Bowles v. Dairymen's League Co-op. Ass'n

• Decision Date: 22 June 1945
• Citation: 61 F. Supp. 358
• Parties: BOWLES, Price Adm'r, Office of Price Administration, v. DAIRYMEN'S LEAGUE CO-OP. ASS'N et al.
• Court: U.S. District Court — Southern District of New York

61 F. Supp. 358

BOWLES, Price Adm'r, Office of Price Administration, v. DAIRYMEN'S LEAGUE CO-OP. ASS'N et al.

District Court, S. D. New York.

June 22, 1945.

Paul L. Ross, of New York City (Elliott Biskind, of New York City, of counsel), for plaintiff.

Fennelly, Lowenstein, Engelhard & Pitcher, of New York City, for defendant Dairymen's.

Herman B. Zipser, of New York City, for defendant Caldwell.

Harry L. Marcus, of Brooklyn, N. Y., for defendants Silvercrest Farms, Inc. and another.

RIFKIND, District Judge.

Plaintiff, having commenced an action by a complaint alleging violations of Maximum Price Regulation 280 (7 F.R. 10144; 8 F.R. 16795; 9 F.R. 1622), and Regional Order G-1 (9 F.R. 2714; 9 F.R. 3618; 9 F.R. 7590), and praying for injunctive relief against all the defendants and a judgment for treble damages against defendant Dairymen's, now moves for an interlocutory injunction. Section 205(a), Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 925(a).

The commodity which is the subject of this suit is fluid milk. The commerce in this commodity is an arena in which many regulatory forces, federal, state¹ and municipal, are in simultaneous operation. Of these, the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq., together with Order No. 27, issued thereunder, and the Emergency Price Control Act are the most pervasive. Dairymen's buys its milk under the former and sells it under the latter. Each system of regulation is directed to its own principal object and it is important that the delicate balance among these contending forces shall not be upset.

The specific violations of Order G-1 charged against the defendants are (1) that Dairymen's has collected and that the other defendants have paid a price for fluid milk which included a factor for butterfat content of the milk in excess of the actual butterfat content of the milk sold; and (2) that Dairymen's has collected and the other defendants have paid, as part of the price of the milk, a transportation charge in excess of the amount permitted by Order G-1.

The material facts are not in dispute. M. P. R. 280 went into effect by its terms on December 3, 1942. Among other food products, it regulated the sale of milk in bulk, at wholesale, by primary handlers to a named class of purchasers. Interhandler sales were not covered by the regulation. On August 19, 1943, the Price Administrator promulgated an amendment to M.P.R. 280 which became Section 1351.817a of that regulation. By that amendment the Administrator delegated to every Regional Administrator power to establish maximum prices for the sale of fluid milk first physically received from producers by handlers at a receiving station or processing plant within the region of the Regional Administrator. Such delegation of authority was permitted by Sections 201(b) and 201(d) of the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 921 (b, d).

Pursuant to the authority so conferred, the Regional Administrator of Region II (comprising New York, New Jersey Pennsylvania, Delaware, Maryland and District of Columbia) issued Order G-1, which by its terms became effective on February 16, 1944. By the terms of that order, the selling price of fluid milk in bulk sold by a "primary handler" to a "dealer" may not exceed, in the category of transactions involved in this suit, the following:

The primary handler's "fluid milk cost," plus 30¢ per hundredweight, f.o.b. the primary handler's receiving or processing plant plus a specified amount for delivery in cans if so delivered, plus a specified amount for pasteurization if pasteurized, plus a transportation charge where delivery is made to a place designated by the purchaser. Such transportation charge may not exceed the lowest of the following:

1. The lowest available common carrier rate.

2. The lowest available contract carrier rate.

3. When transportation is provided in trucks owned or controlled by the seller, the reasonable value of such transportation.

