Parker v. United States, 3790.

• Decision Date: 13 April 1943
• Docket Number: No. 3790.,3790.
• Citation: 135 F.2d 54
• Parties: PARKER v. UNITED STATES et al.
• Court: U.S. Court of Appeals — First Circuit

135 F.2d 54 (1943)

PARKER v. UNITED STATES et al.

No. 3790.

Circuit Court of Appeals, First Circuit.

April 13, 1943.

Richard Wait, of Boston, Mass., for appellant.

Joseph P. Rooney, Asst. U. S. Atty., of Boston, Mass. (Edmund J. Brandon, U. S. Atty., of Boston, Mass., and John S. L. Yost, Sp. Asst. to Atty. Gen., of counsel), for appellees.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

MAGRUDER, Circuit Judge.

Appeal is taken here from an order of the district court dated June 16, 1942, adjudging Howard B. Parker in civil contempt of an interlocutory and of a final decree, both rendered in an equity suit brought by the United States of America and the Secretary of Agriculture against Green Valley Creamery, Inc., to obtain a mandatory injunction requiring the said corporation to comply with the provisions of Order No. 4, as amended, issued by the Secretary of Agriculture pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq. As reparation for the contempt, the order now under review imposed a compensatory fine upon Parker for the benefit of the market administrator, in the sum of $42,236.74, and directed payment of this sum within ten days, in default of which it was directed that Parker be committed to jail until payment was made, or until further order of the court.

The final decree in the equity suit was upheld by us in Green Valley Creamery, Inc., v. United States, 1 Cir., 1939, 108 F. 2d 342. In our opinion in that case pertinent portions of the Act are quoted, the terms of Order No. 4 as amended are summarized, and a description is given of the producer-settlement account or equalization pool by means of which each producer of milk receives a so-called "blended price" computed by the market administrator as directed in the Order, regardless of the use to which the particular milk may have been devoted. See also United States v. Rock Royal Co-operative, Inc., 1939, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; H. P. Hood & Sons, Inc., v. United States, 1939, 307 U.S. 588, 59 S.Ct. 1019, 83 L.Ed. 1478.

The contempt proceedings growing out of the equity suit were before this court at an earlier stage, upon appeal from an order of the court below dated January 27, 1941, adjudging Parker in civil contempt and committing him to jail until Green Valley Creamery, Inc., should effect compliance with the Act and with the mandatory injunction theretofore issued against the said corporation. Parker v. United States, 1 Cir., 1942, 126 F.2d 370; we refer to our opinion there for a fuller statement of the case. Appellant did not challenge the findings of fact by the master, duly confirmed by the district court, dealing with the alleged contemptuous conduct. We set aside the contempt order of January 27, 1941, for the reasons stated in our opinion. But we ruled that on the record Parker should be adjudged in civil contempt both of the interlocutory and final decrees and that a compensatory fine should be imposed upon Parker to make good the loss caused to the market administrator by Parker's contumacious acts; and we remanded the case to the district court with directions to impose such a fine upon Parker, the amount to be determined with due regard to the guides laid down in our opinion. Upon motion of the plaintiffs, the court below, in compliance with our mandate, proceeded to issue the order from which the present appeal is taken. Our opinion on Parker's application to be admitted to bail pending decision on this appeal is reported in Parker v. United States, 1 Cir., 1942, 129 F.2d 374.

Appellant does not take issue with our ruling of law on the earlier appeal to the effect that Parker should be adjudged in contempt of the interlocutory and final decrees and should be subject to a remedial fine in some amount. The only point raised is that the district court did not follow the directions in our mandate in fixing the amount of the fine.

Parker's contempt of the court decrees had to do with his manipulation of the affairs of two corporations which he controlled, Green Valley Creamery, Inc., and Stuart Milk Company.

Stuart Milk Company is a corporation duly organized since 1921 under the laws of Massachusetts. It has a usual place of business in Somerville, Massachusetts, and has been engaged in the business of selling milk to consumers within the Greater Boston Marketing Area. Howard B. Parker is the treasurer, general manager, and a director of Stuart Milk Company and owns 200 shares of its capital stock. The remaining 300 shares are owned by his father, Arthur B. Parker, who is also a director. The third director is Alfred E. Collinson. The business of Stuart Milk Company was dominated by Howard B. Parker; the company, by vote of its stockholders, approved, ratified and confirmed the acts and proceedings of the directors and officers.

