecessary to argue the question.

An agreement among business men not to send telegrams in regard to their business in certain contingencies, when the agreement is entered into only for the purpose of regu¬ lating the business of the individuals, is not a direct attempt to affect the business of the telegraph company, and has no direct effect thereon. Although communication by tele¬ graph may be commerce, and if carried on be¬ tween different states may be commerce among the several states, yet an agreement or by-law of the nature of the one under con¬ sideration is not a burden, or a regulation of, or a duty laid upon, the telegraph company, and was clearly not entered into for the pur¬ pose of affecting in the slightest degree the company itself or its transaction of inter¬ state commerce.

The argument of counsel in behalf of the United States, that because none of the states or territories could enact any law inter¬ fering with or abridging the right of persons in Kansas or Missouri to send prepaid tele¬ grams of the nature in question, therefore an agreement to that effect entered into be¬ tween business men as a means towards the

171 U. S.

Hopkins v. United States.

699-602

proper transaction of tlieir legitimate busi¬ ness would be void, is, as we think, entirely unsound. The conclusion does not follow from the facts stated. The statute might be illegal as an improper attempt to inter¬ fere with the liberty of transacting legiti¬ mate business enjoyed by the citizen, while the agreement among business men for the

better conduct of their own ‘business, as they think, to refrain from using the telegraph for certain purposes, is a matter purely for their own consideration. There is no simi¬ larity between the two cases, and the princi¬ ple existing in the one is wholly absent in the other. The private agreement docs not, as we have said, regulate commeice or im¬ pose any impediment upon it or tax it. Communication by telegraph is free from any burden so far as this agreement is concerned and no restrictions are placed on the com¬ merce itself.

The act of Congress must have a reason¬ able construction or else there would scarce¬ ly be an agreement or contract among busi¬ ness men that could not be said to have, in¬ directly or remotely, some bearing upon in¬ terstate commerce and possibly to restrain it. We have no idea that the act covers or was intended to cover such kinds of agreements.

The next by-law which complainants ob¬ ject to is section 10 of the same lule 9, which prohibits the hiring of a solicitor except up¬ on a stipulated salary not contingent upon commissions earned, and which provides that no more than three solicitors shall be em¬ ployed at one time by a commission firm or corporation.

The claim is that these solicitors are en¬ gaged in interstate commerce, and that such commerce must be free from any state leg¬ islation and free from the control or restraint bv any person or combination of persons. They also object that the rule is an unlawful inhibition upon the privilege possessed by each person under the Constitution to make lawful contracts in the furtherance of his business, and they allege that in this respect these members have surrendered their do¬ minion over their own business and permit¬ ted the exchange to establish a species of re¬ gency, and that the by-law in regard to the employment of solicitors is one which direct¬ ly affects interstate commerce.

McCall v. California, 136 U. S. 104 [34: 391, 3 Inters. Com. Rep. 181] is cited for the proposition that the solicitors emplojed by these defendants are engaged in interstate commerce. In that case the railroad com¬ pany was itself engaged in such commerce, and its agent in California was taxed by rea-

son of his business in soliciting ‘for his com¬ pany that which was interstate commerce. The fact that he did not sell tickets or re¬ ceive or pay out money on account of it was not regarded as material. His principal was a common carrier, engaged in interstate com¬ merce, and he was engaged in that commerce because he was soliciting for the transporta¬ tion of passengers by that company through the different states in which the railroad ran from the state of California. In the case be¬ fore us the defendants are not employed in interstate commerce, but are simply engaged 171 U. S.

in the performance of duties or services re¬ lating to stock upon its arrival at Kansas City. We do not think it can be properly said that the agents of the defendants whom they send out to solicit the various owners of stock to consign the cattle to one of the defendants for sale are thereby themselves engaged in interstate commerce. They are simply soliciting the various stock owners to consign the stock owned by them to partic¬ ular defendants at Kansas City, and until the arrival of the stock at that point and the del 'very by the transportation company no duties of an interstate commerce nature arise to be performed by the defendants. As the business they do is not interstate com¬ merce, the business of their agents in solicit¬ ing others to give them such business is not itself interstate commerce. Not being en¬ gaged in interstate commerce, the agreement of the defendants through the by-law in ques¬ tion, restricting the number of solicitors to three, does not restrain that commerce, and does not therefore violate the act of Congress under discussion.

