United States v. Mills

• Decision Date: 02 September 1960
• Docket Number: 12118,12119.,Civ. No. 12116
• Citation: 187 F. Supp. 314
• Parties: UNITED STATES of America v. Howeth M. MILLS and Crawford Mills, as individuals, and d/b/a Mills Dairy Products Company, a co-partnership. UNITED STATES of America v. Brice G. TWILLEY, individually, and Brice G. Twilley, d/b/a Twilley's City Dairy. UNITED STATES of America v. Nesbit C. MURPHY, individually and Nesbit C. Murphy, d/b/a Shiloh Dairy Farms.
• Court: U.S. District Court — District of Maryland

187 F. Supp. 314

UNITED STATES of America v. Howeth M. MILLS and Crawford Mills, as individuals, and d/b/a Mills Dairy Products Company, a co-partnership.

UNITED STATES of America v. Brice G. TWILLEY, individually, and Brice G. Twilley, d/b/a Twilley's City Dairy.

UNITED STATES of America v. Nesbit C. MURPHY, individually and Nesbit C. Murphy, d/b/a Shiloh Dairy Farms.

Civ. Nos. 12116, 12118, 12119.

United States District Court D. Maryland.

September 2, 1960.

Leon H. A. Pierson, U. S. Atty., Baltimore, Md., and Donald B. MacGuineas and Irwin Goldbloom, Attys., Dept. of Justice, and Joseph A. Walsh, Atty., Dept. of Agriculture, Washington, D. C., for plaintiff.

Robert F. Skutch, Jr., William W. Cahill, Jr., Baltimore, Md., and James K. Knudson and Ben Ivan Melnicoff, Washington, D. C., for defendants.

THOMSEN, Chief Judge.

The defendants in these three cases seek a stay of the orders and injunctions entered by this court on July 7, 1960, following the opinion reported sub nom. United States v. Mills et al., 185 F.Supp. 709.

Facts.

This is an action under sec. 8a(6) of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C.A. § 608a(6), to require defendants to comply with the provisions of Order No. 127, 24 F.R. 11071, 7 C.F.R. Part 1027, regulating the Handling of Milk in the Upper Chesapeake Bay Marketing Area. Order No. 127 was issued on December 28, 1959,¹ after the usual notice, public hearing, briefs, recommended decision, exceptions to the recommended decision, final decision, including findings and conclusions, and a producer referendum. Among the issues decided following the public hearing was whether the Eastern Shore counties should be included in the marketing area covered by the Order. Defendants herein, who are "handlers" on the Eastern Shore, had an opportunity to participate in the proceedings, including the public hearing.

On December 31, 1959, defendants filed a petition with the Secretary under sec. 8c(15) (A) of the Act, 7 U.S.C.A. § 608c (15) (A). The petition alleged that Order No. 127 was a nullity because the Secretary did not make findings of fact as to prices, which the petition alleged to be a "threshold jurisdictional statutory requisite". An application for interim relief was denied on January 26, 1960. On January 27 an answer to the petition was filed and a hearing was scheduled for February 24.

On February 4 defendants filed a long amended petition restating the claim of the original petition, and itemizing many instances in which it was alleged that Order No. 127 was not in accordance with law because various findings and provisions were not supported by evidence in the record or were contrary to the evidence. On February 19 the respondent filed an application to dismiss designated portions of the amended petition, and upon request of defendants herein, they were given an extension of time for filing an answer to the application. They filed such answer and requested oral argument thereon, which was held before a judicial officer on April 11.

At the oral argument defendants withdrew several paragraphs of their amended petition. The judicial officer noted that the amended petition was vague, ambiguous, prolix and argumentative, and, therefore, impossible to answer appropriately; but in the interest of expedition he ruled that the proceeding should continue on the basis of the amended petition, which raised the issue whether Order No. 127 was supported by the evidence in the promulgation record. He stated that questions as to the admissibility of evidence, other than the promulgation record, could be handled as they might arise. An answer to the amended petition was filed on April 27, and on May 4 the proceedings were set for hearing on June 7. On June 2 defendants herein requested a postponement, which was granted. On June 30 they asked for a further postponement of the hearing, and on July 5, the case was set for hearing on August 3.

