157 F. 570 | U.S. Circuit Court for the District of Eastern Arkansas | 1908
(after stating the facts as above). The demurrer of the defendants the Attorney General and the prosecuting attorneys of the state of Arkansas must be sustained upon two grounds: First, for the reasons stated in Western Union Telegraph Co. v. Andrews (C. C.) 154 Fed. 95, this action must be deemed, so far as these defendants are concerned, a suit against the state within the inhibition of the thirteenth amendment to the Constitution of the United States; second, violations of the act involved in this action are made criminal offenses, cognizable solely in the criminal courts of the state, to be instituted by indictment of a grand jury or criminal information filed by a prosecuting attorney. That a court of equity has no power to restrain criminal'proceedings, with few exceptions, is the established rule in England as well as in the courts of the United States. The leading case in the Supreme Court is In re Sawyer, 124 U. S. 200, 211, 8 Sup. Ct. 482, 31 L. Ed. 402, which has been followed and reaffirmed in numerous cases. Harkrader v. Wadley, 172 U. S. 148, 19 Sup. Ct. 119, 43 L. Ed. 399; Fitts v. McGhee, 172 U. S. 516, 19 Sup. Ct. 269, 43 L. Ed. 535; Pacific Whaling Co. v. United States, 187 U. S. 447, 23 Sup. Ct. 154, 47 L. Ed. 253. The exceptions are where the equity proceedings are instituted by a party to a suit already pending before the court, and are in the nature of ancillary proceedings (Prout v. Starr, 188 U. S. 537, 23 Sup. Ct. 398, 47 L. Ed. 584), or where the complainant had acquired property rights which, by the enforcement of the criminal laws enacted thereafter, would be deátroyed and rendered worthless (Camden Interstate Ry. Co. v. City of Cattlesburg [C. C.] 129 Fed. 421).
Counsel rely upon Davis & Farnum Mfg. Co. v. Los Angeles, 189 U. S. 207, 23 Sup. Ct. 498, 47 L. Ed. 778, and Dobbins v. Los Angeles, 195 U. S. 223, 25 Sup. Ct. 18, 49 L. Ed. 169, as modifying this rule; but a careful examination of the facts in these cases will show that they do not apply to the case at bar. In the Davis & Farnum Case the court, after reaffirming In re Sawyer, said that there are some exceptions to the general rule. It will be noticed that that question really was not necessary to the decision of the case, as it was determined upon another ground; and for this reason it might well be
“If there were jurisdiction in a court of equity to enjoin the invasion of property rights through the instrumentality of an unconstitutional law, that jurisdiction would not be ousted by the fact that the state had chosen to assert its power to enforce such law by indictment or other criminal proceeding.”
The only case cited to this proposition is Springhead Spinning Co. v. Riley, L. R. 6 Eq. 551; but in the case cited that question was not decided at all, but what the court there did hold was that a continuing trespass which will result in destruction of property may be enjoined by a court of equity, although the action sought to be enjoined is an offense for which the parties could be prosecuted criminally.
In the Dobbins Case, which involved the same ordinance as did the Davis & Farnum Case, the court did expressly hold that:
“Where property rights will be destroyed, unlawful interferences by criminal proceedings under a void law or ordinance may be reached and controlled by a decree of a court of equity.”
The only authority cited for this conclusion is Davis & Farnum Mfg. Co. v. Los Angeles; but, even had there been no authority whatever cited, if that decision is applicable to the facts in the case at bar, it is the duty of this court to follow'- it, regardless of former decisions, as it is the latest expression of the Supreme Court on that subject. But it is a well-settled rule of law that:
“The opinion in a decision of a court must be read as a whole in the light of the facts upon which it is based. The facts are the foundation of the entire structure, which cannot with safety be used without reference to the facts.” United States v. Wong Kim Ark, 169 U. S. 649, 18 Sup. Ct. 456, 42 L. Ed. 890 ; 26 A. & E. Enc. (2. Ed.) 169.
And this rule is especially applicable when the decision is based on an exception to the general rule of law. The facts in the Dobbins Case were: The city of Los Angeles on August 26, 1901, adopted an ordinance making it unlawful to erect and maintain gas works outside of a certain district described in the ordinance, and fixing penalties for the violation thereof. While this ordinance was in force Dobbins made a contract with the gas company for the erection of certain gas works upon territory to be thereafter designated by the owner, and on September 28, 1901, purchased lands within the limits of the privileged district as fixed by ordinance. On November 22, 1901, the plaintiff was granted permission to erect the gas works upon those premises, whereupon she directed the contractor to proceed with the erection of the works upon the premises so purchased. After $2,500 had been expended upon the foundation, the city passed a second ordinance amending the first ordinance and thereby so limiting the bounds of the territory within which the erection of gas works was permitted in said city as to include the premises of the plaintiff within the prohibited territory. The work of constructing the works was continuously prosecuted until the latter part of February, 1902, when the city caused the employes engaged in the erection of said works to be arrested, charged with violation of the last city ordinance. Upon these facts the court held that the second ordinance was an impairment of the obligation of a contract and void, and as to the action of
“Upon this branch of the case the question is: May a court of equity entertain a bill to inquire into this matter, and, if it finds that the complainant is right in its contention, enjoin the food commissioner from instituting proceedings (criminal) under the laws of Ohio? * * * The jurisdiction of courts of equity has never been carried to this extent in authoritative decisions. On the contrary, the Supreme Court in more than one instance has denied such jurisdiction to a court of equity” — citing and quoting from In re Sawyer and Harkrader v. Wadley.
