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Commodity Futures Trading Commission 

CEA CASES 

NAME: G. H. MILLER AND COMPANY, GILBERT H. MILLER, HOWARD RANDOLPH, REFRIGERATED 

PRODUCTS, INC., J.W. HARDING, CENTRAL IOWA POULTRY AND EGG COMPANY, JOHN H. 

SNOWGREN, ALLEN HEADLEE, E.E. HUMMEL, K. HUMMEL, ALBERT SCHIRM, LEO HAGEN, A.L. 

MYRICK, LEWIS R. VAN SANT, AND ROY ROUNTREE 

DOCKET NUMBER: 60 

DATE: SEPTEMBER 23, 1958 

DOCUMENT TYPE: COURT OPINION 

NOTE: PREVIOUS COURT OF APPEALS OPINION REPORTED AT 260 F.2d 286 

IN THE 

UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

No. 11959 September Term 1958 - September Session 1958 

G. H. Miller and Company, et al., Petitioners, v. United States of America and 

Ezra Taft Benson, Secretary of Agriculture of the United States, Respondents. 

On Rehearing By The Court En Banc 

September 23, 1958 

Before Duffy, Chief Judge, Finnegan, Schnackenberg, Hastings and Parkinson, 

Circuit Judges, on rehearing by the court en banc. 

Parkinson, Circuit Judge. These proceedings originated in this court on a 

petition to set aside an order of the Secretary of Agriculture revoking the 

registration of G. H. Miller and Company as a futures commission merchant and 

Gilbert H. Miller as a floor broker and denying all trading privileges to the 

other petitioners for periods ranging from sixty days to one year and to cancel 

all sanctions imposed. There were fifteen petitioners in all. 

A panel consisting of Judge Major, a former chief judge now retired but 

voluntarily rendering meritorious service as a member of this court, and Judge 

Schnackenberg, an able circuit judge in active service, and the writer of this 

opinion heard the case and handed down a written opinion denying the petition. 

Two of the fifteen petitioners, G. H. Miller and Company and Gilbert H. 

Miller, filed a petition for rehearing wherein they asserted that Miller was in 

fact a damaging participant to the alleged manipulative scheme but if not at the 

most "[a]n objective analysis we submit will place Miller in the category of the 

lowest participant" and implored this court to reduce the penalties because they 

were "excessive" submitting an order as to them for entry as follows: 

"The registration of G. H. Miller and Company as a futures commission 

merchant and the registration of Gilbert H. Miller as a floor broker is 

suspended for a period of six months from the effective date of this order. 

With the effective date of this order G. H. Miller and Company and Gilbert H. 

Miller, directly or indirectly, shall be prohibited from trading speculatively 

on any contract market for a period of one year. During that period futures 

contracts may be executed providing they are clearly bona fide hedges against 

the cash commodity actually possessed by G. H. Miller and Company or Gilbert H. 

Miller and all contract markets shall refuse to said G. H. Miller and Company 

and Gilbert H. Miller the right to so trade speculatively on their exchanges for 

a period of one year." 
Page 2 

On Millers' petition for rehearing Judge Schnackenberg, being of the opinion 

that the "penalties imposed by the Secretary are too harsh", and Judge Major, 

believing "that the penalties imposed in this matter are too severe", the court 

ordered the penalty as to Millers reduced. The writer of this opinion 

dissented. The order was practically verbatim with the submitted form of order 

herein-above set out. It reads as follows: 

"The registration of G. H. Miller and Company as a futures commission 

merchant is suspended for six months and the registration of Gilbert H. Miller 

as a floor broker is suspended for a period of six months, and both of said 

petitioners are prohibited, directly or indirectly, from trading speculatively 

on any contract market for a period of one year, and during said one year period 

futures contracts may be executed 

providing they are clearly bona fide hedges against the cash commodity actually 

possessed by G. H. Miller and Company or Gilbert H. Miller, and all contract 

markets shall refuse to said G. H. Miller and Company and Gilbert H. Miller the 

right to so trade speculatively on their exchanges for a period of one year." 

In order to resolve the question as to the proper function of the Court of 

Appeals in proceedings to set aside an order of an administrative agency fixing 

a penalty within the statutory limits we granted a rehearing before the full 

court en banc. 

Section 6(b) of the Commodity Exchange Act, Title 7 U.S.C.A. § 9 provides 

that the Secretary of Agriculture may suspend, for a period not to exceed six 

months, or revoke, the registration of a futures commission merchant or a floor 

broker registered under the Act who violates any provision thereof. Accordingly 

the penalties fixed in the order did not exceed and were within the limits of 

the statute. 

In Great Western Food Distributors v. Brannan, 7 Cir., 1953, 201 F. 2d 476, 

484, involving an order fixing penalties under the Commodity Exchange Act, we 

held that "we have nothing to do with the question of severity of the penalty." 

In National Lead Company v. Federal Trade Commission, 7 Cir., 1955, 227 F. 2d 

825, we ordered stricken from a general cease and desist order of the Commission 

a provision directing each respondent individually to cease and desist from 

adopting the same or a similar system of pricing for the purpose of "matching" 

the prices of competitors. The Supreme Court reversed, 352 U.S. 419, and 

restored the stricken provision. 

In Federal Trade Commission v. C. E. Niehoff & Co., (Moog Industries, Inc. v. 

Federal Trade Commission), 1958, 355 U.S. 411, the Supreme Court reversed this 

court which had changed a forthwith cease and desist order so that it took 

effect at a future time. It held that "it is ordinarily not for courts to 

modify ancillary features of a valid Commission order." 

