Cloverleaf Butter Co v. Patterson

• Citation: 86 L.Ed. 754,315 U.S. 148,315 U.S. 786,86 L.Ed. 1223,62 S.Ct. 491
• Decision Date: 02 February 1942
• Docket Number: No. 28,28
• Parties: CLOVERLEAF BUTTER CO. v. PATTERSON, Commissioner of Agriculture and Industries of Alabama, et al
• Court: United States Supreme Court

315 U.S. 148

62 S.Ct. 491

315 U.S. 786

86 L.Ed. 754

86 L.Ed. 1223

CLOVERLEAF BUTTER CO.

v PATTERSON, Commissioner of Agriculture and Industries of Alabama, et al.

No. 28.

Argued Dec. 9, 10, 1941.

Decided Feb. 2, 1942.

As Amended on Denial of Rehearing March 9, 1942.

Mr. Erle Pettus and Mr. Horace C. Wilkinson, both of Birmingham, Ala., for petitioner.

Messrs. Charles L. Rowe and William H. Loeb, Asst. Attys. Gen., for respondents.

[Argument of Counsel from page 149 intentionally omitted] Mr. Justice REED delivered the opinion of the Court.

The petitioner, Cloverleaf Butter Company, is engaged at Birmingham, Alabama, in the manufacture of process or renovated butter from packing stock butter. It obtains 25% of its supplies of packing stock butter from the farmers and country merchants of Alabama and 75% from those of other states, and it ships interstate 90% of its finished product. The production of renovated butter is taxed and regulated by the United States. Internal Revenue Code, c. 16, §§ 2320 to 2327 inc., 26 U.S.C.A. Int.Rev.Code, §§ 2320 to 2327. It is also regulated by Alabama Ala.Code 1940, Tit. 2, c. 1.

The respondents, Alabama officials charged with the duty of enforcing the Alabama laws in regard to renovated butter, entered petitioner's factory and in a little more than a year seized on sixteen separate occasions a total of over twenty thousand pounds of packing stock butter, the material from which the finished product is made. Defendants also seized some butter moving to the factory in interstate commerce. There is no allegation that condemnation proceedings have been completed.

Alleging repeated seizures and danger of their continuance to the demoralization and financial impairment of its business, petitioners brought an action, Judicial Code § 24(1), 28 U.S.C.A. § 41(1) in the District Court to enjoin the defendants from acting under the Alabama statute either to determine the wholesomeness of renovated butter made from the raw material in petitioner's hands, to inspect its raw material and plant or to seize and to detain petitioner's packing stock butter. The theory of the bill is that the federal legislation and regulations concerning the manufacture of process or renovated butter exclude such state action. Cf. Hebe Co. v. Shaw, 248 U.S. 297, 39 S.Ct. 125, 63 L.Ed. 255; Cor Products Refg. Co. v. Eddy, 249 U.S. 427, 39 S.Ct. 325, 63 L.Ed. 689. There was a motion to dismiss on the ground that the complaint did not state a cause of action. A stipulation entitled as one of 'facts' was entered into. The District Court dismissed the bill, the Circuit Court of Appeals affirmed, 5 Cir., 116 F.2d 227, and we granted certiorari because of the important question of federal law involved in petitioner' contention that these federal statutes providing for regulation of production of a commodity excluded state action. 313 U.S. 551, 61 S.Ct. 834, 85 L.Ed. 1515.

The so-called stipulation of facts just mentioned is really a limitation of issues. One paragraph of the stipulation will crystallize the essential elements of the dispute. It reads: 'The parties to this cause stipulate and agree that the legal questions in dispute between the parties are: * * * 2. Does the inspection of packing stock butter, in interstate commerce, used by the plaintiff in the manufac- ture of process or renovated butter as alleged in the bill of complaint, made or directed to be made by the Secretary of Agriculture of the United States, pursuant to the Federal laws and regulations relating to renovated or process butter, have the effect in connection with said Federal laws of excluding the State of Alabama, its officers and agents, from inspecting or seizing or suspending the packing stock butter, in interstate commerce out of which renovated butter to be sold in interstate commerce as alleged in the complaint is manufactured by the plaintiff as alleged in the complaint?' As other paragraphs state variations of this controversy or conclusions of law not controlling on the courts, Estate of Sanford v. Comm'r, 308 U.S. 39, 51, 60 S.Ct. 51, 59, 84 L.Ed. 20, we need not consider them further. The central question presented in the petition for certiorari accords with the excerpt from the stipulation.

