United States v. Edwards, No. 866-Y.

• Court: United States District Courts. 9th Circuit. United States District Court (Southern District of California)
• Writing for the Court: E. V. Knauff, of Los Angeles, Cal., and Henry Wenzlaff, of San Bernardino, Cal., for defendant
• Citation: 14 F. Supp. 384
• Parties: UNITED STATES v. EDWARDS.
• Docket Number: No. 866-Y.
• Decision Date: 04 April 1936

14 F. Supp. 384

UNITED STATES
v.
EDWARDS.

No. 866-Y.

District Court, S. D. California, Central Division.

April 4, 1936.

14 F. Supp. 385

Peirson M. Hall, U. S. Atty., and Clyde Thomas and Hal Hughes, Asst. U. S. Attys., all of Los Angeles, Cal.

E. V. Knauff, of Los Angeles, Cal., and Henry Wenzlaff, of San Bernardino, Cal., for defendant.

YANKWICH, District Judge.

The controversy centers around certain provisions of the Agricultural Adjustment Act of 1933 as amended in 1935 (7 U.S. C.A. § 601 et seq.) relating to the control by the Secretary of Agriculture of the marketing of products in interstate commerce, with or without marketing agreements. They are too lengthy to be set out in full. However, the discussion of the problems involved calls for their general outline.

The act declares, in its preamble, an acute emergency to exist. The cause it declares to be the disparity "between the prices of agricultural and other commodities, which disparity has largely destroyed the purchasing power of farmers for industrial products, has broken down the orderly exchange of commodities, and has seriously impaired the agricultural assets supporting the national credit structure." These conditions have "burdened and obstructed the normal currents of commerce in such commodities," making the enactment of the legislation imperative. 7 U. S.C.A. § 601. In view of these conditions, it is declared to be the policy of the Congress to establish and maintain such balance between the production and consumption of agricultural commodities and such marketing conditions therefor "as will re-establish prices to farmers at a level that will give agricultural commodities a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period." The base period, in the case of all agricultural commodities except tobacco and potatoes, is declared to be the pre-war period August, 1909, to July, 1914. 7 U.S.C.A. § 602. One of the methods provided for effectuating the declared purpose of the Congress is by means of marketing agreements with various persons engaged in the handling of any commodity or product thereof. 7 U. S.C.A. § 608b. From time to time, the Secretary of Agriculture is authorized to issue orders applicable to various persons, including associations of producers and others engaged in the handling of agricultural commodities. They are denominated "handlers." The orders must regulate the manner of handling of such agricultural commodities or products as are in the current of interstate or foreign commerce or which directly burden, obstruct, or affect interstate commerce in such commodity or product. Among the commodities affected are fruits, with certain exceptions. Whenever the Secretary has reason to believe that an order is necessary to effect the policy of the act with respect to any commodity, he must give notice for a hearing upon the proposed order. If, after such hearing, he finds that the order will carry into effect the declared policy of the act, he issues the order. 7 U.S.C.A. § 608c (1, 4). Orders relating to fruits must contain limitations of the total quantity of any commodity or product produced within a certain period which may be marketed in or transported to any or all markets in interstate commerce during any period by the handlers thereof; or allotment of the amount which any handler may purchase from or handle during any specified period or periods in interstate

