Borden Co. v. Odham

• Decision Date: 31 July 1959
• Citation: 121 So.2d 625
• Parties: BORDEN COMPANY, a corporation, et al., Appellants, v. J. Brailey ODHAM, Chairman, et al., Appellees.
• Court: Florida Supreme Court

Page 625

121 So.2d 625

BORDEN COMPANY, a corporation, et al., Appellants, v. J. Brailey ODHAM, Chairman, et al., Appellees.

Supreme Court of Florida.

July 31, 1959.

On Rehearing June 22, 1960.

Rehearing Denied July 13, 1960.

Bedell & Bedell, Harold Colee, Jr., Loftin & Wahl, Jacksonville, and Mabry, Reaves, Carlton, Fields & Ward, Tampa, for appellants.

Winston E. Arnow and Harry C. Duncan of Clayton, Arnow, Duncan & Johnston, Gainesville, for appellees.

Scruby & Yonge, Orange Park, for intervenors-appellees.

PER CURIAM.

Statement of Facts

Under Florida law fluid milk is sold and distributed under three classifications. Class I is milk sold in fluid form for human consumption; Class II is milk from which the cream is separated and the skim milk used for purposes other than sale in fluid form for human consumption; Class III is milk from which the cream is separated and the skim milk 'dumped.'

Prior to October, 1957, the Milk Commission, hereinafter referred to as the 'Commission,' fixed the minimum prices payable by distributors to producers for Class I milk but did not fix minimum prices for milk sold as Class II and Class III.

Prior to October, 1957, the Commission entered orders establishing a base-fixing period for each of the several milk marketing areas subject to its jurisdiction under which each producer would earn a 'base' or 'base percentage,' determined by the ratio of the amount of milk delivered by him to his distributor to the total amount of milk delivered to the distributor by all producers during the base-fixing period. The Commission's base-fixing order provided that the base percentage assigned to each producer should be applied to the total number of gallons of milk sold by the distributor in Class I channels for the purpose of determining the number of gallons of milk for which each producer would be paid the Commission-fixed price for Class I milk. As previously stated, the Commission fixed no prices for Class II and Class III milk and no base-fixing order of the Commission purported to apply to or govern the production or sales of Class II or Class III milk.

Prior to October, 1957, the distributors customarily accepted all of the milk produced and delivered to them by their producers, utilizing as much as possible in Class I channels and accounting to the producers for milk sold in Class I channels according to the producers' earned base percentages and paying the producers for the milk received in excess of Class I sales, prices determined by the distributors to be the value of the butterfats and serum solids recovered from such excess milk and utilized or sold for Class II and Class III purposes.

On October 15, 16 and 17, 1957, the Commission held a meeting at Tallahassee, Florida, at which it considered adoption of a statewide base-fixing order and of a statewide price-fixing order which would prescribe minimum producer prices for Class I milk, Class II milk and Class III milk, the latter two of which were not theretofore regulated by the Commission.

On October 17, 1957, the Commission voted to establish minimum producer prices, effective December 1, 1957, in all areas controlled by the Commission of 43cents per gallon for Class II milk, and 30cents per gallon for Class III milk. The price of 61cents per gallon previously established for Class I milk was republished in the new order.

Considering that the minimum prices payable to producers for Class II and Class III milk under the orders so made exceeded the cost of purchasing butterfats and serum solids from other sources to such an extent as to make it economically unsound for the distributors to accept and pay the Commission's prices for such excess milk, the plaintiffs notified their producers that when the Commission-fixed prices for Class II and Class III milk should become effective on December 1, 1957, the plaintiffs would limit the amount of milk accepted from their producers to their anticipated needs for Class I purposes.

