People v. Paramount Citrus Ass'n

• Decision Date: 02 January 1957
• Court: California Court of Appeals Court of Appeals
• Parties: PEOPLE of the State of California, Plaintiff and Respondent, v. PARAMOUNT CITRUS ASSOCIATION, Inc., a corporation, Defendant and Appellant. Civ. 21587.

Page 135

305 P.2d 135

147 Cal.App.2d 399

PEOPLE of the State of California, Plaintiff and Respondent, v. PARAMOUNT CITRUS ASSOCIATION, Inc., a corporation, Defendant and Appellant.

Civ. 21587.

District Court of Appeal, Second District, Division 1, California.

Jan. 2, 1957.

Rehearing Denied Jan. 28, 1957.

Hearing Denied Feb. 27, 1957.

G. V. Weikert, Los Angeles, for appellant.

Edmund G. Brown, Atty. Gen., Walter S. Rountree, Asst. Atty. Gen., Alberta Gattone, John E. Fourt, Deputy Attys. Gen., for respondent.

PER CURIAM.

This action is one prosecuted by the Attorney General under the provisions of division 6, chapter 10, of the Agricultural Code, and particularly section 1300.19 thereof, and upon the complaint of the Director of Agriculture.

Pursuant to the relevant provisions of the Agricultural Code, the Director of Agriculture issued a marketing order effective October 1, 1954, requiring processors of lemon products to place 75 per cent of all their lemons received for processing during the 1954-55 marketing season in the 'Stabilization Pool' and to be there subject to the control of the Director of Agriculture, acting through and upon the advice of the Lemon Products Advisory Board, which was appointed by the Director pursuant to the authority granted him by section 1300.15 of the Agricultural Code.

From time to time during the marketing year 1954-55 the percentage of lemons which any processor was required to place in the Stabilization Pool was reduced, until in June of 1955 the percentage was reduced to 58 per cent. The appellant, Paramount Citrus Association, Inc., is a processor of lemons.

Under the provisions of the marketing orders and the rules and regulations for the administration thereof issued by the Director, each processor was obligated each week to report to the Advisory Board the amount of lemons received by it for processing during the preceding week, and the Stabilization Pool obligation incurred thereon. The processor might meet its obligations to the Stabilization Pool by storing the lemons and delivering warehouse receipts therefor issued in the name of the Board, or by delivering to the Board in lieu of lemons concentrated lemon juice or single-strength juice or warehouse receipts therefor, or by delivering to a processor for conversion into citric acid lemons of a tonnage equal to the unfulfilled obligation of the processor or their equivalent in concentrated or in single-strength juice, or by entering into an agreement with the Director for postponed compliance, and posting a bond in a penal sum in an amount equal to one hundred per cent of the processor's Stabilization Pool obligation computed at the rate of $60 per ton, or an equal amount in cash, as security for compliance at the deferred date which could not be later than August 31 of the marketing year (in this case August 31 of 1955). The rules and regulations provided that all products delivered to the Board in fulfillment of a processor's obligations to the Stabilization Pool should be certified by the United States Department of Agriculture as having been processed in California, and that all bulk containers should be sealed by that department.

The marketing order also provided that in each marketing season between the 1st day of October and a date to be fixed by the Board, which should not be earlier than March 1 nor later than May 30, lemons for use as free tonnage lemons (those not subject to Pool obligations) 'may be sold from the Stabilization Pool' and that they might be sold after May 30 upon the affirmative vote of six members of the Board, and a finding by the Board that such action would not endanger the price stability of lemons or lemon products.

The appellant, in accordance with the terms of the marketing order and regulations, reported to the Board all lemons acquired by it for processing, but as to 34 separate weeks did not deposit any of said lemons with or hold them for the Stabilization Pool, nor did it execute any agreement for postponed compliance or post any bond or cash with the Board. It did, early in the marketing year, deliver to the Board 16 barrels of concentrate, equivalent to 64 fruit tons, for conversion into citric acid, and these were accepted by the Board but only 69 hundredths tons were credited to appellant's current Stabilization Pool obligation, the balance of the 64 tons being credited against appellant's obligation for the preceding season.