This clearly indicates that only the exceptional facts in the Los Angeles Case caused a departure from the general rule. The demurrer of these defendants must therefore be also sustained on this ground.
Before passing upon the demurrer of the defendant telegraph company, a matter of practice should first be disposed of. The complainants are citizens of Illinois, and the defendant a corporation existing under the laws of the state of Texas, but having an agent designated for service of legal process-in this district. As Judiciary Act Aug. 13, 1888, c. 866, § 1, 25 Stat. 433 [U. S. Comp. St. 1901, p. 508], provides that in actions arising under the Constitution or laws of the United States no civil suit shall be brought against any person by original process in any other district than that whereof he is an inhabitant, and when the jurisdiction is founded on the fact that there is a diversity of citizenship it shall be brought only in the district of the residence of either the plaintiff or defendant, an objection on the part of this defendant to the jurisdiction of the court would have been fatal. But defendant entered its appearance generally, and filed a general demurrer to the sufficiency of the bill, making no objection to -being sued in a district of which it is not an inhabitant. After the close of the argument, it having been indicated by the court that the demurrer of the other defendants to the jurisdiction would probably be sustained, this defendant, without leave of the court, filed a paper with the clerk suggesting that the court was without jurisdiction, as neither the plaintiffs nor it were residents of this district. If residence in the district was jurisdictional, it would, of course, be immaterial when the question of jurisdiction was raised, or whether raised at all, for by Judiciary Act of March 3, 1875, c. 137, § 5, 18 Stat. 472 [U. S. Comp. St. 1901, p. 511], which is retained by section 6 of the act of 1888, it is made the duty of the court at any stage of the proceedings, when it shall appear to the court that it is without jurisdiction, to dismiss it. But are the foregoing provisions relating to the residence of the parties, if the 'necessary diversity of citizenship exists or there is a federal question involved, jurisdictional, which may not be waived?
In Ex parte Wisner, 203 U. S. 449, 27 Sup. Ct. 150, 51 L. Ed. 264, there is an expression by the court which would indicate that such is
The courts have not been harmonious as to the effect of the dictum in Ex parte Wisner; the United States Circuit Court of Appeals for the Ninth Circuit holding that its effect is to make the residence of one of the parties to the action in the district jurisdictional, of which the court is bound to take notice, even without objection being made by either party (Yellow Aster, etc., Mining Co. v. Crane Co., 150 Fed. 580, 80 C. C. A. 566), while the United States Circuit Courts of Appeals for the Sixth and Eighth Circuits have followed the rule laid down in Central Trust Co. v. McGeorge, those courts in effect holding that that part of the opinion in Ex parte Wisner was obiter and not controlling (L. & N. R. R. v. Fisher [C. C. A.] 155 Fed. 68; McPhee & McGinnity Co. v. Union Pac. R. R. [Nov. 27, 1907, 8th Circuit; C. C. A.] 158 Fed. 5; Shanberg v. Fidelity & Casualty Co. [decided Nov. 4, 1907, 8th Circuit; C. C. A.] 158 Fed. 1; Corwin Mfg. Co. v. Henrici Washer Co. [C. C.] 151 Fed. 938). As, in the absence of an authoritative decision of the Supreme Court, that of the Circuit Court of Appeals for the Eighth Circuit is conclusive on this court, it follows that it must be held that the filing of the general demurrer by the telegraph company was a waiver of its exemption to be sued in this district, and its paper or motion will be stricken from the files.
This leaves for determination the main issue involved: Is the act of the General Assembly making it a misdemeanor for a telegraph company to knowingly receive in this state, for transmission, any messages relating to the purchase or sale of any commodity for future delivery on margins, or furnishing any leased wires within the state to be used for such purpose, void as being in conflict with the Constitution of the United States ? If the act is a valid law, a court of equity would certainly not require the performance of a contract which would violate the laws of a state and subject the parties to punishment in criminal proceedings. Morris v. Western Union Tel. Co., 94 Me. 423, 47 Atl. 926, where it was held that, if a contract for futures is void as being a gambling contract, losses sustained by reason of a failure or delay in the transmission and delivery of a telegram are not recoverable as damages.
