Waddington Milk Co. v. Wickard, 134.

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: SWAN, AUGUSTUS N. HAND, and CLARK, Circuit
• Citation: Waddington Milk Co. v. Wickard, 140 F.2d 97 (2nd Cir. 1944)
• Decision Date: 10 January 1944
• Docket Number: No. 134.,134.
• Parties: WADDINGTON MILK CO., Inc., v. WICKARD, Secretary of Agriculture.

140 F.2d 97 (1944)

WADDINGTON MILK CO., Inc., v. WICKARD, Secretary of Agriculture.

No. 134.

Circuit Court of Appeals, Second Circuit.

January 10, 1944.

Solomon I. Sklar, of New York City (Hays, Wolf, Schwabacher, Sklar & Epstein and Sydney C. Winton, all of New York City, on the brief), for plaintiff-appellant.

William L. Lynch, Asst. U. S. Atty., of New York City (James B. M. McNally, U. S. Atty., of New York City, on the brief), for defendant-appellee.

Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This proceeding for a review of a ruling of the Secretary of Agriculture brings up another phase of the milk order, No. 27, 7 CFR, 1938 Supp., 927.1-927.11a, regulating the handling of milk in the New York metropolitan marketing area, under consideration in Queensboro Farms Products, Inc. v. Wickard, 2 Cir., 137 F.2d 969. In that case we held that the controlling provision as to milk of the Agricultural Marketing Agreement Act of 1937, amending and re-enacting the Agricultural Adjustment Act, § 8c(5), 7 U.S.C.A. § 608c (5), which requires milk orders to contain one or more of the following terms and conditions, and no others, "Classifying milk in accordance with the form in which or the purpose for which it is used" (and fixing minimum prices for each "such use classification" which all "handlers" or distributors must pay), in view of its objectives and of its legislative history, contemplated a classification according to the use made by or to the handlers, and not the ultimate use of the milk by or to the consumer. That conclusion, as we shall point out below, we think is controlling of the issues here. The order and the act had already been sustained against constitutional attack in United States v. Rock Royal Co-op., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446.

Plaintiff is a handler with a milk plant at Waddington, New York, where it received milk which it manufactured into various milk and skim milk products. These were then either sold there or transmitted to another of plaintiff's plants, located in New York City, to be there sold and distributed. Plaintiff did not ship any fluid milk from its Waddington plant. During the months of July, October, November, and December, 1939, plaintiff separated some of the fluid milk received at its Waddington plant into cream and skim milk. From the skim milk plaintiff made buttermilk and, to improve the quality, added to it some of the cream which had been separated during the preceding few days. In its monthly report to the market administrator it reported the cream so added classified as Class II-A. But the administrator reclassified the milk equivalent of the cream so added in the higher Class I, making an increase in cost of ½c. per quart for July and 1c. for the other months, or a total additional charge against plaintiff of $1,142.55. Plaintiff then pursued its statutory review, 7 U.S.C.A. § 608c(15) (A), to the Secretary, who through the Assistant Secretary affirmed the administrator's action with formal findings, conclusion, and ruling to that effect. Plaintiff's action for review, brought in the district court within the time permitted by statute, 7 U.S.C.A. § 608c(15) (B), resulted in a decision by the district court sustaining the administrator's action and this appeal follows.

Plaintiff attacks first the interpretation put upon the order and second the validity of the order as interpreted. It says that under the order the cream made into buttermilk should have been classified as cream, not as buttermilk, and hence within the lower classification; or, if the cream is to take the higher classification, then the order itself is invalid, particularly because it does not comply with the statutory admonition of uniformity among handlers.

The first point turns upon the meaning of certain parts of Order No. 27, particularly §§ 1 and 2 of Article III, 7 CFR, 1938 Supp., 927.4(a, b). This article is entitled "Classification of milk," and its first section, "Basis of classification," states: "All milk received from producers by handlers shall be classified in the classes set forth in section 2 of this article in accordance with its utilization at, or movement from, the plant where received from producers, including members of any cooperative association," with provisos which state the so-called "second plant exception," covering movement of milk from a first to a second plant "outside the marketing area," not here involved (compare the Queensboro case, 137 F.2d at pages 973, 979-981). Then follow provisions for verification of the utilization claimed by a handler to be made by the market administrator, with audit of the handler's records. The final paragraph is: "Any milk or cream which is on hand at any plant at the end of any month shall be classified in accordance with the form in which it leaves, or is utilized at, such plant not later than the 8th day of the following month."

Section 2, "Classes of utilization," had nine classes at the time here involved.¹ Classes 1 and 2 are here important, viz.: "1. Class I milk shall be all milk which leaves a plant as milk, chocolate milk, or any whole milk drink, and all milk the utilization of which is not established for classification in some other class named in this section," except that loss or waste, not to exceed 2 per cent, may be prorated to each class in the proportion of milk in that class to the total classified. "2. Class II-A milk shall be all milk the butterfat from which leaves or is on hand at a plant in the form of cream," except that included in III-B (cream stored in a cold storage warehouse) and III-D (cream in substance going outside the New York area). Also to be noted is Article V, 7 CFR, 1938 Supp., 927.6, which provides for preliminary and final monthly reports by handlers to the market administrator. The final reports "with respect to milk received at each plant during the preceding month" must be made "on or before the 10th day of each month."²

Plaintiff's contention was that, since the milk products in question were "on hand" at its plant as cream at least for a day, it was entitled to this classification. The milk administrator, however, held this inapplicable and, considering that the cream took the form of buttermilk which was not otherwise specifically classified, concluded that it was covered by Class I as "all milk the utilization of which is not established for classification in some other class named in this section."

Unless the words "on hand" can be given the significance attributed to them by plaintiff, the conclusion of the administrator is clearly correct, for the cream then took the form of buttermilk which falls into the catchall provisions of Class I. But we agree with the considered view of the district court and of the administrative officials that "on hand" cannot mean any of the temporary forms which the milk product may have assumed while at the plant, but clearly refers to the form in which it is on hand at the end of the month, thus tying in directly with the other provisions for determination of the use classification not later than the 8th, and final report by the 10th, of the following month. So interpreted the various parts of the order make a consistent and common-sense whole. Read distributively, however, this language conflicts directly with the provision as to milk products on hand at the end of the month. Further, the definition does not then appear sensible or complete. What reason is there, for example, why, if more or less momentary form is to govern, it should not be the highest, rather than the lowest, form attained by the product, particularly since the insertion of the catchall provision in Class I manifests an intent to prefer that form?

Plaintiff does, however, rely upon two further grounds to support its interpretation, of which one is a deduction from the fact that out of ten references to this matter in the nine different classes of utilization only seven of them contain the words "leaves or is on hand," the other three being in some different form, and the other is an argument based upon late amendments to the order. The first ground is hard to follow. Whatever the reason for the differences in language in the classification, we do not see the distinction plaintiff asserts between some "definite change of form" of the fluid...