307 U.S. 38 (1939), 505, Mulford v. Smith

Docket Nº:No. 505
Citation:307 U.S. 38, 59 S.Ct. 648, 83 L.Ed. 1092
Party Name:Mulford v. Smith
Case Date:April 17, 1939
Court:United States Supreme Court
 
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307 U.S. 38 (1939)

59 S.Ct. 648, 83 L.Ed. 1092

Mulford

v.

Smith

No. 505

United States Supreme Court

April 17, 1939

        Argued March 8, 1939

        APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

        FOR THE MIDDLE DISTRICT OF GEORGIA

        Syllabus

        1. Producers of tobacco, challenging the constitutionality of provisions of the Agricultural Adjustment Act of 1938, sought to enjoin warehousemen from deducting penalties under the Act from the sales price of tobacco to be sold on behalf of the plaintiffs, in excess of their respective quotas.

        Held:

        (1) The suit is within § 24(8) Jud.Code, which confers jurisdiction upon District Courts "of all suits and proceedings arising under any law regulating commerce," irrespective of citizenship of parties or amount in controversy. P. 46.

        (2) The suit is not forbidden by R.S. 3224, which applies only to restraint of assessment or collection of a tax. P. 46.

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        (3) Upon the averments of the bill the case is of equitable cognizance, for want of adequate legal remedy. P. 46.

        2. Title III of the Agricultural Adjustment Act of 1938, reciting, inter alia, the importance to the Nation of the marketing of tobacco; that tobacco is sold on a national market -- almost wholly in interstate and foreign commerce, and that, without federal assistance, tobacco farmers are unable to bring about orderly marketing, with the consequence that excessive supplies are produced and dumped on the market, bringing burdens and obstructions to interstate and foreign commerce -- directs that, when in any year, on November 15th, the Secretary of Agriculture finds that the total supply of tobacco, as of July 1st, exceeded the reserve supply level which is defined in the Act, he shall proclaim the total supply, and a national marketing quota shall be in effect throughout the marketing year which commences the following July 1st, but not if more than one-third of the producers of the crop of the preceding year, at a referendum held by the Secretary, oppose the imposition of such quota. The quota for any year is to be first apportioned among the States, largely on the basis of past production, and each state allotment is to be apportioned among the farms largely on the basis of past production and marketing. Each farmer is to be notified of his marketing quota, and if tobacco in excess of the quota for any farm on which it was produced is marketed through a warehouseman, the latter must pay to the Secretary a penalty equal to fifty percent. of the market price of the excess, and may deduct an amount equivalent to the penalty from the price paid the producer.

        Held:

        (1) The statute does not purport to control production, but regulates commerce in tobacco through marketing. P. 47.

        (2) Where marketing conditions are such that regulation as to sales in interstate and foreign commerce cannot be effective unless extended to sales in intrastate commerce also, such extension of regulation is constitutional. P. 47.

        (3) In order to foster, protect and conserve interstate commerce, or to prevent the flow of that commerce from working harm to the people, the amount of a given commodity which may be transported in it may be limited. P. 48.

        (4) The motive of Congress in asserting the power is irrelevant to the validity of the legislation. P. 48.

        (5) The provisions under review do not amount to unconstitutional delegation of the legislative power to the Secretary of Agriculture. P. 48.

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        Definite standards are laid down in the Act to govern the Secretary in fixing the quota and in its allotment amongst the States and farms. He is directed to adjust allotments so as to allow for specified factors which have abnormally affected the production of the State or the farm in question in test years. Congress has indicated in detail the considerations to be held in view in making these adjustments, and, in order to protect against arbitrary action, has afforded both administrative and judicial review to correct errors.

        3. In its application to the marketing year 1938, the above-mentioned Act provided that the national marketing quota should be proclaimed within 15 days from February 16, 1938, the date of the Act's approval. Subsequent steps were so far delayed that producers of flue-cured tobacco in Georgia and Florida, who had begun preparations in the preceding December for their 1938 crops, and at great expense had brought them to harvest, curing and grading, were not notified of their quotas, which were below the quantities produced, until a few days before the markets opened.