There were some other objections to the validity of the act which should be disposed of before determining the main issue involved. Sections 5, 6, and 7 of the statute make certain acts prima fade evidence of guilt; section 7 providing:
*578 “That proof that any person association of persons or corporations, either as principal or agent, has established an office or place where are posted or published from information received, the fluctuating prices of cotton, grain, provisions, stocks, bonds or other commodity or thing of value, or either of them, shall constitute prima facie evidence of guilt of the offense or offenses prohibited by this act.”
This is claimed to be a deprivation of a person’s liberty without due process of law. That such a provision is not in violation of the Con- ' stitution of the state of Arkansas has been, so far as the courts of the United States are concerned, conclusively settled by the Supreme Court of the state in Winton v. State, 77 Ark. 143, 91 S. W. 7; and that such a statute is not violative of- any provision of the national Constitution has been fully determined in Adams v. New York, 192 U. S. 585, 24 Sup. Ct. 372, 48 L. Ed. 575. In that case a. statute of the state of New York made the possession of policy slips prima fade evidence of the possession being knowingly in violation of the law. Mr. Justice Day, who delivered the opinion of the court, said:
“We fail to perceive any force in this argument. The policy slips are property of an unusual character and not likely, particularly in large quantities, to be found in the possession of innocent persons. Like other gambling paraphernalia, their possession indicates their use, or intended use, and may well raise some inference' against the possession in the absence of explanation. Such is the effect of 'this statute. Innocent persons would have no trouble in explaining the possession of these tickets; and in any event their possession is only prima facie evidence, and the party is permitted to produce such testimony as will show the truth concerning the possession of the slips. Furthermore, it is within the statutory power of the state to prescribe the evidence which is to be received in the courts of its government.”
The next question is: Has the state, under its police power, the right to declare dealing in futures on margins gambling contracts? That gaming is a vice which it is not only the right, but the duty, of the state to prohibit, is recognized by all. Under the police power, which is inherent in every state and government, the power to determine what is injurious to public health or morals must be determined by the lawmaking power, although there are limits beyond which Legislatures cannot rightfully go. It is said:
“Courts are not bound by mere forms, nor are they to be misled by mere pretenses. They are at liberty — indeed, are under a solemn duty — to look at the substance of things, whenever they enter upon the inquiry whether the Legislature has transcended the limits of its authority. If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety has no- real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the constitution.” Mugler v. Kansas, 123 U. S. 623-661, 8 Sup. Ct. 273, 31 L. Ed. 205.
Other cases on the police power of the states which may be consulted are Patapsco Co. v. Board of Agriculture, 171 U. S. 345, 18 Sup. Ct. 862, 43 L. Ed. 191; Ohio Oil Co. v. Indiana, 177 U. S. 190, 20 Sup. Ct. 576, 44 L. Ed. 729; L’Hote v. New Orleans, 177 U. S. 595, 20 Sup. Ct. 788, 44 L. Ed. 899; Reid v. Colorado, 187 U. S. 137, 23 Sup. Ct. 92, 47 L. Ed. 108; Jacobson v. Massachusetts, 197 U. S. 11, 25 Sup. Ct. 358, 49 L. Ed. 643; C., B. & Q. R. R. v. Drainage Com’rs, 200 U. S. 561, 26 Sup. Ct. 341, 50 L. Ed. 596; New Orleans v. Drain
In Cunnius v. Reading School Dist., 198 U. S. 458, 469, 25 Sup. Ct. 721, 49 L. Ed. 1125, the court, in speaking of the effect of the Fourteenth amendment on the police power of the states, said:
“That the amendment does not deprive the states of their police power over subjects within their jurisdiction is elementary. The question, then, is not the wisdom of the statute, but whether it was so beyond the scope of municipal government as to amount to a want of due process of law.”
A very able opinion on that subject, in which the authorities are fully collated, is Grainger v. Douglas Park Jockey Club, 148 Fed. 513, 78 C. C. A. 199.
That the state may, through its'legislative department, prohibit acts of the nature proscribed in the act now under consideration, has been frequently decided by the highest courts of the states; but it would serve no useful purpose to cite them in this opinion, as the highest court of this state has decided that such an act is not in conflict with anything- in the Constitution of this state. Fortenbury v. State, 47 Ark. 188, 1 S. W. 58, where the statute made it a misdemeanor “to buy or otherwise deal in what is known as futures, either in cotton, grain or anything whatsoever, with a view to profit, -which is hereby declared to be gambling.” That such acts are not in conflict with any provision of the national Constitution has been determined by the Supreme Court in Booth v. Illinois, 184 U. S. 425, 22 Sup. Ct. 425, 46 L. Ed. 623; Otis v. Parker, 187 U. S. 606, 23 Sup. Ct. 168, 47 L. Ed. 323; Ballman v. Fagin, 200 U. S. 186, 26 Sup. Ct. 212, 50 L. Ed. 433.
