Gwynette v. Myers

• Citation: 237 S.C. 17,115 S.E.2d 673
• Decision Date: 26 July 1960
• Docket Number: No. 17687,17687
• Parties: Greswold GWYNETTE, L. O. Field, Ben Goodale, Fred E. Pearman, Eugene E. Stone, W. S. Smith, J. K. Earle, Jr., R. P. Knapp and W. L. Harrelson, Commissioner of Agriculture, constituting and as the State Dairy Commission, Appellants, v. J. S. MYERS, d/b/a Kash and Karry, Respondent.
• Court: South Carolina Supreme Court

Page 673

115 S.E.2d 673

237 S.C. 17

Greswold GWYNETTE, L. O. Field, Ben Goodale, Fred E Pearman, Eugene E. Stone, W. S. Smith, J. K. Earle, Jr., R P. Knapp and W. L. Harrelson, Commissioner of Agriculture constituting and as the State Dairy Commission, Appellants, v. J. S. MYERS, d/b/a Kash and Karry, Respondent.

No. 17687.

Supreme Court of South Carolina.

July 26, 1960.

Daniel R. McLeod, Atty. Gen., James S. Verner, Asst. Atty. Gen., for appellants.

Price & Poag, Greenville, for respondent.

Nelson, Mullins & Grier, Columbia, amicus curiae.

LEGGE, Justice.

The State Dairy Commission, having issued an order declaring the Greenville-Spartanburg market area a 'controlled market' and fixing minimum prices to be charged for milk by producers, distributors and retailers in that area, brought this action to enjoin the defendant, a retail grocer of Greenville County, from selling Grade A milk at a price below that so fixed. It appeals from a judgment of the Greenville County Court sustaining a demurrer to its complaint.

The Act of April 27, 1953 (48 Stat. at L. 279), as its preamble shows, was designed to prevent milk of inferior quality being brought into South Carolina from other states during periods of short production of local milk. It divided the states into three zones and provided for the creation of a nine-member State Dairy Commission constituted as follows: one producer from each zone, to be appointed by the Governor from two nominated by the producers in that zone; one distributor from each zone, owning and operating there a milk processing and distributing plant, to be appointed by the Governor from two nominated by the distributors in that zone; two 'consumers' appointed by the Governor; and the Commissioner of Agriculture. It forbade the importation of milk into this state for fluid distribution without a permit from the Commission; and it authorized the Commission to make rules and prescribe sanitary standards to be complied with before shipment of milk into this state, 'in order to protect the health of the people of South Carolina by guaranteeing a pure supply of milk.' Section 10 declared that 'nothing contained in this act shall be construed as giving the State Dairy Commission the power to fix, prescribe or control the price or classification of milk or dairy products produced in the State of South Carolina.'

The Act of May 11, 1955 (49 Stat. at L. 496) broadened the scope of the Commission's functions and vastly increased its power, giving to it 'the authority to supervise and regulate the entire Grade-A milk industry of the State of South Carolina, including the production, purchase, transportation, handling, consignment, processing, manufacture, storage, distribution, bailment, delivery, disposal and sale of milk, cream and milk products in any marketing area in the State of South Carolina.' Among other things, it purported to vest in the Commission power, after a public hearing, to declare a state of emergency to exist in any marketing area (to be then designated a 'controlled market'), and thereupon to fix the minimum prices to be charged for milk in such area by producers, distributors and retailers.

The complaint in the instant case alleged, inter alia:

That the defendant, operating a large retail store in Greenville County, does not advertise his business by radio, television or newspaper publicity, but instead offers to the public certain 'loss-leader' items, among them half-gallon units of milk at thirty-seven cents per unit, which is fourteen cents per unit less than the price charged by other retail merchants and chain stores in the Greenville area, and ten cents per unit below the cost to the defendant; and also quart units at nineteen cents, or seven cents less than the general retail price in that area and five cents less than they cost him; and that as the result of such merchandising efforts over the past several years he has built up a very large business.

'4. That the sale of milk as above stated by the defendant has caused much concern to other retail and chain stores handling milk in the area, which, in order to meet competition, will necessarily have to reduce the price of milk sold by them to a competitive figure, which they have threatened to do and were threatening to do and some were doing prior to the issuance of the Orders of the Commission hereinafter referred to.

