Tagg Bros Moorhead v. United States

• Decision Date: 24 February 1930
• Docket Number: No. 45,45
• Parties: TAGG BROS. & MOORHEAD et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

280 U.S. 420

50 S.Ct. 220

74 L.Ed. 524

TAGG BROS. & MOORHEAD et al.

v UNITED STATES et al.

No. 45.

Argued Oct. 23, 1929.

Decided Feb. 24, 1930.

[Syllabus from pages 420-422 intentionally omitted] Messrs. Francis A. Brogan, of Omaha, Neb., and James M. Beck, of Washington, D. C., for appellants.

[Argument of Counsel from pages 423-429 intentionally omitted] The Attorney General and Mr. John Lord O'Brian, Asst. to Atty. Gen., for appellees.

[Argument of Counsel from pages 429-431 intentionally omitted] Mr. Justice BRANDEIS delivered the opinion of the Court.

The Packers and Stockyards Act, August 15, 1921, c. 64, §§ 301-316, 42 Stat. 159, 163-168; U. S. C. tit. 7, §§ 201-217 (7 USCA §§ 201-217), declares that persons engaged in the business of buying or selling in interstate commerce live stock at a stockyard on a commission basis are 'market agencies'; requires such agencies to furnish their services upon reasonable request, without discrimination and at reasonable rates; and confers upon the Secretary of Agriculture the power to determine what are the just and reasonable rates or charges for their services. The Secretary prescribed a tariff of maximum charges for such services at the Omaha Stockyards, effective January 1, 1927. This suit was brought in the federal court for Nebraska, under section 316 (7 USCA § 217), to enjoin the enforcement of that order and to set it aside. Fifty-eight concerns, all registered under the act as such market agencies, and together comprising the entire membership of the Omaha Livestock Exchange, joined as plaintiffs. The United States, the Secretary of Agriculture, the Attorney General, and the United States Attorney for Nebraska were made defendants. The prayers were that the order be declared null and void, and that the defendants be enjointed from enforcing it by canceling the registration of the agencies, or by instituting proceedings to enforce the penalties prescribed by the act for violation of an order, or by other means. There were also prayers for a restraining order and for an interlocutory injunction. Compare Stafford v. Wallace, 258 U. S. 495, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229.

The occasion for the Secretary's order was this: There is no competition among the Omaha market agencies as to rates, since the Exchange rules require all members to make the same charges for their services. As required by section 306 of the Packers and Stockyards Act (7 USCA § 207), the Omaha market agencies had filed with the Packers and stockyards Administration at Washington a schedule of charges known as Omaha Live Stock Exchange tariff No. 1. On January 16, 1926, they filed a new schedule, known as tariff no. 2, which introduced higher rates to become effective January 26, 1926. The Secretary of Agriculture, acting on his own motion, issued, on January 25, an order suspending the operation of the proposed schedule; and gave to the market agencies and others concerned notice of public hearings to be held before an examiner of the Packers and Stockyards Administration, under title 3 of the act (7 USCA §§ 201-217), to inquire into the reasonableness of the new Schedule.¹

The hearings before the Examiner extended over many months. The market agencies participated through counsel, but introduced little evidence. The Government introduced much. The evidence before the Secretary occupies, in condensed form, 532 pages of the printed record. It consists of the testimony of 33 witnesses and 102 exhibits, including 59 special audits of the books of the several plaintiffs. Upon that record and the report of the Examiner, the case was argued orally by counsel before the Secretary. He made a report which occupies 20 pages of the printed record. His order was based on the findings therein contained.

The application for an interlocutory injunction was made before three judges, pursuant to the provisions of the Urgent Deficiencies Act of October 22, 1913, c. 32, 38 Stat. 208, 219, 220, U. S. C. tit. 28, § 47, 28 USCA § 47, which, by section 316 of the Packers and Stockyards Act, are made applicable to proceedings brought to restrain or annul orders of the Secretary. Stafford v. Wallace, 258 U. S. 495, 512, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229. At that hearing, the Government consented that the interlocutory injunction should issue. Upon the filing of the answer, a special master was appointed by the three judges to hear the evidence and report his conclusions to the court. The master admitted, in addition to the record before the Secretary, oral evidence which, in condensed form, occupies 84 pages of the printed record, and 24 elaborate exhibits. Relying in part on this new evidence, he recommended that the injunction be made permanent. The case was then heard by the three judges on final hearing, upon exceptions to the master's report and a motion to confirm. That court also held the additional evidence admissible. After considering it in connection with that which had been introduced before the Secretary, the court found for the defendants and entered a final decree dissolving the interlocutory injunction and dismissing the bill. (D. C.) 29 F. (2d) 750. The District Judge allowed an appeal to this Court under section 238(4) of the Judicial Code, as amended by the Act of February 13, 1925, c. 229, § 1, 43 Stat. 936, 938, U. S. C. tit. 28, § 345(4), 28 USCA § 345(4).²

