Fleming Foods of Missouri, Inc. v. Runyan, 62685

• Decision Date: 08 June 1982
• Docket Number: No. 62685,62685
• Citation: 634 S.W.2d 183
• Parties: FLEMING FOODS OF MISSOURI, INC., Respondent, v. John G. RUNYAN, Director, Missouri Department of Agriculture, and Missouri Department of Agriculture, Appellants.
• Court: Missouri Supreme Court

Page 183

634 S.W.2d 183

FLEMING FOODS OF MISSOURI, INC., Respondent, v. John G. RUNYAN, Director, Missouri Department of

Agriculture, and Missouri Department of

Agriculture, Appellants.

No. 62685.

Supreme Court of Missouri, En Banc.

June 8, 1982.

John Ashcroft, Atty. Gen., Gerald M. Sill, Asst. Atty. Gen., Wm. Clark Kelly, Jefferson City, for appellants.

Malcolm L. Robertson, Joplin, for respondent.

RENDLEN, Judge.

Respondent, Fleming Foods of Missouri, Inc. (Fleming) applied to the Director of the Missouri Department of Agriculture (Director) for license as a milk distributor, pursuant to the provisions of §§ 416.410 to 416.560, RSMo 1969. Following an evidentiary hearing the Director, on his findings of fact and conclusions of law, entered an order denying the application. Fleming sought judicial review as provided in § 536.100, RSMo 1969 ¹ and on November 26, 1979, the Circuit Court of Jasper County reversed the Director's order, holding "that the finding of the Director of Agriculture was not supported by competent and substantial evidence upon the whole record and is unauthorized by the law" and ordered the license issued. From that judgment the Director sought review in the Missouri Court of Appeals, Southern District, and following the recommendation of that court the cause was transferred here and is decided as though on original appeal. Mo.Const. Art. V, § 10.

In cases of this nature "we review the findings and decisions of the (Director) not the judgment of the trial court." Mueller v. Ruddy, 617 S.W.2d 466, 472 (Mo.App.1981), cert. denied, --- U.S. ----, 102 S.Ct. 600, 70 L.Ed.2d 590, and the scope of our Resolution of the issues requires construction of § 416.440, RSMo 1969, a section of the Unfair Milk Sales Practices Act (Act) of 1959 now codified as §§ 416.410 to 416.560, RSMo 1978. ² We are called on to ascertain the legislative intent, City of Willow Springs v. Missouri State Librarian, 596 S.W.2d 441, 445 (Mo.1980), and so doing, find assistance in earlier decisions of this Court. In Borden Company v. Thomason, 353 S.W.2d 735 (Mo. banc 1962), as in the case at bar, evidence was introduced ³ to show that pursuant to Senate Concurrent Resolution No. 19 of the Sixty-Ninth General Assembly, an interim committee was appointed with Senator Albert M. Spradling, Jr., of Cape Girardeau as Chairman to study the problem of production, processing, sale and distribution of milk in Missouri. The Committee's detailed report of January, 1959 to the Seventieth General Assembly, entitled "Final Report of the Joint Committee on Milk Producers and Distributors", led to adoption of the "Act". That report, in pertinent part, pointed out that: (as quoted in Borden at 741)

review is limited by § 536.140, RSMo 1978. We are to determine in the first instance if the Director's findings were supported by competent and substantial evidence on the record as a whole, Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 802 (Mo.1973), and while not bound by the administrative body's decisions on questions of law, Wolf v. Missouri State Training School for Boys, 517 S.W.2d 138, 142 (Mo. banc 1974), we give due weight to the expertise and experience of the agency and its opportunity to observe the witnesses.

"There is no article of food in more general use than milk; none whose impurity and unwholesomeness may more quickly, more widely, and more seriously affect the health of those who use it. The regulation of its sale is an imperative duty that has been universally recognized. * * * Between 1933 and 1936 twenty-seven states adopted milk price control legislation." The committee, however, submitted a milk sales regulation bill patterned after the Tennessee Act. "Dairy Law of the State of Tennessee," Chapter 3, Secs. 52.331 to 52.341. The committee's finding as to the situation existing in Missouri was as follows:

