United States v. Wrightwood Dairy Co Wrightwood Dairy Co v. United States

Decision Date02 February 1942
Docket NumberNos. 744,783,s. 744
PartiesUNITED STATES v. WRIGHTWOOD DAIRY CO. WRIGHTWOOD DAIRY CO. v. UNITED STATES
CourtU.S. Supreme Court

Mr. Alvin E. Stein, of Chicago, Ill., for Wrightwood Dairy Co.

[Argument of Counsel from pages 111-112 intentionally omitted] Mr. Francis Biddle, Atty. Gen., and Mr. John S. L. Yost, Sp. Asst. Atty. Gen., for the United States.

[Argument of Counsel from Pages 113-114 intentionally omitted] Mr. Chief Justice STONE delivered the opinion of the Court.

The principal questions for our decision are whether certain price regulation by the Secretary of Agriculture of milk produced and sold intrastate is authorized by the provisions of the Agricultural Marketing Agreement Act of June 3, 1937, 50 Stat. 246, 7 U.S.C. § 608c, 7 U.S.C.A. § 608c, and is a permissible regulation under the commerce clause of the Constitution.

Section 8c of the Act authorizes the Secretary of Agriculture to issue marketing orders fixing minimum prices to be paid to producers of milk and certain other commodities. Paragraph 1 of the section provides that orders of the Secretary 'shall regulate, in the manner hereinafter in this section provided, only such handling of such agricultural commodity, or product thereof, as is in the current of interstate or foreign commerce, or which directly burdens, obstructs, or affects, interstate or foreign commerce in such commodity or product thereof'.

The United States sought in the present suit a decree directing respondent to comply with the Secretary's Order No. 41, of August 28, 1939, regulating the handling of milk in the 'Chicago, Illinois, marketing area.' Respondent is a handler in that area of milk which it purchases from producers in Illinois. The order, which is of the type described in the opinion of this Court in United States v. Rock Royal Co-operative, Inc., 307 U.S. 533, 551—555, 59 S.Ct. 993, 1002-1004, 83 L.Ed. 1446, is by its terms applicable to respondent and purports to carry out the statutory scheme for regulating the price of milk paid to producers, considered in the opinion in that case. By the order the Secretary found that all milk produced for sale in the marketing area 'is handled in the current of interstate commerce, or so as directly to burden, obstruct, or affect interstate commerce in milk or its products * * *', and directed that it apply to such 'handling of milk' in the marketing area 'as is in the current of interstate commerce or which directly burdens, obstructs, or affects interstate commerce'.

The order, as provided by the statute, § 8c(5), classifies milk according to its uses, and establishes a formula for determining the minimum price to be paid to producers for each class of milk. It prescribes the method of determining the value of milk received from producers by each handler during each month. It requires the payment of a uniform unit price to producers, computed by dividing the total value of milk reported by all handlers in the marketing area by the total quantity of such milk, with deductions of certain amounts to provide a cash balance in a 'producer-settlement fund'. The handler is required to pay producers the uniform price, subject to butterfat and location differentials. But he is also required to pay into the settlement fund, or permitted to withdraw from it, as the case may be, certain amounts, depending on whether the total value of the milk used by him is greater, or less, respectively, than his total payments to producers at the uniform price. The amounts withdrawn from the settlement fund by handlers are required to be used to bring the price received by certain producers up to the uniform price set in the order, where, because of the purpose for which the handler has sold it, the value of their milk is less than the uniform price. Handlers are required to make reports to the Administrator containing information necessary for the execution of the order and to bear the expense of administering it.

Respondent's answer in the District Court sets up that its business is entirely intrastate and that in consequence the statute does not and under the commerce clause can not constitutionally apply to it. The answer also sets up additional grounds, which need not now be considered, for respondent's contention that the order is invalid, and by way of counterclaim prays that the United States and its officers and agents be enjoined from enforcing the order. The court found that respondent had not complied with the order; that in the course of its business it purchases milk from producers within the State of Illinois, processes the milk and sells it in the state 'in competition with the milk of other handlers in the area'; that none of respondent's milk is physically intermingled with that which has crossed state lines; and that prior to the order 60 per cent of the milk sold in the marketing area was produced in Illinois and 40 per cent in neighboring states, and that at the time of the findings 'over 60 per cent' was produced in Illinois. The record shows that 'approximately 40%' comes from without the state.

