Reynolds v. Milk Commission

• Decision Date: 29 March 1935
• Citation: 163 Va. 957
• Parties: R. J. REYNOLDS, ET ALS. v. MILK COMMISSION OF VIRGINIA.
• Court: Virginia Supreme Court

Page 957

163 Va. 957

R. J. REYNOLDS, ET ALS. v. MILK COMMISSION OF VIRGINIA.

Supreme Court of Virginia, Richmond.

March 29, 1935.

Present, Campbell, C.J., and Holt, Hudgins, Gregory, Browning, Chinn and Eggleston, JJ.

1. CONSTITUTIONAL LAW — Power of Legislature — Extent. — Outside the power ceded to the federal government, the power of the legislature of Virginia to enact statutes is without limit except as restrained by the Constitution of Virginia.

2. CONSTITUTIONAL LAW — Statutes — Statutes to Be Declared Unconstitutional Only When Plainly So. — Courts ought not to pronounce any act of the legislature unconstitutional unless it is plainly so — so plain as to leave no doubt on the subject. To doubt is to affirm its constitutionality.

3. STATUTES — Construction — Act Not to Be Construed as Meaning that Regulations Promulgated Thereunder Will Be Arbitrarily Exercised. — An act is not to be construed as meaning that regulations promulgated under it will at some future time be exercised capriciously, arbitrarily or inequitably.

4. CONSTITUTIONAL LAW — Constitutionality of Statute Regulating Industry — Weight to Be Given Determination of Legislature. — A State legislature is better qualified than the court to determine the necessity, character and degree of regulation of an industry, which new and perplexing conditions may require; and its conclusions should not be disturbed by the courts unless they are clearly arbitrary and unreasonable.

5. POLICE POWER — Right to Regulate Business Affected with a Public Interest. — The State, under its police power, has the right to regulate a business which is affected with a public interest, or clothed with a public use.

6. POLICE POWER — Regulation and Control of Milk Industry — Fixing Prices — Constitutionality of Statute — Case at Bar. — In the instant case, a suit to restrain appellants from distributing milk without a license from the Milk Commission and from selling milk at a price other than that fixed by the Commission, appellants admitted violations of the regulations of the Commission and of the act by which it was created but contended that the act contravened section 1, article I, of the Constitution of Virginia and the Fourteenth Amendment to the Constitution of the United States. The lower court granted a perpetual injunction. The act provides for the supervision, regulation and control of the milk industry as a result of determinations by the legislature that the production, distribution and sale of milk is a business affecting the public health and welfare and should be controlled in the exercise of the police power. The act creates a Milk Commission with power to regulate and control the milk industry; to make and enforce all necessary rules and regulations; to determine, after hearing, whether its powers should be exercised in any particular market; to fix, after hearing and investigation, maximum and minimum wholesale and retail prices; and to grant, decline or revoke licenses of producers and distributors. Provision is made for local milk boards and expenses are to be met by monthly assessments against producers and distributors. The Commission may seek relief by way of injunction if the act is violated.

Held: That the act is constitutional. The milk industry may be regulated, even to the extent of fixing prices, if the public interest demands it.

7. POLICE POWER — Regulation of Milk Industry — Assessments to Meet Expenses — Notice — Case at Bar. — The instant case was a suit to restrain appellants from distributing milk without a license from the Milk Commission and selling milk at a price other than that fixed by the Commission. Violations of the regulations of the Commission and the act under which it was created were admitted but it was contended that the act was invalid on the ground, among others, that it provided for the levying of an assessment without notice. The act provides that the Commission shall prepare an annual budget and collect such sums as are needed for operating expenses from local milk boards by way of monthly assessments, the local boards meeting their expenses and these assessments by levying an assessment on producers and distributors. Each distributor makes a report of the quantity of milk handled, from which is determined the amount he is to pay and he charges each producer according to the milk purchased.

Held: That under the circumstances the distributor and the producer do not need formal notice. They know at all times that an assessment will be made and they can, periodically, determine for themselves just how much it will be. In addition, the assessment is not the levying of a tax, nor is the act a revenue measure. It is merely incident to the regulation, and is proper under the police power of the State.

