Ware v. Mobile County
146 Ala. 163
Ala.
1906
Check Treatment
TYSON, J.

Subdivision 40 of the act “to better provide for the revenue of the state” (Gen. Acts 1903, p. 207) reads as follows: “For each person engaged in the business of buying, and selling futures for speculation or on a commission either for themselves or for other persons, and each place of business commonly known as cotton exchanges, or stock exchanges and sometimes called 'bucket shops’ in towns and cities of twenty thousand inhabitants or more, five hundred dollars; in all other towns and cities, two hundred and fifty dollars ; ;but this shall not be held to legalize any contract which would otherwise be invalid.” It appears from the agreed statement of facts, upon which the case was tried, that during the whole of the year 1903 defendants conducted the business in the city of Mobile, a city of more than 20,000 inhabitants, of buying and selling cotton for future delivery on commission, for the public generally and for special customers. The local agent in the city would take the order of those desiring to buy or sell future cotton contracts, which would be executed by defendants upon the New York or New Orleans cotton exchange; the customer at the time of giving the order, depositing with the local agent a sum of money as margin to protect the defendants against loss in the event the course of the market was adverse to the side of the customer. When the'order was given, it was not usual to say anything about an actual delivery of the cotton; but defendants furnished the customer with a memorandum reserving the right to close the transaction when the margin deposited was about exhausted and to settle the contract in accordance with the rules and customs of the exchange on which the order was placed. This *169memorandum also contained the stipulation that “in all trades actual delivery is contemplated,” and the further stipulation that “all purchases and sales made by us for you are made in accordance with and subject to the rules, regulations, and contracts of the exchange on which the order is placed,” etc. The order of the customer was then transmitted by wire by defendants to their office in the city of New York or New Orleans, where it was executed. The contract thus purchased or sold, as the case may be, was held by defendants for the buyer or seller, their customer, until the same was ordered closed out, which was done by buying or selling another contract against it, as might be necessary to cover or close it out, or receive or deliver cotton on the contract. If a profit was made in the transaction, it was remitted by defendants from their office where made to the Mobile office and there paid over to the customer. If a loss was incurred, it was taken by the Mobile office out of the customer’s margin, and, if that was insufficient to pay the loss, the customer was called on for the balance. No actual delivery of cotton was ever made on such contracts, except in a few instances, and then at the place of its execution, to-wit, New York or New Orleans. When the cotton was delivered on a contract of purchase, it was held by defendants for the purchaser, as his agents, until they were ordered to sell it. When the delivery was made upon a contract of sale, the seller .would ship the cotton from'Alabama to New York or New Orleans, the place of delivery, and defendants, as his agents, would there deliver it to the buyer.

The only question presented for our consideration is whether the business thus shown to have been engaged in by defendants was interstate commerce, and therefore not subject to the license tax sought to be collected of them; for clearly, if the business is not subject to be taxed, although the one for which defendants are here sought to be made liable may be characterized as an occupation tax, there can be no recovery in this case. — Stratford v. City Council of Montgomery, 110 Ala. 619, 20 South. 127. But the defendants’ business of making-contracts of buying and selling future cotton for their customers is not interstate commerce. Indeed, these *170contracts are not articles of commerce at all. — 17 Am. & Eng. Ency. Law (2d Ed.) p. 61. As was said by the supreme court of the United States in Paul v. Virginia, 8 Wall. 183, 19 L. Ed. 357, in speaking of policies of insurance: “These contracts are not contracts of commerce in any proper meaning of the word. They are not subjects of trade and barter, offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one state to another and then put up for sale. They are like other personal contracts between parties which are completed by their signatures and the transfer of the consideration. Such contracts bre mot interstate transactions, though the parties may be domiciled in different states. “See, also, Hooper v. California, 155 U. S. 648, 15 Sup. Ct. 207, 39 L. Ed. 297; N. Y. Life Ins. Co. v. Cravens, 178 U. S. 389, 20 Sup. Ct. 962, 44 L. Ed. 1116. This principle, we think, clearly controls in this case, and its application to the facts makes the defendants liable. The contracts entered into by defendants for their customers, if discharged by the payment of differences in the market values, though executed in another state by and through their agents, the defendants, are clearly not articles of commerce; and the transaction was not different from one that the customer himself in person executed the order on the exchange in New York or New Orleans. Nor is it of consequence, in so lar as the question here is involved, that the contracts were sometimes discharged by the delivery of the cotton. While it is true the cotton may have become an article of interstate commerce, it never became an article of trade from one state to another until it begun to move, and this movement did not begin until the cotton was shipped or was started for transportation from one state to the other.— Kidd v. Pearson,, 128 U. S. 25, 9 Sup. Ct. 6, 32 L. Ed. 346.

There was no stipulation shown in the agreed statement of facts which required the seller to ship cotton from any point. He was at liberty to acquire the cotton in the market of delivery or elsewhere; hence a shipment from one state to another for delivery under the contract would not be interstate commerce by virtue *171of the contract, hut by subsequent and independent act of the seller, and the shipment in that event would not become interstate commerce until the cotton had commenced to he transported. The case of Stratford v. City Council, supra, relied upon by appellants, clearly has no application. In that case Stratford ivas a broker, representing several non-resident wholesale dealers in grain and provisions who lived and carried on their business in other states, and every order for goods from local merchants received or obtained by him was forwarded to his principal, subject to the approval of such principal; and if the order was accepted by the non-resident dealer, he shipped the goods from his place of business to the purchaser, who did business in the city of Montgomery.

Affirmed.

Weakley, C. J., Simpson and Anderson, JJ., concur.