Denver Union Stock Yard Co. v. United States, 9568.

• Decision Date: 04 April 1932
• Docket Number: No. 9568.,9568.
• Parties: DENVER UNION STOCK YARD CO. v. UNITED STATES et al.
• Court: U.S. District Court — District of Colorado

57 F.2d 735 (1932)

DENVER UNION STOCK YARD CO. v. UNITED STATES et al.

No. 9568.

District Court, D. Colorado.

April 4, 1932.

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Robert G. Bosworth, Norman A. Hutchinson, and Pershing, Nye, Tallmadge, Bosworth & Dick, all of Denver, Colo., for petitioner.

John Lord O'Brian, Asst. to the Atty. Gen., William G. Davis and Wendell Berge, Sp. Assts. to the Atty. Gen., and Ralph L. Carr, U. S. Atty., of Denver, Colo., Elton L. Marshall, Sol., Department of Agriculture, C. E. Miles, and G. N. Dagger, all of Washington, D. C., for respondents.

Before McDERMOTT, Circuit Judge, and KENNEDY and SYMES, District Judges.

McDERMOTT, Circuit Judge.

The Secretary of Agriculture, pursuant to the Packers and Stockyards Act of 1921 (7 USCA § 181 et seq.), entered into an inquiry into the lawfulness and reasonableness of the charges made by the Denver Union Stock Yard Company for services rendered by it to its patrons. Pursuant to notice, extensive hearings were held before an examiner, the record of those hearings consisting of 2,023 pages, together with 82 exhibits. On July 28, 1931, Hon. R. W. Dunlap, Acting Secretary of Agriculture, entered the order which is under attack in this litigation, accompanied by carefully prepared and comprehensive findings of fact. By this order, the yardage charges imposed by the petitioner were substantially reduced.

Prior to its effective date, the petitioner filed this suit to set aside and permanently enjoin the enforcement of said order. Issues were joined, and the cause came on for hearing before a three judge court as required by section 316 of the Packers and Stockyards Act (7 USC 217 7 USCA § 217). The only evidence offered was the record made before the Secretary of Agriculture. The bill alleges that its existing rates were not unreasonable; that the finding of the Secretary to that effect is without support in the evidence, and that the Secretary was therefore without power to establish any rate; that the Secretary is without statutory power to value the properties of the petitioner, or to determine the reasonableness of a return upon that value; that the notice is insufficient; that, in determining the reasonableness of the return, the Secretary erred in many respects; that by reason thereof the petitioner has been deprived of its property without due process of law.

Scope of Review.

The parties are in disagreement as to the scope of this judicial review, the petitioner contending that it is the duty of this court to try the case de novo, and to exercise our independent judgment upon all of the questions of fact submitted to the Secretary for his determination. The respondent, on the contrary, contends that our review is limited to the question of whether the Secretary acted within the scope of his statutory powers, and as to whether there is substantial evidence to support the findings of the Secretary.

Section 316 of the act (7 USCA § 217) provides that provisions of the Interstate Commerce Commission "are made applicable to the jurisdiction, powers, and duties of the Secretary in enforcing the provisions of this title, and to any person subject to the provisions of this title." Stafford v. Wallace, 258 U. S. 495, 512, 42 S. Ct. 397, 66 L. Ed. 735, 33 A. L. R. 229; Tagg Bros. v. United States, 280 U. S. 420, 443, 50 S. Ct. 220, 74 L. Ed. 524. The authorities cited by the parties may perhaps be reconciled, if the ground of the attack upon the order is considered. An order of the Secretary may be attacked in court on either one of two grounds, or both.

(a) The attack may be based upon the ground that an order "rests upon an erroneous rule of law, Interstate Commerce Commission v. Diffenbaugh, 222 U. S. 42, 32 S. Ct. 22, 56 L. Ed. 83, or is based upon a finding made without evidence, Chicago Junction Case, 264 U. S. 258, 263, 44 S. Ct. 317, 68 L. Ed. 667, or upon evidence which clearly does not support it, Interstate Commerce Commission v. Union Pacific R. R. Co., 222 U. S. 541, 547, 32 S. Ct. 108, 56 L. Ed. 308; New England Divisions Case, 261 U. S. 184, 203, 43 S. Ct. 270, 67 L. Ed. 605; Colorado v. United States, 271 U. S. 153, 166, 46 S. Ct. 452, 70 L. Ed. 878." Tagg Bros. v. United States, 280 U. S. 420, 442, 50 S. Ct. 220, 225, 74 L. Ed. 524.

Such an attack must be determined upon the record of the proceedings before the Secretary, and it is not competent for a court to receive additional evidence.

