United States v. Edwards

• Decision Date: 08 September 1936
• Docket Number: No. 866-Y.,866-Y.
• Citation: 16 F. Supp. 53
• Parties: UNITED STATES v. EDWARDS.
• Court: U.S. District Court — Southern District of California

16 F. Supp. 53

UNITED STATES v. EDWARDS.

No. 866-Y.

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

September 8, 1936.

Peirson M. Hall, U. S. Atty., and Clyde Thomas, Deputy U. S. Atty., both of Los Angeles, Cal., for the United States.

E. V. Knauf, Harry J. McClean, Erwin H. Haas, all of Los Angeles, Cal., and Henry Wenzlaff, of San Bernardino, Cal., for defendant.

YANKWICH, District Judge.

The facts which lie at the foundation of the controversy are fully stated in the Opinion filed upon the interlocutory injunction on April 4, 1936, and reported in (D. C.) 14 F.Supp. 384. The matter is up now for final decision. Counsel have stipulated the facts substantially as set forth in the bill of complaint, which was summarized in the prior opinion. In effect, the government seeks to enjoin the defendant from handling oranges in California in violation of the order of January 26, 1936, of the Secretary of Agriculture, establishing prorate districts and establishing the quantity of oranges for shipment in interstate commerce and into Canada from California and Arizona and the allotments to be shipped by shippers applying under the order. Under the stipulated facts, the only defense which the defendant now urges is that of unconstitutionality, pleaded in his answer. This defense reads: "That the said Agricultural Adjustment Act approved May 12, 1933, as amended on August 24, 1935, and all orders of the Secretary of Agriculture of the United States made pursuant thereto under which the plaintiff claims the right to restrict and prohibit the defendant from handling and shipping oranges and grapefruit produced in the States of California and Arizona in interstate and foreign commerce are unconstitutional in that the same contravene section 1 of article 1 and the Fifth and Tenth Amendments of the Constitution of the United States."

Extensive briefs have been filed by counsel in the matter.

They involve no principles which were not urged at the argument on the interlocutory injunction. The marketing provisions of the Agricultural Adjustment Act (7 U.S.C.A. § 601 et seq.) are still attacked as violative of due process guaranteed by the Fifth Amendment to the Constitution of the United States, and as an invasion of the reserved powers of the states, in violation of the Tenth Amendment to the Constitution. More specifically, the attack is that the marketing provisions of the act involve an unlawful delegation of legislative power and are a regulation of production of the type condemned in the most recent decisions of the Supreme Court. See U.S. v. Butler (1935) 297 U. S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L. R. 914; Panama Refining Company v. Ryan (1934) 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446; Schechter Poultry Corp. v. U. S. (1935) 295 U.S. 495, 55 S.Ct. 837, 79 L. Ed. 1570, 97 A.L.R. 947; Carter v. Carter Coal Company (1936) 56 S.Ct. 855, 80 L. Ed. 1160.

We have re-examined the conclusions declared in the opinion upon the interlocutory injunction in the light of the arguments now advanced. It would serve no useful purpose to restate these conclusions in detail and to answer the objections raised by counsel to their validity. Suffice it to say that a re-examination of the law on the subject, in the light of the latest decisions of the Supreme Court, confirms the conclusion declared in the prior opinion that the marketing features of the Agricultural Adjustment Act are a proper exercise of the plenary power of the Congress to regulate interstate commerce. They are not a regulation of the production of the products, the shipment of which in interstate commerce they attempt to limit.

The opinions in Carter v. Carter Coal Company, supra, strengthen these views. The main opinion declines to deal with the question of the power to fix prices for commodities in interstate commerce. However, Mr. Chief Justice Hughes, in his concurring opinion, asserts distinctly the existence of such power as incidental to the plenary power of the Congress to regulate interstate commerce.

The dissenting opinion of Mr. Justice Cardozo, concurred in by Mr. Justice Brandeis and Mr. Justice Stone, recognizes that sales in interstate commerce are clearly interstate commerce. The following language of Mr. Chief Justice Hughes is significant: "We are not at liberty to deny to the Congress, with respect to interstate commerce, a power commensurate with that enjoyed by the states in the regulation of their internal commerce. See Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 79 L. Ed. 940, 89 A.L.R. 1469." Carter v. Carter Coal Co., supra, 56 S.Ct. 855, 876, 80 L.Ed. 1160. In Nebbia v. New York, supra, to which the Chief Justice referred, the power of the state to set up a minimum price for a commodity was sustained. In effect, the court there recognized it as within the power of a state to exercise such control in the matter of prices as would result in the abolition of "cut throat" competition and in the establishment of a code of "fair" competition. Can it then be said that the plenary power of the Congress to regulate commerce does not extend to the regulation of quantities of products to be sent in interstate commerce? The regulation of prices would have a much more direct bearing upon the production of goods than the regulation of the quantities to be shipped in interstate commerce. Such regulation would, according to ordinary economic principles, affect the entire price structure of the product, and would be felt not only by the portion of the product in interstate commerce, but also by the portion sold locally. It is an economic truism, that a stable price structure affects production. Everywhere, and particularly in the United States, since the depression, the efforts towards economic recovery have been directed towards establishing a stable price structure that would encourage production and thus restore the unbalanced economic life. A regulation of prices must affect production directly. And yet such regulation is within the power to regulate commerce.

How, then, can it be said that the exercise of that power, when it aims to limit the quantity of products to be shipped in interstate commerce, is invalid, as involving control over production?

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