Marvin Tragash Co., Inc. v. U.S. Dept. of Agr., 75-1481

Citation524 F.2d 1255
Decision Date24 December 1975
Docket NumberNo. 75-1481,75-1481
PartiesMARVIN TRAGASH CO., INC., Petitioner, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Earl Butz, Secretary of Agriculture, Respondent.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Michael A. Shapiro, Robert Dixon, Miami, Fla., for petitioner.

Earl L. Butz, Sec. of Agriculture, U. S. Dept. of Agriculture, Judith S. Feigin, William Kanter, Appellate Sec., Civil Div., Dept. of Justice, Washington, D. C., for respondent.

Petition for Review of an Order of the United States Department of Agriculture (Florida Case).

Before BROWN, Chief Judge, RIVES and BELL, Circuit Judges.

BELL, Circuit Judge.

Petitioner Marvin Tragash Co., Inc., seeks review of a final decision and order by the Secretary of Agriculture which found that petitioner's failure to make full and prompt payment for 35 lots of fruits and vegetables constituted willful, flagrant, and repeated violation of Section 2 of the Perishable Agricultural Commodity Act, 7 U.S.C.A. § 499b. We deny the petition for review and affirm the order below.

Marvin Tragash Co., Inc., was a Florida corporation licensed under Section 3 of the Act, 7 U.S.C.A. § 499c. Between June 1971 and March 1972, the corporation purchased, received, and failed to pay for 35 lots of fruits and vegetables from ten sellers. On April 11, 1972, the corporation filed a petition for arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq. The corporation successfully solicited outside investors to finance a plan of arrangement, and on June 15, 1972, an order confirming the plan was approved. Pursuant to 7 U.S.C.A. § 499d, the corporation's license automatically terminated on that date. The plan of arrangement provided that the corporation would pay 15 per cent of the money owed to all its unsecured creditors in two equal installments of 7.5 per cent each. The creditors, including the ten commodity sellers, agreed to and approved the plan and the bankruptcy court enjoined the corporation from paying any of its obligations except through the plan of payment.

On November 15, 1972, the Secretary of Agriculture filed a complaint and following a hearing the hearing officer found that the corporation's failure to make full payment promptly constituted willful, flagrant, and repeated violations of Section 2 of the Act, 7 U.S.C.A. § 499b. 1 The Judicial Officer subsequently adopted the administrative law judge's decision and Tragash appealed to this court.

Petitioner presents five allegations of error, only one of which merits any extended discussion. The primary contention is that the Perishable Agricultural Commodities Act, insofar as it imposes penalties on petitioner for flagrantly and repeatedly failing to pay its debts, conflicts with the purpose of the Bankruptcy Act under which petitioner entered the plan of arrangement. This issue has been addressed by the Second Circuit Court of Appeals in Zwick v. Freeman, 2 Cir., 1967, 373 F.2d 110, cert. denied, 389 U.S. 835, 88 S.Ct. 43, 19 L.Ed.2d 96. The Second Circuit found no unconscionable or excessive conflict between the Commodities Act and the Bankruptcy Act. As we agree with the Second Circuit's reasoning and conclusion, we quote extensively from its opinion:

The Bankruptcy Act is intended to relieve an honest debtor of liability for his past obligations and to allow him to start afresh. Williams v. United States Fid. & Guar. Co., 236 U.S. 549, 554-555, 35 S.Ct. 289, 59 L.Ed. 713 (1915). The Perishable Agricultural Commodities Act is designed to protect the producers of perishable agricultural products who in many instances must send their products to a buyer or commission merchant who is thousands of miles away. It was enacted to provide a measure of control over a branch of industry which is almost exclusively in interstate commerce, is highly competitive, and presents many opportunities for sharp practice and irresponsible business conduct. H.Rept. No. 1196, 84th Cong. 1st Sess. 2 (1955).

(13) The measures which petitioners object to in the Commodities Act would seem, to some extent, to conflict with the policy of the Bankruptcy Act. They prevent petitioners from shortly making a fresh debt-free start in the industry in which they had been earning their livelihood, although they are entirely free, as far as the challenged statute is concerned, to enter any other occupation or business which appeals to them. Nevertheless, in the light of the purposes of the Commodities Act and the clearly recognized need to have financially responsible persons as licensees or employees of licensees under that Act, the extent of encroachment of the Commodities Act upon the goals of the Bankruptcy Act cannot be regarded as unconscionable or excessive. We find no cases involving alleged conflicts between the Bankruptcy Act and other federal legislation, but there are a number of reported cases that hold that reasonable measures provided for in state statutes which impose penalties on bankrupts are not invalid under the Supremacy Clause, United States Constitution, Art. VI, cl. 2, despite some degree of conflict with the Bankruptcy Act.

It would seem that the principle of these cases involving the application of the Supremacy Clause to a supposed conflict between state and federal statutes would apply a fortiori to a supposed conflict between two federal statutes of equal dignity. We cannot lightly infer that Congress intended to exempt bankrupts from being subject to these provisions of the Commodities Act when such an exemption would be extremely damaging to the goal of the Commodities Act that only financially responsible persons should be engaged in the businesses subject to the Act. Our judgment is supported by the fact that other provisions of the Perishable Agricultural Commodities Act contain specific references to bankruptcy, see 7 U.S.C. §§ 499d(a), 499d(b)(D), 499d(e). It is unlikely that Congress would include references to bankruptcy in some portions of the Commodities Act and omit them from the portions relevant to this case if Congress had intended that the provisions challenged here would be affected by the bankruptcy of persons subject to them. See T. I. M. E., Inc. v. United States, 359 U.S. 464, 79 S.Ct. 904, 3 L.Ed.2d 952 (1959); Lang v. Commissioner of Internal Revenue, 289 U.S. 109, 53 S.Ct. 534, 77 L.Ed. 1066 (1933).

373 F.2d at 116-17.

Petitioner argues that the Zwick holding has been undermined by the Supreme Court's decision in Perez v. Campbell, 1971, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233, which overruled the prior cases cited by Zwick as permitting state statutes to conflict with the Bankruptcy Act, and held that such statutes were unconstitutional under the Supremacy Clause, Art. VI, cl. 2, of the United States Constitution.

The Supremacy Clause does not come into play in this case where there is a conflict between two federal statutes of equal standing. Therefore, the ruling in Perez has no bearing on the validity of the Perishable Agricultural Commodities Act. In any event, the Second Circuit decision in Zwick did not rest entirely on the cases overruled by Perez, but also was based on the court's view that Congress did not intend to exempt bankrupts from the provisions of the Commodities Act, a view supported by the absence of any reference to the Bankruptcy Act in the provisions in question, although other provisions of...

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  • Johnson v. U.S.
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    ...based upon statements that the Air Force had taken from five witnesses. See id. at 158. Accord, Marvin Tragash Co. v. United States Department of Agriculture, 524 F.2d 1255, 1258 (5th Cir. 1975); Brown v. Macy, 340 F.2d 115, 117 (5th Cir. 1965). Congress never instructed the Commission to f......
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    ...between a federal and a state law, not when it involves a conflict between two federal statutes. Marvin Tragash Co. v. United States Dept. of Agriculture, 524 F.2d 1255, 1257 (5th Cir.1975). When a case presents a conflict between two federal statutes, it is not within the preemption doctri......
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    ...under the Supremacy Clause). The courts appear not to have gone beyond this, however. In Marvin Tragash Co. v. U. S. Department of Agriculture, 524 F.2d 1255 (5th Cir. 1975), the court held that 7 U.S.C. § 499b(4) does not conflict to an improper degree with the Bankruptcy Act, following th......
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