United States v. Rock Royal Co-op.
| Decision Date | 23 February 1939 |
| Citation | 26 F. Supp. 534 |
| Parties | UNITED STATES (NOYES, Com'r of Agriculture and Markets, Intervener) v. ROCK ROYAL CO-OP., Inc., et al. |
| Court | U.S. District Court — Northern District of New York |
John S. L. Yost, Charles J. McCarthy, and Harold L. Schilz, Sp. Assts. to Atty. Gen., E. O. Mather, Sr. Atty., Department of Agriculture, of Washington, D. C., Ralph L. Emmons, U. S. Atty., of Syracuse, N. Y., Milo R. Kniffen, Counsel, Department of Agriculture and Markets of State of New York, of Cobleskill, N. Y., Louis S. Wallach, Asst. Counsel, of Brooklyn, N. Y., Seward A. Miller, of New York City, Edward Schoeneck, of Syracuse, N. Y., and Paul J. McCauley, of New York City, for plaintiff Dairymen's League Co-operative.
Edmund F. Cooke and Richard Cooke, both of Buffalo, N. Y., for plaintiff Metropolitan Co-operative Milk Producers Bargaining Agency, Inc.
Willard R. Pratt, of Utica, N. Y., Charles W. Jenkins, of Deposit, N. Y., and Haskell & Foley, of Cortland, N. Y., for defendants.
Samuel Rubinton, of Brooklyn, N. Y. (of counsel), for Rock Royal Co-operative, Inc.
Leonard Acker, of Brooklyn, N. Y. (of counsel), for Central New York Co-operative.
This suit was brought by the Secretary of Agriculture in the name of the United States, for a mandatory injunction to compel the defendants to comply with the provisions of Order No. 27 issued by the Secretary on August 5, 1938, effective September 1, 1938.
The order was issued by the Secretary to make effective the provisions of the Agricultural Marketing Agreement Act as amended in 1937.
The order is concerned only with milk produced by producers approved by the City of New York for sale in interstate commerce in the Metropolitan milk marketing area, consisting of the counties in New York City and the Counties of Nassau, Suffolk and Westchester.
Order 27, among other things, provides for the payment, by non-co-operative dealers, called proprietary handlers, who buy milk from the producers, of a minimum price to the producers.
It also provides for the payment by all handlers, proprietary or co-operative, under varying conditions, of certain moneys into a milk pool or equalization fund, called Producers Settlement Fund, and also for withdrawals from that fund, chiefly by co-operatives.
This suit is brought to compel payment by the defendants into this Producers Settlement Fund of the following sums in compliance with the terms of Order No. 27.
Sept. Oct. Nov
Jetter Dairy Co. Paid $14,616.05 $ 9,039.77
Rock Royal, $3,616.56 3,058.24 1,508.74
Schuyler Junction 1,603.00 1,337.40 757.64
Central New York 20,115.56 19,581.60 11,069.13
Similar amounts are claimed to be due for each succeeding month.
The State of New York has a statute called the Rogers-Allen Law similar to the Federal Act to cover milk produced by like approved producers for sale in intra-state commerce in the Metropolitan milk marketing area and under authority thereof the Commissioner of Agriculture, Farms and Markets of New York State issued his order No. 126.
The two orders are complementary and are administered by the same administrator appointed by each sovereignty.
The State Commissioner intervened as party plaintiff with the consent of the original plaintiff as did the Dairymen's League Co-operative Association, Inc., and also the Metropolitan Co-operative Milk Producers Bargaining Agency, Inc. But the latter two were allowed to intervene only to help the original plaintiff to defend against acts charged against them by the defendants relating to the referendum, and other things more fully referred to hereinafter.
Three of the four defendants are incorporated co-operative associations and the fourth, the Jetter Dairy Company, is a proprietary handler.
It is not questioned here as the Court understands it, but that the milk of all four defendants reaches the Metropolitan marketing area through the channels of interstate commerce and that they are subject to Federal Order 27 if the Federal Statute and Order 27 are valid and are not subject to State Order No. 126.
So the decision here is based on the Federal Order 27 and little attention will be given to State Order No. 126.
Order No. 27 is lengthy and somewhat complicated. That order is attached to and made a part of this memorandum. Parts of it will be referred to herein.