In Arrow Metal Products Corporation v. Federal Trade Commission, 3 Cir., 

1957, 249 F. 2d 83, 85, the Third Circuit, under similar circumstances as here, 

correctly defines the function of the Court of Appeals in the following 

language: 

"The petitioners complain that the cease and desist order is too drastic and 

that some other manner of preventing deception, if any, should be adopted. But 

the matter of shaping a remedy is for the Commission. Our function is simply, 

in the words of the Supreme Court, to find whether the Commission has made 'an 

allowable judgment in its choice of the remedy.' Jacob Siegel Co. v. Federal 

Trade Commission, 1946, 327 U.S. 608, 612, 66 S. Ct. 758, 760, 90 L. Ed. 888." 

It is, therefore, clear to us that if the order of an administrative agency 

finding a violation of a statutory provision is valid and the penalty fixed for 

the violation is within the limits of the statute the agency has made an 

allowable judgment in its choice of the remedy and ordinarily the Court of 
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Appeals has no right to change the penalty because the agency might have imposed 

a different penalty. 

The petitioners Miller insist that the penalty here is more severe than any 

penalty imposed upon any other violator of the Act and cite cases where a lesser 

penalty was affixed. We are not impressed by such a specious argument. 

The very most which can be said for the position of the petitioners Miller is 

that the penalty must have some "reasonable relation to the unlawful practices 

found to exist". Federal Trade Commission v. National Lead Co., 1957, 352 U.S. 

419, 429. This court, in Daniels v. United States, 7 Cir., 1957, 242 F. 2d 39, 

42, held that "[t]he Administrative decision as to the remedy should be 

sustained unless the remedy selected has no reasonable relation to the practice 

found to exist." 

The Judicial Officer concluded from his findings of fact, adequately 

supported by a preponderance of the evidence, that "[t]he violations of sections 

6(b) and 9 of the act found herein are of serious and far-reaching 

consequences." He also concluded that Miller "was obviously the captain of the 

'team' that effectuated what he described 

to Morris Weinger as the 'deal' in which he was sorry to find Weinger caught." 

In the application of the rule that Courts of Appeal must sustain the remedy 

selected by an administrative agency unless it has no reasonable relation to the 

practice found to exist we find in this record no lack of reasonableness in the 

penalty imposed upon Millers. To the contrary the record establishes a direct 

relation between the penalty and the violation. To paraphrase the language of 

the Supreme Court in Chicago Board of Trade v. Olsen, 1923, 262 U.S. 1, 39, 

manipulations of egg futures for speculative profit, though not carried to the 

extent of a corner or complete monopoly, exert a vicious influence and produce 

abnormal and disturbing temporary fluctuations of prices that are not responsive 

to actual supply and demand and discourage not only justifiable hedging but 

disturb the normal flow of actual consignments. Here the petitioners, with 

Miller as the prime factor, did corner the egg market on the Chicago Mercantile 

Exchange in December, 1952. The penalties affixed were certainly commensurate 

with the violation and in their imposition the Secretary of Agriculture did not 

abuse his discretion. 

The order herein entered on February 26, 1958 is vacated and set aside. 

The petition to set aside the order of the respondent Secretary of 

Agriculture issued through the Judicial Officer on September 26, 1956 is denied. 

Finnegan, Circuit Judge, concurring. This matter first came to our Court on 

a petition to review a decision and order, dated September 25, 1956, of the 

Judicial Officer n1 of the United States Department of Agriculture. At the 

administrative level this was a disciplinary proceeding under the Commodity 

Exchange Act. n2 All of the respondents 

joined in a 62-page petition for reconsideration and reargument submitted to the 

Judicial Officer, after his Decision and Order was issued for the Department of 

Agriculture, expressly seeking inter alia reconsideration of "the extent of 

penalties assessed." Counsel for the Commodity Exchange Authority filed an 

answer to that petition before the Secretary of Agriculture. 

n1 The Judicial Officer acted for the Secretary of Agriculture pursuant 

to authority delegated to him. 10 F. R. 13769; 11 F. R. 177A-233; 18 F. R. 

3219; 18 F. R. 3648; 19 F. R. 74. 

n2 Act of September 21, 1922, c. 369, 42 Stat. 998, as amended by the 

Act of June 15, 1936, c. 545, 49 Stat. 1491, as amended, 7 U. S. C. § 1, et 
Page 4 

seq. (1952 ed.) The phrase "to affirm, to set aside, or modify . . ." has 

been in the Act since 1922. 

Point V of the brief filed on the merits for the United States and the 

Secretary of Agriculture, in our Court on October 31, 1957, was: "The 

Administrative Sanction should be Sustained;" and the point was briefed and 

authorities in support discussed. Petitioners' original brief filed August 2, 

1957 in our Court is silent on the "sanctions." Apparently it was not until 

three judges of our Court denied the petition for review that G. H. Miller and 

Company and Gilbert H. Miller decided there was little else left to do but 

attack the administrative remedy invoked against them. 

Section 6(b) of the Commodity Exchange Act n3 provides: 

"If the Secretary of Agriculture has reason to believe that any person (other 

than a contract market) is violating or has violated any of the provisions of 

this chapter, or any of the rules and regulations made pursuant to its 

requirements, or has manipulated or is attempting to manipulate the market price 

of any commodity, in interstate commerce, or for future delivery on or subject 

to the rules of any board of trade, he may serve upon such person a complaint 

stating his charges in that respect, to which complaint shall be attached or 

contained therein a notice of hearing, specifying a day and place not less than 

three days after the service thereof, requiring such person to show cause why an 

order should not be made directing that all contract markets until further 

notice of the Secretary of Agriculture refuse all trading privileges to such 

person, and to show cause why the registration of such person, if registered as 

futures commission merchant or as floor broker hereunder, should not be 

suspended or revoked. Said hearing 

may be held in Washington, District of Columbia, or elsewhere, before the 

Secretary of Agriculture, or before a referee designated by the Secretary of 

Agriculture, which referee shall cause all evidence to be reduced to writing and 

forthwith transmit the same to the Secretary of Agriculture. Upon evidence 

received, the Secretary of Agriculture may require all contract markets to 

refuse such person all trading privileges thereon for such period as may be 

specified in the order, and, if such person is registered as futures commission 

merchant or as floor broker hereunder, may suspend, for a period not to exceed 

six months, or revoke, the registration of such person. Notice of such order 

shall be sent forthwith by registered mail or delivered to the offending person 

and to the governing boards of said contract markets. 

