Act, or regulations promulgated thereunder. As one of the means by which the Congress sought to further the objects of the United States Warehouse Act, and at the same time not make unreasonable requirements of a contract market, Section 5a(7) required such contract market to accept receipts from warehouses licensed under the United States Warehouse Act in satisfaction of any futures contract made on or subject to the rules of such contract market. It provided, however, that such warehouse receipt 'shall be for the kind, quality, and quantity of commodity specified in such contract', and further provided that the warehouse in which the commodity is stored 'meet such reasonable requirements as may be imposed by such contract market on other warehouses as to location, accessibility, and suitability for warehousing and delivery purposes.' (Emphasis supplied.)
Unquestionably this proviso gave to the contract market the right to impose such reasonable requirements with respect to location, accessibility and suitability for warehousing and delivery purposes of the federally licensed warehouse, which otherwise the contract market would not have the right to impose. One cannot read the discussions in the Hearings before the Committee on Agriculture and Forestry of the United States Senate, 74th Congress, 2d Session, on H.R. 6772, with reference to the proposed section, and also what was said on the floor of the Senate when it was adopted, without coming to the conclusion that there was no intention whatsoever to impair the principle of exclusive control by the federal authority of the operation of federally licensed warehouses. In the light of the controversy that had aroused bitter and widespread conflict of views, it is simply inconceivable that, by the use of the term that the 'warehouse' meet 'reasonable requirements * * * as to * * * suitability for warehousing and delivery purposes' in the context where every other expression has to do only with the physical commodity named in the receipt and obviously the physical situation of the warehouse as to 'location' and 'accessibility,' the Congress intended to hand back any control over the warehousemen or the operation of the warehouses, and thus establish a duality of control which the Congress had expressly abolished. Precisely what was obviously meant what that a reasonable requirement could be made respecting the facilities and equipment of the warehouse to unload, store and deliver the commodity, such as Regulation No. 1626 of the Chicago Board of Trade referred to in Note 3, at pages 252 and 253 of 331 U.S. and page 1163 of 67 S. Ct., in Rice v. Chicago Board of Trade, supra, that the warehouses must be 'provided with modern improvements and appliances for the convenient and expeditious receiving, handling, and shipping of grain in bulk.' That this was the accepted intention of the Congress is clearly inferable from the Report of the Federal Trade Commission on the Economic Effects of Grain Exchange Actions Affecting Futures Trading During the First Six Months of 1946, and issued February 4, 1947, prepared at the request of and submitted to the Committee on Agriculture and Forestry, in which it is stated on page 10:
'Neither does the Commodity Exchange Act relate the administration of the Warehouse Act to exchange operations except to make receipts of federally licensed warehouses tenderable on futures contracts provided such receipts are for the kind, quality and quantity specified in futures contracts, and the warehouse itself meets the physical requirements as to location, accessibility, and suitability for warehousing and delivery set up by the exchange for regular warehouses. (Emphasis supplied.)
Doubtless no agency of the federal government has had more familiarity with the legislation on this subject than the Federal Trade Commission, which has made numerous investigations and reports in this field at the direction of and for the Committees of the Congress.
To give the interpretation which the Commission did to the expression used in the proviso would subject a federally licensed warehouseman to plenary control by the contract market so long as such controls were deemed reasonable, non-discriminatory, and not in conflict with regulations promulgated by the Secretary of Agriculture. That would be obviously contrary to the intent and language of the United States Warehouse Act, and such meaning is not lightly to be attributed to an expression of the Congress in the Commodity Exchange Act when, if such had been the intention, Congress surely could and would have used unmistakable language to that effect.
It is hardly to be doubted that certain of the challenged regulations of the Chicago Board of Trade are reasonable and desirable, particularly that one dealing with live transit billing, but, if such regulations are reasonable and desirable, the plaintiff can easily be made subject to them if promulgated and adopted by the Secretary of Agriculture. Indeed this was the action apparently sought originally by the Chicago Board of Trade. But equally clearly a regulation which requires the plaintiff to make application to the Chicago Board of Trade for a determination of 'regularity,' which binds the plaintiff as applicant to agree to conform to rules and regulations of the Chicago Board of Trade is neither reasonable nor in conformity with the intention of the Congress as expressed either in the United States Warehouse Act or the Commodity Exchange Act.
In overruling the motion to dismiss the complaint, filed by the defendants herein, on the ground that said complaint did not state a cause of action, this Court must necessarily have reached substantially the same conclusions herein expressed; otherwise the complaint would not have stated a cause of action.
My conclusion is that the decision of the Commission is not in accordance with law and must be vacated. Motion of the plaintiff for summary judgment is granted. Counsel will prepare and submit an appropriate order to carry this decision into effect.