Grant v. Benson

• Decision Date: 08 December 1955
• Docket Number: No. 12478,12498.,12478
• Citation: 229 F.2d 765
• Parties: Oscar L. GRANT et al., Appellants, v. Ezra Taft BENSON et al., Appellees. Ezra Taft BENSON et al., Appellants, v. Oscar L. GRANT et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

229 F.2d 765 (1955)

Oscar L. GRANT et al., Appellants, v. Ezra Taft BENSON et al., Appellees.

Ezra Taft BENSON et al., Appellants, v. Oscar L. GRANT et al., Appellees.

Nos. 12478, 12498.

United States Court of Appeals District of Columbia Circuit.

Argued May 25, 1955.

Decided December 8, 1955.

Writ of Certiorari Denied April 9, 1956.

Messrs. Willis F. Daniels, of the bar of the Supreme Court of Pennsylvania, Harrisburg, Pa., pro hac vice, by special leave of Court, and Harry Polikoff, New York City, with whom Mr. Lipman Redman, Washington, D. C., was on the brief, for appellants in No. 12478 and appellees in No. 12498.

Messrs. Bernard L. Goodman and George Herbert Goodrich, Washington, D. C., also entered appearances for appellants in No. 12478 and appellees in No. 12498.

Mr. Neil Brooks, Sp. Asst. to Atty. Gen., U. S. Dept. of Justice, with whom Messrs. J. Stephen Doyle, Jr., Sp. Asst. to Atty. Gen., U. S. Dept. of Justice, and Donald A. Campbell, Atty., U. S. Dept. of Agriculture, were on the brief, for Ezra Taft Benson, appellee in No. 12478 and appellant in No. 12498.

Mr. Keith L. Seegmiller, Washington, D. C., for Daniel J. Carey, Commissioner of Agriculture and Markets of the State of New York, appellee in No. 12478 and appellant in No. 12498.

Mr. Frederic P. Lee, Washington, D. C., filed a brief on behalf of Adams Producers Cooperative, Inc., and others, Metropolitan Cooperative Milk Producers' Bargaining Agency, Inc., and Mutual Federation of Independent Cooperatives, Inc., appellees in No. 12478 and appellants in No. 12498.

Mr. Marion R. Garstang, Washington, D. C., filed a brief on behalf of National Milk Producers Federation, as amicus curiae, in support of the judgment.

Mr. H. Keith Eisaman, Washington, D. C., filed a brief on behalf of Eastern Milk Producers Cooperative Association, Inc., as amicus curiae, in support of the stay pending appeal and urging reversal of the judgment.

Before PRETTYMAN, FAHY and DANAHER, Circuit Judges.

Writ of Certiorari Denied April 9, 1956. See 76 S.Ct. 658.

FAHY, Circuit Judge.

The appeals involve the validity of payments authorized by certain parts of an Order regulating the marketing of milk in the New York Metropolitan Milk Marketing Area. The District Court sustained the payments as valid. The Order which provides for them, known as Order No. 27, 7 C.F.R. §§ 927.1 et seq. (1952), as amended, 7 C.F.R. §§ 927.1 et seq. (Supp.1955), was issued originally by the Secretary of Agriculture in 1938, effective upon the issuance of a like order by the Commissioner of Agriculture and Markets of the State of New York, as part of a joint federal-state program. See 3 Fed.Reg. 1945-1951 (1938). The Secretary acted under the purported authority of the Agricultural Marketing Agreement Act of 1937, c. 296, 50 Stat. 246, as amended, 7 U.S.C. § 601 et seq., (1952), 7 U.S.C.A. § 601 et seq. The suit arose on complaint of six dairy farmers whose marketing of milk is regulated by the Order. They sought to enjoin the Secretary¹ from making payments under section 927.76 of the Order to cooperative associations of milk producers or federations of such associations. The plaintiffs attacked this provision as unauthorized by the federal statute. After hearing and upon the basis of findings of fact and conclusions of law the District Court held for the Secretary and other defendants and entered judgment dismissing the complaint. The appeal in No. 12478 is from this judgment. Pendente lite the District Court issued a preliminary injunction requiring the Secretary and the Market Administrator to withhold and place in escrow portions of the payments in question. Upon dismissing the complaint the court vacated this injunction but stayed its action pending the appeal of plaintiffs in No. 12478. In No. 12498 the Secretary appeals from this stay order. The escrow fund has accumulated in the amount of over $1,500,000.

