Borden's Farm Products Co. v. Baldwin

• Decision Date: 06 June 1934
• Citation: 7 F. Supp. 352
• Parties: BORDEN'S FARM PRODUCTS CO., Inc., v. BALDWIN, Com'r of Agriculture and Markets, et al.
• Court: U.S. District Court — Southern District of New York

7 F. Supp. 352

BORDEN'S FARM PRODUCTS CO., Inc., v. BALDWIN, Com'r of Agriculture and Markets, et al.

District Court, S. D. New York.

June 6, 1934.

Timothy N. Pfeiffer, of New York City, for plaintiff.

Henry S. Manley, of Albany, N. Y., for defendants.

Gabriel Kotcher and Ezra B. Kotcher, both of New York City, Leonard Acker, of Brooklyn, N. Y., and Abraham Lipton, of New York City, as amici curiæ, representing various independent milk dealers.

Before L. HAND, Circuit Judge, and GODDARD and COXE, District Judges.

L. HAND, Circuit Judge.

This case comes up upon a bill in equity to enjoin the Commissioner of Agriculture and Markets of New York, the Director of the Division of Milk Control, the Attorney General, and the various district attorneys of the city of New York, from enforcing section 258-q of the Agriculture and Markets Law (Consol. Laws, c. 69), enacted on April 1, 1934; which, so far as is pertinent, is printed in the margin.^* Section 258-m of the act authorized the commissioner upon making proper investigation to fix minimum prices to be paid by milk dealers to producers for milk of various grades, and to be charged by milk dealers to consumers and stores, and by stores to consumers. An earlier act which was to expire on March 31, 1934, contained similar provisions (section 312 (b) and section 317 (c) of chapter 158 of the Laws of 1933), under which the Board of Milk Control, the predecessor of the present commissioner, had determined that the phrase, "well advertised trade name" should include only the plaintiff and three other of the larger dealers in milk. This order has remained in force and the plaintiff has not tried to secure any enlargement of the class. The four distributers named sell about 35 per cent. of the bottled milk that is sold to stores in New York City; the remainder is sold by a large number of "independent" dealers. It does not appear how large a part of the bottled supply which is delivered directly to the consumer is in the hands of the four; the report of the Joint Committee appointed by the New York legislature (page 166), declared that in 1933, 95 per cent. of the retail distribution was in the hands of five companies. By far the greater quantity of milk sold in New York is known as Grade B, the price of which the commissioner fixed at 12 cents for dealers direct to the consumer; 10 cents from the dealer to stores; and 11 cents from the store to the consumer. The result of the privilege given by section 258-q is that unadvertised dealers may sell to stores at 9 cents, and that the stores may pass on this differential to the consumer. The law provides for the granting of licenses by the commissioner without which no one can sell milk (section 257); to get a license the dealer must state such facts as the commissioner considers necessary (section 258), among which he has directed that the applicant shall agree in writing to obey all the provisions of the law. As a consequence the plaintiff must surrender its power to challenge the validity of section 258-q, or proceed by such a bill as this. Every sale of milk is subject to a fine if the seller is not licensed; and as the plaintiff makes many sales every day, the cumulative penalties are destructive. Nobody suggests that the situation so presented is not proper for the intervention of a statutory court under section 266 of the Judicial Code (28 USCA § 380), and our jurisdiction to decide the constitutionality of the statute is therefore apparent and unchallenged. We proceed to the merits.

We may not concern ourselves with the wisdom of the effort in which the Legislature of New York has engaged, or of the appropriateness of the means it has taken. To fix minimum prices for milk may in the end result in lessening consumption and leave the farmer, who is the putative beneficiary, in a worse position than he was before; conceivably there is no escape except by curtailing production, whatever the attendant distress. With all this we have nothing to do; it has now been finally decided that the program is lawful, and our consideration is narrowed to this incident in the general scheme. Nebbia v. N. Y., 291 U. S. 502, 54 S. Ct. 505, 78 L. Ed. 940, 89 A. L. R. 1469. The immediate problem is not old; before June 1, 1933, "loose" (unbottled) milk could be lawfully sold in the city of New York, and it was impractical to sell it at two prices because the ordinary consumer did not distinguish whose milk he was getting; substantially no bottled milk was sold by stores, and there was active competition in "loose" milk, which was sold both by the "well-advertised" dealers and the "independents." When, however, by ordinance the city forbade its sale, the older brands could at once be detected, and the "independents," whose hold upon this part of the market then became precarious, demanded some protection against what they asserted to be an unfair advantage. The Act of 1933 did not when introduced contain any such provision; it was amended in committee, indeed in advance of the actual prohibition of "loose milk," though the ordinance had been passed some months before. The joint legislative committee had not recommended it. Nor did the provision appear in the original act of 1934; again it was introduced at the demand of the "independents" and to meet their supposed grievance. We do not see, however, that this is relevant. Most legislation is the resultant of conflicts between economic or social interests, and the Legislature is the only place where they can be settled. The situation here was such that the Legislature might fear that the larger dealers would gather into their hands substantially all sales of milk to stores; just as they already had gathered direct sales to consumers. If the "independents" had to sell at the same minimum, the public would probably choose the well-known brands; at any rate, that was a reasonable possibility, to be provided against if the result was undesirable. Perhaps it was not; it may be better to allow the four larger companies to take full advantage of their advertising, of their reputation for cleanliness and quality; certainly it is true that the statute seeks to take from them economic advantages which were not only theretofore lawful, but which have generally been commended and fostered. But the consequences of allowing these advantages their full effect would probably, or at least it might, eliminate the "independents" from that part of the market which fed stores. If it did, the whole market would fall into few hands. That might be a good thing, or it might be a bad; but concentration of economic power has generally been watched with a jealous eye in...