Nat'l Dairy Prod.s Co. v. Milk Control Bd. Of N.J..

• Decision Date: 03 December 1945
• Docket Number: No. 250.,250.
• Citation: 44 A.2d 796,133 N.J.L. 491
• Parties: NATIONAL DAIRY PRODUCTS CO. et al. v. MILK CONTROL BOARD OF NEW JERSEY.
• Court: New Jersey Supreme Court

133 N.J.L. 491

44 A.2d 796

NATIONAL DAIRY PRODUCTS CO. et al.

v.MILK CONTROL BOARD OF NEW JERSEY.

No. 250.

Supreme Court of New Jersey.

Dec. 3, 1945.

Certiorari proceeding by National Dairy Products Company and others, as subdealers, to review a determination of the Milk Control Board of the State of New Jersey allowing processors of milk an increase of one-fourth cent per quart.

Order affirmed.

May term, 1945, before DONGES, HEHER, and COLIE, JJ.

Frank K. Sauer and Jay F. Dailey, both of Elizabeth, for prosecutors.

Walter D. Van Riper, Atty. Gen., and John F. Bruther, Deputy Atty. Gen., for defendant.

HEHER, Justice.

By an order made on September 8, 1944, after a public hearing on due notice, the Honorable Arthur F. Foran, State Director of Milk Control, increased 3/8¢ per quart the existing minimum price of Class I milk (in glass or paper containers) charged by processors to subdealers in the State's Marketing Area No. 4. It was therein recited that on the prior February 22nd, the Federal Office of Price Administration had permitted (by Order No. G-4) an increase of 1/2¢ per quart in the price of such milk chargeable by processors to subdealers in that area, based upon findings that ‘the present margin of 5 1/2¢ per quart is higher than those of subdealers in any other part of New Jersey,’ and that ‘a subdealer margin of 5¢ per quart on to-the-home retail sales is sufficient to permit profitable operation of wholesale and retail routes;’ that proof was adduced before the director ‘showing a continued loss by processors in 1944 of more than 1/2¢ per quart,’ and ‘moderate profits' by subdealers ‘but not as great as indicated in the opinion given by OPA, accompanying order No. G-4;’ and that it was requisite that there be ‘an adjustment in the minimum price’ of milk of this class between processors and subdealers in order to insure a ‘continued supply’ to subdealers, ‘as far as production will permit,’ and thus render available to the public ‘a sufficient supply of fresh, wholesome, sanitary milk,’ in accordance with the design of Ch. 274 of the Laws of 1941. Pamph. L. p. 713, N.J.S.A. 4:12A-1 et seq.

While they did not participate in the proceedings before the director, prosecutors, all subdealers, took an appeal from the order to the State Board of Milk Control. That tribunal found that ‘the processors have sustained loss;’ that ‘the net spread of the subdealers is sufficient to justify an increase of 1/4er quart;’ and that such increase ‘will be beneficial to the processors and will give them relief and will alleviate their distressed situation.’ Certiorari was allowed to review this latter determination.

The first insistence is that the action taken by the director was based, not only upon evidence submitted at the public hearing, but also matters revealed by ‘a private investigation’ conducted by him, and that there was ‘in fact no evidence in support of the need of processors generally’ in the area in question ‘for an increase in the minimum price to be charged by them of subdealers,’ and no proof that the subdealers ‘could absorb this cost and at the same time be assured of a reasonable return.’

Secs. 21 and 22, N.J.S.A. 4:12A-21, 4:12A-22, authorize the director to fix minimum milk prices ‘by investigation and proof, as the emergency permits,’ while sec. 23, N.J.S.A. 4:12A-23, makes a ‘public hearing’ after notice by ‘public advertisement’ as therein provided a prerequisite to the exercise of the price-fixing authority; and it would seem to be implicit in the latter provision that the action taken shall not be made to rest upon undisclosed evidence or information dehors the record which the parties in interest have had no opportunity to test for trustworthiness and explain or rebut. Railroad Commission of Cal. v. Pacific G. & E. Co., 302 U.S. 388, 58 S.Ct. 334, 82 L.Ed. 319; Ohio Bell Tel. Co. v. Public Utilities Commission, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093; St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 56 S.Ct. 720, 80 L.Ed. 1033; Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288; Interstate Commerce Commission v. Louisville &c. N. R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431; Trustees of Saratoga Springs v. Saratoga Gas, E. L. & P. Co., 191 N.Y. 123, 83 N.E. 693, 18 L.R.A.,N.S., 713, 14 Ann.Cas. 606; Atchison T. & S. F. Ry. Co. v. Commerce Commission, 335 Ill. 624, 625, 167 N.E. 831. This regulatory power must be exercised conformably to the procedure laid down in the statute.

When a judgment is grounded in matters extra the evidence introduced at the hearing, the parties have not been accorded the fair and open hearing prescribed by the statute. Agencies so empowered are under a peremptory duty to afford opportunity through evidence and argument to challenge the result and to act upon evidence and not arbitrarily. These are of the essence of the hearing essential to due process; and this is what the statute contemplates. ‘Due process' consists in the protection of the individual against arbitrary action.

Rate-making is a legislative province. When the lawmaking body itself acts within the broad domain of legislative discretion, and does not exceed its constitutional powers, its determinations are conclusive. But the Legislature may exercise the rate-making authority through a subordinate agency in conformity with a certain and determinate policy and uniform rule of action; and it may endow the agent with power to make findings of fact which are conclusive, if the exercise of the delegated administrative authority is controlled by requirements of procedural due process, among which is the requisite that the findings have substantial support in the evidence. The action is then subject to judicial superintendency only if it is confiscatory and violative of property rights. St. Joseph Stock Yards Co. v. United States, supra; Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524; Florida v. United States, 292 U.S. 1, 54 S.Ct. 603, 78 L.Ed. 1077; State Board of Milk Control v. Newark Milk Co., 118 N.J.Eq. 504, 179 A. 116.

Under the original Milk Control Act of 1933 (Pamph.L. p. 353), the Control Board's function was purely administrative. There was no requirement of a hearing on notice as a sine qua non of the administrative process; and this is significant of a legislative conception of the right to an independent judicial review of administrative findings made under that statute and a determination upon the law and the facts, as revealed by the record below and such new evidence as might be adduced, under the general provision embodied in R.S. 2;81-8, N.J.S.A., and thus to satisfy the demands of due process. The inquiry then was whether the price regulation was unreasonable or arbitrary, i. e., not reasonably based in the facts and the law, or confiscatory and therefore in excess of constitutional powers. State Board of Milk Control v. Newark Milk Co., supra. Vide Ohio Bell Telephone Co. v. Public Utilities Commission, supra. But under the current statute the authority both of the director and of the board has a double facet, i. e., administrative and quasi-judicial, for while the exercise of this regulatory power is essentially administrative, the ascertainment of the facts from the evidence presented at a public hearing,...