Western Union Telegraph Co. v. Foster

Background

Two telegraph companies supplied continuous stock-price quotations from the New York Stock Exchange to brokers in Boston. A local trader, Calvin H. Foster, applied for the same continuous ticker service but was disapproved by the Exchange. The Massachusetts Public Service Commission found that the refusal to serve Foster was an unlawful discrimination and ordered the companies to provide him the continuous quotations; state courts enforced that order and the telegraph companies challenged it in federal court.

Reasoning

The central question was whether the continuous transmission of Exchange quotations stopped being interstate trade before it reached brokers’ offices. The Court said the quotations remained interstate commerce until they were received where the senders intended them to end — the brokers’ offices. The Court rejected arguments based on the form of contracts, intermediate operators, or lump-sum arrangements, explaining that practice and intended course of transmission, not technicalities of contract, determine whether something is interstate commerce. Because the state order sought to change who could receive the interstate transmissions and thus altered the business at its core, the Court held the state action unlawfully interfered with interstate commerce and reversed the state decrees.

Real world impact

The decision prevents a state commission from forcing telegraph companies to admit a local trader to continuous interstate ticker service in these circumstances. It protects the national character of rapid stock-quotation transmission and limits state power to change who receives such interstate market data. The reversal also affects related suits in federal court that challenged the state action.