The Order is one of a number covering milk marketing areas in various parts of the United States. Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 733, which also arose in this jurisdiction,² contains a general description of the purposes and nature of such orders. They set forth programs that are designed "to stabilize the price of milk, in aid of both producers and distributors or handlers, and to maintain orderly marketing conditions." United Milk Producers of New Jersey v. Benson, 96 U.S.App.D.C. 227, 225 F.2d 527, 529. As we there also said,

"* * * The validity of the statute and of particular marketing orders made under its terms has been upheld in opinions which elaborate the legal and economic aspects of the program. United States v. Rock Royal Co-op, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; H. P. Hood & Sons v. United States, 307 U.S. 588, 59 S.Ct. 1019, 83 L.Ed. 1478."

A general description of Order No. 27 is perhaps desirable before turning to its particular provisions under attack. The Order has many features in common with others which have been before the courts. The purpose of the Order as described in the Secretary's brief, not controverted in this respect, is to establish uniform minimum prices to be paid by handlers and uniform prices to be paid to producers. The first aim is achieved by setting uniform minimum prices for each milk use classification, such as fluid milk, cream, and various manufactured milk products. Thus the price paid by the handler is geared to the use which he makes of the milk. In contrast, the marketing plan is designed to give the producer a uniform price for all the milk he sells regardless of the use made of it by the handlers who purchase it. Several steps are involved in reaching this uniform price. The Market Administrator computes the value of milk used by each pool handler by multiplying the quantity of milk he uses in each class by the class price and adding the results. The values for all handlers are then combined into one total. That amount is decreased or increased by several subtractions or additions, including a deduction for payments to cooperatives for marketwide services, the payments here under attack. The result is divided by the total quantity of milk that is priced under the regulatory program. The figure thus obtained is the basic or uniform price which must be paid to producers for their milk. Each handler whose own total use value of milk for a particular delivery period, i. e., a calendar month, is greater than his total payments at the uniform price is required to pay the difference into an equalization or producer-settlement fund. Each handler whose own total use value of milk is less than his total payments to producers at the uniform price is entitled to withdraw the amount of the difference from the equalization or producer-settlement fund. Thus a composite or uniform price is effectuated by means of the equalization or producer-settlement fund.

The payments to cooperative associations³ of producers sought to be enjoined are specified in section 927.76 of the Order.⁴ The payments are subject to elaborate qualifications the cooperatives must meet with respect to services and reporting. To understand better the place of the cooperatives in the total scheme, some of the findings of the Secretary, made after extensive administrative hearings, are now outlined. See 18 Fed.Reg. 6458-6465 (1953). The Secretary found that the milk supply for the New York Metropolitan Milk Marketing Area is produced by approximately 50,000 dairy farmers scattered over six states in a milkshed which extends more than 400 miles from the marketing area. The value of the milk whose price has been regulated in this area has in recent years exceeded $300,000,000 annually. The volume of milk was approximately seven billion pounds in the year 1952. Price fixing under this huge program is not static; it requires constant attention. Problems in the vast milkshed emphasize the need for active participation in the program by producers. Producer groups must be prepared day by day to submit detailed data as to the market situation, so that the total milk supply will be properly utilized and the greatest return will be brought to all producers under the marketwide pool. The interests of proprietary handlers, a small group, are well represented. In the absence of informed participation by producers they would be at a disadvantage, a result which would be inconsistent with the statutory scheme and with the public interest. But the 50,000 individual producers are not generally able to attend the numerous hearings which it is necessary to hold from time to time on proposed amendments to the Order. The individual dairy farmer, moreover, does not have available the technicians and data necessary to effective representation of his interests at these meetings. He cannot with his limited means maintain the staff necessary to initiate requests for amendments and keep informed as to current market conditions and other changing circumstances in the highly complex field of milk marketing. Therefore active participation by producers under this program is feasible, as was here expressly found, only by means of cooperative associations of producers. Such cooperatives are required to perform the aforementioned marketwide services in order to qualify for the contested payments. In addition, they may be required to channel their milk into those utilizations that are most advantageous to the marketwide pool, thereby enhancing the value of the pool to the advantage of all producers in the milkshed. Finally, some cooperatives maintain manufacturing plants necessary to insure an outlet for the surplus milk which presents a recurring problem in the highly seasonal milk market. Thus it must be concluded that the cooperatives as a group advance the interests of producers generally throughout the milkshed. To the extent that producers' interests in the classification, pricing and pooling provisions of the Order may differ, such multiple interests are...