United States v. Whittenberg

• Decision Date: 08 January 1938
• Docket Number: No. 343.,343.
• Citation: 21 F. Supp. 713
• Parties: UNITED STATES v. WHITTENBERG et al.
• Court: U.S. District Court — Southern District of Texas

21 F. Supp. 713

UNITED STATES v. WHITTENBERG et al.

No. 343.

District Court, S. D. Texas, Brownsville Division.

January 8, 1938.

Douglas W. McGregor, U. S. Atty., of Houston, Tex., J. L. Abney, Asst. U. S. Atty., of Brownsville, Tex., John S. L. Yost, Asst. to Atty. Gen., and G. Osmond Hyde, Atty., Department of Agriculture, of Washington, D. C., for the United States.

A. W. Cameron, of Edinburg, Tex., and Sid Hardin, of Edinburg, Tex., for respondents.

ATWELL, District Judge.

On December 15, 1937, the United States filed its bill against the respondents alleging the violation of orders made in pursuance of the Agricultural Marketing Agreement Act of June 3, 1937, 50 Stat. 246. Many shipments out of the state are shown from early in October, 1937, up to and including the last days of November. There is a detailed itemization of the consignees, the number of boxes, which total many thousands, the date, and the carrier. Allegations are made specifically showing compliance with the 1937 act and setting out the pertinent portions of the order made under such act, by the Secretary, for the counties of Cameron, Hidalgo, and Willacy, Texas, which is the area in Texas created as including the citrus producing territory of that state. The act provides for creation of such areas, since citrus fruit is confined to approximately four sections of the nation, to wit, California, Arizona, the Rio Grande Valley of Texas, and Florida.

Temporary, interlocutory and permanent injunctions are sought.

The respondents answered fully, but later, by stipulation, and in furtherance of the desire of all concerned parties to speed the cause, they withdrew all portions thereof except paragraphs 17, 18, 19, and 20. Those paragraphs challenge the constitutionality of the act, the agreement made in pursuance thereof, the order thereunder, and all regulations emanating from such sources. They claim that the act is violative of the Tenth Amendment, since it invades the reserved rights of the states and is a statutory plan to regulate and control agricultural production and prices, which is beyond the powers delegated to the national government. That it is violative of article 1, section 1, in that it is an attempt to delegate legislative powers to the Secretary of Agriculture, who is an administrative officer. That sections 8b and 8c of the act, 7 U.S.C.A. §§ 608b, 608c, and the Marketing Agreement promulgated thereunder, are void because they delegate legislative powers to the Secretary of Agriculture. That section 8c is void because it delegates legislative power to the handlers of 50 per cent. of the volume of fruit to be affected by the agreement and order. That the same sections are violative of the Fifth Amendment in that the immediate effect thereof is to deprive them of their property without due process, in that the Secretary of Agriculture, who is a party to the marketing agreement, is authorized to become judge and jury to pass upon the validity of the same agreement, regulations, and orders. Further, that the provisions thereof authorize the Secretary of Agriculture to limit and restrict the respondents in their right to lawfully use and dispose of their property, and to limit and restrict the respondents in the disposition of their property upon findings made by the Secretary without the right of jury trial. That it prohibits to them the lawful use and disposition of their property. It discriminates against the handlers and producers who have and own and wholesale an edible fruit of certain sizes and appearances in favor of other handlers and producers who have and own fruit of other sizes and appearances.

Under the stipulation the case went to trial for final decree. At that trial some twenty comprehensive affidavits were presented as depositions. They showed that there were 65,000 growers of grapefruit and oranges in the United States of which 6,600 are in Texas. During the 1936-37 season 18,000,000 boxes of grapefruit and 43,000,000 boxes of oranges were shipped from citrus producing states to the consumers in the United States, Canada, and foreign countries. Of these, 6,600,000 boxes, or 37 per cent. of the grapefruit shipments, and 1,800,000 boxes, or 4 per cent. of all orange shipments, originated in Texas. The estimate of farm value of all oranges and grapefruit produced in the United States during the season amounted to $92,653,000, of which Texas contributed $7,285,000 from grapefruit, and $2,400,000 from oranges. Citrus culture is one of the principal agricultural enterprises in the lower Rio Grande Valley of Texas which extends over the three counties mentioned. Thirty-one per cent. of the total acreage in cotton, fruit, and vegetable crops in this territory is devoted to oranges and grapefruit. Approximately 78,400 acres in Hidalgo, 28,100 acres in Cameron, and 2,700 acres in Willacy, or a total of 109,000 acres, are planted to orange and grapefruit trees. That citrus fruit is grown on more than half of the farms in Hidalgo county, one-third of the farms in Cameron, and one-fifth of the farms in Willacy. When an area directs so large a proportion of its productive capacity to one industry the economic prosperity of that area naturally fluctuates with the vicissitudes of the returns from the sale of that product, and the purchasing power of such growers depends principally upon returns from sales of citrus fruit which enter the channels of interstate trade and commerce, and such returns are of primary importance to them.

