Source: https://en.m.wikisource.org/wiki/Nebbia_v._New_York/Opinion_of_the_Court
Timestamp: 2019-04-20 03:16:56+00:00

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After the board shall have fixed prices to be charged or paid for milk in any form [p520] . . . , it shall be unlawful for a milk dealer to sell or buy or offer to sell or buy milk at any price less or more than such price . . . , and no method or device shall be lawful whereby milk is bought or sold . . . at a price less or more than such price . . . , whether by any discount, or rebate, or free service, or advertising allowance, or a combined price for such milk together with another commodity or commodities, or service or services, which is less or more than the aggregate of the prices for the milk and the price or prices for such other commodity or commodities, or service or services, when sold or offered for sale separately or otherwise. . .
Save the conduct of railroads, no business has been so thoroughly regimented and regulated by the State of New York as the milk industry. Legislation controlling it in the interest of the public health was adopted in 1862,  and subsequent statutes  have been carried into the general [p522] codification known as the Agriculture and Markets Law.  A perusal of these statutes discloses that the milk industry has been progressively subjected to a larger measure of control.  The producer or dairy farmer is in certain circumstances liable to have his herd quarantined against bovine tuberculosis; is limited in the importation of dairy cattle to those free from Bang's disease; is subject to rules governing the care and feeding of his cows and the care of the milk produced, the condition and surroundings of his barns and buildings used for production of milk, the utensils used, and the persons employed in milking (§§ 46, 47, 55, 72-88). Proprietors of milk gathering stations or processing plants are subject to regulation (§ 54), and persons in charge must operate under license and give bond to comply with the law and regulations; must keep records, pay promptly for milk purchased, abstain from false or misleading statements and from combinations to fix prices (§§ 57, 57a, 252). In addition, there is a large volume of legislation intended to promote cleanliness and fair trade practices, affecting all who are engaged in the industry.  The challenged amendment [p523] of 1933 carried regulation much farther than the prior enactments. Appellant insists that it went beyond the limits fixed by the Constitution.
Thus has this court, from the early days, affirmed that the power to promote the general welfare is inherent in government. Touching the matters committed to it by the Constitution, the United States possesses the power,  as do the states in their sovereign capacity touching all subjects jurisdiction of which is not surrendered to the federal government, as shown by the quotations above given. These correlative rights, that of the citizen to exercise exclusive dominion over property and freely to contract about his affairs and that of the state to regulate the use of property and the conduct of business, are always in collision. No exercise of the private right can be [p525] imagined which will not in some respect, however slight, affect the public; no exercise of the legislative prerogative to regulate the conduct of the citizen which will not to some extent abridge his liberty or affect his property. But, subject only to constitutional restraint, the private right must yield to the public need.
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.
In the same volume, the court sustained regulation of railroad rates.  After referring to the fact that railroads are carriers for hire, are incorporated as such, and given extraordinary powers in order that they may better serve the public, it was said that they are engaged in employment " affecting the public interest," and therefore, under the doctrine of the Munn case, subject to legislative control as to rates. And in another of the group of railroad cases then heard,  it was said that the property of railroads is "clothed with a public interest" which permits legislative limitation of the charges for its use. Plainly, the activities of railroads, their charges and practices, so nearly touch the vital economic interests of society that the police power may be invoked to regulate their charges, and no additional formula of affection or clothing with a public interest is needed to justify the regulation. And this is evidently true of all business units supplying transportation, light, heat, power and water to communities, irrespective of how they obtain their powers.
It is clear that there is no closed class or category of businesses affected with a public interest, and the function of courts in the application of the Fifth and Fourteenth Amendments is to determine in each case whether circumstances vindicate the challenged regulation as a reasonable exertion of governmental authority or condemn it as arbitrary or discriminatory. Wolff Packing Co. v. Industrial Court, 262 U.S. 522, 535. The phrase "affected with a public interest " can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good. In several of the decisions of this court wherein the expressions "affected with a public interest" and "clothed with a public use" have been brought forward as the criteria of the validity of price control, it has been admitted that they are not susceptible of definition and form an unsatisfactory test of the constitutionality of legislation directed at business practices or prices. These decisions must rest, finally, upon the basis that the requirements of due process were [p537] not met, because the laws were found arbitrary in their operation and effect.  But there can be no doubt that, upon proper occasion and by appropriate measures, the state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells.
