Morgan v. United States

• Decision Date: 09 April 1940
• Docket Number: No. 2328 and Related Cases No. 2329-2378.,2328 and Related Cases No. 2329-2378.
• Citation: 32 F. Supp. 546
• Parties: MORGAN et al. v. UNITED STATES et al.
• Court: U.S. District Court — Western District of Missouri

32 F. Supp. 546

MORGAN et al. v. UNITED STATES et al.

No. 2328 and Related Cases Nos. 2329-2378.

District Court, W. D. Missouri, W. D.

April 9, 1940.

John B. Gage, of Kansas City, Mo. (Frederick H. Wood and Thomas T. Cooke, both of New York City, and Carson E. Cowherd, of Kansas City, Mo., on the brief), for petitioners.

Wendell Berge and Hugh B. Cox, Sp. Assts. to Atty. Gen.(James C. Wilson, Sp. Asst. to Atty. Gen., S. R. Brittingham, Jr., Sp. Atty., of Norfolk, Va., Maurice M. Milligan, U. S. Atty., of Kansas City, Mo., and Mastin G. White, Sol., Department of Agriculture, and G. N. Dagger, Atty., Department of Agriculture, both of Washington, D. C., on the brief), for the United States and the Secretary of Agriculture.

Homer H. Berger and Douglas Stripp, both of Kansas City, Mo. (Morrison, Nugent, Berger, Byers & Johns, of Kansas City, Mo., on the brief), for New Amsterdam Casualty Co.

Before VAN VALKENBURGH, Circuit Judge, and REEVES and OTIS, District Judges.

VAN VALKENBURGH, Circuit Judge.

This is the third time this case has come before this court, and a better understanding of the issues now presented requires a recapitulation of the successive steps of the litigation in this court and in the Supreme Court of the United States.

The proceeding was instituted by an order of the Secretary of Agriculture in April 1930. An order presenting rates followed in May 1932. Upon rehearing, granted in July 1932, a new order was made on June 14, 1933. The order of June 14, 1933, was attacked in this court, so far as it prescribed maximum charges for selling livestock, as illegal, arbitrary, and as depriving the plaintiff commission men of their property without due process of law.

The outstanding allegation in the bill, in support of the contention that the order was null and void because plaintiffs had been denied a fair and full hearing, was the charge set forth in paragraph IV that the Secretary had delegated to assistants, purporting to be acting Secretaries of Agriculture, powers and authorities vested by the Packers and Stockyards Act, 7 U.S.C. A. § 181 et seq., solely in the Secretary. That the hearings, such as were granted, were held before such subordinates, who made the findings and conclusions incorporated in said order. That the secretary himself signed the order, but that his sole information with respect to the proceeding was derived from consultation with employees for the Department of Agriculture, largely out of the presence of plaintiffs or their representatives.

Counsel for the secretary moved to strike the paragraph from the bills on the ground that this was a purely departmental administrative proceeding, and this court improvidently indulged that contention and sustained the motion to strike. Subsequently, under misconception of the limitations imposed upon the review of such proceedings, the order was sustained and the bills of complaint were dismissed. D.C., 8 F. Supp. 766.

On appeal to the Supreme Court the decree of this court was reversed and some very pertinent and instructive rulings were made with respect to proceedings under the Packers and Stockyards Act. Morgan v. United States, et al., 298 U.S. 468, 56 S.Ct. 906, 911, 80 L.Ed. 1288. It was there held that:

There is "no basis for the contention that the authority conferred by section 310 of the Packers and Stockyards Act 7 U.S.C. A. § 211 is given to the Department of Agriculture, as a department in the administrative sense. * * *

"The proceeding is not one of ordinary administration, conformable to the standards governing duties of a purely executive character. It is a proceeding looking to legislative action in the fixing of rates of market agencies. * * *

"A proceeding of this sort requiring the taking and weighing of evidence, determinations of fact based upon the consideration of the evidence, and the making of an order supported by such findings, has a quality resembling that of a judicial proceeding. * * *

"To give the substance of a hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determinations must consider and appraise the evidence which justifies them. That duty undoubtedly may be an onerous one, but the performance of it in a substantial manner is inseparable from the exercise of the important authority conferred. * * *

"Facts and circumstances must not be considered which should not legally influence the conclusion. * * *

"In determining whether in conducting an administrative proceeding of this sort the Secretary has complied with the statutory prerequisites, the recitals of his procedure cannot be regarded as conclusive. Otherwise the statutory conditions could be set at naught by mere assertion. If upon the facts alleged the `full hearing' required by the statute was not given, plaintiffs were entitled to prove the facts and have the Secretary's order set aside."