Apparently there is no specific allegation or admission that the packing stock butter which Alabama inspected and seized was the property of the petitioning manufacturer at the time. It has, however, been so treated by the courts and parties and properly so, we conclude, from the allegations of the bill.¹ The reach of this decision is therefore limited to Alabama's inspection and seizure of packing stock butter, actually owned by petitioner and held in its own hands or those of its bailees, whether in factory warehouse or course of carriage, for manufacture into process or renovated butter for interstate or foreign commerce.

The test to be applied to the action of the state in seizing material intended solely for incorporation into a product prepared for interstate commerce is the effect of that action upon the national regulatory policy declared by the federal statute. Cf. Illinois Nat. Gas Co. v. Central Illinois Pub. Serv. Co., 314 U.S. 498, 62 S.Ct. 384, 86 L.Ed. —-, decided January 5, 1942. Not only does Congressional power over interstate commerce extend, the 'Laws of any State to the Contrary notwithstanding,'² to interstate transactions and transportation, but it reaches back to the steps prior to transportation and has force to regulate production 'with the purpose of so transporting' the product. United States v. Darby, 312 U.S. 100, 117, 61 S.Ct. 451, 458, 459, 85 L.Ed. 609, 132 A.L.R. 1430. It extends to the intrastate activities which so affect commerce as to make regulation of them appropriate means to the attainment of a legitimate end, regulation of interstate commerce. Id., 312 U.S. 118 et seq., 61 S.Ct. 459, 85 L.Ed. 609, 132 A.L.R. 1430, and cases cited. By the regulatory provisions of Internal Revenue Code § 2325, note 10, infra, the entire process of manufacture is subject to federal supervision. Thus so far as any situation here involved is concerned, the scope of Congressional power is such that it may override the exercise of state power and render impossible its application to petitioner's manufacturing processes.

This power of Congress to exercise exclusive control over operations in interstate commerce is not in dispute here.³ Nor is this power limited to situations where national uniformity is so essential that lacking Congres- sional permission all state action is inadmissible notwithstanding a complete absence of federal legislation.⁴ Exclusive federal regulation may arise, also, from the exercise of the power of Congress over interstate commerce where in the absence of Congressional action the states may themselves legislate. It has long been recognized that in those fields of commerce where national uniformity is not essential, either the state or federal government may act. Willson v. Black-bird Creek Marsh Co., 2 Pet. 245, 7 L.Ed. 412; California v. Thompson, 313 U.S. 109, 114, 61 S.Ct. 930, 932, 85 L.Ed. 1219. Where this power to legislate exists, it often happens that there is only a partial exercise of that power by the federal government. In such cases the state may legislate freely upon those phases of the commerce which are left unregulated by the nation.⁵ But where the United States exercises its power of legislation so as to conflict with a regulation of the state, either specifically⁶ or by implication,⁷ the state legislation becomes inoperative and the federal legislation exclusive in its application.

When the prohibition of state action is not specific but inferable from the scope and purpose of the federal legislation, it must be clear that the federal provisions are inconsistent with those of the state to justify the thwarting of state regulation.⁸

Apparently there are no cases of this Court dealing specifically with state interference with federally regulated manufacturing. It is evident, we think, that the same principles govern state action in this field as in the instances cited under note 7 to show the exclusive power of federal enactments in transportation, employers liabil- ity, quarantine and aliens. The rule is clear that state action may be excluded by clear implication or inconsistency. Its application to individual cases creates difficulties. The differentiation between cases where the assumption of federal power is exclusive and where it admits state action is narrow. For example, in Oregon-Washington R. & Nav. Co. v. Washington, 270 U.S. 87, 46 S.Ct. 279, 70 L.Ed. 482, Section 8 of the Plant Quarantine Act, 37 Stat. 315, 318, as amended 39 Stat. 1165, 7 U.S.C. § 161, 7 U.S.C.A. § 161, was held to exclude a state quarantine against plant infestation. Yet a little later in Mintz v. Baldwin, 289 U.S. 346, at page 352, 53 S.Ct. 611, 614, 77 L.Ed. 1245, a very similar statute, the Cattle Contagious Diseases Act was held to permit a state quarantine, because this latter act differed from the former, in that its provisions, 'by specification of the cases in which action under it shall be exclusive, disclose the intention of Congress that, subject to the limitations defined, state measures may be enforced. This difference is essential and controlling.' Cf 21 U.S.C. § 126, 21 U.S.C.A. § 126.

It is urged that the later Welch, Eichholz and Maurer cases, cited above, which allow state action when the federal statute does not cover the particular point regulated show a trend away from the doctrine of the Oregon-Washington R. & Nav. Co. decision. Other similar instances may be found in notes 3 and 5, supra. In all of these, however, it was the ruling of this Court that the federal enactment was consistent with the narrow regulation sought to be enforced by the state so that the state enactment did not stand 'as an obstacle to the accomplishment and execution of the full...