The lawmaking bodies have in the past endeavored to promote free competition by laws aimed at trusts and monopolies. The consequent interference with private property and freedom of contract has not availed with the courts to set these enactments aside as denying due process.  Where the public interest was deemed to require the fixing of minimum prices, that expedient has been sustained.  If the lawmaking body, within its sphere of government, concludes that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer's interests,  produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulation adopted fixes prices reasonably deemed by the legislature to be fair to those engaged in the industry and to the consuming public. And this is especially so where, as here, the economic maladjustment is one of price, which threatens harm to the producer at one end of the series and the consumer at the other. The Constitution does [p539] not secure to anyone liberty to conduct his business in such fashion as to inflict injury upon the pubic at large, or upon any substantial group of the people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.
^ . People v. Nebbia, 262 N.Y. 259, 186 N.E. 694.
^ . Chapter 158 of the Laws of 1933 added a new Article (numbered 25) to the Agriculture and Markets Law. The reasons for the enactment are set forth in the first section (§ 300). So far as material they are: that unhealthful, unfair, unjust, destructive, demoralizing and uneconomic trade practices exist in the production, sale and distribution of milk and milk products, whereby the dairy industry in the state and the constant supply of pure milk to inhabitants of the state are imperiled; these conditions are a menace to the public health, welfare and reasonable comfort; the production and distribution of milk is a paramount industry upon which the prosperity of the state in a great measure depends; existing economic conditions have largely destroyed the purchasing power of milk producers for industrial products, have broken down the orderly production and marketing of milk, and have seriously impaired the agricultural assets supporting the credit structure of the state and its local governmental subdivisions. The danger to public health and welfare consequent upon these conditions is declared to be immediate, and to require public supervision and control of the industry to enforce proper standards of production, sanitation and marketing.
^ . Laws of 1862, Chap. 467.
^ . Laws of 1893, Chap. 338. Laws of 1909, Chap. 9; Consol.Laws, Chap. 1.
^ . Laws of 1927, Chap. 207; Cahill's Consolidated Laws of New York, 1930, Chap. 1.
^ . Many of these regulations have been unsuccessfully challenged on constitutional grounds. See People v. Cipperly, 101 N.Y. 634, 4 N.E. 107; People v. Hill, 44 Hun 472; People v. West, 106 N.Y. 293, 12 N.E. 610; People v. Kibler, 106 N.Y. 321, 12 N.E. 795; People v. Hills, 64 App.Div. 584, 72 N.Y.S. 340; People v. Bowen, 182 N.Y. 1; 74 N.E. 489; Lieberman v. Van de Carr, 199 U.S. 552; St. John v. New York, 201 U.S. 633; People v. Koster, 121 App.Div. 852, 106 N.Y.S. 793; People v. Abramson, 208 N.Y. 138, 101 N.E. 849; People v. Frudenberg, 209 N.Y. 218, 103 N.E. 166; People v. Beakes Dairy Co., 222 N.Y. 416, 119 N.E. 115; People v. Teuscher, 248 N.Y. 454, 162 N.E. 484; People v. Perretta, 253 N.Y. 305; 171 N.E. 72; People v. Ryan, 230 App.Div. 252, 243 N.Y.S. 644; Mintz v. Baldwin, 289 U.S. 346.
^ . See Cahill's Consolidated Laws of New York, 1930, and Supplements to and including 1933: Chap. 21, §§ 270-274; Chap. 41, §§ 435, 438, 1740, 1764, 2350-2357; Chap. 46, §§ 6-a, 20, 21.
