New England Dairies v. Wickard, Civil Action No. 186.
| Decision Date | 31 August 1943 |
| Docket Number | Civil Action No. 186. |
| Citation | 51 F. Supp. 444 |
| Parties | NEW ENGLAND DAIRIES, Inc., v. WICKARD, Secretary of Agriculture. |
| Court | U.S. District Court — District of Vermont |
A. Pearley Feen, of Burlington, Vt., for plaintiff.
Joseph A. McNamara, U. S. Atty., of Burlington, Vt., John S. L. Yost, Sp. Asst. to Atty. Gen., Department of Justice, and Jesse L. Cook, Sr. Atty., Office of the Solicitor, U. S. Department of Agriculture, of Washington, D. C., for defendant.
This action is brought to review the ruling made by the Secretary of Agriculture upon a petition filed by the plaintiff pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, Sec. 8c(15) (A), 7 U.S.C.A. § 608c(15) (A). The complaint was filed in this Court under Sec. 8c(15) (B) of the said act for the purpose of determining whether the Secretary's denial of plaintiff's petition is in accordance with law.
The plaintiff, a cooperative association, is a Vermont corporation formed in 1931, with its principal place of business in Boston. It was organized for the purpose of acting as a central marketing agency for milk. Its members comprise cooperative associations of milk producers and individual producers. Membership is effected by means of a written contract. The plaintiff owns and operates a substantial number of plants in the so-called New England milk shed where it receives from producers, milk for marketing in the Greater Boston market, under the order which will be hereinafter mentioned.
The Burlington Cooperative Milk Products Company, Inc., a cooperative association, hereinafter referred to as "Products", is a Vermont Corporation, organized in 1918, with its principal place of business at Burlington, Vermont. It is engaged in marketing in Burlington and its immediate vicinity, milk which it receives from its producer members. It is not, and never has been, a member of plaintiff, and no contract similar to the contract between plaintiff and its members exists between plaintiff and Products.
The Burlington Cooperative Creamery Association, Inc., a cooperative association, hereinafter referred to as "Creamery", is a Vermont Corporation, organized in 1934, with its principal place of business in Burlington, Vermont. It also is engaged in marketing milk which it receives from its producer members. It is a member of plaintiff and has executed a membership contract with it. Its milk is handled by plaintiff for sale in the Boston market.
Both Products and Creamery had the same treasurer, although otherwise each of these corporations had its own officers and directors. Each maintained separate books of account and other records.
The plant involved is located in Burlington, Vermont. It is owned by Farmer's Realty Company, Inc., a Vermont corporation organized in 1926. The Realty Company leases the plant to Products which alone operates it. Both Products and Creamery did business and received milk from their producer members in this plant. Complete operations of the plant were conducted by, and were in charge of, the same general manager, including the keeping of the accounts of the producer members of both companies. All milk coming to this plant from producers of both corporations was received and marketed under the supervision of the same general manager. This plant was approved by health authorities as a plant from which milk could be shipped for sale as milk in the Boston market.
The producer members of both Products and Creamery delivered their milk at the plant and when the milk was received it was deposited in the same tank and so intermingled that thereafter it was impossible to separate the milk belonging to one corporation from that belonging to the other. Products performed all of the physical handling services of the milk of both corporations. Creamery paid Products for the handling services the sum of 15 cents per hundred pounds. The plaintiff paid Creamery the sum of 23 cents per hundred pounds, which nets Creamery 8 cents profit on the handling of each hundred pounds.
Products sold milk only in Burlington and vicinity during the period involved. At times its sales exceeded its receipts from members and it would then purchase milk from the plaintiff out of the milk which had been delivered to the plant for Creamery.
Creamery made savings in the handling charges which were returned to its producers in the form of bonus payments. Products also had an income from the sale of skim milk. Thus both Products and Creamery always paid their producers the same price for milk and both companies always returned the same profits to their producers.
This method of operation of Products and Creamery described above was in effect from September 1, 1937, to January 15, 1939, the period of time involved in this case. In fact since the organization of Creamery in 1934 the plan of business described herein had been maintained and continued up to and during the time above mentioned.
From February 9, 1936, to August 1, 1936, the Market Administrator in connection with an audit of the books of Creamery examined the books and records of Products, and at various times from August 1, 1937, to January 15, 1939, he caused examinations of the books and records of both corporations to be made.
The plaintiff is undisputably a handler of the products of Creamery under the provisions of Order No. 4 as amended, and pursuant to the provisions thereof filed its reports with the Market Administrator. These reports included only the milk which it had received from its members, both association members and individual producer members. These reports are subject to verification by the Market Administrator and have from time to time been verified by him through auditors attached to his office. Pursuant to the examination of the books and records of Products and Creamery made by the Market Administrator, adjustments in the producer settlement account of the plaintiff were issued on September 3, 1938. These adjustments covered each of the pay periods from September, 1937, through March, 1938. Copies of the invoices issued by the Administrator to the plaintiff showing the adjustments in the producer settlement account of the plaintiff with respect to the milk of Products and Creamery were in the form of Exhibit 13, a part of the record.
On July 3, 1939, the Market Administrator rendered bills to the plaintiff in the aggregate amount of $9914.08 as the amount due to the Producers Settlement Fund from plaintiff on account of milk handled by Products and on the same day the Administrator rendered bills to the plaintiff in the aggregate amount of $514.36 as the amount due from the plaintiff to the Administrator as administration charges on account of milk handled by Products. These bills were directed to the plaintiff and were with respect to all milk received at the plant by Products from its own producer members. The milk received from members of Creamery was properly accounted for by the plaintiff and is not involved in this case. In other words the Market Administrator ruled that solely by reason of the intermingling of the milk of Products with that of Creamery, that the plaintiff was a handler of the milk of Products and therefore was obliged to report and account for all milk received by Products from its own producer members and was obliged to pay thereon for the benefit of the Producers Settlement Fund and for Administration charges.
This ruling was sustained on appeal by the Secretary of Agriculture and it is to obtain relief from the latter's ruling that this action was instituted.
A portion of the facts presented at the administrative hearing was introduced by stipulation between the parties and the balance by the testimony of Fred C. Fiske, general manager of the Burlington plant, who was the plaintiff's witness and the only witness at the hearing.
The statute involved is the Agricultural...
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