Antonio Roig Sucrs. S. En C. v. Sugar Board of Puerto Rico

• Citation: 235 F.2d 347
• Decision Date: 17 July 1956
• Docket Number: 4960,No. 4959,4972.,4959
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Parties: ANTONIO ROIG SUCRS. S. EN C. et al., Petitioners, Appellants, v. The SUGAR BOARD OF PUERTO RICO, Defendant, Appellee. EASTERN SUGAR ASSOCIATES, (a Trust), Petitioners, Appellants, v. The SUGAR BOARD OF PUERTO RICO. EASTERN SUGAR ASSOCIATES (a Trust), v. COLONOS DE CANA DE SANTA JUANA, Inc., et al., Appellees.

235 F.2d 347 (1956)

ANTONIO ROIG SUCRS. S. EN C. et al., Petitioners, Appellants, v. The SUGAR BOARD OF PUERTO RICO, Defendant, Appellee.

EASTERN SUGAR ASSOCIATES, (a Trust), Petitioners, Appellants, v. The SUGAR BOARD OF PUERTO RICO.

EASTERN SUGAR ASSOCIATES (a Trust), v. COLONOS DE CANA DE SANTA JUANA, Inc., et al., Appellees.

Nos. 4959, 4960, 4972.

United States Court of Appeals First Circuit.

July 17, 1956.

Francisco Castro-Amy, San Juan, P. R., with whom James R. Beverley and R. Castro-Fernandez, San Juan, P. R., were on brief, for Antonio Roig Sucrs. S. en C. et al., appellants.

E. T. Fiddler, San Juan, P. R., with whom Jose G. Gonzalez, Tomas I. Nido and Carlos J. Faure, San Juan, P. R., were on brief, for Eastern Sugar Associates (A Trust), appellant.

Abe Fortas, Special Asst. Atty. Gen., of Puerto Rico, J. B. Fernández Badillo, Asst. Atty. Gen., of the Commonwealth of Puerto Rico, with whom Jose Trias Monge, Atty. Gen. of Puerto Rico, and Arnold, Fortas & Porter, Washington, D. C., were on brief, for The Sugar Board of Puerto Rico, appellee.

Colonos de Cana de Santa Juana, Inc., appellee, submitted on brief of The Sugar Board of Puerto Rico by leave of Court.

Before MAGRUDER, Chief Judge, and MARIS and WOODBURY, Circuit Judges.

WOODBURY, Circuit Judge.

These appeals under Title 28 U.S.C. § 1293 from final decisions of the Supreme Court of Puerto Rico present questions of the validity under the Constitution of the United States of certain provisions of the Sugar Act of Puerto Rico. Act No. 426 of May 13, 1951; Laws of Puerto Rico, 1951, page 1138. In addition Eastern Sugar Associates in its appeal No. 4960 alleges error in that the Supreme Court of Puerto Rico deprived it of a forum in which to defend its constitutional rights.

The sugar problem of Puerto Rico is an old, obstinate, and difficult one. And its solution is of vital importance for we may take judicial notice of the well known fact that the economy of the Island rests in major part upon the growing of sugar cane and the processing of the cane into raw sugar. Moreover, the growing of the cane and its grinding are closely related enterprises for the reason that while the cane is grown in large part by independent farmers called colonos, a great many of whom have only small holdings, it is also grown by the processors themselves, usually on large holdings; and furthermore, since cane is heavy and bulky and must be ground within twenty-four hours after it is cut, the colonos are per force dependent upon the services of some nearby mill or central, each one of which represents a substantial capital investment.

The Sugar Act of Puerto Rico, supra, is the third of a series of statutes enacted by the local legislature since 1937 for the purpose of providing a comprehensive scheme for the regulation of the sugar industry in both its agricultural and its industrial aspects. The appellants do not challenge the power of the insular legislature either to enact such statutes or to include therein provisions regulating the compensation which the colonos are entitled to receive for their cane from the centrals. Indeed, the legislative power in the premises could not successfully be attacked in view of the decisions of this court in Vidal v. Fernandez, 1 Cir., 1939, 104 F.2d 606, and Roig v. People of Puerto Rico, 1 Cir., 1945, 147 F.2d 87. The appellants here challenge only certain features of the 1951 statutory scheme for compensating the colonos for their cane.