"After the issuance of the order by the Secretary of Agriculture, as 

aforesaid, the person against whom it is issued may obtain a review of such 

order or such other equitable relief as to the court may seem just by filing in 

the United States court of appeals of the circuit in which the petitioner is 

doing business a written petition praying that the order of the Secretary of 

Agriculture be set aside. A copy of such petition shall be forthwith served 

upon the Secretary of Agriculture by delivering such copy to him, and thereupon 

the Secretary of Agriculture shall forthwith certify and file in the court a 

transcript of the record theretofore made, including evidence received. Upon 

the filing of the transcript the court shall have jurisdiction to affirm, to set 

aside, or modify the order of the Secretary of Agriculture, and the findings of 

the Secretary of Agriculture as to the facts, if supported by the weight of 

evidence, shall in like manner be conclusive." 

n3 7 U. S. C. § 9 (1952 ed.) 

That the remedies used at the administrative level in this case are within 

the statutory range of § 6(b) was and still is uncontested. When G. H. Miller 

and Company and Gilbert H. Miller filed their consolidated petition for 

"Rehearing and Modification," on January 22, 1958, they asked for a modification 

of the "excessive penalties assessed against" the petitioners. That petition 

was the aftermath of the unanimous opinion reported as G. H. 
Page 5 

Miller and Company v. United States of America, et al., . . . F. 2d . . . (7th 

Cir. 1958). An opinion on rehearing was filed February 26, 1958, later 

implemented, by an order, showing that Judges Major and Schnackenberg agreed the 

"penalties" imposed were "too severe" and "too harsh." Judge Parkinson who wrote 

the initial opinion, dissented to the opinion of February 26, 1958. Judges 

Major and Schnackenberg voted to deny the Millers' petition for rehearing on all 

other points presented; Judge Parkinson unqualifiedly voted to deny that 

petition for rehearing. 

Understandably, the government petitioned for rehearing before the full Court 

sitting en banc and the current array of opinions flows from this last hearing. 

The significance of this historical background lies in the fact that the 

initial unanimous opinion, handed down January 8, 1958, was by three Judges who 

flatly refused to set aside the order of the Secretary of Agriculture and it is 

that order which underlies the administrative "penalties", so-called, 

subsequently modified by two members of the original division of this Court, who 

first heard the petition for review of the Secretary's order. 

I. 

Consequently, the question now before us, as I view it, is just how much we 

can tinker with the Secretary's legal suspension and revocation of trading 

privileges -- concededly within the statutory range -- based upon the judicially 

approved administrative order issued by the Secretary. Indeed, § 6(b) states, 

inter alia: ". . . the findings of the Secretary of Agriculture as to the facts, 

if supported by the weight of evidence shall in like manner be conclusive." The 

three judges of our Court recognized this provision in their first opinion, and 

refused to disturb that phase of the case on rehearing number one. 

Civil remedies and criminal punishments are both prescribed by the Commodity 

Exchange Act. See 7 U. S. C. § 13 and it must be borne in mind that we are not 

here concerned with a criminal case. Regardless of dramatic catch phrases, i. 

e., "economic death," we are confronted only with statutory devices committed by 

the Congress to 

the Secretary's discretion, for the purpose of policing the market place. To be 

sure, revocation is a drastic step yet it must be assayed in the environment of 

the Commodity Exchange Act and the fact these petitioners were exercising a 

privilege. Another proceeding, Nelson v. Secretary of Agriculture, 133 F.2d 

453, 456 (7th Cir. 1943) under the Commodity Exchange Act gave rise to 

proceedings to set aside an order of the Secretary of Agriculture and Judge 

Lindley, writing for the division of Judges, said: 

"In permitting petitioner to buy and sell grain for future delivery on 

contract markets, the Government has in effect granted him a privilege. 

Suspension of such a privilege for failure to comply with the statutory standard 

is merely withdrawal by the Government of permission to engage in a business 

affected with the National public interest in which the person has no inherent 

right to engage, but in which he may participate only upon compliance with 

conditions imposed by Congress in the exercise of its power over commerce. 

Inasmuch as Congress has the power to fix conditions upon which petitioner may 

engage in trading on the market . . . it may, through an administrative agency, 

withdraw the privilege for violation of these conditions . . ." 

A similar position was taken by the First Circuit in Nichols & Co. v. 

Secretary of Agriculture, 131 F. 2d 651, 659 (1st Cir. 1942): "We believe that 

suspension of a registrant is not primarily punishment for a past offense but it 

is necessary power granted to the Secretary of Agriculture to assure a proper 

adherence to the provisions of the Act." 
Page 6 

Chief Judge Duffy has followed the same line of thinking when reviewing a 

suspension order of a Judicial Officer of the United States Department of 

Agriculture, issued under the Packers and Stockyards Act, 7 U. S. C. § 181, et 

seq., in Cella v. United States, 208 F. 2d 783, 789 (7th Cir. 1953). 

Cella was cited and quoted in the brief filed for the government in Daniels 

v. United States, 242 F. 2d 39 (7th Cir. 1957) and used in that opinion by Chief 

Judge Duffy. Under "contested issues" in the Daniels' brief is this one: 

"3. The final issue is whether or not the suspension order should be set aside 

at this time on the grounds that, even under the present record, it is 

excessively harsh and oppressive." It was to this point then, that Chief Judge 

Duffy stated: "The Administrative decision as to the remedy should be sustained 

unless the remedy selected has no reasonable relation to the practice found to 

exist . . . In view of respondent's previous violations, the order, including 

the sanctions, should be approved." (242 F. 2d 39, 42). 