14 F. Supp. 386

commerce; or allotment of the commodity or produce which each handler may market in or transport to any or all markets in the currents of interstate commerce; or determination of the surplus of any such commodity, the establishment of means of eliminating the surplus, and the establishment of reserve pools. The orders must also contain one or more of the following terms and conditions: Prohibiting unfair methods of competition and unfair trade practices in the handling thereof, providing that the commodities shall be handled by all handlers at a price fixed by all, providing for the selection by the Secretary of an agency for the administration of the order — and other conditions necessary to carry into effect the provisions as to limiting, allotting, et cetera. No order issued under the provisions relating to marketing is effective until the handlers of not less than 50 per cent. of the volume of the commodity or product so marketed have signed a marketing agreement under the provisions of the act. As to California citrus fruits, the marketing agreement is not effective until the handlers of not less than 80 per cent. of the volume of such commodity or product have signed the agreement. The issuance of such order must be approved by at least two-thirds of the producers in all localities except California, where, in the case of citrus fruits, it must be approved by three-fourths of the producers. 7 U.S.C.A. § 608c(7, 8). The order may be issued either with or without a marketing agreement. 7 U.S.C.A. § 608c(9, 10). The orders are to be regional unless the Secretary finds, as to a particular commodity or product, that orders made applicable to regional areas would not carry into effect the object of the act. 7 U.S.C.A. § 608c(11). The approval or disapproval of producers may be expressed through their co-operative associations. 7 U.S.C.A. § 608c(12). No order applies to any person who sells agricultural commodities or products at retail (with certain exceptions), nor to producers as such. 7 U.S.C.A. § 608c (13). The violation of an order is made an offense. 7 U.S.C.A. § 608c(14). A handler has the right to be heard by the Secretary in opposition to any order made. The ruling of the Secretary on the matter is subject to review by the various district courts of the United States. 7 U.S.C.A. § 608c(15). Orders of the Secretary may be terminated or suspended by him whenever he finds that the order obstructs or fails to effectuate the policy of the act. He may also terminate any marketing agreement, if he finds that such termination is favored by the majority of the producers who during a representative period have been engaged in the production for market of the commodity specified in the agreement or order. 7 U.S.C.A. § 608c(16). The parties to marketing agreements and handlers are required to furnish the Secretary with information relating to the manner in which the agreement has been carried out. The information is kept confidential. 7 U.S.C.A. § 608d. If the base period, or a portion of it, specified in the act cannot be determined from the available statistics of the Department of Agriculture, the post-war period, August, 1919, to July, 1929, governs. 7 U.S.C.A. § 608e. The Secretary is authorized to establish state and local committees or associations of producers to act as agents of their members in connection with the provisions of the act. The orders issued by the Secretary must require a prorating of the expenses of administration by the agency among the handlers. 7 U.S.C.A. § 610. Certain rights and powers of the Federal Trade Commission Act approved September 26, 1914 (15 U.S. C.A. §§ 41-51), are made applicable to the Secretary in the administration of the act. And he is authorized to confer, with state authorities, at their request, as to methods of administration aiming at uniformity and he may, with the consent of state authorities, use such state employees or local officers as may be necessary. 7 U.S.C.A. § 610

The amendments of August 24, 1935, continued in effect the marketing agreements entered into under the provisions of the act of 1933.

The action was instituted under the direct authority of subdivision 6 of section 8a of the act (7 U.S.C.A. § 608a(6), which gives the District Courts jurisdiction to enforce the provisions of the section and to prevent and restrain the violation of any of its provisions or of any orders or agreements entered under it. The act also authorizes the several United States attorneys of the United States, under the direction of the Attorney General, to institute appropriate proceedings. 7 U.S.C.A. § 608a(7).

The bill of complaint recites the following facts:

14 F. Supp. 387

The defendant is a citizen of California, engaged in business under the name of Edwards Fruit Company at Colton, County of San Bernardino. In accordance with the provisions of the Agricultural Adjustment Administration General Regulations, Series A, No. 1, the Secretary of Agriculture, on September 24, 1935, gave to all interested persons, including the defendant, notice of a hearing to be held in Los Angeles, Cal., on October 9, 1935, with respect to a proposed order regulating the handling of oranges and grapefruit in the state of California and Arizona. From the evidence introduced at the hearing, the Secretary determined that an order regulating the handling of oranges and grapefruit would tend to improve the marketing conditions in the handling of these fruits in interstate and foreign commerce, and to effectuate the policy of the act. Accordingly, he issued an order on January 4, 1936, making a finding to that effect. The order became effective on January 13, 1936, and is still in effect. The order is applicable to shippers of oranges and grapefruit in the states of California and Arizona. It regulates the handling of such oranges and grapefruit in the same manner as the previous marketing agreement executed by the Secretary on December 14, 1933, after a public hearing. The parties signatory to the agreement were the shippers who handle more than 80 per cent. of the oranges and grapefruit shipped annually in the current of interstate and foreign commerce. The order designated members of a Growers' Advisory Committee and members of a Distribution Committee to be known jointly as the California-Arizona Orange Grapefruit Agency. The Secretary, upon the basis of the recommendation of the California-Arizona Orange Grapefruit...