White House Milk Co. v. Reynolds

• Decision Date: 02 December 1960
• Citation: White House Milk Co. v. Reynolds, 106 N.W.2d 441, 12 Wis.2d 143 (Wis. 1960)
• Parties: WHITE HOUSE MILK CO., Inc., a New York Corporation, Respondent, v. John W. REYNOLDS, Atty. Gen., et al., Appellants.
• Court: Wisconsin Supreme Court

Page 441

106 N.W.2d 441

12 Wis.2d 143

WHITE HOUSE MILK CO., Inc., a New York Corporation, Respondent, v. John W. REYNOLDS, Atty. Gen., et al., Appellants.

Supreme Court of Wisconsin.

Dec. 2, 1960.

John W. Reynolds, Atty. Gen., George F. Sieker, Albert Harriman, Asst. Attys. Gen., for appellants.

Michael, Spohn, Best & Friedrich, Milwaukee, Kenneth K. Luce, John K. MacIver, Milwaukee, of counsel, for respondent.

DIETERICH, Justice.

Sec. 100.22, Stats., provides:

'Unfair discrimination in purchase of dairy products. (1) Any person, firm or corporation, foreign or domestic, engaged in the business of buying milk, cream or butter fat for the purpose of manufacture, that shall discriminate between different sections, communities, towns, villages or cities of this state, or between persons, firms or corporations in any locality of this state, by paying for such commodity at a higher price or rate in one section, community, town, village or city, or to any person, firm or corporation in any locality of this state, than is paid for the same commodity by said person, firm or corporation, foreign or domestic, in another section, community, town, village or city, or to another person, firm or corporation in any locality of this state, shall be guilty of unfair discrimination, which is hereby prohibited and declared unlawful; provided, that it shall be a justification for such a discrimination in price if the difference is merely commensurate with an actual difference in the quality or quantity of the commodity purchased or in transportation charges or other expense of marketing involved in said purchase.'

Plaintiff contends that sec. 100.22, Stats., is a violation of the XIVth amendment to the constitution of the United States because a Minnesota statute, identical in substance, and parallel in its legislative history, was held to be such violation in Fairmont Creamery Co. v. State of Minnesota, 1927, 274 U.S. 1, 47 S.Ct. 506, 508, 71 L.Ed. 893.

Neither the Minnesota statute nor sec. 100.22, Stats., required the state to prove a buyer's intent to injure a competitor or limit competition, or permitted the buyer to defend by proving that his price variation was necessary in order to meet competition.

In Fairmont, the supreme court held:

'As the inhibition of the statute applies irrespective of motive, we have an obvious attempt to destroy plaintiff in error's liberty to enter into normal contracts, long regarded, not only as essential to the freedom of trade and commerce, but also as beneficial to the public.

Buyers in competitive markets must accommodate their bids to prices offered by others, and the payment of different prices at different places is the ordinary consequent. Enforcement of the statute would amount to fixing the price at which plaintiff in error may buy, since one purchase would establish this for all points, without regard to ordinary trade conditions.

'The real question comes to this: May the state, in order to prevent some strong buyers of cream from doing things which may tend to monopoly, inhibit plaintiff in error from carrying on its business in the usual way heretofore regarded as both moral and beneficial to the public and not shown now to be accompanied by evil results as ordinary incidents? Former decisions here require a negative answer. We think the inhibition of the statute has no reasonable relation to the anticipated evil--high bidding by some with purpose to monopolize or destroy competition. Looking through form to substance, it clearly and unmistakably infringes private rights, whose exercise does not ordinarily produce evil consequences, but the reverse.'

The Fairmont decision has never been expressly overruled, but later decisions at least limit, and perhaps repudiate, in fact though not in words, its doctrine.

In Nebbia v. People of State of New York, 1933, 291 U.S. 502, 524, 54 S.Ct. 505, 510, 78 L.Ed. 940, decided only six years after the Fairmont Case, the United States supreme court upheld the constitutionality of a New York statute providing for fixing of prices of milk, and stated:

'Thus has this court from the early days affirmed that the power to promote the general welfare is inherent in government * * *

'The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business, or in given circumstances, may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts.'

The minority opinion in the Nebbia case of the four dissenting justices placed great reliance upon the Fairmont case and considered that the holding in the former could not be squared with the decision in the latter. We think that such a conclusion is well warranted and undoubtedly the determination in the Nebbia case cast serious doubt on the authority of the Fairmont case as a binding precedent.

The holding in the Fairmont case was grounded on the principle that the Minnesota statute, which is comparable to sec. 100.22, Wis.Stats., was a denial of freedom of contract which violated due process. However, there has not been a single state regulatory statute struck down on the ground of a violation of freedom of contract since the 1937 decision in West Coast Hotel Co. v. Parrish, 1937, 300 U.S. 379, 391, 392, 57 S.Ct. 578, 581, 81 L.Ed. 703, wherein the court stated:

'The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation, the Constitution does not recognize an absolute and uncontrollable liberty. Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals, and welfare of the people. Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation which is reasonable in relation to its subject and is adopted in the interests of the community is due process.

'This essential limitation of liberty in general governs freedom of contract in particular. More than twenty-five years ago we set forth the applicable principle in these words, after referring to the cases where the liberty guaranteed by the Fourteenth Amendment had been broadly described.

"But it was recognized in the cases cited, as in many others, that freedom of contract is a qualified, and not an absolute, right. There is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards. Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community.' Chicago, Burlington & Quincy R. Co. v. McGuire, 219 U.S. 549, 567, 31 S.Ct. 259, 262, 55 L.Ed. 328.'

The trend of decisions of the United States supreme court so apparent since 1937, in refusing to invalidate state regulatory legislation on the ground of violation of due process, is highlighted by the following remark of Mr. Justice Douglas, speaking for the entire court in Williamson v. Lee Optical Co., 1955, 348 U.S. 483, 488, 75 S.Ct. 461, 464, 99 L.Ed. 563:

'The day is gone when this Court uses the Due Process Clasue of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought. See Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505 [78 L.Ed. 940], 89 A.L.R. 1469; West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703; Olsen v. State of Nebraska ex rel. Western Reference & Bond Ass'n, 313 U.S. 236, 61 S.Ct. 862, 85 L.Ed. 1305; Lincoln Federal Labor Union No. 19129, A. F. of L. v. Northwestern Iron & Metal Co., 335 U.S. 525, 69 S.Ct. 251, 93 L.Ed. 212; Daniel v. Family Sec. Life Ins. Co., 336 U.S. 220, 69 S.Ct. 550, 93 L.Ed. 632; Day-Brite Lighting, Inc. v. State of Missouri, 342 U.S. 421, 72 S.Ct. 405, 96 L.Ed. 469. We emphasize again what Chief Justice Waite said in Munn v. State of Illinois, 94 U.S. 113, 134, 24 L.Ed. 77, 'For protection against abuses by legislatures the people must resort to the polls, not to the courts.''

We conclude that the facts pertaining to the marketing of milk in Wisconsin, the evils which may reasonably be thought to result if buyers are legally free to offer different prices to different persons or in different localities, and the results which may reasonably be thought to flow from the existence and enforcement of sec....