"Equitable relief" mentioned in § 6(b), is not, in my opinion, Congressional 

authority for substituting our subjective attitudes concerning the quantum of 

sanction or duration of suspension of trading privileges for that of the 

Secretary. A common sense approach, I should think, shows this to be nothing 

more than a recognition of the common garden variety of temporary injunction. 

Congress, in my view, simply recognized the usual questions arising in 

connection with enjoining orders of administrative agencies and made it clear 

that equitable relief could be invoked against the government. See e. g., 

Davis, Administrative Law § 213 and § 217, Statutory Limitations on Enjoining 

Administrative Action. I do not believe "equitable relief" means we are to 

decide the extent of sanction for that power is expressly conferred on the 

Secretary (not the Courts) by § 6(b), and as I view it his power is so potent -- 

and necessarily so to achieve the aims of this legislation -- that injunctive 

relief is expressly authorized in order that the basis in fact for 

administrative action can be probed expeditiously, in appropriate cases, rather 

than await the run of a calendar of cases for review. 

"Modify" is the target word lurking in § 6(b). What has been done in this 

case was to treat "modify" as a third exclusive remedy on a petition for review 

of the Secretary's order, i. e., approve his order and modify his order of 

suspension or revocation of registration. At best, I think the general 

principles of administrative law would permit modification, by a Court of 

Appeals, only to the extent of unlawfulness of the Secretary's ruling or order. 

But so long as the Secretary makes findings of fact and they are based on 

evidence conforming to the statutory standards and he acts intra vires the 

relevant acts of Congress we cannot, in my opinion, modify sanctions because we 

personally think them "too harsh" or "too severe." 

 

To do otherwise ignores the expertise of the Secretary in the complexities of 

trading in futures. We can abdicate our judicial function by usurpation just as 

well as by abandonment to administrative agencies. Obviously all this goes 

further. Without the word "modify" in § 6(b), Courts of Appeal would have only 

two alternatives regarding the Secretary's final orders -- affirm or set aside. 

But by using "modify" Congress allows some play in the joints, enabling a 

reviewing court to send back an order for further administrative action based 

upon some modification. Even a cursory reading of the first portion of § 6(b) 

reveals the numerous grounds of administrative action, any one of which could be 

the basis of a lengthy record and detailed order. Rather than have an order set 

aside and the proceedings annulled, the word "modify" allows for adjustment 

between Court, parties and Secretary on some aspects of the order. There is 

nothing in § 6(b) indicating that the scope of judicial review has been enlarged 

to the point where periods of suspension, for example, can be either increased 

or decreased, or that revocations can be judicially converted into suspensions. 
Page 7 

Much lays in the balance here if we merely glance at the word "modify" and 

let quick reaction turn us away from the broader question demanding our judicial 

attention. As part of his dissent to the majority in United States v. Monia, 

317 U. S. 424, 431-432 (1943), Mr. Justice Frankfurter, caught the theme 

implicit in statutory interpretation problems: 

"The notion that because the words of a statute are plain, its meaning is 

also plain, is merely pernicious oversimplification. It is a wooden English 

doctrine of rather recent vintage . . . [citing], to which lip service has on 

occasion been given here, but which since the days of Marshall this Court has 

rejected, especially in practice . . . [citing] A statute, like other living 

organisms, derives significance and sustenance from its environment, from which 

it cannot be severed without being mutilated. Especially is this true where the 

statute, like the one before us, is part of a legislative process having a 

history and a purpose. The meaning of such a statute cannot be gained by 

confining inquiry within its four corners. . . ." 

Though I have quoted from a dissent the concept and grasp of the problem is 

diminished not one whit because the author was not with the majority. Yet, if 

it be insisted only majority opinions deserve mention, then what Mr. Justice 

Reed wrote for the majority of a divided court in U. S. v. American Trucking 

Association, 310 U.S. 534, 542-544 (1940) will serve the purpose: 

"In the interpretation of statutes, the function of the courts is easily 

stated. It is to construe the language so as to give effect to the intent of 

Congress. There is no invariable rule for the discovery of that intention. To 

take a few words from their context and with them thus isolated to attempt to 

determine their meaning, certainly would not contribute greatly to the discovery 

of the purpose of the draftsmen of a statute, particularly in a law drawn to 

meet many needs of a major occupation. 

"There is, of course, no more persuasive evidence of the purpose of a statute 

than the words by which the legislature undertook to give expression to its 

wishes. Often these words are sufficient in and of themselves to determine the 

purpose of the legislation. In such cases we have followed their plain meaning. 

When that meaning has led to absurd or futile results, however, this Court has 

looked beyond the words to the purpose of the act. Frequently, however, even 

when the plain meaning did not produce absurd results but merely an unreasonable 

one 'plainly at variance with the policy of the legislation as a whole' this 

court has followed that purpose, rather than the literal words. When aid to 

construction of the meaning of words, as used in the statute, is available, 

there certainly can be no 'rule of law' which forbids its use, however clear the 

words may appear on 'superficial examination'. The interpretation of the 

meaning of statutes, as applied to justiciable controversies, is exclusively a 

judicial function. This duty requires one body of public servants, the judges, 

to construe the meaning of what another body, the legislators, has said. 

Obviously there is danger that the courts' conclusion as to legislative purpose 

will be unconsciously influenced by the judges' own views or by factors not 

considered by the enacting body. A lively appreciation 

 

of the danger is the best assurance of escape from its threat but hardly 

justifies an acceptance of a literal interpretation dogma which withholds from 

the courts available information for reaching a correct conclusion. Emphasis 

should be laid, too, upon the necessity for appraisal of the purposes as a whole 

of Congress in analyzing the meaning of clauses or sections of general acts. A 

few words of general connotation appearing in the text of statutes should not be 

given a wide meaning, contrary to a settled policy, 'excepting as a different 

purpose is plainly shown.'" 

