91 F.2d 767 (9th Cir. 1937), 8386, Edwards v. United States

Docket Nº:8386.
Citation:91 F.2d 767
Case Date:July 22, 1937
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 767

91 F.2d 767 (9th Cir. 1937)




No. 8386.

United States Court of Appeals, Ninth Circuit.

July 22, 1937

Page 768

E. V. Knauff, Harry J. McClean, and Erwin H. Haas, all of Los Angeles, Cal., and Henry Wenzlaff, of San Bernardino, Cal., by Harry J. McClean, of Los Angeles, Cal., for appellant.

Peirson M. Hall, U.S. Atty., of Los Angeles, Cal., and W. Carroll Hunter, Atty., U.S. Dept. of Agriculture, of Washington, D.C., and Wendell Berge and John S. L. Yost, Sp. Assts. to Atty. Gen., and Mastin G. White, Sol., U.S. Dept. of Agriculture, and Joseph G. Blandi, Atty., U.S. Dept. of Agriculture, both of Washington, D.C., for the United States.

Those B. Adams, of Jacksonville, Fla., and Wm. N. Ellis and J. J. Parrish, Jr., both of Orlando, Fla., amici curiae.

Before GARRECHT, DENMAN, and HANEY, Circuit Judges.

DENMAN, Circuit Judge:

This proceeding is an appeal from a decree ordering a permanent injunction restraining the appellant from shipping in interstate or foreign commerce any oranges or grapefruit grown in California or Arizona in violation of orders of the Secretary of Agriculture made pursuant to the Agricultural Adjustment Act. The appellant, a shipper of oranges, admits the facts necessary to the District Court's jurisdiction, that the order complies with the provision of the act and that he has violated it. He states his appeal 'is a test case to determine the constitutionality of the Agricultural Adjustment Act,' and confines the appeal to three assignments of error, being the only assignments specified in his brief or discussed at the hearing:

'Specifications of Errors Relied Upon.

'I. The holding by the court that the provisions of Title I of the Agricultural Adjustment Act are constitutional and not in contravention of section 1 of article 1 of the Constitution of the United States.

'II. The holding by the court that the provisions of Title I of the Agricultural Adjustment Act are constitutional and not in contravention of the Fifth Amendment of the Constitution of the United States.

'III. The holding by the court that the provisions of Title I of the Agricultural Adjustment Act are constitutional and not in contravention of the Tenth Amendment of the Constitution of the United States.'

We have adopted the government's brief's analysis of the act, description of the order and statement of fact showing the condition of the citrus industry and appellant's relation to it and the existence of a justiciable controversy, because of the excellence of the summary and the admission and acceptance by appellant in his briefs and at the hearing of the facts as stated.

I. The Applicable Provisions of the Act.

The Agricultural Adjustment Act, as originally enacted, was approved May 12, 1933 (48 Stat. 31, 7 U.S.C.A. § 601 et seq.). The act has been amended from time to time, but, for the purpose of this case, the most important amendatory act is that of August 24, 1935. (49 Stat. 750). The act contains many provisions not applicable to this case. The applicable provisions are set forth in the footnote hereto. 1 These provisions

Page 769

may principally be found in Title I, sections 1, 2, 8b, and 8c (7 U.S.C.A. §§ 601, 602, 608b, 608c)

The act first recites that the normal currents of commerce in agricultural commodities have been burdened and obstructed by

Page 770

the severe disparity between the prices of agricultural commodities and the prices of industrial products which disparity has resulted in the substantial destruction of the purchasing power of farmers for industrial products and the breaking down of the orderly

Page 771

exchange of all commodities. It then makes provision, in its declaration of policy, for the issuance by the Secretary of Agriculture of orders regulating in a prescribed manner only such handling of specified agricultural commodities as is in the current of

Page 772

interstate or foreign commerce, or which directly affects such commerce in such commodities. This is for the purpose of establishing and maintaining such marketing conditions for such commodities as will reestablish prices to farmers at a level that

Page 773

will give such commodities a purchasing power with respect to articles farmers buy equivalent to that which obtained in a prior period, in this case, the pre-war period August, 1909, to July, 1914. The protection of the consumer is provided for by the requirement

Page 774

of a gradual approach to the desired level of farmer purchasing power and by the prohibition of any action which has for its purpose the establishment of a higher level. Sections 1, 2, 8c(1, 2), 7 U.S.C.A. §§ 601, 602, 608c(1, 2).