In the Booth Case, the statutes of Illinois provided that:
“Whoever contracts to have, or give to bimself or another, the option to sell or buy at a future time any grain, or other commodity, stock of any railroad or other company, or gold, to forestall the market by spreading false rumors to influence the price of commodities therein,” etc., “shall be fined not less than ten dollars nor more than one thousand dollars, or confined in the county jail not exceeding one year, or both; and all contracts made in violation of this section shall be considered gambling contracts and shall be void.”
The validity of this act was sustained by the Supreme Court of Illinois, and its decision affirmed by the Supreme Court of the United States.
In the Otis Case the Constitution of California provided:
“All contracts for the sales of shares of the capital stock of any corporation or association, on margin, or to be delivered at a future day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent jurisdiction.”
This provision was sustained by the court. Mr. Justice Holmes, who delivered the opinion of the court, said:
“It is true, no doubt, that neither a state Legislature nor a state Constitution can interfere arbitrarily with private business or transactions, and that the mere fact that an enactment purports to be for the protection of public safety, health, or morals is not conclusive upon the courts. Mugler v. Kansas, 123 U. S. 623, 661, 8 Sup. Ct 273, 31 L. Ed. 205; Lawton v. Steele, 152*580 U. S. 133, 137, 14 Sup. Ct 499, 38 L. Ed. 385. But general propositions do not carry us far. While the-courts must exercise a'judgment of their own, it. by no means is true that every law is void which may seem to the judges who pass upon itp excessive, unsuited to its ostensible end, or based upon conceptions of morality with which they disagree. Considerable latitude must be allowed for differences of view, as well as for possible peculiar conditions which this court can know but imperfectly, if at all. * * * Even if the provision before us should seem to us not to have been justified by the circumstances locally existing in California at the time when it was passed, it is shown by its adoption to have expressed a deep-seated conviction on the part of the people concerned as to what that policy required. Such a deep-seated conviction is entitled to great respect. If the state thinks that an admitted evil cannot be prevented, except by prohibiting a calling or transaction not in itself necessarily objectionable, the courts cannot interfere, unless, in looking at the substance of the matter, they can -see that it is a clear, unmistakable infringement of rights secured by the fundamental law.”
In the Ballmann Case, Ballmann had been committed for contempt in, refusing to, produce certain books before the grand jiiry of the United States District Court in Ohio, showing certain transactions of future dealings. His refusal was upon the ground that they would tend to criminate him, as the statutes of Ohio made dealings in futures on margins, a criminal offense. The .Supreme Court-held that this was a good ground for refusal, and discharged him, thus by implication holding such an act valid.
It is next claimed that as complainants had, prior to the passage of this act, relying upon the legitimacy of their business under the laws of the state, incurred great expense to fit offices for the conduct of their business, the act now under consideration is, in effect, an impairment of the obligations of á contract, in violation of- the national Constitution. Assuming that the act of the General Assembly of the state of Arkansas approved March 30, 1883 (Acts 1883, p. 296), digested as sections 1753 and 1754, Kirby’s Dig., and sustained in Fortenbury v. State, supra, did not apply to the business as conducted by complainants, are they protected by that- constitutional provision? In Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079, the question before the court was whether, after the state had for a stipulated sum in cash granted a charter to a lottery company for 25 years, it could, before the expiration of that term, prohibit lotteries from conducting their -business in the state, in the face of article 1; § 10, of the national Constitution; and it was held that, as lotteries might be prohibited by the police power as harmful to the morals of the people, the Eegislature cannot bargain away the public health or public morals. The court said:
“The supervision of both these subjects of governmental power is continuing in its nature, and they are to be dealt with as the special exigencies of the moment may require. Government is organized with a view to their preservation, and cannot devest itself of the power to provide for them. For this purpose the largest legislative discretion is allowed, and the discretion cannot be parted with any more than the power itself.”
This was reaffirmed in Douglas v. Kentucky, 168 U. S. 488, 18 Sup. Ct. 199, 42 L. Ed. 553. The same rule has been applied to the manufacture and sale of intoxicating liquors. In Beer Co. v. Mass., 97 U. S. 25, 24 L. Ed. 989, a question of that nature was before the
“Whatever differences of opinion may exist as to the extent and boundaries of tbe police power, and however difficult it may be to render a satisfactory definition of it, there seems to be no doubt that it does extend to the protection of the lives, health, and property of the citizens and to the preservation of good order and the public morals. The Legislature cannot, by any contract, devest itself of the power to provide for these objects. They belong emphatically to that class of objects which demand the application of the maxim, ‘Salus populi suprema lex,’ and they are to be attained and provided for by such appropriate means as the legislative discretion may devise. That discretion can no more be bargained away than the power itself.”