8. POLICE POWER — Regulation of Milk Industry — Grant of Power to Milk Commission to Make and Enforce Rules and Regulations — Relief from Oppressive Regulations Must Be First Sought from Commission — Case at Bar. — The instant case was a suit to restrain appellants from distributing milk without a license from the Milk Commission and selling milk at a price other than that fixed by the Commission. Violations of rules of the Commission and the act creating it and defining its powers and duties were admitted but it was contended that the act was invalid; that because the Commission was granted power to make, adopt and enforce all rules, regulations and orders necessary to carry out the purposes of the act, there was delegated to the Commission power to enact legislation which is both prohibitory and penal in character and operative only in such milk areas as the Commission may define. Appellants had not applied to the Commission to have any order corrected or invalidated, and no objection to any order or rule was pointed out to the Commission so as to give it opportunity to correct it if erroneous.

Held: That appellants should first seek relief from any regulations that may be unreasonable or oppressive by applying to the Commission to modify them.

Appeal from a decree of the Law and Equity Court, Part Two, of the city of Richmond. Decree for complainant. Defendants appeal.

The opinion states the case.

Timberlake & Nelson, for the appellants.

Abram P. Staples, Attorney-General, and Edwin H. Gibson, Assistant Attorney-General, for the appellee.

UPON REHEARING.

GREGORY, J., delivered the opinion of the court.

The appellants were perpetually enjoined and restrained from distributing milk in the city of Staunton until they shall have received a license from the Milk Commission, and from selling milk in the Staunton-Waynesboro market area at any other price than that fixed by the Commission. They were also required to pay any and all assessments levied upon them under the authority of the Commission. It is of the decree carrying the injunction into effect that the appellants complain.

The pleadings in the case consist of the bill of complaint filed by the Milk Commission and the answer thereto filed by the appellants. The cause was heard upon an agreed statement of facts.

In the bill of complaint it was alleged that the complainant, the Milk Commission was created by the provisions of chapter 357, page 558, of the Acts of the General Assembly of 1934; that said act grants authority to the complainant to regulate and control the milk industry in Virginia, and to make, adopt and enforce all rules, regulations and orders necessary to carry out the purposes of the act; that the complainant was given power to define and create natural market areas within which milk shall be produced to supply such area; that the Commission may require all distributors to obtain a license and that licenses may be classified; that complying with the provisions of the act the Commission established the Staunton-Waynesboro market area, fixed the price of milk and adopted rules and regulations for the industry; that seventy-five per centum of the producers and distributors in that area were desirous of having the Commission exercise its power there; that previously, milk was being sold in Staunton at prices ranging from eight cents to twelve cents per quart; that all efforts to stabilize the price had failed because a few producers and distributors declared their purpose and intention to market milk below the cost of milk produced in compliance with the health laws of the State.

The Commission finds and alleges that milk is an essential item of diet; that the production and distribution thereof is a major industry and represents more than twenty-five per centum off all agricultural income of the State; that it is of greator value than the combined income from corn, wheat, tobacco and apples and that it represents an investment of many millions of dollars.

It is alleged "that the fluid milk production, sale and distribution is affected by many factors peculiar to itself and necessitates governmental control in order to insure an economical, profitable and healthful conduct of the business that milk is perishable, cannot be stored, and is a medium for the growth of bacteria and the transmission of diseases; that, under approved methods of distribution into larger markets, the industry must carry a surplus of approximately twenty per centum, as the demand and supply vary from day to day; that the adjustment of supply and demand is hindered by factors difficult to control, as surplus presents very difficult problems, as the price realizable is necessarily much less than that for milk sold for consumption in fluid form, and that the stabilization of prices requires that the burden of the loss in the marketing of surplus milk be shared equally by all producers and distributors in each market area; that, if this burden is not shared by all, a condition arises resulting in a demoralized situation on the market, leading in practically all instances to disastrous price cutting, and that this market condition may be and is brought...