Originally, the Stuart Milk Company owned a country plant or receiving station at Passumpsic, Vermont, where it made purchases of milk directly from producers. Had this remained the situation, Stuart would have come under obligation to make payments to the market administrator under the provisions of Order No. 4 as amended. On March 15, 1934, federal regulation of the marketing of milk in the Greater Boston Area was begun by the issuance of License No. 38 by the Secretary of Agriculture under authority conferred on him by § 8(3) of the Agricultural Adjustment Act, 48 Stat. 35. See United States v. Seven Oaks Dairy Co., D.C.Mass. 1935, 10 F.Supp. 995. Thereafter, in October, 1934, Green Valley was organized under the laws of Massachusetts with a usual place of business in Somerville, Massachusetts. Within a few weeks thereafter Green Valley purchased the plant at Passumpsic, Vermont, from Stuart for an unknown amount of cash and a $9,000 mortgage. This mortgage was foreclosed early in 1938, after which the said plant, though back in the ownership of Stuart, continued to be operated by Green Valley.¹

All the capital stock of Green Valley was owned by Howard B. Parker, who was its treasurer and general manager, in addition to being a director, and he dominated its business during the entire period in question.

Parker's method of operation is fully set forth in the master's report. Green Valley bought the milk from producers. Its entire product was then sold to Stuart. Parker, as the dominating man in both corporations, dictated the prices at which Green Valley should sell and Stuart should buy. Under the direction and management of Parker the bills from the market administrator to Green Valley were not carried as accounts payable by Green Valley, whose operating accounts were balanced without including therein the bills of the market administrator. By Parker's dictation, the prices for milk sold to Stuart by Green Valley "were established and adjusted after disregarding the sums due to the market administrator and the amounts of the bills received by Green Valley Creamery, Inc., from the market administrator." These prices were so nicely set by Parker in 1938 "that the total receipts of Green Valley Creamery, Inc., were maintained at a level substantially sufficient to balance the books of Green Valley Creamery, Inc., without consideration of the sums due from Green Valley Creamery, Inc., to the market administrator." If, however, the amounts due the market administrator are included (as of course they should be) as part of the cost of the milk to Green Valley, it is found by the master that as a result of Parker's domination "Stuart Milk Company was enabled to purchase the entire products of Green Valley Creamery, Inc., for the period between August 1, 1937, to December 31, 1939, at $47072.65 less than the total costs of such products to Green Valley Creamery, Inc."

It is quite evident that Parker did not maintain his wholly owned corporation, Green Valley Creamery, Inc., for the legitimate purpose of conducting a milk business for profit; rather, as the master found, it was "operated and controlled for the benefit of Stuart Milk Company." It served as a buffer between Stuart Milk Company and the market administrator, for the Stuart Milk Company, purchasing its milk not directly from producers but from a handler, would not be obligated to make payments into the equalization pool operated by the market administrator under the Order. Parker was within his rights in testing the constitutionality of the Act, but he was at pains to see to it that Green Valley Creamery, Inc., should not have on hand assets wherewith to discharge its obligations to the market administrator if the Act should eventually be upheld, as in fact it was. The maintenance of the uniform blended price to each producer, whether or not his milk goes predominantly into the fluid milk market, is impossible unless handlers who have more than the market average of the fluid milk sales make the prescribed equalization payments into the pool. The Act and the Order seek to achieve a fair division of the more profitable fluid milk market among all producers, thereby eliminating the disorganizing effects which had theretofore been a consequence of cutthroat competition among producers striving for the fluid milk market. This is clearly set forth in the opinion in United States v. Rock Royal Co-operative, Inc., 1939, 307 U.S. 533, 548-550, 59 S.Ct. 993, 83 L.Ed. 1446.

The interlocutory injunction against Green Valley Creamery, Inc., in the equity case was issued on November 30, 1937. Among other things it commanded the corporation, "its agents, officers, employees, successors and assigns", to comply with all of the provisions of Order No. 4, as amended, during the pendency of the suit or until a further order of the court. Pending appeal therefrom this court issued a supersedeas staying in part the operation of the mandatory injunction, upon condition, however, that...