Pursuant to section 8c of the Marketing Act, the years 1924-25 to 1928-29 were established as the base period for Texas citrus fruit. Order 15 of the Secretary of Agriculture, approved June 3, 1937.

In no season since the base period has the farm price for Texas oranges and grapefruit had a purchasing power equivalent to that which obtained in the base period, at which time the farm price averaged $2.10 a box for grapefruit and $2.09 a box for oranges. During the 1936-37 season grapefruit farm prices averaged less than 40 per cent. of parity, and farm prices of oranges averaged 93 per cent. Preliminary calculations for the 1937-38 season indicates a parity price of $1.76 for oranges and $1.77 for grapefruit.

The shipments from Cameron, Hidalgo, and Willacy counties are primarily interstate in character. Approximately 84 per cent. of the grapefruit shipped from these counties during 1936-37 was shipped to points outside of the state and distributed to consumers in forty-two states, plus the District of Columbia and Canada. This section of Texas supplies virtually all of the grapefruit consumed west of the Mississippi river with the exception of the Pacific Coast states. In the 1936-37 season, 63 per cent. of the Texas orange shipments were marketed in trade channels outside of Texas and were distributed in twenty-six states and Canada, while the market for Texas oranges is concentrated to adjacent and nearby states. Figures were presented showing a growth in both production and shipments for oranges and grapefruit.

Considerable instability in the movement of prices from week to week within any one season was shown as being due, in a large measure, to the volume and timing of shipments, and that a measure of stability can be secured by an adjustment of the quantity shipped to market. Such control must come from concentrated effort toward the regulation of the flow of shipments in interstate commerce and by the control of grade and size. Control of this sort is committed to the Secretary under the act. A poor quality which is undesirable for fresh consumption has a tendency to destroy confidence of customers and affects the market, and the elimination of cull fruit is of benefit. The State of Texas has certain maturity standards, which fruit must pass, in order to be shipped and that the regulations of the Secretary maintain quality and standards in harmony with the Texas requirements. There is considerable independence in the demand for each size of grapefruit and that an increase in the volume of shipments of any given size will depress the price received for that size relative to the price of other sizes. That during large crop years and general low prices, sizes, of which there is a large quantity on the market, fall to prices that are only equal to, or below total handling charges and the grower receives nothing for his crop and sometimes even suffers a loss in getting his fruit to market.

The factors considered in the orders are: Current market prices, fruit on hand in market areas, supplies of competing areas which produce citrus fruit, other competitive fruits, trend in consumer income, and available supply and condition of fruit in the producing areas.

Full participation in affecting an orderly movement market is necessary. All handlers should obey the orders in order to insure equitable benefit and a sharing of the burden.

The testimony established complete compliance with the provisions of the act in the reception of demand for the order, necessary meetings, notices, committees, etc.

The Growers Industry Committee is composed of twelve members and the Shippers Marketing Committee has seven members. These committees are the choice of the local people and are ratified by the Secretary.

Sizes of grapefruit are those which have less than 96 to the box, 96, 112, 126, and 150 per box; these boxes contain 1 3/5 bushels, and all including and over 96 are small sizes. United States grade Nos. 1 and 2 and preferable, while grade No. 3 are culls. These grades depend, not upon size, but upon shape, color texture, scale, etc. The small size may be good grade, that is, the first or second.

The testimony also showed that during the present year the sizes are smaller than usual, and that there is a good demand for such sizes outside of Texas and in Canada. That the respondents, as well as others for that matter, frequently bought fruit in the field which, of course, included all sizes...