CHIPPEWA COUNTY CO-OP. DAIRY v. Clark

• Decision Date: 08 October 1947
• Docket Number: No. 389.,389.
• Citation: 163 F.2d 753
• Parties: CHIPPEWA COUNTY CO-OP. DAIRY v. CLARK, Director, Division of Liquidation, Department of Commerce.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

163 F.2d 753 (1947)

CHIPPEWA COUNTY CO-OP. DAIRY v. CLARK, Director, Division of Liquidation, Department of Commerce.

No. 389.

United States Emergency Court of Appeals.

Heard September 5, 1947.

Decided October 8, 1947.

COPYRIGHT MATERIAL OMITTED

Matthew M. Wallrich, of Shawno, Wis., for complainant.

Harry H. Schneider, Atty., Department of Justice, of Washington, D. C. (Tom C. Clark, Atty. Gen., and Floyd L. Cook, Charles G. Mulligan and James A. Durham, Attys., Department of Justice, both of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and McALLISTER and LINDLEY, Judges.

Heard in Madison September 5, 1947.

LINDLEY, Judge.

Complainant, a farmers' cooperative engaged in procuring, distributing and processing milk, located in northwestern Wisconsin, having been sued in a treble-damage action in the United States District Court for alleged violations of Maximum Price Regulation No. 280 occurring between May 20 and December 30, 1943, in sales of condensed skim milk, after judgment against it in the trial court, brought this proceeding under Section 204(e) of the Emergency Price Control Act as amended, 50 U.S.C.A.Appendix, § 924(e). The complaint attacks the validity of Maximum Price Regulation No. 280 (7 F.R. 10144) upon the following grounds: (1) Being a freeze price regulation, it became void after sixty days; (2) the Administrator wrongfully promulgated the regulation without prior investigation and proclamation by the Secretary of Agriculture; (3) the order for enforcement violated the provision of Public Law No. 139, 78th Congress, 1st Session, 57 Stat. 522, that no part of the money then appropriated should be used to enforce any maximum price on any agricultural commodity including milk, unless the Secretary of Agriculture should have first determined and published for such commodity the prices specified in § 3(a) of the Emergency Price Control Act of 1942 as amended October 2, 1942, 50 U.S.C.A.Appendix, § 903(a); (4) the regulation works arbitrary, unreasonable discrimination under Section 1351.804; (5) the regulation is vague, ambiguous, conflicting and uncertain; (6) the attempted inclusion of complainant's sales within the regulation is unjustified because the regulation does not cover concentrated skim milk; (7) concentrated skim milk is not a food commodity processed from cows' milk composed of milk ingredients constituting more than 50 per cent by weight or volume.

Dairy products were first brought under price control on October 3, 1942, by Temporary Price Regulation No. 22 (7 F.R. 7914), which fixed maximum prices at the highest prices charged by individual sellers during the period from September 28, 1942 to October 2, 1942 for the same product. On December 3, 1942 this temporary regulation was superseded by Maximum Price Regulation No. 280 (7 F.R. 10144) now attacked. The freeze prices originally established by TPR-22 were continued in Maximum Price Regulation No. 280. The pertinent coverage of Maximum Price Regulation No. 280 is as follows: "(2) Milk products — Fluid milk and fluid cream sold at wholesale in containers other than bottles and paper containers, butter, cheese, condensed and evaporated milk, powdered milk, casein, malted milk powder and any other food commodity which is processed or manufactured from cows' milk and composed of milk ingredients constituting more than 50 per cent by weight or volume, excluding ice cream." (Italics ours) On December 24, 1943, with the issuance of Maximum Price Regulation No. 289, (7 F.R. 10996), the Administrator replaced the freeze technique with specific dollars and cents ceilings for prices of manufactured dairy products and, by Amendment 30 to Maximum Price Regulation No. 289, (9 F.R. 3649) specific prices were promulgated for concentrated skim milk.

