State ex rel. North Carolina Milk Commission v. National Food Stores, Inc., 847

• Decision Date: 24 May 1967
• Docket Number: No. 847,847
• Court: North Carolina Supreme Court
• Parties: STATE of North Carolina on relation of the NORTH CAROLINA MILK COMMISSION v. NATIONAL FOOD STORES, INCORPORATED, a North Carolina Corporation.

Page 548

154 S.E.2d 548

270 N.C. 323

STATE of North Carolina on relation of the NORTH CAROLINA

MILK COMMISSION v. NATIONAL FOOD STORES, INCORPORATED, a North Carolina Corporation.

No. 847.

Supreme Court of North Carolina.

May 24, 1967.

Morgan, Byerly, Post & Keziah, High Point, for defendant appellant.

Holding, Harris, Poe & Cheshire, Raleigh, for plaintiff appellee.

LAKE, Justice.

The act creating the Milk Commission was first before this Court in State ex rel. North Carolina Milk Commission v. Galloway, 249 N.C. 658, 107 S.E.2d 631, in which an order of the Commission fixing a uniform hauling charge to the producer by the processor for the transportation of milk from the farm to the processing plant was sustained. Parker, J., now C.J., speaking for the Court, said:

'The considerations which impelled the General Assembly to adopt the Act are found in its preamble on page 1323, Acts of 1953. * * * Among the facts set forth in the preamble to the Act are these: 'Milk is a primary and necessary food for the children and adult population of the State. * * * (I)t is necessary to suppress unfair, unjust and destructive trade practices which are now being carried on in the production, marketing and distribution of milk and which tends to create a hazardous and dangerous condition with reference to the health and welfare of the people of the State.' Other facts stated in the preamble, as well as the Act itself, make it plain that the General Assembly was also concerned with suppressing unfair and destructive trade practices, and with stabilizing the milk industry, So as to enable the producers to secure a fair price for their milk. These recitals in the preamble set the framework for the legislation.' (Emphasis added.)

Since Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, it has been recognized that the Fourteenth Amendment to the Constitution of the United States does not forbid a state to confer upon an administrative agency the power to fix minimum and maximum retail prices to be charged for the sale of milk in grocery stores to consumers for the purpose of assuring the steady flow of an adequate supply of clean, wholesome milk from the producing farms to the consumer. In that case, Mr. Justice Roberts, speaking for the Court, said:

'Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. * * *

'So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. * * * And it is equally clear that if the legislative policy be to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory it does not lie with the courts to determine that the rule is unwise. * * *

'The Constitution does not secure to anyone liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of the people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the Legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.'

State ex rel. North Carolina Milk Commission v. Galloway, supra, establishes that neither Article I, § 7, nor Article I, § 17, of the Constitution of North Carolina, forbids the Legislature of this State to confer upon the Milk Commission authority to fix a uniform rate for the transportation of milk from the farm to the processing plant so as to enable the producers of milk to secure a fair price for their product. This Court there recognized the relation between such transportation charge and the assurance to the producers of milk of a fair price for that which they sell. It also recognized, as the Supreme Court of the United States had done in Nebbia v. People of State of New York, supra, that the Legislature might reasonably conclude that the maintenance of a fair price to the producer of milk is necessary to the assurance of an adequate supply of milk produced, transported and marketed under sanitary conditions. The constitutionality of the entire Milk Commission Act was not before this Court in the Galloway case, supra, and has never been determined by this Court. It is not before us in the present case.

The act must be construed in the light of its objective, which the Galloway case, supra, states. It empowers the Commission '(t)o investigate all matters pertaining to the production, processing, storage, distribution, and sale of milk for consumption,' and '(t)o supervise and regulate the transportation, processing, storage, distribution, delivery and sale of milk for consumption.' G.S. § 106--266.8(2)(3). The Commission has not determined that conditions surrounding the production and marketing of milk in this State require a fixing of the price to be charged by a retail grocery store for the sale of milk to consumers in order to accomplish the purposes for which the act was adopted. The Commission has not undertaken to fix the price to be charged in such a sale. Consequently, its authority to do so is not now before us. The affidavit of Honorable James A. Graham, Commissioner of Agriculture, offered in evidence by the plaintiff, states, '(T)he North Carolina Milk Commission sets minimum prices to be paid to dairy farmers for their milk, but does not establish prices at any other level.'