While it may be urged we are not barred legislatively on the bare word 

"modify" I think the temporary urgency characterized by these petitioners as an 

"economic death sentence," fails in overriding broader principles controlling 
Page 8 

court-administrator relations. Virtually all final orders of federal 

administrative agencies have economic impact on the parties against whom they 

are directed; obviously such deprivations are the teeth in the statutes. Mr. 

Justice Douglas, delivering the Court's opinion in F. P. C. v. Idaho Power Co., 

344 U. S. 17, 21 (1952) wrote: "The Court, it is true, has power 'to affirm, 

modify, or set aside' the order of the Commission 'in whole or in part,' . . . 

But that authority is not power to exercise an essentially administrative 

function. See Ford Motor Co. v. Labor Board, 305 U. S. 364, 373-374; Siegel Co. 

v. Federal Trade Commission, 327 U. S. 608." 

Chief Judge Swan, speaking for a division of the Second Circuit, observed in 

Consumers Sales Corp. v. Federal Trade Commission, 198 F. 2d 404, 408 (2nd Cir. 

1952); "Our power to modify an order such as this, once an illegal trade 

practice has been found, is severely circumscribed [citing cases in a marginal 

note] but even if it were not we could find nothing improper about the 

Commission's efforts to prevent this scheme from reappearing in a slightly 

altered garb." 

"It is a fundamental principle . . . that where Congress has entrusted an 

administrative agency with the responsibility of selecting the means of 

achieving the statutory policy 'the relation of remedy to policy is peculiarly a 

matter for administrative competence.'" American Power Co. v. S. E. C., 329 U. 

S. 90, 112 (1946). One need only read 

 

§ 5 of the Commodity Exchange Act, embodying the Congressional declaration of 

"the dangerous tendency of dealings in commodity futures," to commence 

understanding the reason why it supplied the Secretary with such drastic 

remedies: 

"Transactions in commodity involving the sale thereof for future delivery as 

commonly conducted on boards of trade and known as 'futures' are affected with a 

national public interest; such transactions are carried on in large volume by 

the public generally and by persons engaged in the business of buying and 

selling commodity and products and byproducts thereof in interstate commerce; 

the prices involved in such transactions are generally quoted and disseminated 

throughout the United States and in foreign countries as a basis for determining 

the prices to the producer and the consumer of commodity and the products and 

byproducts thereof and to facilitate the movements thereof in interstate 

commerce; such transactions are utilized by shippers, dealers, millers, and 

others engaged in handling commodity and the products and byproducts thereof in 

interstate commerce as a means of hedging themselves against possible loss 

through fluctuations in price; the transactions and prices of commodity on such 

boards of trade are susceptible to speculation, manipulation, and control, and 

sudden or unreasonable fluctuations in the prices thereof frequently occur as a 

result of such speculation, manipulation, or control, which are detrimental to 

the producer or the consumer and the persons handling commodity and products and 

byproducts thereof in interstate commerce, and such fluctuations in prices are 

an obstruction to and a burden upon interstate commerce in commodity and the 

products and byproducts thereof and render regulation imperative for the 

protection of such commerce and the national public interest therein." 

Since the Secretary's order does not contravene any constitutional 

limitation, is within the constitutional and statutory authority of the 

Secretary, and is supported by the requisite quantum and quality of evidence, I 

fail to see how we can set the order aside in part pertaining to the legal 

sanction or remedy given him to exclude persons 

 

from the trading privileges. These remedies are matters left specifically by 

Congress to the discretion of the Secretary; we fully perform our function on 

review by a determination that there has been a fair hearing, correct 
Page 9 

application of the relevant statutory provisions, and nothing contravening 

constitutional rights. 

II. 

In C. E. Niehoff & Co. v. Federal Trade Commission, 241 F. 2d 37 (7th Cir. 

1957) the Commission's opinion contains this factor: "Stating that an order 

requiring the respondent to terminate its unlawful discriminations will destroy 

the Niehoff business when its competitors are not likewise enjoined, appellant 

[Niehoff] requests that this proceeding be held in abeyance until the Commission 

can place all industry members under identical restrictions. The pricing 

practices used by the respondent, however, have been found to be in violation of 

law. Since their continuance by the respondent is likewise unlawful the 

Commission's duty under the applicable statute is to require their termination 

forthwith . . ." 51 F. T. C. 1114 (See also Transcript of Record filed on 

certiorari, at page 1026). 

On review of that Niehoff order and opinion I dissented (241 F. 2d 37, 43) 

because my two colleagues stated "the order against Niehoff is hereby modified 

by striking the word 'forthwith' therefrom and by adding to said order the 

following: 'This cease and desist order shall take effect at such time in the 

future as the United States Court of Appeals for the Seventh Circuit may direct, 

sua sponte or upon motion of the Federal Trade Commission.' As thus modified, 

the order is affirmed." Judge Major and Judge Schnackenberg invoked § 11 of the 

Clayton Act, 15 U. S. C. § 21 as their authority for such modification, and, of 

course, the word "modify" appears in that section of the Clayton Act. 

When the Solicitor General, on behalf of the Federal Trade Commission, sought 

issuance of a writ of certiorari to review our judgment in Niehoff, the question 

presented in the petition was stated as: ". . . [W]hether the power of judicial 

review conferred by Section 11 of the Clayton Act authorizes the reviewing court 

to postpone the operative 

 

date of a Commission order adjudicated to be valid, for the declared purpose of 

rendering the order a nullity until like orders have been entered against 

respondent's 'competitors.'" (Petition for certiorari, p. 2). The brief in 

opposition to the government's petition responded to that issue and the question 

was thus crystallized for review by the Supreme Court. When certiorari was 

granted, both sides briefed that particular issue. 