The conclusion was that the district court erred in striking out the allegations of Paragraph IV of the bills of complaint. The decree was reversed and the cause remanded with directions that the defendants therein should be required to answer the allegations contained in that paragraph, and that the question whether plaintiffs had had a proper hearing should be determined.

At the next hearing before this court, constituted as at present, the majority reached the conclusion that the secretary gave plaintiffs that hearing to which the law entitled them, and entered a decree dismissing the bills. Morgan v. United States, D.C., 23 F.Supp. 380, 384. The writer was unable to concur in that conclusion, and the reason for dissent was epitomized in the following language: "It is impossible, in my judgment, to read the testimony of the Secretary without recognizing that he carried into the final determination reached this conception of the proceeding as one belonging to his department in an administrative sense. The examinations he made were casual and perfunctory in the extreme. He says his final determination represented his reactions to the findings of the men in the Bureau of Animal Industry. He accepted these findings because he regarded his subordinates as in a better position than himself to make the decision. In his view `the phrase "Secretary of Agriculture" is perhaps used in connections with regard to laws of this sort in the broad sense as well as in the narrow sense'."

On appeal to the Supreme Court the decree was again reversed and the order of the Secretary held void for failure to allow the full hearing before the Secretary required by the Packers and Stockyards Act. 304 U.S. 1, 58 S.Ct. 773, 999, 82 L. Ed. 1129.

The Secretary of Agriculture at the outset was firmly of the opinion that the authority conferred by section 310 of that Act is given to the Department of Agriculture as a department in the administrative sense. Despite the holding of the Supreme Court in the first Morgan case that there is no basis for this contention (298 U.S. loc. cit. 481, 56 S.Ct. 906, 80 L.Ed. 1288), he in effect still adhered to this view, as witness his deposition taken in the former hearing, in which, having been referred to as the "ratemaker" under the terms of the Act, he said: "Yes, that is correct. I would think, however, that the phrase `Secretary of Agriculture' is perhaps used in connections with regard to laws of this sort in the broad sense as well as the narrow sense."

In the second Morgan opinion, 304 U.S. loc. cit. 18, 58 S.Ct. loc. cit. 776, 82 L.Ed. 1129, the court said:

"The substance of his action is stated in his answer to the question whether the order represented his independent conclusion, as follows:

"`My answer to the question would be that that very definitely was my independent conclusion as based on the findings of the men in the Bureau of Animal Industry. I would say, I will try to put it as accurately as possible, that it represented my own independent reactions to the findings of the men in the Bureau of Animal Industry.'

"Save for certain rate alterations, he `accepted the findings.'"

The following language of that opinion, 304 U.S. loc.cit. 20, 21, 58 S.Ct. loc.cit. 777, 82 L.Ed. 1129, has especial pertinency to the inquiry now before us:

"The requirements of fairness are not exhausted in the taking or consideration of evidence, but extend to the concluding parts of the procedure as well as to the beginning and intermediate steps.

"The answer that the proceeding before the Secretary was not of an adversary character, as it was not upon complaint but was initiated as a general inquiry, is futile. It has regard to the mere form of the proceeding and ignores realities. In all substantial respects, the Government acting through the Bureau of Animal Industry of the Department was prosecuting the proceeding against the owners of the market agencies. The proceeding had all the essential elements of contested litigation, with the Government and its counsel on the one side and the appellants and their counsel on the other. It is idle to say that this was not a proceeding in reality against the appellants when the very existence of their agencies was put in jeopardy. Upon the rates for their services the owners depended for their livelihood, and the proceeding attacked them at a vital spot. This is well shown by the fact that, on the merits, appellants are here contending that under the Secretary's order many of these agencies, although not found to be inefficient or wasteful, will be left with deficits instead of reasonable compensation for their services, and will be compelled to go out of business. And to this the Government responds that if as a result of the prescribed rates some agencies may be unable to continue, because through existing competition there are too many, that fact will not invalidate the order. While we are not now dealing with the merits, the breadth of the Secretary's discretion under our rulings applicable to such a proceeding, Tagg...