The question before us requires the construction of G.S. § 106--266.21, which provides:

'The sale of milk by any distributor or producer-distributor or retailer below cost for the purpose of injuring, harassing or destroying competition is hereby prohibited. At any hearing or trial on a complaint under this section, evidence of sale of milk by a distributor or subdistributor or retailer below cost shall constitute prima facie evidence of the violation or violations alleged, and the burden of rebutting the prima facie case thus made, by showing that the same was justified in that it was not, in fact, made below cost or that it was not for the purpose of injuring, harassing or destroying competition, shall be upon the person charged with a violation of this section. * * * The prima facie case of a violation of this section, made by proof of sale below cost, may be rebutted by proof of any of the following facts * * *.'

The provision in this section of the act that the statutory prima facie case of violation may be rebutted by proof of specified circumstances, none of which applies to the present case, does not mean that these are the only circumstances which may be relied upon to rebut such prima facie proof of violation. See State ex rel. North Carolina Milk Commission v. Dagenhardt, 261 N.C. 281, 134 S.E.2d 361. To construe the statute otherwise would raise a serious question as to its constitutionality and it is well settled that a statute will not be construed so as to raise such question if a different construction, which will avoid the question of constitutionality, is reasonable. State v. Barber, 180 N.C. 711, 104 S.E. 760; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352, 1361; Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598; Fed. Trade Comm. v. Amer. Tobacco Co., 264 U.S. 298, 44 S.Ct. 336, 68 L.Ed. 696, 32 A.L.R. 786; Re Keenan, 310 Mass. 166, 37 N.E.2d 516, 137 A.L.R. 766, 773; 16 Am.Jur.2d, Constitutional Law, § 146; 16 C.J.S. Constitutional Law § 98b.

It is well settled in this State that it is within the power of the Legislature to change the rules of evidence and, within constitutional limits, to provide that the proof of one fact shall be deemed prima facie evidence of a second fact. Lower Creek Drainage Commissioners v. Mitchell, 170 N.C. 324, 87 S.E. 112; State v. Dowdy, 145 N.C. 432, 58 S.E. 1002; State v. Barrett, 138 N.C. 630, 50 S.E. 506, 1 L.R.A., N.S., 626. Notwithstanding the contrary opinion of Professor Wigmore, set forth at length in the Barrett case, supra, it is now also well established in this State, and in other jurisdictions, that the exercise of such power by the Legislature is subject to the limitation that there must be such relation between the two facts in human experience that proof of the first may reasonably be deemed some evidence of the existence of the second. Lower Creek Drainage Commissioners v. Mitchell, supra; State v. Dowdy, supra; Tot v. United States, 319 U.S. 463, 63 S.Ct. 1241, 87 L.Ed. 1519; Bandini Petroleum Co. v. Superior Court, 284 U.S. 8, 52 S.Ct. 103, 76 L.Ed. 136, 78 A.L.R. 826; Mobile, J. & K.C.R.R. v. Turnipseed, 219 U.S. 35, 43, 31 S.Ct. 136, 55 L.Ed. 78; People v. Pay Less Drug Store, 25 Cal.2d 108, 153 P.2d 9; State v. Kelly, 218 Minn. 247, 15 N.W.2d 554; Anno., 162 A.L.R. 495, 505; 29 Am.Jur.2d, Evidence, § 10. There are many circumstances in addition to those specified in the above statute, which would tend to disprove an intent to injure, harass or destroy competition by a sale of an article at less than its cost to the seller. To deprive the seller of the right to disprove the intent which is part of the conduct forbidden by the statute, by proof of such other circumstances, would raise grave doubt as to the constitutionality of the provision as an arbitrary interference with the liberty of...