(b) Or an order may be attacked upon the ground that it deprives the petitioner of its property without due process of law. Where the attack is made upon constitutional grounds, a court is required to exercise its independent judgment as to both law and facts. United Railways v. West, 280 U. S. 234, 50 S. Ct. 123, 74 L. Ed. 390; Lehigh Valley R. R. v. Commissioners, 278 U. S. 24, 26, 49 S. Ct. 69, 73 L. Ed. 161, 62 A. L. R. 805; Chicago, B. & Q. R. R. v. Osborne, 265 U. S. 14, 44 S. Ct. 431, 68 L. Ed. 878; Bluefield Co. v. Pub. Serv. Comm., 262 U. S. 679, 683, 43 S. Ct. 675, 67 L. Ed. 1176; Georgia Ry. v. R. R. Comm., 262 U. S. 625, 43 S. Ct. 680, 67 L. Ed. 1144; Ohio Valley Co. v. Ben Avon Borough, 253 U. S. 287, 289, 40 S. Ct. 527, 64 L. Ed. 908; Lincoln Gas Co. v. Lincoln, 223 U. S. 349, 32 S. Ct. 271, 56 L. Ed. 466.

In Crowell v. Benson, 52 S. Ct. 285, 296, 76 L. Ed. ___ Chief Justice Hughes, speaking for a majority of the court, said: "In cases brought to enforce constitutional rights, the judicial power of the United States necessarily extends to the independent determination of all questions, both of fact and law, necessary to the performance of that supreme function. The case of confiscation is illustrative, the ultimate conclusion almost invariably depending upon the decisions of questions of fact. This court has held the owner to be entitled to `a fair opportunity for submitting that issue to a judicial tribunal for determination upon its own independent judgment as to both law and facts.'"

Constitutional rights may be as successfully and as seriously invaded by mistakes of fact as by mistakes of law. When a citizen asserts that the rights guaranteed him by the Constitution have been invaded, the responsibility rests upon the courts to hear him, and he cannot be denied a hearing on the ground that his claim rests upon a question of fact. Where such a claim is made, the petitioner is entitled to present all of the material facts. After hearing him, it may be determined that the notice and hearing which he has had before an administrative tribunal complied with the essentials of due process. Den ex dem. Murray v. Hoboken Land & Improvement Co., 18 How. 272, 15 L. Ed. 372; United States v. Ju Toy, 198 U. S. 253, 263, 25 S. Ct. 644, 49 L. Ed. 1040. But in the case at bar we are not dealing with an administrative hearing of matters judicial in nature, the determination of rights on existing facts. We are dealing with an exercise of legislative power. The petitioner has had no hearing, before any tribunal, as to whether the legislative order of the Secretary invades its rights. We are compelled, therefore, to hear the evidence and to decide for ourselves whether the order of the Secretary deprives petitioner of its property without due process of law (Const. Amend. 14).

However, there is a presumption that the findings of the Secretary are correct. Banton v. Belt Line Ry., 268 U. S. 413, 422, 45 S. Ct. 534, 69 L. Ed. 1020. In Cotting v. Kansas City Stock Yards Co., 183 U. S. 79, 91, 22 S. Ct. 30, 35, 46 L. Ed. 92, Mr. Justice Brewer said: "It the Supreme Court has also ruled that the determination of the legislature is to be presumed to be just, and must be upheld unless it clearly appears to result in enforcing unreasonable and unjust rates." See, also, Cambridge Electric Light Co. v. Atwill (D. C.) 25 F.(2d) 485, and cases therein cited. This evidentiary rule is a branch of the accepted doctrine that legislative acts will not be held to be unconstitutional unless they are clearly so. This legal presumption is strengthened in this case by the fact that the report of the Secretary bears internal evidence of the careful investigation made by him, and his disposition to be fair.

The Notice.

The petitioner contends that, under the notice served, the Secretary was powerless to inquire as to the reasonableness of yardage charges, but was limited to an inquiry into the reasonableness of charges made for feed. The notice recited that a hearing would be had "upon the reasonableness and lawfulness of the rates and charges as provided for by said Tariff No. 2, as amended by Supplements Nos. 1 and 2." The supplements dealt with charges for feed. Tariff No. 2, referred to in the notice, concerns yardage charges, and on its face the notice is ample to advise the petitioner that an inquiry would be made into yardage charges. The argument of petitioner is that the yardage charges contained in tariff No. 2, were identical with the yardage charges contained in tariff No. 1, which had been published many years before; that therefore tariff No. 2 made no change as to yardage charges.

The petitioner contends that the only section which authorizes the Secretary to institute an inquiry into the "lawfulness" of a rate is section 306 (7 USC 207 7 USCA § 207), and that that section deals exclusively with new or changed rates; that, the rates in tariff No. 2 being neither, the Secretary is without the power to inquire as to their lawfulness. Section 310 (7 USC 211 7 USCA § 211) gives the Secretary power either on his own initiative or upon complaint to prescribe a just and reasonable rate for services, upon a finding that existing rates are "unjust, unreasonable, or discriminatory." The power of the Secretary under this section is ample, and is not confined to new or changed rates. The objection that this section does not use the word "lawfulness," while the notice does contain such word, is hypercritical in the extreme. No surprise...