U.S. Supreme Court
Hill v. Wallace, 259 U.S. 44 (1922)
Hill v. Wallace
Argued January 11, 12, 1922
Decided May 15, 1922
259 U.S. 44
1. Members of an incorporated board of trade have standing to maintain a bill against its president and directors to restrain them from complying with an unconstitutional act of Congress threatening seriously to impair the value of the board to its members and the value of their memberships when the directors have refused to bring the suit for fear of antagonizing government officials. P. 259 U. S. 60.
2. Section 3224 of the Revised Statutes forbidding suits to restrain collection of a tax held inapplicable to this case because of its exceptional and extraordinary circumstances. P. 259 U. S. 62. Dodge v. Brady, 240 U. S. 122.
3. The Act of August 24, 1921, c. 86, 42 Stat. 187, known as the Future Trading Act, is in purpose, in essence, and on its face a regulation of the business of grain boards of trade, with a heavy penalty, called a tax, imposed on sales of grain for future delivery to coerce boards and their members into compliance with the regulations, and therefore it cannot be sustained as an exercise of the taxing power of Congress insofar as concerns this so-called tax and the regulations related to it. P. 259 U. S. 66. Child Labor Tax Case, ante, 259 U. S. 20.
4. Neither are the tax and related regulations sustainable under the Commerce Clause. P. 259 U. S. 68.
5. Sales of grain for future delivery made at Chicago between the members of a board of trade, to be settled there by offsetting purchases or by delivery of warehouse receipts for grain there stored, are not in themselves interstate commerce, and cannot come within the regulatory power under the Commerce Clause unless they are regarded by Congress, from the evidence before it, as chanroblesvirtualawlibrary
directly interfering with interstate commerce so as to obstruct or burden it. P. 259 U. S. 68.
6. A direction in an act that, if any of its provisions or the application thereof to any person or circumstance be held invalid, the validity of the remainder of the act or the application of such provision to other persons and circumstances shall not be affected is an assurance that separable valid provisions may be enforced consistently with legislative intent, but does not and cannot empower the courts to amend inseparable provisions of the act by inserting limitations which it does not contain. P. 259 U. S. 70.
7. Under § 11 of the Future Trading Act, supra, directing severance of valid from invalid provisions and applications, § 9, which authorizes investigations by the Secretary of Agriculture, and, semble, § 3, imposing a tax on certain kinds of options of purchase or sale of grain, are unaffected by the conclusion that § 4, imposing the tax on sales for future delivery, and the regulations interwoven with it in subsequent sections, are invalid. P. 259 U. S. 71.
This is a suit attacking the validity of the Future Trading Act, approved August 24, 1921. 42 Stat. 187, c. 86. The act imposes a tax of 20 cents a bushel on all contracts for the sale of grain for future delivery, but excepts from its application sales on boards of trade designated as contract markets by the Secretary of Agriculture on fulfillment by such boards of certain conditions and requirements set forth in the act.
The bill is filed by eight members of the Board of Trade of the City of Chicago, who sue in behalf of all other members of that body who may wish to join and share in the relief granted, against the Secretary of Agriculture, the Commissioner of Internal Revenue, the United States District Attorney for the Northern District of Illinois, the Collector of Internal Revenue for the First District of that state, the Board of Trade of the City of Chicago, its president, vice-presidents, and directors. The bill avers that the appellants applied to the directors of the Board of Trade to institute a suit to have the Future Trading Act adjudged unconstitutional before they should comply with chanroblesvirtualawlibrary
it, but the board of directors refused to take any steps, and announced that they intended to comply with the provisions of the act; that the board refused because they feared to antagonize the public officials whose duty it was to construe and enforce the act, and the complainants feared that, acting under the coercion imposed upon them by the act, the board of directors would admit to membership on the board the representatives of the cooperative associations of producers; that the Secretary of Agriculture would designate such board as a contract market, and that such action by the board of directors would cause irreparable injury to the complainants and all the other members of the board. Complainants set out the character of the Board of Trade of Chicago and its organization as a corporation under a special charter of the State of Illinois in 1859, of which certain persons engaged in the purchase and sale of grain were created a corporation and given power to admit members, and expel them, to adopt regulations and bylaws for the management of the business and the mode in which it should be transacted; to appoint committees of arbitration for the settlement of differences between the members; to appoint persons to examine, measure, weigh, gauge, inspect grain and other articles of produce, with authority to issue a certificate as to quality or quantity; to make the brand or mark thereof evidence between any buyer and seller assenting to the employment of such person, and to do and carry on business usual in the management of boards of trade.
The bill avers that the Board has 1,610 members, of whom the complainants are members in good standing; that its memberships are salable for more than $7,000 apiece; that, in recent years, there have been organized in most of the grain-producing states, among so-called farmers, cooperative societies who desire to market their crops at actual cost, and to market them through the exchanges chanroblesvirtualawlibrary
at actual cost, and without paying the commissions charged by the members of such exchange, the plan being to sell all grain through an authorized member of such organization admitted to the exchange who shall charge the prescribed commission and ultimately rebate back to the members of such organ