In Mugler v. Kansas that question was again before the court, and the former decision of the court followed. Mr. Justice Harlan, who delivered the opinion of the court, said on that subject:
“It is true that, when the defendants in these cases, purchased or erected their breweries, the laws of the state did not forbid the manufacture of intoxicating liquors. But the state did not thereby give any assurance, or come under an obligation, that its legislation upon that subject would remain unchanged. Indeed, as was said in Stone v. Mississippi (above cited), the supervision of the public health and the public morals is a governmental power, ‘continuing in its nature,’ and ‘to be dealt with as the special exigencies of the moment may require,’ and that ‘for this purpose the largest legislative discretion is allowed,’ and the discretion cannot be parted with any more than the power itself.” 123 U. S. 669, 8 Sup. Ct. 301, 31 L. Ed. 205.
Since then this rule has been consistently adhered' to by all the courts of the country.
Is the act in conflict with the interstate commerce clause of the Constitution? The contract between the complainants and the telegraph company relates solely to messages to be transmitted to and received from other states, and the leased wires were to connect the complainants’ offices in the state of Arkansas with offices in other states. That the telegraph is an instrument of commerce, and that the foreign and interstate business of telegraph companies is subject to the regulating power of Congress, and any burdens placed on interstate business by a state is unconstitutional, has been conclusively determined in numerous cases. Pensacola Co. v. Western Union Tel. Co., 96 U. S. 1, 24 L. Ed. 708; Western Union Tel. Co. v. Texas, 105 U. S. 460, 26 L. Ed. 1067; Western Union Tel. Co. v. Pendleton, 122 U. S. 347, 7 Sup. Ct. 1126, 30 L. Ed. 1187; Western Union Tel. Co. v. Alabama, 132 U. S. 472, 10 Sup. Ct. 161, 33 L. Ed. 409; Muskogee National Tel. Co. v. Hall, 118 Fed. 382, 55 C. C. A. 208., And it is claimed that for that reason the act is invalid in so far as it applies to the contract now sought to be specifically enforced by complainants against the telegraph company. The leading case relied on, on behalf of complainants, is Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 L. Ed. 128, where, after a most thorough review of the previous decisions on that subject, it was held that a law of the state prohibiting the sale of liquors, as applied to a sale by the importer and in original packages, is repugnant to the commerce clause of the national Constitution. Unless this case and the numerous cases following it can be distinguished by other authoritative decisions of that court from the case at bar, the contention of complainants, at least
The state of Arkansas, in the proper exercise of its police power, has declared dealings in futures on margins gambling and prohibited it. The question therefore is: Can it, under that police power, prohibit telegraph companies from aiding others to engage in what it has declared to be gambling, although the contracts are to be performed in other states, where such transactions are not prohibited ? The identical question has never been determined by the Supreme Court of the United States, nor by any of the national courts whose judgments are conclusive on this court. It is true in Christie Grain Co. v. Board of Trade, 125 Fed. 161, 61 C. C. A. 11, it was held by the United States Circuit Court of Appeals for this (the Eighth) Circuit that the transactions on the Board of Trade of Chicago, one of the exchanges on which complainants operate and invoke the aid of this court for it, were gaming transactions; but that was determined on proof, while in the case at bar, the allegations of the bill, which the demurrer admits to be true, show the very reverse. In this connection it may be proper to state that the reversal of that case by the Supreme Court in 198 U. S. 236, 25 Sup. Ct. 637, 49 L. Ed. 1031, was upon a different point; that court holding that, even if the transactions on the Chicago Board of Trade were of such a nature as to constitute a bucket shop, it is certainly entitled to have its collection of quotations protected by the law and to keep the work which it has done to itself. “A collection of information, otherwise entitled to protection,” the court said, “does not cease to be so because it concerns illegal acts; and statistics of crime are property to the same extent as other statistics, even if collected by a criminal who furnished some of the data.”
It has been held in many cases by that court that it is within the power of a state, under its police power, to exclude anything which may become dangerous to its citizens; that it may exclude from its limits persons likely to become a public charge, or criminals, paupers, convicts, or persons afflicted with contagious or infectious diseases, and also protect its people from being defrauded or injured in their health, or anything which will corrupt their morals. In Plumley v. Massachusetts, 155 U. S. 461, 15 Sup. Ct. 154, 39 L. Ed. 223, it was held that an act of that state prohibiting the sale of oleomargarine colored so as to permit deception in the manufacture and sale of imitation butter was a proper exercise of its police power and not in conflict with the commerce clause of the Constitution, although such sales were made in the original packages in which they were shipped from other states. In distinguishing that case from Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 L. Ed. 128, the court said:
“It is sufficient to say of Leisy v. Hardin that it did not in form' or in 'substance present the particular question now under consideration. The article which the majority of the court in that case held could be sold in Iowa in original packages, the statute of that state to the contrary notwithstanding, was beer manufactured in Illinois and shipped to the former state to be there sold in such packages. So far as the record disclosed, and so far as the contentions of the parties were concerned, the article there in question was what it appeared to be, namely, genuine beer, and not a liquid or drink colored artificially so as to cause it to look like beer. The language we have quoted from*583 Leisy v. Hardin must be restrained in its application to the case actually presented for determination, and does not justify the broad contention that a state is powerless to prevent the sale of articles manufactured in or brought from another state, and subjects of traffic and commerce, if their sale may cheat the people into purchasing something they do not intend to buy, and which is wholly different from what its condition and appearance import.”