'5. That the employees of the Dairy Commission have heretofore called upon the defendant several times and explained to him that his method of operation would certainly disrupt the whole milk market, result in the lowering of prices by his competitors to a point which would cause loss to all parties, and would eventually cause the lowering of milk prices to such extent as to affect and ruin the producers or dairy farmers of South Carolina, who have a great investment in the business and are without sufficient capital to stand any prolonged price war, which would force them to sell their dairy cattle, close their dairies, and result in the people of South Carolina once more becoming dependent upon foreign sources of supply, at whatever prices such suppliers might charge.

'6. That because of the activities of this defendant, which have existed for years and which he has refused to discontinue after several discussions and requests by the Commission so to do, and because of an imminent price war resulting from his activities as well as the activities and threats of others involved in other phases of the of the milk business in the market, a public hearing was held in Spartanburg, South Carolina, on the 14th day of July, 1959, after full and proper notice had been given to the public and to all others interested in any and all phases of the milk business. At this hearing some 300 individuals attended and considerable testimony was taken upon the threatening conditions existing in the market and the necessity of price-fixing, the Commission finding that an emergency existed justifying the exercise of its price-fixing powers in the Greenville-Spartanburg market, which has been designated by the Commission as Controlled Market No. 1 and consists of these counties: Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, Oconee, Pickens, Spartanburg and Union.

'7. That thereafter the Commission declared the Greenville-Spartanburg market area a controlled market and passed Orders fixing the minimum wholesale, retail and producer prices to be charged for various units of milk by all sellers and buyers of milk, these Orders becoming effective September 1, 1959; the defendant being notified prior to that time to apply for a permit, and of the other requirements of the Orders applicable to him. The prices fixed by these Orders were those generally prevailing at the time in the area and neither raised nor lower prices, except as to those who were selling as was defendant and others generally conducting activities such as his.

'8. That despite full information and knowledge of the laws, regulations and action of the Commission, upon information and belief, the defendant, on September 1, 1959, through his employee F. H. Vaughn, sold one half-gallon of Grade A homogenized milk for thirty-seven cents to James A. Merck and threatens to continue such sales at such prices, although the minimum price set and fixed by the Commission for such a unit of milk by its Order is set at fifty-one cents.'

The primary ground of the demurrer is that the price-fixing provisions of the Act and of the Commissioner's orders issued by virtue thereof deny the defendant the due process and equal protection guaranteed by Article I, Section 5 of the Constitution of South Carolina. Stated otherwise, the question is: May the State fix the price at which a retail grocer may sell milk?

To fix the price at which the owner of a thing may sell it is, to that extent, to deprive him of his property; for one's ownership of property consists not only of his right to possess it, but also of his right to use it as he pleases, to sell it at his own price, and to give it away if he wishes to do so. Rogers-Kent, Inc., v. General Electric Co., 231 S.C. 636, 99 S.E.2d 665.

The right of a citizen to engage in lawful business, to make contracts, and to dispose of his property, is not absolute; it is subject to regulation and control by the state in the exercise of its police power. But that power, though an essential attribute of sovereignty, is also not absolute; it may be exercised only for the protection of the public in its health, safety, morals or general welfare. Gasque, Inc. v. Nates, 191 S.C. 271, 2 S.E.2d 36.

Involved here is no question of public health, safety or morals. The issue, as before stated, concerns only the asserted right of the state to fix the minimum price of milk at retail. Beyond doubt, the state has power to regulate and control the price that one in private business may charge for goods or services where such business is 'affected with a public interest.' Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77. That, conversely, it may not fix prices in a business not so affected, is manifest not only from the fact that the police power is concerned with public, not private, welfare, but also for the reason that such governmental intermeddling with business essentially private in nature is repugnant to the fundamental concept of free enterprise.

The term 'affected with a public interest' is not susceptible of precise definition. In Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 43 S.Ct. 630, 634, 67 L.Ed. 1103, the court classified businesses clothed with a public interest as follows: (1) those operating under a public grant of privileges expressly or impliedly imposing the affirmative duty of rendering a public service upon demand of any member of the public, e. g. common carriers and public utilities; (2) certain exceptional occupations which from the early days of the common law have been...