The Secretary contends that Order 27 was appropriate and necessary to effectuate the provisions of the statute and asks that the defendants be compelled to comply with it by paying the aforesaid sums.
The defendants assert, on various grounds to be more particularly referred to later herein, that the order is invalid, that its approval in the referendum of producers was procured by misrepresentation of its terms, that its terms, operation and effect, and the statute under which it was issued, are so discriminatory that it will confiscate the defendants' property, if enforced, and both statute and order are unconstitutional in operation and effect.
The statute involved in the present case under which the Secretary of Agriculture purported to issue Marketing Order No. 27 is the Agricultural Marketing Agreement Act of 1937, Act of June 3, 1937, Public No. 137, 75th Congress, 50 Stat. 246, 7 U.S. C.A. § 601 et seq.
That act re-enacts and amends some of the provisions of the Agricultural Adjustment Act of 1933, 48 Stat. 31, as amended by the Act of August 24, 1935, 49 Stat. 750.
The purpose of the act is set forth in the "declaration of policy" contained in section 2 of the Act, 7 U.S.C.A. § 601. That purpose is to establish prices to farmers at a level which will give agricultural commodities a purchasing power, in relation to articles that farmers buy, equivalent to the purchasing power possessed by such commodities in the so called "base period".
The attainment of the farmers' purchasing power at such level is to be had by creating and maintaining orderly marketing conditions for agricultural commodities in interstate commerce through the exercise by the Secretary of Agriculture of the powers conferred by the Act.
The goal sought through the act is to regain for the farmers the favorable financial conditions which they enjoyed without any economic or marketing control during the base period which was about 25 years ago and before the World War.
The regulation of marketing conditions in agricultural commodities in interstate commerce through the machinery provided in the Act is merely a means of reaching and thereafter maintaining the goal sought. The act is in no sense an emergency measure but is to continue until the Secretary determines that the exercise of the powers therein conferred is no longer necessary or, possibly, is ineffective to obtain the desired object.
The means provided for attaining this object is the issuance by the Secretary of Agriculture of orders applicable to persons engaged in the handling in Interstate Commerce of certain agricultural commodities. Milk is one of the specified commodities. Section 8c (2), 7 U.S.C.A. § 608c (2).
Orders are to be issued when the Secretary has reason to believe that the issuance of the order will tend to effectuate the declared policy of the act with respect to the particular commodity involved when he so finds upon evidence introduced at a hearing of which he has given due notice. Section 8c (3, 4). Such an order may be issued with respect to the commodity if the handlers of not less than 50% of the volume of such commodity produced or marketed out of the particular area defined in the order, shall sign a marketing agreement which regulates the handling of the commodity in the manner provided in the order. Section 8c (8).
Should 50% of such handlers refuse to sign such an agreement an order may nevertheless be issued if the Secretary determines that their failure so to sign the marketing agreement tends to prevent effectuation of the declared policy of the act and that the issuance of the order is the only practical means of advancing the interests of the producers. Section 8c (9).
Whether an order is issued in connection with a marketing agreement under Section 8c (8) or without such agreement under Section 8c (9), the order must be approved by two-thirds of the producers of such commodity or the producers of two-thirds of the volume thereof, who during a representative period to be determined by the Secretary, were engaged in the production of such commodity for sale in the marketing area to which the order applied. Section 8c (8 and 9).
In order to determine that approval, the Secretary may conduct a referendum of producers, and if two-thirds of those represented in the referendum approve, that is sufficient. Section 8c (19).
In conducting such referendum the secretary shall consider the approval or disapproval by any co-operative association of producers bona fide engaged in marketing the commodity or product thereof, covered by such order, or in rendering services for or advancing the interests of the producers of such commodity, as the approval or disapproval of the producers who are members of, stockholders in, or under contract with such co-operative association of producers. Section 8c (12).
A number of terms and conditions are set forth in the act, one or more of which must be contained in all orders.
These terms and conditions include provisions prohibiting unfair methods of competition and unfair trade practices and, except in the case of fluid milk or cream to be sold for consumption in fluid form, provision for sale of commodities only to be at prices fixed by the handlers and also a provision for the selection of the agency to administer the order.
Besides these general terms common to all orders, the Statute states particular terms or conditions to be included in orders relating to milk and its products. Section 8c (5).
None of these terms and conditions need be included in...
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