The plaintiffs conceded below that, being engaged in interstate commerce at public stockyards, they are subject to some regulation by Congress. But they claimed that the order is void, in whole or in part, on five grounds. That the act does not purport to confer upon the Secretary power to issue an order prescribing commission charges for market agencies and directing their observance in the future. That, if the act be construed as confer- ring such authority, it exceeds the constitutional power of the Federal Government, because it is not a regulation of commerce, and violates the Fifth Amendment, because the charges to be fixed are those for personal services. That so much of the order as reduces the charges below those of tariff No. 1 is void, because it was outside the scope of the Secretary's inquiry, as defined in the notice given by him. That the evidence presented to the Secretary was not sufficient to establish that the charges contained in either tariff No. 1 or tariff No. 2 were unreasonable or discriminatory; or that the schedule prescribed by the Secretary would adequately compensate the market agencies for their services and disbursements. That the rates in force prior to the hearing were not excessive, unreasonable or discriminatory; and that the charges prescribed by the Secretary are unreasonable and confiscatory.

In this Court 27 specific errors are assigned, although some were not pressed in argument. One assignment attacks the construction given to the Act. One attacks its constitutionality in so far as it purports to authorize the Secretary to fix plaintiffs' commission charges. Fifteen assignments attack the findings of the Secretary on the grounds that the evidence before him was not sufficient to sustain them, or that he erred in making specific findings, or that he erred in ruling on the admissibility of evidence and on the effect given to evidence, or that he erred in his processes of reasoning. Seven relate to the lower court's treatment of the additional evidence introduced before the master. One assignment attacks the legality of the order, in so far as it reduces the charges below those of tariff No. 1, on the ground that it was beyond the scope of the inquiry. One attacks the order on the ground that it is confessedly confiscatory as to some of the plaintiffs and cannot be sustained except by fixing the number of plaintiffs entitled to carry on the business, or by eliminating some plaintiffs for the purpose of increasing the compensation of those remaining. And one assignment attacks the order on the ground that it is confiscatory as to all the plaintiffs.

First. The contention that Congress did not purport to empower the Secretary to issue an order prescribing the charges of market agencies is without substance. The language used was apt to confer the power. The Committee of the House declared in terms that it did so, when it reported the bill.³ The executive department charged with the duty of enforcing the act so interpreted it. This Court assumed in Stafford v. Wallace, 258 U. S. 495, 514, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229, and Chicago Board of Trade v. Olsen, 262 U. S. 1, 34, 43 S. Ct. 470, 67 L. Ed. 839, that the power had been conferred. The Maximum Rate Cases, Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce Commission, 162 U. S. 184, 16 S. Ct. 700, 40 L. Ed. 935, Id., 167 U. S. 479, 17 S. Ct. 896, 42 L. Ed. 243, Interstate Commerce Commission v. Alabama Midland R. Co., 168 U. S. 144, 18 S. Ct. 45, 42 L. Ed. 414, upon which appellants rely, lend no support to their contention.

The order here in question resulted from a proceeding begun under title 3, § 306. Subdivision (a) of that section requires the agencies to file with the Secretary their schedules of rates. Subdivision (e) authorizes the Secretary, upon complaint or on his own motion, to suspend a new rate pending a hearing as to its lawfulness; and, after the hearing, to make such order with reference thereto as would be proper in a proceeding initiated after the rate had become effective. Subdivision (g) makes any agency which fails to comply with any order made under this section liable to a penalty recoverable in a civil action; and subdivision (h) provides for a fine and imprisonment in cases of willful violation.

Section 310 of the same title (7 USCA § 211) provides that whenever, after a full hearing, the Secretary is of opinion that any rate 'of a stockyard owner or market agency' is unreasonable, he may (a) fix the charge to be thereafter observed and (b) make an order that...