The court held that 'the order was issued by the Secretary in full compliance with the law. All conditions precedent to the effectiveness of said order have occurred', but that the business of the defendant 'was not in the current of interstate * * * commerce and did not directly burden, obstruct or affect interstate * * * commerce in milk marketed within the Chicago, Illinois, marketing area.' It accordingly decreed that the complaint be dismissed, and granted the injunction prayed by the counterclaim.

The Circuit Court of Appeals affirmed, 7 Cir., 123 F.2d 100, 103, on the sole ground that Congress is without authority under the commerce clause to regulate intrastate transactions in milk which affect interstate commerce through competition only. It recognized that respondent's milk is sold in competition with other milk moving interstate; that the 'milk problem is a serious one and apparently for the most effective control requires unified regulations', and that if respondent is not subject to the present regulations '(it) may well be that the effective sanction of the order will wither before the force of competition, the morale of the market will disintegrate, and this attempted solution of the problem by the National Government will fail.' But it concluded that there is a hiatus between the constitutional power of state and nation which precludes any solution of the problem by Congressional legislation.

We think there is no such hiatus. Congress plainly has power to regulate the price of milk distributed through the medium of interstate commerce, United States v. Rock Royal Co-operative, Inc., supra, and it possesses every power needed to make that regulation effective. The commerce power is not confined in its exercise to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce, or the exertion of the power of Congress over it, as to make regulation of them appropriate means to the attainment of a legitimate end, the effective execution of the granted power to regulate interstate commerce. See McCulloch v. Maryland, 4 Wheat. 316, 421, 4 L.Ed. 579; United States v. Ferger, 250 U.S. 199, 39 S.Ct. 445, 63 L.Ed. 936; Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 221, 59 S.Ct. 206, 213, 83 L.Ed. 126; United States v. Darby, 312 U.S. 100, 118, 119, 61 S.Ct. 451, 459, 85 L.Ed. 609, 132 A.L.R. 1430. The power of Congress over interstate commerce is plenary and complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. Gibbons v. Ogden, 9 Wheat. 1, 196, 6 L.Ed. 23. It follows that no form of state activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress. Hence the reach of that power extends to those intrastate activities which in a substantial way interfere with or obstruct the exercise of the granted power.

Familiar examples are the Congressional power over commodities inextricably commingled, some of which are moving interstate and some intrastate, see United States v. New York Central R.R. CO., 272 U.S. 457, 464, 47 S.Ct. 130, 132, 71 L.Ed. 350; the power to regulate safety appliances on railroad cars, whether moving interstate or intrastate, Southern Ry. Co. v. United States, 222 U.S. 20, 32 S.Ct. 2, 56 L.Ed. 72; the power to control intrastate rates of a common carrier which affect adversely federal regulation of the performance of its functions as an interstate carrier, Shreveport Case, (Houston, E. & W.T.R. Co. v. United States), 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341; Railroad Commission of Wisconsin v. Chicago, B. & Q.R.R. Co., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; the regulation by the Tobacco Inspection Act, 7 U.S.C.A. § 511 et seq., of tobacco produced intrastate and destined to consumers within the state as well as without, Currin v. Wallace, 306 U.S. 1, 59 S.Ct. 379, 83 L.Ed. 441; the regulation of both interstate and intrastate marketing of tobacco under the Agricultural Adjustment Act, 7 U.S.C.A. § 601 et seq., Mulford v. Smith, 307 U.S. 38, 47, 59 S.Ct. 648, 652, 83 L.Ed. 1092; and see cases collected and discussed in United States v. Darby, 312 U.S. 100, 118—125, 61 S.Ct. 451, 459—462, 85 L.Ed. 609, 132 A.L.R. 1430.

Competitive practices which are wholly intrastate may be reached by the Sherman Act, 15 U.S.C.A. §§ 1—7, 15 note, because of their injurious effect on interstate commerce. Northern Securities Company v. United States, 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679; Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518; United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; Coronado Coal Co. v. United Mine Workers, 268 U.S. 295, 45 S.Ct. 551, 69 L.Ed. 963;...

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