From the affidavits and arguments presented on the motion the following issues emerge:

1. Has the Order G-1 been issued by an officer duly authorized by law to make such regulation; and has this suit been instituted by an officer authorized to prosecute such litigation? 2. Is Dairymen's a primary handler as defined by the Order? 3. Is the method of doing business pursued by Dairymen's permitted by the Order? 4. What is the meaning of "available" in the formula for determining transportation charges?

1. The challenge to the authority of the promulgating agency in issuing Order G-1 and in instituting this suit springs from Section 3(e) of the Emergency Price Control Act, as amended by the Stabilization Extension Act of 1944, 50 U.S.C.A.Appendix, § 903(e), which reads as follows:

"Notwithstanding any other provision of this or any other law, no action shall be taken under this Act by the Administrator or any other person with respect to any agricultural commodity without the prior approval of the Secretary of Agriculture; except that the Administrator may take such action as may be necessary under section 202 and section 205 to enforce compliance with any regulation, order, price schedule or other requirement with respect to an agricultural commodity which has been previously approved by the Secretary of Agriculture."

The approval of the Secretary of Agriculture was given to M.P.R. 280; but the language of M.P.R. 280, (which deals with many food products) reporting such approval does not require the inference that the Administrator regarded the fluid milk here under discussion as an agricultural commodity.²

It has been stipulated by plaintiff and defendant Dairymen's that the approval of the Secretary of Agriculture has not been given to the mentioned amendment to M.P.R. 280 nor to Order G-1. It is the contention of the plaintiff that the milk here considered is not an agricultural commodity but a processed agricultural commodity and therefore not within the provisions of Section 3(e). It is not disputed between the parties that if the milk herein involved is a processed agricultural commodity the approval of the Secretary of Agriculture is not required. This agreement arises from the distinction drawn in the statute between agricultural commodities and commodities processed from any agricultural commodities, Sections 3(a), 3(c); and see, Bowles v. American Brewery, 4 Cir., 1945, 146 F.2d 842; Bowles v. Sunshine Packing Corp. of Pennsylvania, D.C.W.D.Pa.1945, 59 F.Supp. 164. The posture of the problem is, therefore, this: that the O. P. A. Administrator has classified milk received from producers at a receiving station or processing plant, where generally it is cooled for shipment, as not an agricultural commodity within the meaning of Section 3(e). Whether the Administrator is right in so doing is clearly a question of validity which, by Section 204, 50 U.S.C.A.Appendix, § 924, has been withdrawn from consideration by the district courts and vested exclusively in the Emergency Court of Appeals.

Defendant has submitted affidavits by persons apparently competent to express an opinion asserting that such fluid milk is not a processed agricultural commodity, whereas the plaintiff has submitted affidavits to substantiate its claim that it is. The very existence of this issue makes peculiarly relevant the proscription against the consideration of questions of validity. For manifestly, if the Administrator's classification is wrong, then the amendment to M.P.R 280 and Order G-1 have not been issued by an officer duly authorized to make such regulations and are invalid. Such a controversy is one with respect to validity; and the policy of the statute to centralize the disposition of such questions has been meticulously observed in the decisions which have construed Section 204 of the Act. Hence this case does not present for decision the intriguing question whether a district court may refuse to enforce a regulation "invalid on its face." Bowles v. Willingham, 1944, 321 U.S. 503, 526, 64 S.Ct. 641, 88 L.Ed. 892 (concurring opinion of Rutledge, J.); Rottenberg v. United States, 1 Cir., 1943, 137 F.2d 850, 857; Brown v. W. T. Grant Co., D.C.S.D.N.Y.1943, 53 F. Supp. 182, 188; Thomas Paper Stock Co. v. Bowles, Em.App., 1945, 148 F.2d 831, 843.

The uniform lesson of the decisions construing Section 204 of the Act is to avoid carrying out exceptions to the policy of securing nationally uniform adjudication on the issue of validity and to confine such questions to the Emergency Court and to the...