"Testimony received by the committee revealed the seriousness of a situation which has been only too evident in the corner grocery stores and supermarkets of our state during the past months. A series of destructive price wars has frightened and demoralized those of our "Of course, prices such as these are often greeted with enthusiasm by inflation-weary consumers, but the natural consequences thereof bode future difficulties for producers, distributors and consumers alike. Price wars exert tremendous pressure on smaller distributors who are without the resources to operate for extended periods of time when a loss is incurred on each sale. The price of much of the milk purchased from producers in Missouri is established under a federal order. Thus the distributor finds himself trapped between the contracting pincers of the stable price of the milk he buys and the ever lower price of the milk he sells. Under such conditions small distributors disappear and large distributors expand until competition no longer controls prices and the buyer is left to the mercy of the seller." (Emphasis added).

citizens who fully understand the implications of such activities as well as those who depend for their livelihood upon the milk industry. Milk has sold for as little as eight cents per half gallon in some areas. In one town, the price of milk and other dairy products dropped so low that the farmers were able to purchase them to feed to their pigs.

The Court in Borden continued at 743:

"that the dairy industry is subject to regulation and has been regulated so by the legislature for the public welfare for many years." In the case of State of Kansas ex rel. Anderson v. Fleming Co., 184 Kan. 674, 339 P.2d 12, the court said the dairy industry had been regulated for the purpose of protecting the public health and welfare more completely than any other industry.

In the case of H. P. Hood & Sons v. DuMond, 336 U.S. 525, 69 S.Ct. 657, 660, 93 L.Ed. 865, the court said: "Production and distribution of milk are so intimately related to public health and welfare that the need for regulation to protect those interests has long been recognized and is, from a constitutional standpoint, hardly controversial. Also, the economy of the industry is so eccentric that economic controls have been found at once necessary and difficult." The police power extends to economic needs. (Emphasis added).

and further stated at 744:

Clearly there is a greater governmental interest in promoting and insuring fair competition in the milk industry by prohibiting sales below cost in that industry than in other industries, which fact accounts for the legislative attempt to remedy unfair competition and avoid the danger of monopoly in that industry. On the facts found by the interim committee the Legislature could properly single out the milk industry for a valid exercise of the police power of the State to remedy conditions found to exist in that industry. (Emphasis added).

Before proceeding further with respondent's contentions regarding the validity of the Act, we should say that it is apparent on the face of the Act that in passing it the Legislature was purporting to act under the police power of the State and that the Act is designed to prevent monopolies and unfair trade practices by competitors for the public good. "The propriety, wisdom, and expediency of legislation enacted in pursuance of the police power is exclusively a matter for the Legislature." Star Square Auto Supply Co. v. Gerk, 325 Mo. 968, 997, 30 S.W.2d 447, 462(14-16).

Summing up the general purposes of legislation controlling the fluid milk industry which includes both health and economic concerns, this Court in Borden at 745, citing Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 516, 78 L.Ed. 940 (1934), concluded that when the legislature within its sphere decides that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of consumers' interest and a public need has been demonstrated that appropriate statutes passed to correct the threatened consequences, such statute will be enforced and not be set aside though the regulation fixes prices if "deemed by the Legislature to be fair to those engaged in the industry and to the consuming public. And this is especially There is no valid ground for a strict construction of the Act against the State in this proceeding and we think it must be given a liberal construction in order that its beneficial purposes may be subserved. (l. c. 753)

so where, as here, the economic maladjustment is one of price, which threatens harm to the producer at one end of the series and the consumer at the other." Id. at 745. Rejecting various constitutional challenges to the Act the court in Borden held:

adding at page 755:

The Missouri statute contains no criminal penalties and is not a criminal statute, and is not required to be strictly construed against the State.

In this regard it is worthy of note that Fleming, during the testimony of its expert witness Dr. Gary Devino, introduced as its Exhibit No. 31 an article Devino authored wherein he expressed his view of the legislative intent when adopting the Unfair Milk Sales Practices Act as follows:

The concern on the part of the legislature was that a continuation of the price wars would result in a disappearance of small distributors, and the development of monopolies by large distributors. (Emphasis added).

From the language of the Act and with these insights to the legislative intent we have examined the record to determine if the findings and conclusions of the Director were supported by competent substantial evidence and authorized by law.

Fleming Foods of Missouri, Inc., respondent herein, is a wholesale food distributor and franchisor of IGA retail grocery stores in a 16 county area of southwest Missouri, the northwest and northeast portions of Arkansas and Oklahoma respectively, and a part of southeast Kansas. It distributes wholesale groceries and supplies only to IGA retailers who have entered...