Nor can it be said that this case was overruled, or even modified, in Schollenberger v. Pennsylvania, 171 U. S. 1, 18 Sup. Ct. 757, 43 L. Ed. 49. In that case it was held that, if the oleomargarine is not colored so as to mislead purchasers and practice a fraud on them, a state cannot prohibit its sale in the original packages when shipped from another state. The distinction between that case and the Plumley Case is plainly shown in Capital City Dairy Co. v. Ohio, 183 U. S. 238, 22 Sup. Ct. 120, 46 L. Ed. 171. Other cases upholding statutes prohibiting the sale of adulterated foods, although applying to imported articles sold in original packages, are Crossman v. Lurman, 192 U. S. 189, 24 Sup. Ct. 324, 48 L. Ed. 401; Arbuckle v. Blackburn, 113 Fed. 616, 51 C. C. A. 122, 65 L. R. A. 864; In re Scheitlin (C. C.) 99 Fed. 272.
In Patterson v. Kentucky, 97 U. S. 501, 24 L. Ed. 1115, it was held that:
“The states may, by police regulations, protect their people against the introduction within their respective limits of infected merchandise,” and by like regulation “exclude from their midst, not only convicts, paupers, idiots, lunatics, and persons likely to become a public charge, but animals having contagious diseases.”
This was placed upon the distinct ground that:
“The police power of the states was not surrendered when the Constitution conferred upon Congress the general power to regulate commerce with foreign nations and among the several states.”
In Rahrer’s Case, 140 U. S. 545, 554, 11 Sup. Ct. 865, 35 L. Ed. 572, the Chief Justice, speaking for the court, said:
“The power of the state to impose restraints and burdens upon persons and property in conservation and promotion of the public health, good order, and prosperity is a power originally and always belonging to the states, not surrendered by them to the general government, nor directly restrained by the Constitution of the United States, and essentially exclusive; and this court has uniformly recognized state legislation, legitimately for police purposes, as not in the sense of the Constitution necessarily infringing upon any right which has been confided expressly or by implication to the national government.”
In Geer v. Connecticut, 161 U. S. 579, 16 Sup. Ct. 600, 40 L. Ed. 793, the validity of a statute of the state of Connecticut prohibiting any persons from transporting, or having in possession with intent to procure their transportation, beyond the limits of the state, any such birds (those mentioned in the act) killed within the state, was before the court. It was claimed that the state may not forbid carrying such game beyond the limits of the state, inasmuch as the state had chosen to allow the people within her borders to take game and dispose of it, thus causing it to become an object of commerce, and as a result, of necessity, such property becomes the subject of interstate commerce,
“The power of the state to protect by adequate police regulation its people against the adulteration of articles of food, although in doing so commerce might be remotely affected, necessarily carries with it the existence of a like power to preserve a food supply which belongs in common to all the people of the state, which can only become the subject of ownership in a qualified way, and which can never be the object of commerce, except with the consent of the state and subject to the conditions which it may deem best to Impose for the public good.”
It is true the facts in that case are distinguishable from those in the case at bar; but it is referred to for the purpose of showing that the police powers of the state are not affected in matters in which, incidentally, interstate commerce may be affected.
In-Western Union Telegraph Co. v. James, 162 U. S. 650, 16 Sup. Ct. 934, 40 L. Ed. 1105, it was held that a state may prescribe how messages should be delivered within the state, whether received from within or without the state; the court holding that the validity of the statute is based upon the general power of the state to enact such laws in.-relation to persons and property within its borders as may promote the public' health and public morals and the general prosperity and safety of its inhabitants. Mr. Justice Peckham, who delivered the opinion of the court, said:
“We see no reason to fear any weakening of the protection of the constitutional provision as to commerce among the several states by holding that in regard to such a.message as the one in question, although it comes from a place without the state, it is yet under the- jurisdiction of the state where it is to be delivered (after its arrival therein at the place of delivery), at least so far as legislation of the state tends to enforce the performance of the duty owed by the company under the general law. So long as Congress is silent on the subject,' we think it is within the power of the state government to enact legislation of the nature of the Georgia statute. It is not a case where .the silence of Congress is equivalent to an express enactment”
Similar statutes in which this question in its relation to interstate commerce have been uniformly upheld by the highest courts of the States: State v. Stripling, 113 Ala. 120, 21 South. 409, 36 L. R. A. 81; Louisville v. Wehmoff, 116 Ky. 812, 76 S. W. 876, 79 S. W. 201; Lacey v. Palmer, 93 Va. 159, 24 S. E. 930, 31 L. R. A. 822, 57 Am. St. Rep. 795; State v. Hardbourne, 70 Conn. 484, 4 Atl. 179, 40 L. R. A. 607, 66 Am. St. Rep. 126.