On review by the Supreme Court, Niehoff was taken together with Moog 

Industries, Inc. v. Federal Trade Commission, 355 U. S. 411, 414 (1958) where, 

in a per curiam, the Court ordered that the Niehoff judgment be ". . . vacated 

and the cause remanded to the Court of Appeals [Seventh Circuit] with directions 

to affirm the order of the Commission in its entirety." Reaching that result the 

salient portion of the per curiam opinion was as follows: 

"In view of the scope of administrative discretion that Congress has given 

the Federal Trade Commission, it is ordinarily not for courts to modify 

ancillary features of a valid Commission order. This is but recognition of the 

fact that in the shaping of its remedies within the framework of regulatory 

legislation, an agency is called upon to exercise its specialized, experienced 

judgment. Thus, the decision as to whether or not an order against one firm to 

cease and desist from engaging in illegal price discrimination should go into 

effect before others are similarly prohibited depends on a variety of factors 

peculiarly within the expert understanding of the Commission. Only the 

Commission, for example, is competent to make an initial determination as to 

whether and to what extent there is a relevant 'industry' within which the 

particular respondent competes and whether or not the nature of that competition 

is such as to indicate identical treatment of the entire industry by an 

enforcement agency. Moreover, although an allegedly illegal practice may appear 

to be operative throughout an industry, whether such appearances reflect fact 

and whether all firms in the industry should be dealt with in a single 

proceeding or should receive individualized treatment are questions that call 
Page 10 

for discretionary determination by the administrative agency. It is clearly 

within the special competence of the 

 

Commission to appraise the adverse effect on competition that might result from 

postponing a particular order prohibiting continued violations of the law. 

Furthermore, the Commission alone is empowered to develop that enforcement 

policy best calculated to achieve the ends contemplated by Congress and to 

allocate its available funds and personnel in such a way as to execute its 

policy efficiently and economically. 

"The question, then, of whether orders such as those before us should be held 

in abeyance until the respondents' competitors are proceeded against is for the 

Commission to decide. If the question has not been raised before the 

Commission, as was the situation in No. 77, a reviewing court should not in any 

event entertain it. If the Commission has decided the question, its 

discretionary determination should not be overturned in the absence of a patent 

abuse of discretion." 

Certainly that opinion shrivelled the word "modify" in the section of the 

Clayton Act concerning our reviewing powers and the result understandable when 

read with an acute awareness of our relationship to the Commission. No doubt 

the luster of "modify" in pre-Niehoff days would be blinding unless read in the 

broad context of the administrative law problem. 

The word "modify" employed in § 6(b) should not be construed to reach the 

statutory remedies given the Secretary unless those remedies, (called 

"penalties" when viewed from an offender's position) are shown to be wholly 

without evidentiary support or ultra vires the enabling act of the Congress. Of 

course, if the order suspending a futures commission merchant or floor broker 

were unsupported by the "weight of evidence" we would be bound to set it aside. 

But "modifying" the remedy utilized by the Secretary when his order meets the 

statutory test, is unsound. 

We should, I think, withhold substitution of our judgment of the extent of 

the Secretary's remedy when he acts within the scope of his statutory standards 

and administrative discretion. Congress entrusted the Secretary with these 

remedies to cope with market problems arising 

 

within his jurisdiction. Clearly the question of remedy, whether suspension or 

revocation, is peculiar to this case and these facts and consequently we ought 

not to interfere with particularized application of § 6(b) when there is absent 

any constitutional impingements and the Secretary's compliance with relevant 

statutes is unchallenged. 

Our personal powers of discrimination might well discredit the degree of 

remedy invoked by the Secretary because it does not square with our individual 

judgments. But this can arise from circular thinking enclosing the record and 

our personal predilections rather than combining all of that with the 

Secretary's experience, knowledge and goal. After all this is a review, not a 

petition for enforcement of an administrative order. Here I do not wish to be 

misunderstood. I speak from a point of view confronting what I believe to be 

the judicial function in this situation which is not too well delineated by case 

precedent. On the record now before us the question is not whether the remedy 

is too harsh. Congress invested the Secretary with primary authority for 

selecting among statutory remedies the ones useful to achieve the purposes for 

which such power was granted. Whether facts found by the Secretary amount to a 

violation is a question of law for this Court. The initial judicial review 

answered that question favorably for the administrator, going further when no 

other error of law has been urged invades the province of discretion granted the 

Secretary. To countenance judicial adjustment of sanctions imposed by the 

Secretary in this case makes a stalking horse out of the statutory word 

"modify." 
Page 11 

Schnackenberg, Circuit Judge, dissenting. 

By this court's order the rehearing en banc was limited to this question: 

Does the Court of Appeals have the power and jurisdiction to change a penalty 

fixed by respondent Secretary of Agriculture, which penalty is within the 

statutory limits? In effect, Judge Parkinson's opinion answers this question in 

the negative. Inasmuch as I find myself in dissent, I deem it essential to 

state my reasons. The prior proceedings herein are partly set forth 

 

in Judge Parkinson's opinion, supra. His statement in that regard needs the 

following supplementation and clarification. 

1. After retired Circuit Judge Major and I modified the original panel 

opinion written by Judge Parkinson, over his objection that this court "has no 

power or right to reduce a penalty imposed by this respondent which is within 

the statute", the order for the en banc hearing eliminated Judge Major from 

further consideration of the case (to which he had been regularly assigned). 

Thereby, not only his vote, but the benefit of his mature judgment in conference 

with the other members of the court, were lost. The only reason given for 

excluding Judge Major at that point was reliance upon 28 U.S.C.A. § 46 (c), 

which reads: 

"(c) Cases and controversies shall be heard and determined by a court or 

division of not more than three judges, unless a hearing or rehearing before the 

court in banc is ordered by a majority of the circuit judges of the circuit who 

are in active service. A court in banc shall consist of all active circuit 

judges of the circuit." 

This reasoning, however, overlooks other relevant sections of the statute. 

