United States v. Rock Royal Noyes v. Same Dairymen Leagueass v. Same Metropolitanmilk Producers Bargaining Agency v. Same 8212 828, CO-O

• Court: United States Supreme Court
• Writing for the Court: REED
• Citation: 59 S.Ct. 993,83 L.Ed. 1446,307 U.S. 533
• Parties: UNITED STATES v. ROCK ROYALnc., et al. NOYES, Com'r of Agriculture and Markets of New York v. SAME. DAIRYMEN'S LEAGUEASS'N, Inc., v. SAME. METROPOLITANMILK PRODUCERS BARGAINING AGENCY, Inc., v. SAME. —828
• Decision Date: 05 June 1939
• Docket Number: CO-OP,Nos. 771,826,I,CO-O

307 U.S. 533 59 S.Ct. 993 83 L.Ed. 1446 UNITED STATES

v.

ROCK ROYAL CO-OP, Inc., et al. NOYES, Com'r of Agriculture and Markets of New York v. SAME. DAIRYMEN'S LEAGUE CO-OP. ASS'N, Inc., v. SAME. METROPOLITAN CO-OP. MILK PRODUCERS BARGAINING AGENCY, Inc., v. SAME.

Nos. 771, 826—828. Argued April 24, 25, 1939. Decided June 5, 1939.

Appeals from the District Court of the United States for the Northern District of New York.

[Syllabus from pages 533-539 intentionally omitted]

Page 539

Messrs. Frank Murphy, Atty. Gen., and Robert H. Jackson, Sol. Genl., for the United States.

Mr. Milo R. Kniffen, of Cobleskill, N.Y., for appellant Noyes.

Mr. Seward A. Miller, of New York City, for appellant Dairymen's League Cooperative Ass'n.

Mr. John E. Larson, of Washington, D.C., for appellant Metropolitan Cooperative Milk Producers Bargaining Agency.

Mr. Leonard Acker, of Brooklyn, N.Y., for appellee Central New York Cooperative Association, Inc.

Mr. Willard R. Pratt, of Utica, N.Y., for appellees Rock Royal Co-operative, Inc., et al.

Mr. Justice REED delivered the opinion of the Court.

These appeals involve the validity of Order No. 27 of the Secretary of Agriculture, issued under the Agricul-

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tural Marketing Agreement Act of 1937, ¹) regulating the handling of milk in the New York metropolitan area.

On October 27, 1938, the United States of America filed a complaint against the Rock Royal Co-operative, Inc., the Central New York Cooperative Association, Inc., and Schuyler Junction New York Milk Shed Cooperative, Inc., seeking a mandatory injunction requiring the defendants and their representatives to comply with the provisions of the Order. On November 26, 1938, a similar action was filed in the same court against the Jetter Dairy Company, Inc. On December 2 these causes were consolidated. The original proceedings had sought relief not only for violations of the Order of the Secretary of Agriculture but also, if the court should find that the defendants or any of them were not subject to that Order, for violation of Official Order No. 126 issued by the Commissioner of Agriculture and Markets of the State of New York. The two orders are in pari materia, one covering milk moving in or directly burdening, obstructing or affecting interstate commerce and the other² covering milk in intrastate commerce. Each defendant is a dealer handling milk moving in interstate commerce. On December 15, Holton V. Noyes, as Commissioner of Agriculture and Markets of the State of New York, was permitted to intervene as a party plaintiff in the consolidated action. He sought an injunction commanding the defendants and their representatives to comply with Order No. 126 or, should it be determined that their milk was not subject to this Order, to comply with the Order of the Secretary of Agriculture.

In their answers, the defendants pleaded certain affirmative defenses, setting up the invalidity of Order No. 27 because of improper efforts to secure its adoption.

Page 541

Broadly speaking, these defenses were based upon erroneous representations alleged to have been made by officials and by certain private organizations to bring about the approval of the Order and upon an alleged conspiracy of the same private organizations to create a monopoly by means of the Order. The motion to strike these defenses having been overruled, the Dairymen's League Cooperative Association, hereinafter called the League, and the Metropolitan Cooperative Milk Producers Bargaining Agency, Inc., hereinafter called the Agency, were permitted to intervene to combat them.

The answers also challenged the two orders and the Act as contrary to the Fifth and Fourteenth Amendments to the Constitution, U.S.C.A., and the Act as involving improper delegation of legislative power. The Central New York Cooperative Association denied the power of the Congress to enact the legislation under the Commerce Clause and set up as a further defense that it was not subject to either order.

