Currin v. Wallace

Decision Date30 January 1939
Docket NumberNo. 275,275
Citation306 U.S. 1,59 S.Ct. 379,83 L.Ed. 441
PartiesCURRIN et al. v. WALLACE, Secretary of Agriculture, et al
CourtU.S. Supreme Court

[Syllabus from pages 1-3 intentionally omitted] Messrs. J. C. Lanier, of Greenville, N.C., B. S. Royster, Jr., of Oxford, N.C., J. W. H. Roberts, of Greenville, N.C., for petitioners.

[Argument of Counsel from pages 3-5 intentionally omitted] Messrs. Robert H. Jackson, Sol. Gen., and Robert K. McConnaughey, of Dayton, Ohio, for respondents.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

Plaintiffs, tobacco warehousemen and auctioneers in Oxford, North Carolina, seek a declaratory judgment1 that the Tobacco Inspection Act of August 23, 1935,2 is unconstitutional and an injunction against its enforcement. The Circuit Court of Appeals, reversing the District Court,3 sustained the validity of the Act and directed the dismissal of the bill of complaint. 95 F.2d 856. We granted certiorari. October 10, 1938, 305 U.S. 584, 59 S.Ct. 91, 83 L.Ed. —-.

The Act states its scope and purpose. Secs. 1, 2. It applies to transactions involving the sale of tobacco at auction as commonly conducted at auction markets. These transactions are carried on by tobacco producers and by persons engaged in the business of buying and selling tobacco in commerce as defined, that is, in commerce which is interstate or foreign or is with or within the Territories or the District of Columbia.4 Congress finds that the classification of tobacco according to type, grade, and other characteristics affects the prices received; that 'without uniform standards of classification and inspection the evaluation of tobacco is susceptible to speculation, manipulation, and control' and 'unreasonable fluctuations in prices and quality determinations occur', constituting a burden upon commerce; and that the use of uniform standards is imperative 'for the protection of producers and others engaged in commerce and the public interest therein'.

The Secretary of Agriculture is authorized to investigate the handling, inspection and marketing of tobacco and to establish standards by which its type, grade, size, condition, or other characteristics may be determined and these standards are to be the official standards of the United States, Secs. 3, 4.

The Secretary is authorized to designate those markets where tobacco bought and sold at auction or the products customarily manufactured therefrom move in commerce. He is not to designate a market unless two-thirds of the growers, voting at a prescribed referendum, favor it. The Act provides that after public notice that a market has been so designated, no tobacco shall be offered for sale at auction thereon until it has been inspected and certified by an authorized representative of the Secretary according to the established standards. There is a proviso that in case competent inspectors are not available or for other reasons the Secretary is unable to provide for such inspection and certification at all auction markets within a type area, he shall first designate those markets where the greatest number of growers may be served with the facilities available. Sec. 5.

Warehousemen must provide space on warehouse tickets or other tags or labels used by them for showing the grades as determined by an authorized inspector. Sec. 8. The Secretary is authorized to publish and distrib- ute, without cost to the grower, timely information on the 'market supply and demand, location, disposition, quality, condition, and market prices'. Sec. 9. Violation of the requirement of inspection and certification at designated markets, is made a misdemeanor punishable by a fine of not more than $1000 or imprisonment for not more than one year or both. Sec. 12.

The market practices which led to this enactment are disclosed by the record. They are described at length in the Report of the Committee on Agriculture of the House of Representatives on the submission of the bill.5 The growers sort their tobacco for market as best they can. It is tied in bundles or 'hands' and brought to the auction warehouse where it is put in baskets, weighed, and placed in rows on the warehouse floor with a ticket on each pile. The warehousemen auction the tobacco, acting as representatives of the growers and receiving fees at rates fixed by the state law. The auction goes forward with extreme rapidity—about one basket every ten seconds—the auctioneer proceeding along one side of a row and the buyers moving with him. The auction is conducted with a technical vocabulary intelligible only to the initiated, bids being made by well-understood gestures. The sale is not completed until the grower accepts the bid; he may decline the bid and take his tobacco away. The bidders are representatives of tobacco companies and speculators who are experts in grades.6 The Committee reported that 'The possession of grade and price information by the buyers and the lack of it on the part of the growers, places the growers under a severe handicap in the marketing of their tobacco and opens the way to abuses and practices by which farmers are victim- ized. * * * It is the thought of the committee that if the purchaser needs an expert in grades in order to protect his interest in the sale, the growers should be accorded the same protection'. It also appears from the record that because of the speed of the sale few buyers have the opportunity to make a satisfactory examination of the tobacco and consequently many errors are made, although on the average the buyers are not supposed to suffer seriously. The effect of the methods used is to introduce an unusual degree of uncertainty in the prices which a grower may receive for tobacco of any particular grade.