They are 28 U.S.C.A. § 294(b) and § 296, which in their present form were 

enacted on June 25, 1948, 62 Stat. 901, which is the same day § 46 was enacted 

in its present form. 

Sec. 294 (b) provides: 

"Any retired circuit * * * judge may be designated and assigned to perform 

such judicial duties in any circuit as he is willing to undertake. Designation 

and assignment of such judge for service within his circuit shall be made by the 

chief judge * * *." 

Sec. 296 provides: 

"A * * * judge shall discharge, during the period of his designation and 

assignment, all judicial duties for which he is designated and assigned. He may 

be required to perform any duty which might be required of a judge of the court 

* * * to which he is designated and assigned. 

"Such * * * judge shall have all the powers of a judge of the court, * * * to 

which he is designated 

 

and assigned, except the power to appoint any person to a statutory position or 

to designate permanently a depository of funds or a newspaper for publication of 

legal notices. 

"A * * * judge who has sat by designation and assignment in another district 

or circuit may, notwithstanding his absence from such district or circuit or the 

expiration of the period of his designation and assignment, decide or join in 

the decision and final disposition of all matters submitted to him during such 

period and in the consideration and disposition of applications for rehearing or 

further proceedings in such matters." (Emphasis supplied). 

Judge Major, being willing to undertake the judicial duties to which he was 

assigned, sat on the three-judge panel which decided the case at bar and he 

concurred in the opinion of the court and the panel's modification of the order 
Page 12 

entered by the respondents. The designation and assignment to hear this case 

had not expired when a rehearing en banc was ordered and will not expire until 

this case is finally disposed of in this court, because § 296 makes it clear 

that he may be required to perform any duty which might be required of a judge 

of this court, and certainly that would include participating in the final 

action on a petition for rehearing in this case. That function is included in 

the language of the second paragraph of § 296, which is to the effect that such 

a designated and assigned judge "shall have all the powers of a judge of the 

court to which he is designated and assigned", with certain irrelevant 

exceptions. Moreover, the third paragraph of § 296 is clear that, even if he 

were designated to sit in another circuit, neither his absence from said circuit 

or the expiration of the period of his designation and assignment would deprive 

him of the power to "decide or join in the decision and final disposition of all 

matters submitted to him during such period and in the consideration and 

disposition of applications for rehearing or further proceedings in such 

matters." (Emphasis supplied.) A fortiori, Judge Major, having been designated 

and assigned to sit in his own circuit, the Seventh, does not have less power 

than if he had been designated and assigned to sit in another circuit. 

We are not justified in attributing to congress an intention, by § 46, to 

prevent a judge, who actively sits on the panel which decides an appeal, from 

participating in an en banc hearing on a petition for rehearing, the object of 

which is to overturn a major part of the panel's decision. A reading of both § 

294 (b) and § 296, in conjunction with § 46, dispels any such legislative 

intention. The only reasonable construction which can be given to the entire 

pertinent legislative language, in its application to this case, is that the 

designation and assignment of Judge Major to this case bestowed upon him the 

duty of acting as a judge therein and in the consideration and disposition of 

such applications for rehearing as have been or will be filed therein. It would 

be incredible that congress intended that an experienced and capable retired 

judge, who voluntarily accepts an assignment to hear a case in his own circuit 

and in the decision of which he has joined, should be excluded from the 

consideration of a petition for rehearing thereof, whether or not it is to be 

heard by the original panel of which he is a member or the court sitting en 

banc. Such a result would be incongruous and contrary to common sense. Even if 

it could be urged that this construction involves a "sacrifice of literalness 

for common sense," I call attention to the apt language of Justice Douglas in 

Textile Mills Corp. v. Comm'r., 314 U.S. 326, 334, where he said: 

"* * * any sacrifice of literalness for common sense does no violence * * *. 

Certainly, the result reached makes for more effective judicial administration. 

Conflicts within a circuit will be avoided. Finality of decision in the circuit 

courts of appeal will be promoted. Those considerations are especially 

important in view of the fact that in our federal judicial system these courts 

are the courts of last resort in the run of ordinary cases. Such considerations 

are, of course, not for us to weigh in case Congress has devised a system where 

the judges of a court are prohibited from sitting en banc. But where, as here, 

the case on the statute is not foreclosed, they aid in tipping the scales in 

favor of the more practicable interpretation." 

To me, the legislative intent in enacting § 46 was to prevent the overturning 

of a panel decision by the loading of the court on an en banc hearing by 

bringing in a 

 

number of retired judges who had not been members of the original panel. That 

intent is based upon an obviously sound purpose, but the section should not be 

extended beyond that objective. 

The views herein expressed find support in U.S. v. Watkins, 164 F.2d 457 (2 

Cir.). There Justice Holtzoff of the District of Columbia was designated to sit 

in the District Court for the Southern District of New York. His first ruling 
Page 13 

was to amend the warrant of deportation there involved. He thereafter granted 

respondent's motion for reargument, and, after further hearing, changed his 

holding to agree with respondent and dismissed the writ of habeas corpus. It 

was held, at 460, that, although his designation had already expired when he 

granted reargument, he was the proper judge to hear same. The court in a 

footnote cited Frad v. Kelly, 302 U.S. 312, 316, where the Supreme Court said: 

"When an assigned judge has presided at the trial of a cause, he is to have 

power, though the period of his service has expired, and though he may have 

returned to his own district, to perform the functions which are incidental and 

supplementary to the duties performed by him while present and acting in the 

designated district. And where a cause has been submitted to him in the 

designated district, after his return to his own district he may enter decrees 

or orders and file opinions necessary to dispose of the case, notwithstanding 

the termination of his period of service in the foreign district. * * *" 

(Emphasis supplied). 

I believe that Judge Major is entitled to participate in this case until its 

final disposition in this court. 