After a hearing upon the merits, the District Court dismissed the complaints. The state order was eliminated from consideration on the understanding, not questioned here, that the milk of all four defendants is covered by the Federal Order, if valid. It was further held that Sections 8c(5)(B)(ii) and 8c(5)(F) of the Act, 7 U.S.C.A. § 608c(5)(B)(ii), (F), violate the due process clause of the Fifth Amendment, that the Order is discriminatory and takes property without compensation, that approval of the producers was secured by unlawful misrepresentation and coercion and that important provisions of the Order, authorizing payments to cooperative and proprietary handlers, have no basis in the Act. United States v. Rock Royal Co-operative, D.C., 26 F.Supp. 534, 544, 545, 548, 550, 553. As the unconstitutionality of certain sections of an Act of Congress was one ground of the decision an appeal was allowed directly to this Court.³

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The Statute.⁴ The controversy revolves almost entirely around Order No. 27. Back of the Order is the statute under which it was issued, the Agricultural Marketing Agreement Act of 1937 which reenacted and amended certain provisions of the Agricultural Adjustment Act.⁵

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As its name implies, it was aimed at assisting in the marketing of agricultural commodities.

By Section 1, 7 U.S.C.A. § 601, it is declared that 'the disruption of the orderly exchange of commodities in interstate commerce impairs

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the purchasing power of farmers' thus destroying the value of agricultural assets to the detriment of the national public interest. This interference is declared to 'burden and obstruct the normal channels of interstate commerce.'

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By Section 2, 7 U.S.C.A. § 602, it is declared to be the policy of Congress, through the exercise of the powers conferred upon the Secretary of Agriculture, 'to establish and maintain such orderly marketing conditions for agricultural commodities in interstate commerce as will establish prices to farmers at a level that will give agricultural commodities

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a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period. * * *'

Under Section 2 of the Act, the base period for agricultural commodities, except tobacco and potatoes, is fixed at the pre-war period of August, 1909, to July, 1914. Where the purchasing power during the base period cannot be satisfactorily determined from available statistics within the Department of Agriculture, the Secretary is authorized to take as the base period from August, 1919, to July, 1929, or a portion thereof. Section 8e. In prescribing minimum prices for milk the statute authorizes the Secretary to fix minimum prices without restriction to the purchasing power during the base period so as to reflect the prices of available supplies of feed and other economic conditions, if he finds after a hearing that minimum prices with a base period purchasing power are unreasonable. Section 8c(18).

Section 8a(6) gives jurisdiction to the district courts of the United States to enforce and to prevent and restrain any person from violating any of the orders, regulations or agreements under its provisions.

Section 8b authorizes the Secretary of Agriculture to enter into marketing agreements with the producers and others engaged in the handling of agricultural commodities in or affecting interstate commerce. These agreements may be for all agricultural commodities and their products, are entirely voluntary and may cover the handling of the commodity by any person engaged in the various operations of processing or distribution. Agreements are involved only incidentally in this proceeding.

Section 8c provides for a use of orders, instead of agreements, in certain situations. These orders apply only to specified commodities, including milk. ⁶ They are to be entered only when the Secretary of Agriculture has rea-

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son to believe that the issuance of an order will tend to effectuate the declared policy of the Act with respect to any commodity or product thereof, and after notice and an opportunity for hearing. It is necessary also for the Secretary of Agriculture to set forth in such order a finding upon the evidence introduced at the hearing that the issuance of the Order and of the terms and conditions thereof will tend to effectuate the declared policy.⁷ When, as here, the commodity is milk, the Act requires⁸ that the Order contain one or more of terms specified in Section 8c(5) and no others, except certain terms common to all orders and set out in Section 8c(7). These terms, as used in the Order under examination, will be referred to later. Orders may only be issued⁹ after hearing upon a marketing agreement which regulates the handling of the commodity in the same manner as the order. Without special determination of the Secretary of Agriculture and approval of the President, orders are not to become effective unless approved by handlers as required by the Act.¹⁰

Notwithstanding the refusal or failure of handlers to sign a marketing agreement relating to such commodity, the Secretary of Agriculture, with the approval of the President, may issue an order without the adoption of an agreement if he determines that the refusal or failure of the handlers to sign a marketing agreement tends to prevent the effectuation of the declared policy with respect to the commodity and that the issuance of the order is the only practical means of advancing the interest of the producers. In such a case the order must be approved or favored by two-thirds of the producers in number or volume who have been engaged, during a representative period, in the production for market of the

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commodity within the production area or two-thirds of those engaged in the production of the commodity for sale in the marketing area specified in the marketing...