Those cases involved acts prohibiting poolrooms and the transmission of messages and money by telegraph to another state for the purpose of being placed as bets upon horse races. In each of these cases the same question raised in the case at bar was before the court. In the Wehmoff Case the court said;
“Here the thing prohibited is the transmission by a poolroom operator in the city of Louisville of messages intended for use — to be used — in a vicious enterprise. Their use is that of gambling, and is universally held in this country to be immoral, degrading, and injurious to society. Such use cannot have any legitimate purpose. The business of furnishing such messages, known to be intended solely for such use, makes the carrier essentially a participator in*585 that offense. Its part of the profits of the business is its tolls for carrying the messages. The poolroom operator’s part is a toll or percentage on the volume of business. * * * The carrier wants us to say that its part in this unlawful partnership to violate the moral and statute laws of a community is protected by the federal Constitution. As was said by one of the courts, the Constitution, at most, gives the Congress exclusive jurisdiction to regulate interstate commerce, not interstate crime. The liquor cases are cited by appellees as holding a contrary doctrine to this court’s position. We do not understand that they do. Traffic in liquor is not illegal or immoral per se.”
So in the case at bar the people of this state, acting through the Legislature, have determined that contracts for futures on margins are immoral, and gambling, and for these reasons should be prohibited.
In Austin v. Tennessee, 179 U. S. 343, 349, 21 Sup. Ct. 132, 45 L. Ed. 224, Mr. Justice Brown, in speaking of the police powers of the state, said:
“We have had repeated occasion to hold, where state legislation has been attacked as violative either of the power of Congress over interstate commerce or of the Fourteenth amendment to the Constitution, that if the action of the state Legislature were as a bona fide exercise of its police power, and dictated by a genuine regard for the preservation of the public health or safety, such legislation would be respected, though it might interfere indirectly with interstate commerce.”
In McLean v. Denver & Rio Grande R. R. Co., 203 U. S. 38, 27 Sup. Ct. 1, 51 L. Ed. 78, a statute of the territory of New Mexico, making it an offense for any railroad company to receive for ship- \ ment beyond the limits of the territory hides which had not been inspected as required by law, was sustained as not being “an unwarranted regulation of or burden on interstate commerce,” the court saying:
“We see no reason why an inspection law which has for its purpose the protection of the community against fraud and promotion of the welfare of the people cannot be passed in the exercise of the police power, when the legislation tends to subserve the purpose in view. * * * It is true it affects interstate commerce; but we do not think such was its primary purpose, and. while it may have an effect to levy a tax upon this class of property, the main purpose evidently was to protect the people against fraud and wrong.”
So in the case at bar. While the act attacked may affect the telegraph company’s interstate business, that was not its primary purpose; the main purpose being to prevent maintaining and operating a place of business in this state for dealing in futures on margins.
Another ground upon which the relief prayed may be denied is that places where these quotations are sought to be posted, or orders for these contracts taken, will naturally attract many persons who will congregate there for that purpose. In fact, the bill charges that in order 1 ' carry on their business successfully it is necessary that these quotations should be posted for the benefit of its customers. The state has declared such contracts gambling and unlawful, and such places would constitute a nuisance. For a very learned review of the authorities on this point the opinion of Chief Justice Hill in State v. Vaughan, 81 Ark. 117, 98 S. W. 685, may be consulted. The aid of the telegraph company by furnishing private wires at those places conveying the quotations of the exchanges, as well as transmitting the orders for
But, even if there be some doubt as to the constitutionality of the act, it is well settled that all doubts must be resolved in favor of he constitutionality of an act of the Legislature. It is well to refer here to the language of Chief Justice Marshall in Fletcher v. Peck, 6 Cranch, 87, 3 L. Ed. 162, the leading case on that question. He said:
“The question whether a law be void for its repugnancy to the Constitution is at all times a question of much delicacy, which ought seldom, if ever, to be decided1 in the affirmative in a doubtful case. The court, when impelled by duty to render such a judgment, would be unworthy of its station, could it be unmindful of the solemn obligations which that station imposes. But it is not on slight implication and vague conjecture that the Legislature is to be pronounced to have transcended its powers, and its acts to be considered as void. The opposition between the Constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other.”
