State v. Newark Milk Co.

• Decision Date: 21 May 1935
• Docket Number: No. 48.,48.
• Citation: 179 A. 116
• Parties: STATE ex rel. STATE BOARD OF MILK CONTROL v. NEWARK MILK CO.
• Court: New Jersey Supreme Court

179 A. 116

STATE ex rel. STATE BOARD OF MILK CONTROL

v. NEWARK MILK CO.

No. 48.

Court of Errors and Appeals of New Jersey.

May 21, 1935.

[Copyrighted material omitted.]

Appeal from Court of Chancery.

Suit by the State, on the relation of the State Board of Milk Control, against the Newark Milk Company. From an adverse interlocutory order, defendant appeals.

Modified and, as modified, affirmed, and cause remanded for decree in accordance with opinion.

Samuel Kaufman and Merritt Lane, both of Newark (Morris M. Schnitzer, of Newark, on the brief), for appellant.

David T. Wilentz, Atty. Gen., and Edward W. Currie, Asst. Atty. Gen., for respondent.

HEHER, Justice.

The challenged order denied appellant's motion to strike out the bill of complaint upon the ground that it does not disclose a cause of action, and enjoining it, until the further order of the court in the premises "from selling or distributing milk to consumers or stores at less than the minimum prices fixed by the New Jersey Milk Control Board for the area in which said defendant conducts its business for sale within the State of New Jersey."

An earlier restraint, awarded upon the filing of the bill, against the importation from sister states of milk "from plants or dairies, not licensed, pursuant to the laws of the State," and from "purchasing milk from producers situated beyond the territorial limits of the State of New Jersey at prices less than paid the producers within the State * * * for sale within this State," was vacated. This was proper; for such a restraint is clearly an excess of power. It contravenes the commerce clause of the Federal Constitution (article 1, § 8, cl. 3). A state possesses no authority to regulate the price to be paid in a sister state for milk acquired there, or to prohibit the importation of milk of wholesome quality acquired in another state, whatever the price may be. A state may not, in any form or under any guise, directly impose a burden upon the prosecution of interstate business. Baldwin v. G. A. F. Seelig, Inc., 55 S. Ct. 497, 79 L. Ed.—.

The respondent board came into being by virtue of the provisions of chapter 169 of the Laws of 1933, Pamph. L. 1933, p. 353 (see N. J. St. Annual 1933, § 81—162A (25) et seq.). The Legislature invoked the police power to enact what it declared to be an "emergency law, necessary for the immediate preservation of the public peace, health and safety." Such pressing necessity was stated to be the result of "unfair, unjust, destructive and demoralizing practices" pursued "in the production, sale and distribution of milk for human food, which are likely to result in the undermining of health regulations and standards, the demoralization of the agricultural interests of this State engaged in the production of milk, and the creation of conditions inimical to the health of milk consumers." There was a legislative finding that "such conditions have progressed to the point that there is immediate danger not only to the public health, but also to the public peace and safety." Preamble, § 1.

To correct these public evils, the milk control board was created. It was generally empowered to supervise and regulate the milk industry, including the production, importation, transportation, manufacture, storage, distribution, delivery, and sale of milk and milk products in this state, "in those matters as in the declaration of legislative policy and intent stated in this act to be necessary to control or prevent unfair, unjust, destructive and demoralizing practices which are likely to result in the undermining of health regulations and standards, the demoralization of agricultural interests in this State engaged in the production of milk." It was specifically authorized, inter alia, to license dealers; to adopt and enforce all necessary rules, orders, and regulations; to make all needful investigations, and to conduct hearings; and to fix and determine "the price to be paid to the producer and to be charged the consumer for milk in the several municipalities or markets of this State, under varying conditions, as will best protect the supply of fresh, wholesome and sanitary milk in this State, and insure a sufficient quantity of pure and wholesome milk to the inhabitants of this State, having special regard to the health and welfare of children and be most in the public interest." Articles 3, 4, 5, and article 7, as amended by P. L. 1933, p. 688 (N. J. St. Annual 1933, §§ 81—162A(27), 81—162A(28), 81—162A (29), 81—162A(31). It is enjoined (article 7, § 1, as amended, N. J. St. Annual 1933, § 81—162A(31), in the exercise of the latter power, to consider "the various grades of milk produced, the varying percentages of butter fat, plant volume, seasonal production, and other conditions affecting the cost of production, cost of transportation and marketing, and the amount necessary to yield a reasonable return to the producer and to the milk dealer."