        Held, that, in being subjected to the statutory penalty on the excess, they were not deprived of property without due process, through retroactive operation of the statute. Pp. 49, 51.

        The statute operated not on production, but prospectively on marketing, the activity regulated. It did not prevent any producer from holding over the excess of tobacco produced, or from processing and storing it for sale in a later year, and the circumstance that the producers in Georgia and Florida had not provided facilities for these purposes is not of legal significance.

        24 F.Supp. 919, affirmed.

        APPEAL from a decree of a three-judge District Court which dismissed the bill in a suit brought by tobacco farmers to enjoin warehousemen from deducting and remitting to the Secretary of Agriculture the penalties inflicted by the Agricultural Adjustment Act of 1938 on tobacco sold for the plaintiffs in excess of the quotas assigned to their respective farms. The suit was begun in the Superior Court of Georgia. The defendants removed the case to the federal court. The United States intervened under the Act of August 24, 1937.

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        ROBERTS, J., lead opinion

        MR. JUSTICE ROBERTS delivered the opinion of the Court.

        The appellants, producers of flue-cured tobacco, assert that the Agricultural Adjustment Act of 1938,1 is unconstitutional as it affects their 1938 crop.

        The portions of the statute involved are those included in Title III, providing marketing quotas for flue-cured tobacco.2 The Act directs that, when the supply is found to exceed the level defined in the Act as the "reserve supply level," a national marketing quota shall become effective which will permit enough flue-cured tobacco to be marketed during the ensuing marketing year to maintain the supply at the reserve supply level. The quota is to be apportioned to the farms on which tobacco is grown. Penalties are to be paid by tobacco auction warehousemen for marketing tobacco from a farm in excess of its quota

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       Section 311 is a finding by the Congress that the marketing of tobacco is a basic industry which directly affects interstate and foreign commerce; that stable conditions in such marketing are necessary to the general welfare; that tobacco is sold on a national market, and it and its products move almost wholly in interstate and foreign commerce; that, without federal assistance, the farmers are unable to bring about orderly marketing, with the consequence that abnormally excessive supplies are produced and dumped indiscriminately on the national market; that this disorderly marketing of excess supply burdens and obstructs interstate and foreign commerce, [59 S.Ct. 650] causes reduction in prices and consequent injury to commerce, creates disparity between the prices of tobacco in interstate and foreign commerce and the prices of industrial products in such commerce, and diminishes the volume of interstate commerce in industrial products, and that the establishment of quotas as provided by the Act is necessary and appropriate to promote, foster and obtain an orderly flow of tobacco in interstate and foreign commerce.

        There is no provision for continuous regulation of tobacco marketing, but, by § 312(a), regulation becomes effective in any year only if, on November 15th, the Secretary finds that the total supply of tobacco as of July 1st exceeded the reserve supply level which is defined in the Act.3 If he so finds, he shall, by December 1st, proclaim the total supply, and a national marketing quota shall be in effect throughout the marketing year which commences the following July 1st. The quota is to be the amount which the Secretary finds will make available during the ensuing marketing year a supply of tobacco equal to the

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reserve supply level. As it was not passed until after November 15, 1937, the Act provided, with respect to the marketing year beginning July 1, 1938, for which the quotas involved in this case were in effect, that the determination and proclamation of the national marketing quota should be made within fifteen days after the statute's approval.4

        Within thirty days after proclamation, the Secretary is to conduct a referendum of the producers of the crop of the preceding year to ascertain whether they favor or oppose the imposition of a quota. If more than one-third oppose, the Secretary is to proclaim the result before January 1st, and the quota is not to be effective.5

        By § 313(a), it is directed that the quota is to be first apportioned among the states based on the total quantity of tobacco produced in each state during the five years immediately preceding the year in question, plus the normal production of any acreage diverted under any agricultural adjustment and conservation program in any of the years. The basic determination is to be adjusted to correct state allotments, giving due consideration to seed bed or other plant diseases, production trends, or abnormal producing conditions which affected production in the several states...

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