Under the operation of the Act federal inspectors examine the tobacco about an hour before the sale. They pull samples from each pile and place tickets indicating the grade. Each day there is displayed in the warehouse a report indicating the average price for the government grades sold on the previous day, and weekly reports are issued for the preceding week.

The Secretary promulgated regulations to be effective January 2, 1936. Later, official standard grades for flue-cured tobacco were prescribed. The Secretary designated twenty-three markets throughout the country for compulsory inspection and grading. In North Carolina tobacco was marketed on forty auction markets. Three of these, at Oxford, Goldsboro, and Farmville, were designated.7 In view of the lack of expertly trained inspectors and graders, all markets in North Carolina could not be designated and defendants say that the markets above named were selected because in previous years the Department had established at these places voluntary inspection of tobacco under the Farm Products Inspection Act8 and the growers were familiar with the benefits accruing from the federal action.

In relation to Oxford, the market here in question, the required referendum was had. Upwards of 8,600 ballots were distributed to growers who had sold on that market during the previous season; 1,896 ballots were returned, of which 1,782 were in favor of the designation. There were 248 other ballots returned, of which 96 per cent. were favorable.

Plaintiffs contend (1) that the transaction of offering tobacco for sale at auction on the warehouse floor is not a transaction in interstate commerce and hence is not subject to congressional regulation; (2) that the Act is invalid because of its discriminatory character; (3) that the Act provides for an unconstitutional delegation of legislative power; and (4) that the Act violates the due process clause of the Fifth Amendment, Const.U.S.C.A.

The Circuit Court of Appeals found, and the record supports the finding, that there is an actual controversy between plaintiffs and defendants, entitling plaintiffs to invoke the Declaratory Judgment Act. See Aetna Life Insurance Company v. Haworth, 300 U.S. 227, 240, 241, 57 S.Ct. 461, 463, 81 L.Ed. 617, 108 A.L.R. 1000.

First.—Plaintiffs urge that tobacco 'is not inherently an interstate commodity'; that the auction transaction is not a sale as title is not passed until the grower accepts the price; that after the auction the grower may, and often does, reject the bid and he may take his tobacco away; that the inspection required by the Act is done prior to the offering for sale; and that until sale and delivery to the purchaser the tobacco is not in interstate commerce and its control is reserved to the State. These objections are untenable. The record shows that the sales consummated on the Oxford auction market are predominantly sales in interstate and foreign commerce. The principal purchasers are few in number and in the main are engaged in the export trade or in the manufacture of tobacco products in other States. It appears that in a given week, shortly before the beginning of this suit approximately 2,000,000 pounds of tobacco were sold on the Oxford market, only 15.3 per cent. of which were definitely destined for manufacture in North Carolina. About 14 per cent. were in part for manufacture in North Carolina and in part for other States, and about 62 per cent. moved directly into foreign commerce. The fact that the growers are not bound to accept bids, and in certain instances reject them, does not remove the auction from its immediate relation to the sales that are consummated upon the offers that the growers do accept. The auction in such cases is manifestly a part of the transaction of sale. So far as the sales are for shipment to other States or to foreign countries, it is idle to contend that they are not sales in interstate or foreign commerce and subject to congressional regulation. Where goods are purchased in one State for transportation to another the commerce includes the purchase quite as much as it does the transportation. Swift & Co. v. United States, 196 U.S. 375, 398, 399, 25 S.Ct. 276, 280, 49 L.Ed. 518; ...

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