Hegeman Farms Corporation v. Baldwin 8212 1934

• Decision Date: 05 November 1934
• Docket Number: No. 27,27
• Citation: 55 S.Ct. 7,79 L.Ed. 259,293 U.S. 163
• Parties: HEGEMAN FARMS CORPORATION v. BALDWIN et al. Argued Oct. 8—9, 1934
• Court: U.S. Supreme Court

293 U.S. 163

55 S.Ct. 7

79 L.Ed. 259

HEGEMAN FARMS CORPORATION

v BALDWIN et al.

No. 27.

Argued Oct. 8—9, 1934.

Decided Nov. 5, 1934.

Appeal from a decree of the District Court of the United States for the Southern District of New York.

Messrs. Leonard Acker and Samuel C. Duberstein, both of Brooklyn, N.Y., for appellant.

[Argument of Counsel from pages 163-165 intentionally omitted] Mr. Henry S. Manley, of Albany, N.Y., for appellees.

[Argument of Counsel from pages 163-166 intentionally omitted] Mr. Justice CARDOZO delivered the opinion of the Court.

In this suit for an injunction, the appellant, a wholesale milk dealer, contests the validity under the Fourteenth Amendment of orders of the New York milk control board limiting the price of milk. A District Court of three judges, organized in accordance with section 266 of the Judicial Code (28 U.S.C. § 380 (28 USCA § 380)), has denied a motion by the complainant for an interlocutory injunction, and granted a motion by the defendants to dismiss the bill. 6 F.Supp. 297. No testimony was taken, but, for the purposes of the two motions, certain facts were stipulated and embodied in findings. Nothing important is there added to what is stated in the complaint. From the final decree there has been an appeal to this court. 28 U.S.C. § 380 (28 USCA § 380).

The attempt is made in the bill to state two causes of action, pleaded in separate counts. The first cause of action assails the Milk Control Act (N.Y. Laws 1933, c. 158) as a whole, and was dismissed on the authority of Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469. It has not been pressed in this Court, and must be treated as abandoned.¹ The second cause of action, the only one contested here, assumes provisionally the validity of the statute and assails the orders made under it in their application to appellant. On that head the bill recounts the orders of the board prescribing a minimum selling price to be charged by dealers to their customers and also a minimum buying price to be paid by dealers to producers. The milk sold by the appellant is known as grade B. At the time of the trial the minimum wholesale price for milk of that grade in the city of New York was nine cents per quart, except that dealers such as the appellant marketing their product without a well-established trade-name might sell one cent a quart below the minimum for others. By the same orders the minimum price for fluid milk to be paid to producers was fixed at five cents a quart. A separate schedule of the orders gives the rates for fluid cream. The complainant's license was revoked by the board after notice and a hearing because of underpayments to producers. The license was, however, to be reinstated upon payment of the difference ($23,000). The bill prays a decree cancelling the revocation with exemption for the future.

The question on this appeal is whether the allegations of the bill, admitted in the stipulation, but not substan- tially enlarged, make out a cause of action. For an understanding of the complainant's position both in its economic and in its legal aspects, the fact is of critical importance that there has been no attempt by the board to fix a maximum price in respect of any of the transactions subject to its regulatory power. What is fixed is a minimum only. None the less, the competition among dealers is so keen that in practice the legal minimum is the maximum that the appellant is able to charge. The 'spread' between what must be paid to the producers and what can be collected from the customers is so small that it 'is insufficient in amount to afford plaintiff a fair return on the present fair value of the properties devoted by it to its milk business less depreciation.' This the bill and findings state. They tell us also that the properties have a value of more than $450,000. They do not tell us whether the appellant ran its business with reasonable efficiency when compared with others in its calling. They do not even tell us whether it was earning a fair return on its investment before the orders were adopted. The omission is the more significant because, according to official records, the 'spread' has been increased, instead of being diminished, through the operation of control. Report of the Milk Control Board, March 1934, pp. 17, 18.² For all that appears upon this record, a change of the minimum prices would avail the appellant nothing if a corresponding increase or reduction were allowed to its competitors. It might still be driven to the wall without the aid of a differential that would neutral- ize inequalities of capacity or power. If different minima would help, the pleading leaves us in the dark as to what those minima should be. There is no statement that a different selling price could be fixed with fairness to consumers, or a different purchasing price with fairness to producers. The appellant's grievance amounts to this, that it is operating at a loss, though other dealers more efficient or economical or better known to the public may be operating at a profit.

A bill of complaint so uncertain in aim and so meager in particulars falls short of the standard of candor and precision set up by our decisions. Public Service Comm. of Montana v. Great Northern Utilities Co., 289 U.S. 130, 136, 53 S.Ct. 546, 77 L.Ed. 1080; AEtna Ins. Co. v. Hyde, 275 U.S. 440, 447, 48 S.Ct. 174, 72 L.Ed. 357. True the appellant is losing money under the orders now in force. For...