Borden Farm Products Co v. Ten Eyck

• Decision Date: 10 February 1936
• Docket Number: No. 597,597
• Citation: 80 L.Ed. 669,56 S.Ct. 453,297 U.S. 251
• Parties: BORDEN'S FARM PRODUCTS CO., Inc., v. TEN EYCK, Com'r of Department of Agriculture and Markets of New York, et al
• Court: U.S. Supreme Court

297 U.S. 251

56 S.Ct. 453

80 L.Ed. 669

BORDEN'S FARM PRODUCTS CO., Inc.,

v TEN EYCK, Com'r of Department of Agriculture and Markets of New York, et al.

No. 597.

Argued Jan. 6, 1936.

Decided Feb. 10, 1936.

Appeal from the District Court of the United States for the Southern District of New York.

Mr. Walter E. Hope, of New York City, for appellant.

[Argument of Counsel from pages 252-254 intentionally omitted] Mr. Samuel Kramer, of New York City, for appellee State of New York.

Mr. Henry S. Manley, of Albany, N.Y., for appellee Ten Eyck and others.

Mr. Justice ROBERTS delivered the opinion of the Court.

This cause is here a second time. The prior appeal was from a decree denying a preliminary injunction and dismissing the bill.¹ We reversed, holding that evidence should be taken, findings and conclusions made, and a decree thereupon entered. After remand the appellant amended its bill, the court sent the case to a master who made findings of fact, stated his conclusions of law, and recommended that an injunction be entered. The District Court accepted the master's findings, and found certain additional facts, but dismissed the bill upon the merits.² From this judgment the present appeal was taken.

As will appear by reference to our former opinion, the appellant's complaint is that the fixing of a differential of not to exceed one cent per quart on sales to stores, in favor of milk dealers not having a 'well advertised trade name,' by the Milk Control Law of April 10, 1933, Laws N.Y. 1933, c. 158 (re-enacted by the Laws N.Y. 1934, c. 126 (Agriculture and Markets Law N.Y., Consol. Laws, N.Y. c. 69, § 258-q, as added by Laws N.Y. 1934, c. 126, § 2)), was an invasion of rights guaranteed by the Fourteenth Amendment. The bill, as framed when the case was here before, recited that the administrative authority which fixed the minimum price on sales to stores found the appellant and three other milk dealers in the metropolitan market had well-advertised trade-names and the statute permitted dealers not having such trade-names to sell bottled milk to stores at one cent per quart less than the minimum which dealers with well advertised trade-names were required to charge, and also permitted stores to resell to their customers the unadvertised brands of milk at a price one cent per quart less than that at which the appellant's milk could be sold under the minimum fixed by the order. Resulting loss of business and irreparable damage were alleged.

In this court the appellees sought to justify the differential by the assertion that the statute was temporary in character, intended to relieve a temporary economic situation, and meanwhile to prevent monopoly of the business by dealers having well-advertised names. In support of this position it was said that prior to the adoption of the Milk Control Act of 1933 independent dealers, so-called, had purchased from producers at prices lower than those paid by appellant and other purveyors of well-advertised brands, and in turn charged less to stores than the appellant and others in its class. By the Milk Control Act the independent dealers were compelled to purchase from the farmers on the same basis as the well-known dealers; and to deprive them of this advantage and in turn to compel them to charge the same price for their milk as the well-advertised brands commanded would be to transfer all their customers to the owners of well-known brands, and put them out of business. The appellant replied that, prior to the adoption of the Milk Control Law, there had been a threat to forbid the sale of milk in bulk to stores; this compelled the independents who had formerly sold mostly bulk milk to change to the bottled trade, and keen competition ensued between them and the owners of well-advertised brands with destructive price cutting throughout the greater part of New York City, so that there was no fixed price for bottled milk sold to stores either by the independents or the well-advertised dealers. In support of these contentions we were referred to statements found in the legislative report leading to the adoption of the Milk Control Law, and the injunction affidavits.

We held we could not take judicial notice of local trade conditions prevailing in the city of New York; as the case had been disposed of below on the allegations of the bill, we were not called upon to examine the affidavits submitted in support of the motion for injunction and to find the facts; and the constitutionality of the challenged provision should be determined in the light of evidence upon the matters as to which the parties were in disagreement.

By amendment the appellant added to its bill paragraphs to the following effect: Prior to 1932 less than one-third of the fluid milk sold in New York was bottled, the balance being sold in bulk and under no trade-name. Toward the end of 1931 a commission recommended that the sale of loose milk to stores be prohibited. The Board of Health made an order, effective January 1, 1933, the effective date of which was subsequently postponed to June 1, 1933, prohibiting the practice. By reason of the impending ban upon the sale of loose milk, dealers engaged in the sale of that commodity were forced to make a drastic change in their methods. The transition from the sale of loose milk to bottled, which began about April 1, 1933, and continued until June 1, 1933, engendered widespread price cutting and a steadily declining price level, and brought about unsettled market conditions and great variations in price. At no time prior to the effective date of the Milk Control Act was there any trade custom, practice, or usage whereby the bottled milk of dealers thereafter classified as not having well-advertised trade-names was sold to stores at a price different from that of the bottled milk of the appellant and others classified as having well-advertised trade-names. Before April 10, 1933, and thereafter, the appellant was in active competition with more than 150 dealers in the sale of bottled milk to stores in the city. The appellant and others classified as having well-advertised trade-names sell approximately 21 per cent. of the bottled milk sold to stores. The prices paid by dealers to producers under the Milk Control Law have been the same for all dealers no matter how classified. All bottled milk must have printed on the cap the name of the dealer distributing it. The services rendered by the appellant and by so-called independent dealers differ in no respect.

The assertions of shrinkage of appellant's sales to stores consequent upon the establishment of the differential were repeated and amplified in the amended bill. An answer was filed denying the allegations of the bill. Much evidence was received.

The findings of the master establish that the dealers having a well-advertised trade-name, of which appellant is one, are in keen competition with each other and with the independent dealers, and have no monopoly, nor anything approaching a monopoly, of the sale of bottled milk to stores. The findings further demonstrate that the good will incident to appellant's well-known trade-name 'Borden's' has been built up largely by advertising, and there is no finding that the appellant's methods in that respect, or its trade practices, have been illegal. Grade B milk, with which we are alone concerned, must conform to standards of quality, purity, and cleanliness prescribed by law, whether sold by appellant or by an independent dealer. The service rendered and the conditions of sale are the same for both. It is plain from these facts that the allowance of the differential cannot be justified as a preventive of monopoly or as a deterrent of illegal combination or illegal trade practices, or as a recognition of differences in the service rendered.

We are brought to the remaining issue of fact to resolve which the case was remanded. Was there a differential during a substantial period prior to adoption of the act between the price charged to stores by dealers having well-advertised trade-names and that charged by those lacking this advantage?

The master's findings upon the point, though the appellant excepted to them, were adopted by the court below. They are to the effect that from November, 1931, to April, 1933, and for several years prior thereto, the independent dealers sold their bottled milk to stores in New York City for resale to consumers at one or more cents per quart below the price at which the advertised dealers were selling their bottled milk to stores in that city; and during the same years the stores were...