Highland Farms Dairy v. Agnew

• Decision Date: 29 March 1937
• Docket Number: No. 573,573
• Parties: HIGHLAND FARMS DAIRY, Inc., et al. v. AGNEW et al., Members of Milk Commission of Commonwealth of Virginia
• Court: U.S. Supreme Court

300 U.S. 608

57 S.Ct. 549

81 L.Ed. 835

HIGHLAND FARMS DAIRY, Inc., et al.

v AGNEW et al., Members of Milk Commission of Commonwealth of Virginia.

No. 573.

Argued March 8, 9, 1937.

Decided March 29, 1937.

Appeal from the District Court of the United States for the Eastern District of Virginia.

Messrs. Lawrence Koenigsberger and Philip W. Rosenfeld, both of Washington, D.C., for appellants.

Messrs. Edwin H. Gibson, of Richmond, Va., and John S. Barbour, of Fairfax, Va., for appellees.

Mr. Justice CARDOZO delivered the opinion of the Court.

A statute of Virginia, known as the 'Milk and Cream Act,' is assailed by the appellants as invalid both under the Constitution of Virginia and under that of the United States.

The act is chapter 357 of the Acts of 1934. It recites the existence of demoralizing trade practices in the dairy industry, threatening to interrupt the supply of pure and wholesome milk for the inhabitants of the Commonwealth and producing an economic emergency so acute and destructive as to call for corrective measures. It establishes a milk commission with power to crete within the state natural market areas, and to fix the minimum and maximum prices to be charged for milk and cream therein. It authorizes the commission to exact a license from distributors subject to the act, and provides that in the absence of such a license sales shall be unlawful within the market areas. It imposes taxes or fees for the support of the commission and of local milk boards which are to be created to co-operate with the commission in making the plan effective. It warns (section 14) that none of its provisions 'shall apply or be construed to apply to foreign or interstate commerce, except in so far as the same may be effective pursuant to the United States Constitution and to the laws of the United States enacted pursuant thereto.' Finally it provides (section 16) that, 'if any section, clause, or sentence or paragraph shall be declared unconstitutional for any reason, the remainder of the act shall not be affected thereby.' A fuller summary of the statute is given in the opinion of the court below ((D.C.) 16 F.Supp. 575), to which reference is made. Other provisions will be noted in this opinion later.

The suit is for an injunction to restrain the members of the commission from enforcing the statute or the regulations made thereunder. One of the two plaintiffs (Highland Farms Dairy, Incorporated), which will be spoken of as 'Highland,' has a creamery for the pasteurizing and treatment of milk at Washington in the District of Columbia. For that purpose it buys milk from farmers in Virginia and Maryland. Its entire output of bottled milk it sells to the other plaintiff, Luther W. High, who has retail stores in Virginia and elsewhere for the sale of ice cream, milk and other dairy products. A regulation adopted by the commission on March 27, 1936, set up a market area, described as the Arlington-Alexandria Milk Market, within which High is engaged in business. Mini- mum prices prescribed for that area are in excess of the prices at which Highland had been selling to High and at which High had sold to the consumers. Each went on selling at the old prices. Neither made application for a license. In June, 1936, the commission gave notice to High that it would proceed against him for an injunction if he refused compliance with its orders. No proceedings against Highland were begun or even threatened, the commission taking the position that Highland was not subject to the prohibitions of the statute, its sales and purchases in Virginia being transactions in interstate commerce. In spite of this disclaimer, Highland joined with High in suing to enjoin the enforcement of the act. A District Court of three judges, organized in accordance with section 266 of the Judicial Code (28 U.S.C. § 380 (28 U.S.C.A. § 380)), gave judgment for the defendants, with a comprehensive opinion to which little can be added. 16 F.Supp. 575. The case is here upon appeal. 28 U.S.C. § 380 (28 U.S.C.A. § 380).