The Secretary is empowered not only, but required, to issue such orders. Section 8c(1, 4) 7 U.S.C.A. § 608c(1, 4). Orders may also be issued in cooperation with regulations within the jurisdiction, and under the authority, of any state. Section 10(i) 7 U.S.C.A. 610(i).

Orders are applicable to processors, associations of producers, and others engaged in the handling of such commodities, and producers, in their capacity as such, are specifically exempted from regulation. Section 8c(1), (13)(B), 7 U.S.C.A. § 608c(1), (13)(B).

The commodities subject to such regulation, with inapplicable exceptions, are milk, fresh fruits, fresh vegetables, tobacco, soy beans, and naval stores. Section 8c(2), 7 U.S.C.A. § 608c(2). The manner of regulation is carefully circumscribed. As applicable to this case, there may be (a) a limitation of the total quantity of any such commodity which may be marketed in or transported to any or all markets in the current of interstate or foreign commerce, or so as directly to affect such commerce in such commodity, and (b) an allotment of this total quantity among handlers under a uniform rule based upon the quantity which each handler has available for current shipment, to the end that the total quantity may be equitably apportioned among all handlers. Section 8c(6)(A, C,), 7 U.S.C.A. § 608c(6)(A, C). There are special provisions for milk. Section 8c(5), 7 U.S.C.A. § 608c(5).

The order may provide (a) for the selection by the Secretary of an agency to administer the provisions of the order, (b) for the payment to such agency by each handler of his pro rata share of the expenses of administering the order, as such expenses are

Page 775

determined by the Secretary, (c) for the prohibition of unfair methods of competition and unfair trade practices in the handling of the commodity under regulation, and (d) for such other matters as are incidental to, and not inconsistent with, the foregoing provisions and necessary to effectuate the same. Sections 8c(7) and 10(b)(2), 7 U.S.C.A. §§ 608c(7), 610(b)(2).

The effectiveness of any order is dependent upon the determination by the Secretary that the order is approved or favored by a given percentage in number or volume of the producers (two-thirds in volume in the instant case), and upon the execution of a marketing agreement, with like manner of regulation, entered into by the Secretary with handlers of a given percentage of volume (80 per cent. in the instant case of California citrus fruits). However, an order, having the requisite producer approval, may, notwithstanding the refusal of handlers in sufficient volume to sign a marketing agreement, be issued by the Secretary with the approval of the President. Section 8c(8, 9, 10), 7 U.S.C.A. § 608c(8-10). In determining the approval or disapproval of producers, the Secretary is required to consider the action of cooperative associations in this respect as the action of their affiliated producers. Section 8c(12), 7 U.S.C.A. § 608c(12).

As a condition precedent to the issuance of an order, there must be a hearing upon a proposed order, and a finding by the Secretary, based upon evidence introduced at such hearing, that the issuance of the order will tend to effectuate the declared policy of the act. Section 8c(3, 4), 7 U.S.C.A. § 608c(3, 4). Hearings are also required as a condition precedent to the making by the Secretary of any marketing agreement. Section 8b, 7 U.S.C.A. § 608b. 2

There are provisions relating to (a) regional application of orders (section 8c(11), 7 U.S.C.A. § 608c(11), (b) amendments to orders (section 8c(17), 7 U.S.C.A. 608c(17)), (c) termination of orders (section (16), 7 U.S.C.A. § 608c(16)), and (d) Penalty for the violation of any orders respecting which penalty any handler may have (a) immunity during the pendency of a petition filed by him with the Secretary of Agriculture alleging invalidity of the order and (b) a judicial review of the ruling of the Secretary on the petition. Section 8c(14, 15), 7 U.S.C.A. § 608c(14, 15).

The validity of marketing agreements and licenses issued under the provisions of the act before the amendment of August 24, 1935, and outstanding at the time of such amendment, together with any act done pursuant thereto either before or after the enactment of the amendatory act, is preserved by the amendatory act Public No. 320, 74th Congress, Sec. 38, 49 Stat. 750, 7 U.S.C.A. § 608 note).

II. The Applicable Provisions of the Order.

The order is known as Order No. 2 -- Order Regulating the Handling of Oranges and Grapefruit Grown in the States of California and Arizona. The order was issued pursuant to, and in accordance with, the applicable provisions of the act and in accordance with United States Department of Agriculture, Agricultural Adjustment Administration, General Regulations A No. 1 made pursuant to Title I, part 2, section 10(c) of the Act, 7 U.S.C.A. § 610(c). The order was issued January 4, 1936, effective January 13, 1936. It contains the requisite findings of the Secretary based upon evidence...

To continue reading