Curly's Dairy, Inc. v. State Dept. of Agriculture

• Decision Date: 15 June 1966
• Citation: Curly's Dairy, Inc. v. State Dept. of Agriculture, 415 P.2d 740, 244 Or. 15, 82 Or.Adv.Sh. 867 (Or. 1966)
• Parties: CURLY'S DAIRY, INC., an Oregon corporation, and Lester W. Hagel, Petitioners-Appellants, v. Oregon STATE DEPARTMENT OF AGRICULTURE, Respondent.
• Court: Oregon Supreme Court

Page 740

415 P.2d 740

244 Or. 15

CURLY'S DAIRY, INC., an Oregon corporation, and Lester W Hagel, Petitioners-Appellants, v. Oregon STATE DEPARTMENT OF AGRICULTURE, Respondent.

Supreme Court of Oregon, Department 2.

Argued and Submitted March 4, 1966.

Decided June 15, 1966.

Dean Ellis, Salem, argued the cause and filed a brief for appellants.

Helen B. Kalil, Asst. Atty. Gen., Salem, argued the cause for respondent. With her on the brief were Robert Y. Thornton, Atty. Gen., Don Parker, C. D. Royal and Harold E. Burke, Asst. Attys. Gen., Salem.

Before McALLISTER, C.J., and PERRY, SLOAN, GOODWIN and LUSK, JJ.

PERRY, Justice.

This is a suit brought by petitioners Curly's Dairy, Inc., and Lester W. Hagel for a declaratory judgment construing the provisions of ORS, Chapter 583, particularly ORS 583.510(2). The precise question is whether the Department of Agriculture (hereinafter referred to as the Department) has the authority under ORS 583.510 to establish separate pools for producers and producer-distributors within the same market area. The trial court held that the Department did have such authority and the petitioners have appealed.

In 1963 the Milk Marketing Act was enacted by the state legislature. ORS 583.405 to 583.545. This provided for regulation of milk production and marketing by the Department. The Department was directed to establish market areas, set up a system of pooling the milk in each market, determine quotas for producers and producer-distributors, and work out equalization of returns from milk sales to all producers of milk. An explanation of the operation of the system is stated by a witness as follows:

'I am setting out an example here showing three producers or producergroups. It will be immaterial whether it was one producer or a hundred in each group. But this will represent producers or producer groups. Producer A and B and C. And we'll also have Handler A, B and C. And what I am going to illustrate here is the method of how the market pool works and how equalization comes out of it. Now the first thing that we need to determine is sales. For this purpose we have sales equaling a hundred pounds of Class 1 milk, with Handler A selling 50 pounds, Handler B selling 30 pounds, and Handler C selling 20 pounds. Now, under the present method of allocation of quotas for each hundred pounds of sales in the market area, in the previous year, we are to allocate a hundred and fifteen pounds of quota, this is building in this 15% Of surplus. Now, for purposes of simplification, we were going to say each one of these producers has exactly the same production. So, each producer would have a quota of 38 1/3 pounds. Each one of these producers in this illustration is going to produce 50 pounds--total milk--50 pounds of which 38 1/3 pounds is quota. So, we have a hundred and fifty pounds of milk to sell, and we have sold a hundred pounds of it in Class 1 which leaves us 50 pounds to dispose of in Class 2. Well, obviously, Handler A, who has already sold his 50 pounds in Class 1 will have no Class 2 sales. Handler B will have 20 pounds in Class 2, and Handler C will have 30 pounds in Class 2.

'Now, again, for simplification purposes, we will assume that the price of Class 1 milk is $5 a hundredweight, and Class 2 milk is $3 a hundredweight. So, Handler A then is obligated to pay to producers or to the pool as--whichever weight you want to place on it, but under the minimum price, he is going to have to pay $2.50 for this 50 pounds of milk he used as Class 1. Handler B will pay $1.50 for the 30 pounds of Class 1 milk, and 60cents for the 20 pounds in Class 2. Handler C will pay a dollar for the Class 1 milk and 90cents for the Class 2, so this handler's total obligation for the pool is a dollar and ninety cents. Handler B is two dollars and ten cents, and Handler C (sic) is two dollars and fifty cents. So, we have a total, then, of six dollars and fifty cents, total of all of the milk--of this hundred and fifty pounds of milk--as was sold under the minimum prices for six dollars and fifty cents by three different handlers. So, the producers will be entitled to each receive exactly one-third of the six dollars and fifty cents, or two dollars and sixteen and two-thirds cents apiece.

'Now, this handler has sold his milk for $2.50, he only has to pay his producer two dollars sixteen and two-thirds cents. So, he sends to the state in the form of equalization, the oversale or over-amount of money that he has in his till of thirty-three and one-third cents. Each of the other two handlers have not sold their milk in a sufficient form to have enough money to pay their producers the pool blend price. This is what we call blend price, that came out of the pool by blending Class 1 price and Class 2 price on the sale of this hundred and fifty pounds of milk. So this thirty-three and a third cents that he pays in comes over to these two handlers and six and two-thirds cents to Handler B, and twenty-six and two-thirds cents the Handler C, and they in turn take the money and give it to their producers. So this is where we have said in previous testimony that the equalization money is actually not the handler's money, it is the producer's money. This six dollars and fifty cents belongs to the three producers involved, and this interchange of money is called equalization and the Department acts as a liaison or handler of that money--a trustee.'

Originally the Department in administering the Act treated producers and producer-distributors exactly the same in a single pool. Subsequently, on June 17, 1964, the Department issued Administrative Order No. AD 10--64 establishing a different system for determining the quotas of producer-distributors. This order created separate market pools for producers and producer-distributors.

The petitioners assert that the Department has no statutory authority to promulgate such an order and that the order is, therefore, invalid.

Thus, the only issue for the court to resolve is whether ORS 583.510(2) allows the Department to establish separate pools for producers and producer-distributors. This is solely a matter of statutory construction.

The pertinent portion of the statute is as follows:

(2) Thereafter the department shall establish a system in each market area for the equalization of returns for all quota milk whereby all producers selling milk to milk handlers in such market area, And all producer-distributors selling or delivering milk in such market area, will receive the same price for all quota milk utilized as Class 1 and Class 2 * * *.' (Emphasis supplied)

The italicized phrase which is set off by commas is the center of the controversy.

Petitioners, it seems, have misunderstood the true issue. The bulk of their argument is based upon the assumption that the statute is unambiguous and that it clearly states that the Department has no authority. Thus, the cases relied on by petitioners (Layman v. State Unemp. Comp. Comm., 167 Or. 379, 117 P.2d 974, 136 A.L.R. 1468; Safeway Stores v. Milk Commission, 197 Va. 69, 87 S.E.2d 769; Ideal Farms, Inc. v. Benson, 288 F.2d 608 (3rd Cir. 1961)) are not in point unless it can be said the statute clearly does not confer the authority in question upon the Department.

There is no doubt that the...