A penalty of not less than $25, nor more than $200, is prescribed for the violation of "any of the provisions of this act and/ or the orders, rules and regulations of the board as adopted from time to time." Article 7, § 1 (d), as amended, N. J. St. Annual 1933, § 81—162A(31), subd. (d). Summary jurisdiction for the collection thereof is vested in the several district courts, and in the court of common pleas of a county which does not have a district court.

By express limitation, the operation of the statute wholly ceases on July 1, 1935.

The bill, filed on January 9, 1934, alleged the pursuit, by groups of producers of milk, for "some months" prior thereto, of various means and methods to control production, and the sale and distribution of fluid milk, in order to secure "a better financial return to such producers"; the carrying on of "milk strikes"; the destruction and "dumping" of milk, and the prevention of delivery thereof to distributors and consumers to such an extent that the "public has been denied a sufficient supply of good, wholesome milk." There were allegations that a resultant condition was that the producers were unable to obtain reimbursement "for the actual cost of production of good clean milk"; that "the situation in the production and distribution of milk for human consumption is such that the health and welfare of the citizens of the State * * * is (sic) threatened, and an emergency exists in the State * * * in the matter of the production, sale and distribution of milk for human food"; that to avert an "immediate danger not only to the public health but also to the public peace and safety," the statute in question was enacted; that pursuant to the authority thereby conferred, the respondent board adopted certain enumerated rules and regulations, and, on June 30, 1933, promulgated an order prescribing certain minimum prices to be charged for fluid milk in the state, whereby appellant was required to vend milk to stores in the area which it served at the price of 9 cents per quart; and that appellant, in willful violation of this order, sold milk to stores at the rate of 8 cents per quart, and was a habitual violator of this and other rules, orders, and regulations issued by the respondent board.

It was also averred that this body, prior to the fixation of the prices and the promulgation of the rules and regulations, conducted an investigation, and "obtained proof of the conditions existing in relation to the importation, production and consumption of milk within the State," and, "after careful consideration of the facts and proofs acquired in said investigation," concluded that the prices prescribed and the rules and regulations therein referred to were essential to "protect the supply of fresh, wholesome and sanitary milk in this State."

Irreparable injury was alleged, and the general equity jurisdiction, and that expressly conferred by chapter 420 of the Laws of 1933 (Pamph. L. 1933, p. 1139, N. J. St. Annual 1934, § 81—162A(34), were invoked.

Appellant submitted affidavits tending to show the following matters of fact: It is engaged in the business of purchasing, pasteurizing, and selling milk, and the product? thereof, to retailers in New Jersey and New York. By reason of its ability to dispose of surplus milk not required for fluid consumption during the summer season, when production is high, through its conversion into butter, cheese, and other milk products, thus affording a market to its producers during the entire year, and efficiency in management, it is enabled to undersell its competitors in the fluid consumption field; and the result of the abolition by the milk control board of the consequent price differentials was a substantial drop in business volume.

The insistence is that this constitutes a deprivation of liberty and property without due process of law. On the other hand, the state maintains that appellant undersold its competitors at the sacrifice of quality; that the "situation became progressively worse as the market prices declined"; that the low price level had made it impossible for the farmers to properly feed their herds and maintain sanitary conditions; and that the ultimate result would be a termination of the supply of wholesome milk.

Appellant asserts in limine a lack of jurisdiction of the subject-matter. It is said that equity possesses "no jurisdiction to enforce penal laws by injunction"; and that the statute which purports to confer jurisdiction is repugnant to article 10, § 1, of the state Constitution, providing that "the several courts of law and equity, except as herein otherwise provided, shall continue with the like powers and jurisdiction as if this constitution had not been adopted." It relies—in vain, however—upon the doctrine laid down in Hedden v. Hand, 90 N. J. Eq. 583, 107 A. 285, 286, 5 A. L. R. 1463. There this court dealt with a statute (Pamph. L. 1916, p. 315) "declaring all buildings and places wherein or upon which acts of lewdness, assignation or...