Shortly thereafter appellant delivered to the processing plant for conversion into citric acid for credit against its Pool obligation 16 additional barrels of concentrate, which was the equivalent of 65.4 tons of lemons, but this concentrate was rejected by the Board as not having been certified or sealed by the United States Department of Agriculture. At this time the appellant orally notified the representative of the Board that it had approximately 103 additional barrels for delivery. Of this 103 barrels appellant on June 27, 1955, delivered 81 barrels of lemon concentrate, which were certified and sealed by the United States Department of Agriculture and which were accepted by the Board, but were not credited against appellant's delinquency. The Board's manager testified that the 81 barrels of concentrate were the approximate equivalent of 250 tons of fruit, but neither plaintiff nor defendant offered any other evidence as to the citric acid content of this concentrate. ¹

The original complaint filed herein was in 15 counts. In the first count facts relevant to the promulgation of the marketing order and the rules and regulations, the failure of the appellant to comply with those rules and regulations, and the processing and sale by the appellant of the lemons which under the marketing order it was obligated to hold for the account of the Pool, were alleged, as well as other facts relevant to plaintiff's prayer for an injunction against further violations of the marketing order by appellant.

Each of the remaining 14 counts charged appellant with a violation of the marketing order in that it had, during a calendar week designated in that count, incurred an obligation to the Stabilization Pool of a certain number of tons, or citric acid pounds, of lemons, and in violation of the marketing order had failed to deliver any portion thereof to the Pool; and as to each violation sought a penalty of $500 or such lesser sum as the court should assess pursuant to section 1300.19(b) of the Agricultural Code.

By its supplemental complaint filed during the progress of the trial, the People alleged in separate counts 21 further violations of the same character covering 21 weeks during the period between January 1, 1955, and the week ending June 25, 1955. By its answer ² appellant set forth two affirmative defenses, the first of which alleged in substance that 96 per cent of all the lemons produced in the United States are produced in California; that 99 per cent of all the lemons processed in the United States are processed in this state; that Sunkist Growers, Inc., and Exchange Lemon Products Co., which is alleged to be a subsidiary of Sunkist, control and handle 86 per cent of all lemons produced and processed in this state and have a virtual monopoly of the handling and marketing of lemon products in this state; that said Sunkist Growers, Inc., has since 1942 been subject to the terms of a decree of a United States court enjoining it from committing acts in violation of the federal antitrust laws including obstructing, restricting, or interfering with purchase by others of fruits; that under the provisions of the California Marketing Act of 1937 any marketing order must be assented to by processors who handle or process not less than 65 per cent of the volume of the agricultural commodity regulated thereby, and that by reason of the fact that Sunkist dominates and controls 86 per cent of the lemons the purposes of the act are defeated and nullified and the will of Sunkist imposed upon others engaged in the lemon industry in this state; that in order to operate its processing plant efficiently appellant must process at least ten thousand tons of lemons during each season; that it can acquire that quantity of lemons and has established an outlet for that quantity; that compliance with the decree of the Advisory Board that 75 per cent of all lemons acquired for processing during the present season be set aside and turned over to the Stabilization Pool would leave appellant able to meet less than 25 per cent of the requirements of its customers; that Sunkist has a surplus of lemons for processing but other processors in the state have more demand for their lemon products than they can supply, and that Sunkist refuses to sell any of said lemons to appellant but has turned its surplus into the Stabilization Pool for conversion into citric acid; that appellant attempted to buy ten thousand tons of lemons from the Stabilization Pool at the price fixed by the Advisory Board, but the Board refused to sell said lemons upon the ground that the sale thereof might unstabilize the market; and that the appellant had petitioned the Director of Agriculture to review the decision of the Advisory Board refusing to sell lemons to appellant from the Stabilization Pool. ³

By its second affirmative defense appellant pleaded that the marketing order and the administrative rules and regulations issued thereunder 'as the same have been and are now being interpreted and administered' are contrary to and in violation of the provisions of the Marketing Act and sections 11 and 13 of article I of the Constitution of the state and section 1 of the 14th Amendment to the Constitution of the United States.

During the trial of the action appellant tendered, but the court refused to receive, an amendment to its answer by which it pleaded the same matters set forth in its second separate defense (denominated by the answer as Third Answer to the First Amended...