Acker v. United States 8212 1936
| Decision Date | 18 May 1936 |
| Docket Number | No. 655,655 |
| Citation | 298 U.S. 426,80 L.Ed. 1257,56 S.Ct. 824 |
| Parties | ACKER et al. v. UNITED STATES et al. Argued March 3—6, 1936 |
| Court | U.S. Supreme Court |
mS.CT825m- Messrs. George I. Haight and John S. Boyd, both of Chicago, Ill., for appellants.
Mr. John Dickinson, Asst. Atty. Gen., for appellees.
September 23, 1932, the Secretary of Agriculture, acting under the Packers and Stockyards Act, 1921,1 ordered an inquiry and gave notice of a hearing to determine the reasonableness of rates charged by market agencies doing business at the Union Stockyards in Chicago. After protracted hearings and argument, he made findings of fact, announced his conclusion that the existing rates were unreasonable, and fixed new maximum rates. The appellants, who conduct market agencies, petitioned for rehearing. This the secretary denied, but by a supplemental order he increased some rates. An amended petition for rehearing was dismissed and the appellants then filed their bill in the District Court seeking an injunction against enforcement of the original and supplemental orders. The case was heard by three judges, who granted an interlocutory injunction. At final hearing, the appel- lants offered in evidence the record of the proceedings before the secretary and also proffered additional testimony which was received over the appellees' objection and subject to their exception. The court dismissed the bill, holding that the secretary's findings were supported by substantial evidence. In the light of the evidence before him, and that adduced at the trial, the court adopted the secretary's findings as its own; adjudged the prescribed rates reasonable, and concluded the orders entered were not arbitrary and did not operate so as to take the agencies' property without due process of law.
The appellants contended in the court below, and here insist, that the secretary failed to apply the principles for ascertaining reasonable rates approved by this court in Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524; improperly invaded the field of management in determining reasonable unit costs; used an improper test period for ascertaining costs; disregarded the evidence in fixing an allowance for salesmenship costs and expense of getting and maintaining business, and arbitrarily denied the petitions for rehearing. These errors, so they claim, resulted in the fixing of unreasonable and confiscatory rates.
The services performed by commission merchants in the Chicago yards are substantially the same as those described in the opinion in Tagg Bros. & Moorhead v. United States, supra, touching the market agencies at the Omaha stockyards. Little capital is invested; the business is the rendering of personal services for which charges are made according to a uniform schedule. In ascertaining whether the rates are reasonable, the prime factor is the agencies' costs, of which the most important are salesemen's compensation and the expense of getting and maintaining business. The old schedule of rates, like that prescribed for the Omaha yards, and considered in Tagg Bros. & Moorhead v. United States, supra, was based upon carload lots. In the present case the secretary determined that a more accurate and reasonable schedule could be prepared on the basis of the consignment rather than that of the carload. In order to ascertain unit costs it was necessary for him to break down the total costs into three principal items—salaries, other expenses, and interest. These in turn were subdivided thus: Salaries into selling and buying, yarding, business getting and maintaining, office and administrative; other expenses into yarding, office, business geting and maintaining, administrative and general, and risk. Interest was calculated on the value of fixed assets, inventory of supplies, and cash working capital equivalent to one month's expense allowance. Costs were thus determined for each sort of livestock handled. In arriving at the rate, an allowance was made for management and uninsurable risks; that is, for profit. The secretary stated that he adopted the same principles for determining rates as were approved in the Tagg Bros. Case. The complaints against the rates are not directed to these principles, but to their application in the present case. We think they are without merit.
1. In general, the secretary's findings are challenged as not giving proper weight to the past experience of the market agencies. As the findings demonstrate, full consideration was given to the costs incurred, but in ascertaining a reasonable unit cost as the basis of a uniform rate the secretary was not bound to, and indeed he coul not, adopt any one agency's costs or an average of the costs of all of them; to do so would be to leave out of consideration relative size, relative volume, and relative efficiency of individual agencies.
2. The attack upon the allowance for salesmen's salaries is bottomed on the fact that the secretary refused to adopt an average of salaries heretofore paid. He was not required so to do. What is a typical salesman's performance, and a fair recompense for it, is a matter of judgment based upon all the facts. That the secretary considered and weighed the evidence is clearly shown by his findings; that he exercised an informed judgment upon it cannot successfully be denied.
Many proprietors of agencies take part in the activities of buying, selling, yarding, etc. As they own the enterprise, they receive no salaries. Their recompense is the profit realized from the business. What each of them thus earned during the test period was disclosed at the hearing. The appellants insisted that the secretary should in his cost computations fix a salary allowance for such owners without reference to their actual earnings. In order to furnish a basis for a finding in this behalf, they procured independent persons, said to have knowledge of the subject, to make appraisals of the value of the services of these owners and introduced the appraisals in evidence. They insist that because the secretary, in arriving at selling costs, ignored these hypothetical salaries, his action was arbitrary and unreasonable. We cannot so hold. We think it evident that he was justified in considering conditions as he found them and refusing to load the business with a cost having no relation to actualities.
3. With respect to the cost of getting and maintaining business, the secretary had before him a complete analysis of the actual expenditures made during an adequate test period. He had ample evidence pro and con as to the necessity and wisdom of these expenditures. It appears that he weighed the proofs, found that in certain respects the expenditures had been extravagant and wasteful, and, in the exercise of judgment, arrived at a cost he considered fair and adequate. The contention is that the amount to be expended for these purposes is purely a question of managerial judgment. But this overlooks the consideration that the charge is for a public service, and regulation cannot be frustrated by a requirement that the rate be made to compensate extravagant or unnecessary costs for these or any purposes. We are not persuaded that the conclusions as to proper allowances on this head were without substantial support in...
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