209 U.S.

Argument for Plaintiffs in Error.

had become dormant, while both parties were recognizing their binding obligation and doing all that the law permitted, to effect their satisfaction, and had entered into a contract which prevented the judgment creditors from taking steps to avail themselves of their right to collect their judgments by execution or by writ of mandamus.

For these reasons the judgment of the Supreme Court of Oklahoma Territory is

Reversed, and the cause remanded to the Supreme Court of the State of Oklahoma for further proceedings in accordance with this opinion.

WARE AND LELAND v. MOBILE COUNTY.

WARE AND LELAND v. STATE OF ALABAMA.

ERROR TO THE SUPREME COURT OF THE STATE OF ALABAMA.

Nos. 173, 174. Submitted March 10, 1908.-Decided April 6, 1908.

Contracts for sales of cotton for future delivery, which do not oblige interstate shipments, are not subjects of interstate commerce, nor does the fact that a delivery may be made by means of interstate carriage make them so; and a state tax on persons engaged in buying and selling cotton for future delivery held in this case not to be a regulation of interstate commerce and as such beyond the power of the State. Paul v. Virginia (insurance policy case), 8 Wall. 168, followed; Lottery Case, 188 U. S. 321; Rearick v. Pennsylvania, 203 U. S. 507, distinguished.

146 Alabama, 163, affirmed.

THE facts are stated in the opinion.

Mr. Burwel! Boykin Boone for plaintiffs in crror:

The license tax in question, sought to be collected from the plaintiffs in error, is a burden upon and a regulation of interstate commerce, and in conflict with Article I, Section 8, para

graph 3, of the Constitution of the United States. Champion v. Ames, 188 U. S. 351; Hanley v. Kansas City Southern R. R. Co., 187 U. S. 619; Stradford v. City Council of Montgomery, 110 Alabama, 619; Stockard v. Morgan, 185 U. S. 27; Brennan v. Titusville, 153 U. S. 289; Caldwell v. North Carolina, 187 U.S. 622.

No counsel appeared for defendants in error.

MR. JUSTICE DAY delivered the opinion of the court.

These cases were submitted together and are in all respects similar, and involve the constitutional validity of subdivision 40 of an act of the legislature of Alabama imposing license taxes, "to better provide for the revenue of the State," General Acts, 1903, p. 207, which reads as follows:

"For each person engaged in the business of buying and selling futures for speculation or on 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."

In case No. 173 the action was brought by Mobile County for the recovery of the defendants' license tax for the year 1903, for engaging in the business of buying and selling futures on commission for other persons in the city of Mobile. The other case (No. 174) was an action by the State. Plaintiffs recovered in the Circuit Court and both judgments were affirmed by the Supreme Court. 146 Alabama, 163.

The cases were submitted upon an agreed statement of the facts as follows:

"During the whole of the year 1903 defendants had an office in the city of Mobile, in the county of Mobile and State

of Alabama: they also had offices in the city of New York in the State of New York, and in the city of New Orleans in the State of Louisiana, and in the city of Chicago in the State of Illinois, each of which offices was connected by private telegraph wires with said Mobile office. Said Mobile, Alabama, office was in the charge of their agent, one Robbins, and was engaged in the business of buying and selling cotton for future ́delivery, on commission, for the public generally and for special customers, said business being conducted in the following way and in no other way: They would undertake, through their agent, to buy or sell a cotton future contract for a customer in the Cotton Exchange in New York or in New Orleans, as he might select, he making at the time a deposit of money with them as a margin to protect them against loss in making such transaction for him. When the customer gave the order to Ware and Leland, either for a sale or a purchase of a future contract, it was not usual for anything to be said between them about an actual delivery of the cotton, but when the transaction was commenced by a purchase or sale of the cotton Ware and Leland would immediately furnish to the customer a memorandum thereof, partly written and partly printed, upon which the following stipulations were printed: 'On all marginal business, we reserve the right to close transactions without further notice when margins are about exhausted, and to settle contracts in accordance with the rules and customs of the exchange on which the order is placed, it being understood and agreed in all trades that actual delivery is contemplated,' and 'All purchases and sales made by us for you are made in accordance with and subject to the rules, regulations and customs of the exchange on which the order is placed, and the rules, regulations and requirements of the board of managers of said exchange, and all amendments that may be made thereto.' Such agent would thereupon transmit such order by their private telegraph line to the defendants' office in the city without the State of Alabama selected for such transaction; that such order would be there

upon executed by defendants by the purchase or sale, as directed, of a future cotton contract for such customer in the cotton exchange of the city to which such order was sent, and subject to the rules and regulations of such cotton exchange, which rules and regulations may be introduced in evidence by defendants in this cause; that said contract would be held by defendants for such customer until he ordered the same closed out, when they would sell or buy another cotton contract against it as might be necessary to cover the same or close it out, or receive or deliver the cotton on said contract. If a profit was made on the transaction defendants remitted the same to its agent in Mobile, who paid it over to the customer; if a loss was made, it was taken by the agent out of the customers' margin, or, if that was insufficient therefor, the customer was called on for the balance. Said business was done on a commission paid defendants by the customers.

"No actual delivery of cotton or grain was ever made on any such contracts, except in a few instances, when such deliveries were made where the contracts were executed, to wit: in New York, New York, or in New Orleans, Louisiana, or Chicago, Illinois. When any such delivery of cotton was made to defendants for the customer on a purchase by him, it was held by the defendants for account of the customer at the place of delivery, either in New York, New York, or in New Orleans, Louisiana, until ordered sold by the customer, and was then sold by them there for the account of the customer, and the proceeds accounted for by them to such customer. When they made delivery of cotton on a sale of futures made by them for a customer, the cotton was shipped by the customer for whom such sale was made from Alabama to the place of sale and there delivered through defendants to the buyer.

"A similar future grain business was done by defendants at their said office in Mobile, Alabama, for customers through their office in Chicago, in the State of Illinois-said orders being executed on the Chicago, Illinois, Board of Trade, and subject to its rules and regulations, which contemplated and

provided for the actual receipt or delivery of grain bought or sold therein-such delivery to be made in Chicago, Illinois.

"During the whole of the year 1903 said city of Mobile, Alabama, was a city of more than twenty thousand inhabitants.

"Defendant paid to plaintiff a license tax of one hundred dollars for doing such business in said city for the year 1903, which payment was made prior to the fourth day of March, 1903; they have not paid any further license tax to plaintiff for doing such business in said year."

Upon the trial of the action, in addition to the foregoing agreed facts, the counsel for the plaintiff admitted that the rules and regulations of the New York Cotton Exchange, New Orleans Cotton Exchange and Chicago Board of Trade, respectively, provided "that contracts executed therein should be in writing; and also provided that in every cotton or grain contract for future delivery executed and entered into in said exchange or board of trade, it should be stipulated, agreed and understood that an actual receipt and delivery of the cotton or grain was to be had, and that said contracts were transferable and assignable."

The sole question here presented is, whether the statute in question is an attempt to regulate interstate commerce, for if the plaintiffs in error are shown by the foregoing agreed facts to be engaged in interstate commerce then the statute is void, as an attempt by a State to regulate the commerce which the Constitution of the United States places within the exclusive control of Federal authority.

Interstate commerce must be such as takes place between States as differentiated from commerce wholly within a State. It must have reference to interstate trade or dealing, and if the regulation is not such, and comprehends only commerce which is internal, the State may legislate concerning it. In each case the recurring question is, on which side of the line does the commerce under investigation fall?

It is unnecessary to review the former decisions of this court,