The position of the solicitors is entirely different from that of drummers who are traveling through the several states for the purpose of getting orders for the purchase of property. It was said in Robbins v. Shelby Comity Taxing District, 120 U. S. 489 [30:

tiation of sales of goods which are in another state for the purpose of introducing them into the state in which the negotiation is made is interstate commerce.

But the solicitors for these defendants have no property or goods for sale, and their only duty is to ask or induce those who own the property to agree that when they send it to ‘market for sale they will consign it to the

solicitor’s principal, so that he may perform such services as may be necessary to sell the stock for them and account to them for the proceeds thereof. Unlike the drummer who contracts in one state for the sale of goods which are in another, and which are to be thereafter delivered in the state in which the contract is made, the solicitor in this case has no goods or samples of goods and negoti¬ ates no sales, and merely seeks to enact a promise from the owner of property that when he does wish to sell he will consign to and sell the property through the solicitor’s principal. There is no interstate commerce in that business.

Hooper v. California, 155 U. S. 648 [39:

297, 5 Inters. Com. Rep. 610], is another il¬ lustration of the meaning of the term “com¬ merce” as used in the Constitution of the United States. In that case contracts of marine insurance are stated not to appertain to interstate commerce, and cases are cited upon the nature of the contract of insur¬ ance generally at page 653 [39: 300, 5 Inters.

Com. Rep. 615] of the opinion.

It is also to be remarked that the effect of the agreement as to the number of solicitors to be employed by defendants can only be re¬ mote and indirect upon interstate commerce.

The number of solicitors employed has no direct effect upon the number of cattle trans¬ ported from state to state. The solicitors ^ 299

602-604

Oct. Term,

Supreme Court of the United States.

do not solicit transportation of the cattle. They are not in the interest of the transpor¬ tation company, and the transportation is an incident only. They solicit a consignment of cattle to their principals, so that the lat¬ ter may sell them on commission and thus transact their local business. The transpor¬ tation would take place anyway, and the cattle be consigned for sale by some one of the defendants, or by others engaged in the business. It is not a matter of transporta¬ tion, but one of agreement as to who shall render the services of selling the cattle for their owner at the place of destination.

We say nothing against the constitutional right of each one of the defendants, and each person doing business at the Kansas City stock yards, to send into distant states and territories as many solicitors as the business

of each will warrant. This 'original right is not denied or questioned. But cannot the citizen, for what he thinks good reason, con¬ tract to curtail that right? To say that a state would not have the right to prohibit a defendant from employing as many solicitors as he might choose proves nothing in regard to the right of individuals to agree upon that subject in a way which they may think the most conducive to their own interests. What a state may do is one thing, and what partiesmay contract voluntarily to do among themselves is quite another thing.

The liberty of contract as referred to in Allgeyer v. Louisiana, 165 U. S. 578, [41: 832] , is the liberty of the individual to be free, under certain circumstances, from the restraint of legislative control with regard to all hjs contracts, but the case has no ref¬ erence to the right of individuals to some¬ times enter into those voluntary contracts by which their rights and duties may prop¬ erly be measured and defined and in many cases greatly restrained and limited.

We agree with the court below in thinking there is not the slightest materiality in the fact that the state line runs through the stock yards in question, resulting in some of the pens in which the stock may be confined being partly in the state of Kansas and part¬ ly in the state of Missouri, and that sales may be made of a lot of stock which may be at the time partly in one state and partly in the other. The erection of the building and the putting up of the stock pens upon the ground through which the state line ran were matters of no moment so far as any question of interstate commerce is concerned. The character of the business done is not in the least altered by these immaterial and incidental facts.

It follows from what has been said that the complainants have failed to show the defendants guilty of any violations of the act of Congress, because it does not appear that the defendants are engaged in inter¬ state commerce, or that any agreements or contracts made by them and relating to conduct of their business are in restraint of any such commerce.

Whether they refused to transact business which is not interstate commerce, except with those who are members of the exchange, and whether such refusal is justifiable or

300

not, *are questions not open for discussion [604) here. As defendant’s actions or agreements are not a violation of the act of Congress, the complainants have failed in their case, and the order for the injunction must be reversed, and the case remitted to the Circuit Court of the United States for the District of Kansas,

First Division, with directions to dismiss the bill with costs.

Mr. Justice McKenna took no part in the decision of this case.