The power of a state to fix a minimum price for milk in order to save producers, and with them the consuming public, from price cutting so destructive as to endanger the supply, was affirmed by this Court in Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469, and in other cases afterwards. Hegeman Farms Corp. v. Baldwin, 293 U.S. 163, 55 S.Ct. 7, 79 L.Ed. 259; Borden's Farm Products Co. v. Ten Eyck, 297 U.S. 251, 56 S.Ct. 453, 80 L.Ed. 669. Appellants are not asking us to undo what was there done. They take the ground, however, that the statute of Virginia is open to objections that were inapplicable to the statute of New York. The present grounds of criticism will be considered one by one.

1. The statute is not invalid as an unlawful delegation of legislative power.

The General Assembly of the Commonwealth in setting up the Milk Commission did not charge it with a duty to prescribe a scale of prices in every portion of the state. The commission was to establish market areas, and with reference to each area was to determine, after a public hearing, whether there was need within such area that prices should be regulated. If it was satisfied of the need, it was to fix a scale accordingly. The argument for the appellants is that in this there was a grant of discretionary power overpassing the limits of lawful delegation.

The Constitution of the United States in the circumstances here exhibited has no voice upon the subject. The statute challenged as invalid is one adopted by a state. This removes objections that might be worthy of consideration if we were dealing with an act of Congress. How power shall be distributed by a state among its governmental organs is commonly, if not always, a question for the state itself. Nothing in the distribution here attempted supplies the basis for an exception. The statute is not a denial of a republican form of government. Constitution, art. 4, § 4. Even if it were, the enforcement of that guarantee, according to the settled doctrine, is for Congress, not the courts. Pacific Telephone Co. v. Oregon, 223 U.S. 118, 32 S.Ct. 224, 56 L.Ed. 377; State of Ohio ex rel. Davis v. Hildebrant, 241 U.S. 565, 36 S.cT. 708, 60 L.Ed. 1172; State of Ohio ex rel. Bryant v. Akron Metropolitan Park District, 281 U.S. 74, 79, 80, 50 S.Ct. 228, 230, 74 L.Ed. 710, 66 A.L.R. 1460. Cases such as Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446, and Schechter Poultry Corporation v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947, cited by appellants, are quite beside the point. What was in controversy there was the distribution of power between President and Congress, or between Congress and administrative officers or commissions, a controversy affecting the structure of the national government as established by the provisions of the national Constitution.

So far as the objection to delegation is founded on the Constitution of Virginia, it is answered by a decision of the highest court of the state. In Reynolds v. Milk Commission, 163 Va. 957, 179 S.E. 507, the Supreme Court of Appeals passed upon the validity of the statute now in question. The commission sued distributors to enjoin them from selling milk at a price lower than the prescribed minimum, and the injunction was granted against the defendants' objection that the statute was invalid. Upon appeal to the Supreme Court of Appeals the judgment was affirmed. To escape the force of that decision the argument is made that the question of unlawful delegation was not considered or decided. But the contrary is plainly indicated both in the opinion of the court and in that of its dissenting members. The prevailing opinion summarizes the arguments against the act, and among them is this (163 Va. 957, at page 976, 179 S.E. 507, 514), that there is 'the delegation to the commission of the power to enact legislation which is both prohibitory and penal in character and which will be operative only in such milk areas as the commission may define.' The dissenting opinion says (163 Va. 957, at page 980, 179 S.E. 507, 516): 'The commission may order milk to be sold at one price in Staunton, at another in Harrisonburg, and may leave Woodstock to shift for itself.' These statements are too clear to leave room for misconstruction. A judgment by the highest court of a state as to the meaning and effect of its own Constitution is decisive and controlling everywhere.

2. The statute is not invalid in its present application by reason of a provision for the cancellation of the prices established for a market, if cancellation is requested by a majority of the producers and distributors in the area affected.¹

The argument is made that the effect of that provision is to vest in unofficial agencies, capriciously selected, a power of repeal to be exercised at pleasure. The case of Eubank v. Richmond, 226 U.S. 137, 33 S.Ct. 76, 57 L.Ed. 156, 42 L.R.A.(N.S.) 1123, Ann.Cas.1914B, 192, is cited for the proposition that this cannot be done consistently with the Fourteenth Amendment of the Federal Constitution. Delegation to official agencies is one thing, there being nothing in the concept of due process to require that a particular agency shall have a monopoly of...