Meanwhile, the Market Administrator determined that defendants were handlers of milk, as defined in Order No. 127, and subject to regulation thereunder, and that defendants had failed and refused to file the requisite reports for January and February 1960. Accordingly, the instant actions under sec. 8a(6) were filed in this court to compel compliance. The principal defense raised by defendants was that the record keeping and reporting requirements of Order No. 127 are null and void and unenforceable because of failure to comply with the provisions of the Federal Reports Act of 1942, 5 U.S.C.A. § 139 et seq. After a hearing, this court filed an opinion on June 30, 1960, reported in 185 F.Supp. 709, concluding that it was not necessary or proper to decide that issue in this case because under United States v. Ruzicka, 329 U.S. 287, 67 S.Ct. 207, 91 L.Ed. 290 and other cases cited therein, defendants must first raise such an issue in the 8c (15) (A) proceeding. If they are decided adversely to the defendants by the Secretary, defendants may obtain a review by this court of the Secretary's ruling. See 8c(15) (B). It is specifically provided in that section that the pendency of such proceedings shall not impede, hinder or delay the United States or the Secretary of Agriculture from obtaining relief pursuant to 8a(6). See 185 F.Supp. at 710. This court, therefore, held that the government's motions for summary judgment in the three cases should be granted, and that proper orders or injunctions should be issued, requiring defendants to comply fully with Order No. 127.

When the proposed orders and injunctions were presented to the court, defendants' counsel made an oral motion for a stay. A hearing was held in open court on that motion, at the conclusion of which the court ruled that it would deny the stay for reasons analogous to those stated in the second Willow Farms decision, Willow Farms Dairy, Inc., v. Benson, D. C., 181 F.Supp. 802, and particularly for the reasons stated by the Supreme Court in United States v. Ruzicka, supra, and by Judge Wortendyke in United States v. Ideal Farms, D.C.N.J., 162 F.Supp. 28, affirmed, 3 Cir., 262 F.2d 334, and to avoid such difficulties as developed in H. P. Hood & Son v. United States, 1 Cir., 97 F.2d 677, which brought forth the decision reported in Green Valley Creamery v. United States, 1 Cir., 105 F.2d 754. This court stated, however, that the denial of the stay would be without prejudice to the right of defendants to apply for a stay at any time more than three months from the date—July 7, 1960—of the order, if the Secretary had not decided the 8c(15) (A) proceedings by that time, and upon a showing that the failure of the Secretary so to decide the case amounted to a denial of due process or to grossly negligent delay.

Orders and injunctions requiring compliance by defendants with Order No. 127 were entered on July 7. Defendants were required, inter alia, (a) to file with the Market Administrator within thirty days, i. e. by August 6, all reports required by the provisions of Order No. 127, (b) to make available to the Administrator all books, account records, etc. to enable him to verify the data contained in the reports, and (c) to pay to the Administrator by August 6 the moneys shown to be due.

Defendants did not comply with the requirements of the orders and injunctions, but on August 8 entered an appeal therefrom to the United States Court of Appeals for the Fourth Circuit.

Meanwhile, on August 3 the administrative hearing under sec. 8c(15) (A) began in Cambridge, Maryland. At that hearing defendants herein attempted to introduce evidence that the Eastern Shore of Maryland is a separate political and economic entity from the Western Shore, and consequently that the Secretary's inclusion of the Eastern Shore in Order No. 127 was not in accordance with law. The attorney representing the Secretary objected to the admissibility of such evidence. The hearing examiner sustained the objection, for reasons set out in Note ². Although the hearing examiner excluded the de novo evidence, he allowed the defendants to make extensive offers of proof for possible review purposes. He also granted them permission to amend their petition to charge violation of the Federal Reports Act of 1942, 5 U.S.C.A. § 139, in the promulgation of the order; and it is agreed that defendants may offer evidence in the 8c (15) (A) proceeding to prove the alleged violation.

On the second day of the hearing defendants herein requested a recess so that they might take an interlocutory appeal to a judicial officer of the Department from the hearing examiner's ruling excluding their proffered evidence. Their request was granted, and on August 17 defendants formally requested such a review. A hearing was held before a judicial officer on August 23, and he sustained the rulings of the hearing officer in a carefully reasoned opinion filed on August 29, important parts of which are set out in Note ³.

Meanwhile, on August 10, after filing their appeal to the Fourth Circuit, defendants herein met with counsel for the government before Chief Judge Sobeloff and requested a stay. After discussions before Judge Sobeloff on August 10 and August 11, it was agreed among counsel for the respective parties that the defendants would dismiss their appeals without prejudice and would file a new motion in this court for a stay of the orders and injunctions of July 7. Accordingly, defendants have dismissed their appeals entered on August 8, but have indicated that they intend to file new appeals on or before September 6.

In their pending motions for stay of the said orders and injunctions, defendants contend that:

"* * * 9. The action of the hearing examiner in refusing to receive evidence tendered by the Defendants at the hearing before him on August 3, 1960 and 4, 1960, at Cambridge, Maryland, constitutes a denial to the Defendants of the full and fair hearing required by 7 U.S. C.A. 608c(15) (A), and of the Administrative Procedure Act

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