Opinion ID: 1547000
Heading Depth: 3
Heading Rank: 2

Heading: Jurisdiction over Chamber.

Text: Any jurisdiction of the Commission over the Chamber is denied on several grounds. The first ground is that the Chamber is not organized for profit. This is true. But it is a legal entity which can and does act and it is legally responsible for its acts and entirely amenable to lawful control. It is capable of entering into a combination or conspiracy or of being an effective instrumentality to execute the purposes of a combination or conspiracy formed by others. A second ground is that the Chamber is not engaged in interstate commerce. The Federal Trade Commission Act (Comp. St. § 8836a, et seq.) was enacted under the power of Congress to regulate interstate and foreign commerce and by its express terms (Section 4) deals only with such commerce. Although the Chamber is not itself engaged in any commerce in the sense of being a trader or shipper, yet it is an instrumentality in the current of interstate commerce which directly affects such commerce and is within the regulatory power of Congress. Board of Trade of Chicago v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839; and see Stafford v. Wallace, 258 U. S. 495, 517, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229; Hill v. Wallace, 259 U. S. 44, 69, 42 S. Ct. 453, 66 L. Ed. 822; U. S. v. Coffee Exchange, 263 U. S. 611, 621, 44 S. Ct. 225, 68 L. Ed. 475; United Leather Workers v. Herkert, 265 U. S. 457, 469, 44 S. Ct. 623, 68 L. Ed. 1104, 33 A. L. R. 566. A third ground is that any effect of the rules of the Chamber upon interstate commerce is indirect, therefore, regulation of such Chamber is a matter for state action in the absence of congressional regulation. This may be true as a broad general statement. Hill v. Wallace, 259 U. S. 44, 68, 42 S. Ct. 453, 66 L. Ed. 822, and citations in that opinion. But Congress, in the Federal Trade Commission Act, has assumed to legislate concerning unfair methods of competition affecting interstate commerce and if any action by or any rule or regulation of the Chamber has that effect it is certainly subject to that act, no matter what the state has or has not authorized or permitted in that respect. Any action by the state Legislature or any decision of the state courts falls blunted if it strikes at this power which Congress vested and had constitutional authority to vest in the Commission. Northern Pac. Ry. v. Washington, 222 U. S. 370, 378, 32 S. Ct. 160, 56 L. Ed. 237. A fourth ground is that Congress has exercised its regulatory power over such boards of trade in the Grain Futures Act (Sept. 21, 1922, 42 Stat. 998 [Comp. St. Ann. Supp. 1923, §§ 8747 4/5 to 8747 4/5k]) and that the provisions of that act are exclusive of all other regulation, either national or state. The above act was passed after this complaint was filed but before the order was made herein. As the orders of the Commission are purely remedial and preventative, the effect thereof is entirely in the future. Therefore, the jurisdiction of the Commission should, in this respect, be measured as of the time of the order rather than as of the filing of the complaint or as of the hearing thereon. The above act was passed in pursuance of the commerce power of Congress (Board of Trade v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839) and would necessarily supersede and displace all existing statutes which conflict therewith. Wherein is there conflict between this act and the act creating the Trade Commission? The prime purpose of the Grain Futures Act was to prevent gambling in grain futures. Chicago Board of Trade v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839. The plan thereof was to prohibit grain future transactions except in contract markets (section 4); to require certain conditions in a market before it could become such contract market (section 5) and supervision to see that those conditions were lived up to (sections 6 and 8). These prerequisite market conditions were (1) reports of sales; (2) provision for prevention of dissemination, by the board or any member, of false, misleading or known inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of grain in interstate commerce; (3) provision for prevention of price manipulation or cornering on its floor; (4) no exclusion from membership of any duly authorized representative of any lawfully formed and conducted co-operative association of producers having adequate financial responsibility which is engaged in cash grain business, if such association has complied, and agrees to comply, with such terms and conditions as are or may be imposed lawfully on other members of such board: Provided, that no rule of a contract market shall forbid or be construed to forbid the return of a patronage basis by such co-operative association to its bona fide members of moneys collected in excess of the expense of conducting such business. Section 5. It is conceded that the Chamber is such a contract market. Whether such fraudulent reports, price manipulations or corners have, by the above act, been withdrawn from the jurisdiction of the Commission, even though they might constitute unfair methods of competition, need not be determined as such character of acts are not involved in this proceeding. The provision as to profit sharing membership would seem directly concerned here. It seems clear that Congress intended to and did settle this much contraverted economic matter by requiring contract markets to admit representatives of co-operative associations which paid patronage dividends to its own members which, by fair implication, means that such market is not required to admit any other kind of cooperative association  such, for example, as pays patronage dividends to all customers, whether members of such association or not. We think this provision of the act is a legislative definition and withdrawal of all other regulatory control over who shall constitute the membership of contract markets. Therefore, there was no jurisdiction in the Commission to enter those portions of its order, contained in the second division thereof, which forbade: (3) Passing or enforcing any rule or regulation, or enforcing any usage or custom, that prohibits or prevents members of the respondent Chamber from conducting their business of dealing in grain according to the co-operative method of marketing grain or according to the patronage dividend plan, like or similar to the method or plan adopted by the Equity Co-operative Exchange. (4) Denying to any duly accredited representatives of any organization or association of farmer grain growers or shippers admission to membership in said respondent Chamber, with full and equal privileges enjoyed by any or all of its members or by any or all concerns represented by membership in said respondent Chamber of Commerce, because of the plan or purpose on the part of such organization or association to pay or propose to pay patronage dividends or to operate or propose to operate according to the co-operative plan of marketing grain, namely, the plan of returning any portion or all of its earnings or surplus to its patrons or members on the basis of patronage, whether such earnings or surplus is derived from charging patrons or members commissions or otherwise. Except as just set forth, the jurisdiction of the Commission existed as to the Chamber.