Complainant contends first that Maximum Price Regulation No. 280 was not applicable to and did not cover sales of concentrated skim milk and that, if it was applicable, it can be rightfully construed only so as to permit manufacturers to increase their ceilings with each increase in the cost of bulk fluid milk, and that, if not so construed, it is invalid because it did not permit increases in ceiling prices on concentrated skim milk based on increased costs of bulk fluid milk. It is further contended in this connection that Section 3(e) of the Act was violated by the Administrator's institution of a treble-damage action without prior approval of the Secretary of Agriculture. At this point we must remember that the construction of Maximum Price Regulation No. 280, its applicability to complainant's sales, and whether the Administrator violated Section 3(e) by instituting a treble-damage action without prior approval of the Secretary of Agriculture are all questions of which the enforcement court has jurisdiction and which can be addressed only to that court for disposition in the performance of its functions. Otherwise this court would be called upon to exercise the function of reviewing the determinations of the trial court as to interpretation and construction of the Act and the regulations promulgated thereunder. Under the Act creating our authority, we have no such jurisdiction, except in a limited sense, where necessary to determine complainant's right to attack validity. Collins v. Porter, 1946, 328 U.S. 46, 66 S.Ct. 893, 90 L.Ed. 1075; Conklin Pen Co. v. Bowles, Em.App., 152 F.2d 764; Gordon v. Bowles, Em.App., 153 F.2d 614; Van Der Loo v. Porter, Em.App., 160 F.2d 110, certiorari denied 329 U.S. 774, 67 S.Ct. 193; Auerbach v. Fleming, Em.App., 161 F.2d 207, certiorari denied 67 S.Ct. 1742; Taylor v. Porter, Em.App., 156 F.2d 805, certiorari denied 329 U.S. 782, 67 S.Ct. 203. Thus the district court has found that concentrated skim milk is a food commodity processed from cows' milk composed of milk ingredients constituting more than 50 per cent of weight or volume and concluded as a matter of law that the price of concentrated skim milk was governed by Maximum Price Regulation No. 280 during the period when the alleged violations occurred. If those determinations are erroneous, that error can be reached only by appeal to the United States Circuit Court of Appeals for the Seventh Circuit. Complainant's claim that the regulation did permit increase in ceilings of manufactured dairy products based upon increased cost of raw milk as related to the contention of complainant that the regulation worked unlawful discrimination, will be mentioned in our discussion of validity.

Complainant contends that the regulation is not generally fair and equitable and is unduly discriminatory. Essential to determination of this question is a finding by us that it was unlawful to prohibit complainant from increasing its maximum price of such commodity at such times as the cost of whole milk increased. In this connection, the regulation is said to be unduly discriminatory because it froze complainant's maximum prices at a level lower than that of other manufacturers of concentrated skim milk.

The freeze technique of a ceiling price has been many times approved by this court. Philadelphia Coke Co. v. Bowles, Em.App., 139 F.2d 349; Gillespie-Rogers-Pyatt Co. v. Bowles, Em.App., 144 F.2d 361; Chatlos v. Brown, Em.App., 136 F.2d 490; Lakemore v. Brown, Em.App., 137 F. 2d 355; Interwoven Stocking Co. v. Bowles, Em.App., 141 F.2d 696; Madison Park Corp. v. Bowles, Em.App., 140 F.2d 316; Allied Foods v. Bowles, Em.App., 151 F.2d 449. The regulation is not illegal merely because it resulted in lower maximum prices for complainant than for some other sellers of the product. U. S. Gypsum Co. v. Brown, Em.App., 137 F.2d 803, certiorari denied 320 U.S. 799, 64 S.Ct. 427, 88 L.Ed. 482. This results from the fact that any freeze formula, if it reflects competitive as opposed to monopoly conditions, will establish varying maximum prices for individual sellers.

Complainant insists, however, that by virtue of Section 1351.804 of Maximum Price Regulation No. 280 discrimination is brought about in view of the decision in Porter v. Consolidated Badger Cooperative, 7 Cir., 157 F.2d 835. This section provides that "If the maximum price established for any seller by this Maximum Price Regulation No. 280 is below the minimum price established for him by any marketing agreement order or license heretofore or hereafter to be issued by the Secretary of Agriculture pursuant to the Agricultural Marketing Agreement Act of 1937, as amended 50 Stat. 246, such minimum price shall become the seller's maximum price." 7 F.R. 10144, 1942. In view of the fact that Order No. 41 of the Secretary of Agriculture fixed the price of fluid milk, complainant asserts that this inevitably should result in a corresponding increase in the processed commodity. During 1942-1943, minimum prices for fluid milk were established under Order No. 41 in the Chicago area. On July 1, 1943 the Market Administrator revised the pricing formula of the order for fluid milk in such a manner as complainant claims to result in an increase in the cost of milk solids of 2 cents per pound. The order did not mention milk solids or processed milk commodities; it applied only to prices of fluid milk. Whether a producer was to be included within Order No. 41 was entirely optional upon his part. Those who voluntarily became subject to the order were known as "regulated handlers" and those who did not choose to come within the order, as "unregulated handlers."

In Porter v. Consolidated Badger Cooperative, supra, a regulated handler of milk and processor of skim milk had been sued in a treble-damage suit. We do not have the record in that case, but it appears that the enforcement court made a specific finding that, pursuant to Order No. 41, the price of skim milk to regulated handlers such as the then defendant, was increased in the equivalent of 2 cents a pound on skim milk solids. What the evidence to support this finding was we do not know,...