2. Judge Parkinson's opinion reveals no disagreement among members of the 

court as to the harshness of the penalty imposed by the administrative agency, -

- but disagreement only as to the court's power to restrain the agency when it 

seeks to inflict an unreasonable and harsh penalty. Here Judge Major and I have 

relied upon the heretofore undisputed power of courts to protect citizens from 

such a penalty. This court has exercised its jurisdiction to review the 

sanctions imposed by the Secretary of Agriculture, under the Packers and 

Stockyards Act, in Daniels v. United States of America, and Ezra Taft Benson, 

 

 Secretary of Agriculture, 242 F.2d 39. Chief Judge Duffy, who wrote the court's 

opinion in that case, did not in any way indicate that this court had no power 

to pass upon a contention that the sanctions imposed by the Secretary of 

Agriculture were excessive. Instead he proceeded, at 42, to review the facts in 

the record bearing upon that contention and came to the conclusion that the 

record supported the sanctions imposed. 

Traditionally, courts who find their historical roots in Anglo-Saxon 

jurisprudence have always been alert to strike down harsh or excessive 

penalties. 

Legislatively, congress has expressly bestowed upon this court power to 

"modify" orders of the administrative agency here involved. 7 U.S.C.A. § 9 

provides: 

"After the issuance of the order by the Secretary of Agriculture, as 

aforesaid, the person against whom it is issued may obtain a review of such 

order or such other equitable relief as to the court may seem just by filing in 

the United States court of appeals of the circuit in which the petitioner is 

doing business a written petition praying that the order of the Secretary of 

Agriculture be set aside. * * * the court shall have jurisdiction to affirm, to 

set aside, or modify the order of the Secretary of Agriculture, * * *." (Italics 

supplied.) 

Both Judge Parkinson and the respondents have mistakenly relied upon Federal 

Trade Commission v. C. E. Niehoff & Co., 355 U.S. 411, which held, in a Federal 

Trade Commission case, that we were correct in our holding, 241 F.2d 37, at 42, 

where we said: 

"The commission takes the position that it has no power to stay compliance 

with its order. It relies upon a part of section 11 of the amended Clayton Act, 

contending that it has no discretion as to the enforcement of the law. It fails 

to cite that part of section 11 which provides that the commission 'shall issue 

* * * an order requiring such person to cease and desist from such violations * 

* * within the time fixed by said order.' It is our opinion that this statutory 
Page 14 

language vests in the commission power to postpone the time at which an order is 

to take effect." (Italics supplied for emphasis.) 

 

It is true that, in order to induce the Federal Trade Commission to seek a 

review in the United States Supreme Court in the Niehoff case, we modified the 

Commission's order sua sponte, in view of the Commission's assertion that it had 

no power to stay compliance with its order. The Commission thereupon took the 

case to the Supreme Court which inter alia sustained our holding that the 

Commission did have such power. It is apparent, therefore, that the Supreme 

Court agreed with us that the Commission had power to postpone the date for 

compliance with its order and that the Commission was mistaken in its stated 

position that it did not have that power. That was the principal question 

involved in the Niehoff case, as we had held that we would affirm the 

Commission's order on the merits. 

Judge Parkinson's opinion in the en banc proceeding avoids the language of 7 

U.S.C.A. § 9, supra, as to our power to grant "such other equitable relief as to 

the court may seem just" and our power to "modify the order of the Secretary of 

Agriculture", by simply not mentioning it. Why this crucial language in the 

statute is swept under the rug is not explained. Judge Parkinson does not in 

any way explain why the panel's changing of the order of the Secretary of 

Agriculture, by reducing the penalties imposed on G. H. Miller and Company and 

Gilbert H. Miller, did not amount to a modification of the order, as is 

expressly authorized by the Act. He has ignored the Act in that critical 

aspect. It would be interesting if Judge Parkinson or counsel for the Secretary 

of Agriculture had stated what the words "modify the order" mean. Do the words 

bestow upon this court the mere power to "cross the t's and dot the i's" in an 

agency's order? Judge Parkinson instead emphasizes the statutory grant of power 

to the agency to "revoke" a license. n1 Our cleavage is over the question of 

our power -- not the power of the agency. Here we have express authority to 

affirm, set aside or modify the administrative order, and to grant equitable 

relief as to us may seem just. Those are the words of congress. While congress 

has adopted a policy which recognizes the usefulness of a system of 

administrative 

 

agencies, it has seen the need for judicial control of such agencies, which 

usually exercise the multiple functions of instigating proceedings, gathering 

evidence, as well as prosecuting and acting as judges of those proceedings. 

Moreover, most Americans realize the need for judicial control because they see 

in the history of commissions and other administrative agencies no proof that 

they are infallible. The majority opinion would sustain in all cases the most 

severe penalty which the agency may be authorized by congress to impose in the 

most aggravated case, taking the position that we are powerless to restrain such 

abuse of authority. The mere statement of such a doctrine exhibits its utter 

speciousness. 

n1 7 U.S.C.A. § 9. It will be noted that this section does not require a 

revocation. Other alternatives are provided. 

While this is an obscure case, it is one which will shock all observers of 

the American scene, when its full import is realized. It marks a court's 

retreat from a long-established line of defense. The publication of the court's 

opinion will emerge as an outright abdication of a judicial protection upon 

which our citizens have hitherto justifiably and proudly relied. 

In a nutshell we have here a situation in which an agency has imposed upon 

two citizens what is virtually economic death. To review the harshness of this 

action they came to the court designated by congress to review the agency's 

decisions. They are met by a refusal by that court to perform its function in 
Page 15 

this regard. Asserting its impotence, it abdicates its functions and leaves the 

citizens remediless. 

The action of the original panel in modifying the order of the Secretary of 

Agriculture, as to the penalty imposed, was correct. 

A true Copy: 

Teste: 

Clerk of the United States Court of 

Appeals for the Seventh Circuit. 

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