Or in the language of Mr. Justice Holmes in Interstate, etc., Ry. Co. v. Massachusetts (decided Nov. 4, 1907) 207 U. S. 79, 28 Sup. Ct. 26, 52 L. Ed.-:
“It is not enough that the statute goes to the verge of constitutional power. We must be able to see clearly that it goes beyond that power. In case of real ■doubt, a law must be sustained.” •
Does the fact that such contracts are valid in the states where they were to be made and performed, as is alleged in the bill, make it the duty of this court to enforce them, even if prohibited as immoral and against public policy in this state? The fact that this is a national court does not change the rules of law governing state courts in matters of this nature. It is as much the duty of a national court to respect and enforce the valid laws of the state in which it is held as it is the duty of the state courts to be governed by the Constitution and laws of the United States, although they are created by different governments and are independent of control by the other government. Cooper Mfg. Co. v. Ferguson, 113 U. S.727, 737, 5 Sup. Ct. 739, 28 L. Ed. 1137. The rule, as it has been determined by the courts of England, as well as by all the American courts, is that they will refuse to enforce a contract, although lawful and enforceable in the courts where it is entered into and is to be performed, if it is against the policy of the state in which it is sought to enforce it. Dicey on Conflict of Laws, p. 558; Brook v. Brook, 9 H. L. Cas. 193; Rousillon v. Rousillon, 14 Ch. Div. 351; Minor on Conflict of Laws, §§ 5, 13; Oscanyan v. Arms Co., 103 U. S. 261, 26 L. Ed. 539; Union Locomotive Co. v. Erie R. R. Co., 37 N. J. Law, 23; Witherspoon v. Musselman, 14 Bush (Ky.) 214, 29 Am. Rep. 404; Pittsburg, etc., Co.’s Appeal (Pa.) 4 Atl. 385; Hallam v. Tellerin, 55 Neb. 255, 75 N. W. 560; Dearing v. McKinnon, 165 N. Y. 78, 58 N. E. 773, 80 Am. St. Rep. 708; Pope v. Hanke, 155 Ill. 617, 40 N. E. 389, 28 L. R. A. 568; Minzeshimer v. Doolittle, 60 N. J. Eq. 394, 45 Atl. 611; Seamans v. Temple Co., 105
In the Oscanyan Case, Chief Justice Field speaking for the court said:
“Admitting that the Turkish government was willing that its officers should be allowed to take commissions on contracts obtained for it by their influence, that is no reason why the courts of the United States should enforce them. Contracts permissible by other countries are not enforceable in our courts, if they contravene our laws, our morality, or our policy. The contract in suit was made in this country, and its validity must be determined by our laws. But bad it been made in Turkey, and were it valid there, it would meet with the same reprobation when brought before our courts for enforcement. The general rule undoubtedly is that the validity of a contract is to be decided by the law of the place where it is made, unless it is to be performed in another country; but to this, as to all general rules, there are exeej)tions, and among these Story mentions contracts made in a foreign country to promote or reward the commission of crime, to corrupt or evade the due administration of justice, to cheat public agents, or to affect the public rights, and other contracts which in their nature are founded in moral turpitude, and are inconsistent with the good order and solid interest of society. ‘All such contracts,’ he adds, ‘even although they might be held valid in a country where they are made, would be held void elsewhere, or at least ought to be, if the dictates of Christian morality or even of natural justice are allowed to have their due force and influence in the administration of international jurisprudence.’ Story, Confl. L. § 258.”
In Pope v. Hanke, the plaintiff sued on notes executed in Missouri in settlement of an option deal, which made them void under the statutes of Illinois, but were valid in Missouri where the transaction took place. The court refused to enforce them, saying:
“The enforcement of such foreign law would contravene the Criminal Code of this state, and would be in opposition of its public policy and the express prohibition of its statutory enactment, and would be prejudicial to the-interests of its people.”
In the Minzeshimer Case the highest court of New Jersey followed the same rule.
As to what constitutes public policy is clearly stated by Mr. Justice Peckham in United States v. Freight Ass’n, 166 U. S. 290, 340, 17 Sup. Ct. 540, 41 L. Ed. 1007, in the following terse language:
“The public policy of the government is to be found in its statutes, and, when they have not directly spoken, then in the decisions of the courts and the constant practice of the government officials; but, when the lawmaking power speaks upon a particular subject over which it has constitutional power to legislate, public policy in such a case is what the statute enacts. If the law prohibit any contract or combination in restraint of trade or commerce, a contract or combination made in violation of such law is void, whatever may have been theretofore decided by the courts to have been the public policy of the country on that subject.”
What has been said is upon the theory that the contracts made by complainants would be in violation of the act of the General Assembly of the state of Arkansas mentioned in the bill, although it is charged that the business is not within the prohibition of that act; but it is also charged that, if their business is in violation of the provisions of that act, then the act is unconstitutional as being in conflict with the various provisions of the Constitution of the United States mentioned
The demurrer of the telegraph company will be sustained.