On November 19 and 20, 1957, before the price orders voted by the Commission at its October meeting were actually entered, the Commission held another meeting at Tallahassee and voted to revise the prices of Class II and Class III milk which had been adopted at its October meeting. In lieu thereof the Commission voted to adopt price orders, effective January 1, 1958, prescribing the revised minimum prices to be paid producers for Class I, Class II and Class III milk. No change was thereby made for Class I milk, but in lieu of a straight 43cents for all Class II milk, the revised orders provided for a price of 43cents for so much of Class II milk as equaled 5% of the Class I milk, and for the balance of Class II milk, the price was to be determined in accordance with the 'Miami formula.' The price of Class III milk was reduced from 30cents per gallon to 26cents per gallon. After this action was taken by the Commission, the plaintiffs informed their producers that their policy of not accepting milk in excess of Class I requirements would not become effective until January 1, 1958, the effective date of the Commission's revised orders.

Unwilling to accept the Commission-fixed prices for excess milk delivered by their producers, the plaintiff-distributors on December 13, 1957, filed a complaint in Circuit Court of Leon County alleging, among other things, that the Commission was contending that it had power to compel the plaintiffs to accept all of the milk tendered to them by their producers and to pay the Commission-fixed prices therefor, regardless of the distributors' needs or the distributors' willingness to continue accepting such milk; that Commission representatives were making threats to revoke the licenses of the plaintiffs should they refuse to accept all of the milk tendered to them by their producers. The complaint further alleged that no one of the plaintiffs desired to continue purchasing milk from his producers in excess of such plaintiffs' Class I requirements at prices fixed by the defendant Commission or at prices arrived at in any way other than through mutual agreements with plaintiffs' producers, free from compulsion of any order of the Commission purporting to fix minimum prices for such excess milk.

The complaint further says that the Commission does not have the power and authority to compel plaintiffs to accept all milk produced and delivered by their producers and to pay the minimum prices fixed by the Commission for milk used for Class II and Class III purposes regardless of plaintiffs' willingness to purchase all of such milk. Plaintiffs also contend that should the milk law be construed as granting such power and authority to the Commission, the provisions of that law would deprive them of their liberty of contract and their property without due process of law in violation of Section 12 of the Declaration of Rights, Constitution of Florida, F.S.A., and the Fourteenth Amendment, Constitution of the United States. The complaint prayed for injunction and for declaratory decree to determine whether the Commission has the power and authority to require distributors and producer-distributors subject to its jurisdiction to accept any part or all of the milk produced and delivered to them by their producers, including milk which the distributors or producer-distributors neither need nor want. The plaintiffs further prayed that should the court determine that the Commission has such power and authority, the court should further determine and decree:

(a) Whether such authority is limited to requiring acceptance and payment for milk utilized in Class I channels only, or whether such power and authority exists in respect to all classes of milk;

(b) Whether such power and authority is affected by the amount of milk delivered and accepted during the base-setting period and, if so, the extent which such power and aurhority is so affected, and

(c) Whether such power and authority includes power and authority to prohibit and prevent the distributors and producer-distributors from limiting the amounts of deliveries by producers during the basesetting period.

To this complaint the Commission filed an answer and counterclaim. In their answer they assert that the suit was premature because they say that they have not yet determined whether they have, or believe they have, the power and authority to require the plaintiffs and other distributors or producer-distributors subject to the Commission's jurisdiction to accept all milk produced and delivered to them by their producers and to pay the minimum price fixed by the Commission for the milk used for Class II and Class III purposes regardless of the distributors and producer-distributors' Class I requirements and regardless of their willingness to purchase all such milk.

In their counterclaim defendants prayed that the court enjoin plaintiff-distributors [appellants here] from rejecting milk delivered or tendered to them by their producers pursuant to the notices which had been given by the plaintiffs to their producers or for the reasons set forth in the complaint. On December 23, 1957, temporary injunction was entered restraining defendants from instituting any proceedings against the plaintiffs because of any refusal to accept or pay the prices for milk delivered by or on behalf of their producers in excess of those quantities or prices which would be applicable in ordinary continuance of a previous course of dealing and further restraining the plaintiff-distributors from rejecting any milk delivered or tendered for delivery by or on behalf of any producer in ordinary continuance of a previous course of dealing. The plaintiff-distributors were required to file bonds in substantial amounts conditioned, among other things, that each of the plaintiff pay to all of its producers such sum or sums owing said producers in the event it should be finally held that such plaintiff was obligated to accept the milk which it did...