The appellants in the first two appeals, Nos. 4959 and 4960, question the constitutional validity of § 7 of the Sugar Act of Puerto Rico as interpreted by the Sugar Board created by the Act in its Rule 2 and by the Supreme Court of Puerto Rico. We shall consider first the contentions of these appellants and then pass on to consideration of the contention of the appellant in the third appeal.

Historically the centrals in Puerto Rico have either purchased cane from the colonos at a price per ton calculated on the sugar content of the cane or have ground cane for the colonos on the toll basis, the amount of toll also calculated on the sugar content of the cane. The earlier insular sugar acts of 1937 and 1942 sanctioned both of these alternative methods of compensating the colonos but regulated the amount of toll to be taken or the price to be paid by the centrals. However, at least in later years, payment in cash became the usual method of compensation. The Sugar Board found and it is not disputed that during the 1952 grinding season, 26 (one on an experimental basis for that year only) of the 33 centrals grinding colonos' cane¹ paid for it in cash, and of the 7 remaining centrals operating on the toll basis, 4, all Eastern's, delivered the colonos' share of the sugar derived from their cane directly to them, or to some person authorized to receive it for them, and 3 under agency agreements sold the colonos' share of the sugar with their own and settled with the colonos for cash. The Supreme Court of Puerto Rico held that the Sugar Board in its Rule 2 correctly construed § 7 of the Sugar Act as altering this historic pattern of dealing between centrals and colonos by requiring all centrals, regardless of their previous practice, to liquidate with the colonos in cash except as to those colonos who gave the central notice within a period of time fixed by the Act of their desire to have their cane ground on the toll basis. The appellants contend that this statutory requirement that the centrals operate on the cash basis unless the colonos elect otherwise deprives them, the centrals, of their property and of their freedom of contract without due process of law in violation of either the Fifth or the Fourteenth Amendment of the federal Constitution.²

We take our text from the opinion of the Supreme Court of the United States in Nebbia v. People of State of New York, 1934, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, wherein the Court enunciated the general principles governing cases of this sort. It is said by way of introduction on pages 523 and 524 of 291 U. S., at page 510 of 54 S.Ct.:

"Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest. * * *

* * * * *

"* * * These correlative rights, that of the citizen to exercise exclusive dominion over property and freely to contract about his affairs, and that of the state to regulate the use of property and the conduct of business, are always in collision. No exercise of the private right can be imagined which will not in some respect, however slight, affect the public; no exercise of the legislative prerogative to regulate the conduct of the citizen which will not to some extent abridge his liberty or affect his property. But subject only to constitutional restraint the private right must yield to the public need."

And on page 525, of 291 U.S., on page 510 of 54 S.Ct., the Court marked the bounds of constitutional restraint under the due process clauses. It said:

"The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. * * *"

Then, on page 537 of 291 U.S., on page 516 of 54 S.Ct., the Court stated the function of the courts in the premises by saying:

"So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio."

We do not understand any of the appellants to quarrel in the least with these general propositions. The attack of the appellants in the first two appeals upon § 7 of the statute as interpreted by the Sugar Board and the Supreme Court of Puerto Rico, is essentially two-pronged. They say that the only conceivable purpose of § 7 of the Act as construed is to improve the economic position of a single group in the community, the colonos, and hence cannot be said to serve a "public purpose," and that the statute, because it forces the centrals to "enter a new business," i. e. the purchase of cane from the colonos, is necessarily arbitrary, capricious, and unreasonable. We find no merit in either contention.

Certainly § 7 by requiring the centrals to pay in cash unless the colono otherwise elects deprives the centrals of their power unilaterally to decide whether they will grind colonos cane on the toll basis or purchase it — whether they will pay the colonos in kind or in cash. And no doubt the effect of this limitation on the central's freedom of contract was intended to and does redound primarily to the economic benefit of the colonos. Furthermore, we may assume that the purpose of ...