^ . Munn v. Illinois, 94 U.S. 113, 124, 125; Orient Ins. Co. v. Daggs, 172 U.S. 557, 566; Northern Securities Co. v. United States, 193 U.S. 197, 351, and see the cases cited in notes 16-23, infra.
^ . Allgeyer v. Louisiana, 165 U.S. 578, 591; Atlantic Coast Line v. Riverside Mills, 219 U.S. 186, 202; Chicago, B. & Q. R. Co. v. McGuire, 219 U.S. 549, 567; Stephenson v. Binford, 287 U.S. 251, 274.
^ . Gibbons v. Ogden, 9 Wheat. 1, 203.
^ . New York v. Miln, 11 Pet. 102, 139.
^ . United States v. Dewitt, 9 Wall. 41; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 215.
^ . Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 228-229.
^ . Barbier v. Connolly, 113 U.S. 27, 31; Chicago, B. & Q. R. Co. v. Drainage Comm'rs, 200 U.S. 561, 592.
^ . Clark v. Nash, 198 U.S. 361; Strickley v. Highland Boy Mining Co., 200 U.S. 527.
^ . Cusack Co. v. Chicago, 242 U.S. 526; St. Louis Poster Advertising Co. v. St. Louis, 249 U.S. 269.
^ . Packer Corp. v. Utah, 285 U.S. 105.
^ . Jackman v. Rosenbaum Co., 260 U.S. 22.
^ . Fischer v. St. Louis, 194 U.S. 361; Welch v. Swasey, 214 U.S. 91; Hadacheck v. Sebastian, 239 U.S. 394; Reinman v. Little Rock, 237 U.S. 171.
^ . Euclid v. Ambler Realty Co., 272 U.S. 365; Zahn v. Board of Public Works, 274 U.S. 325; Gorieb v. Fox, 274 U.S. 603.
^ . Yick Wo v. Hopkins, 118 U.S. 356, 369.
^ . Terrace v. Thompson, 263 U.S. 197; Webb v. O'Brien, 263 U.S. 313.
^ . Forbidding transmission of lottery tickets, Lottery Case, 188 U.S. 321; transportation of prize fight films, Weber v. Freed, 239 U.S. 325; the shipment of adulterated food, Hipolite Egg Co. v. United States, 220 U.S. 45; transportation of women for immoral purposes, Hoke v. United States, 227 U.S. 308; Caminetti v. United States, 242 U.S. 470; transportation of intoxicating liquor, Clark Distilling Co. v. Western Maryland Ry. Co., 242 U.S. 311; requiring the public weighing of grain, Merchants Exchange v. Missouri, 248 U.S. 365; regulating the size and weight of loaves of bread, Schmidinger v. Chicago, 226 U.S. 578; Petersen. Baking Co. v. Bryan, 290 U.S. 570; regulating the size and character of packages in which goods are sold, Armour & Co. v. North Dakota, 240 U.S. 510; regulating sales in bulk of a stock in trade, Lemieux v. Young, 211 U.S. 489; Kidd, Dater & Price Co. v. Musselman Grocer Co., 217 U.S. 461; sales of stocks and bonds, Hall v. Geiger-Jones Co., 242 U.S. 539; Merrick v. Halsey & Co., 242 U.S. 568; requiring fluid milk offered for sale to be tuberculin tested, Adams v. Milwaukee, 228 U.S. 572; regulating sales of grain by actual weight, and abrogating exchange rules to the contrary, House v. Mayes, 219 U.S. 270; subjecting state banks to assessments for a state depositors' guarantee fund, Noble State Bank v. Haskell, 219 U.S. 104.
^ . Prescribing hours of labor in particular occupations, Holden v. Hardy, 169 U.S. 366; B. & O. R. Co. v. I.C.C., 221 U.S. 612; Bunting v. Oregon, 243 U.S. 426; prohibiting child labor, Sturges & Burn Co. v. Beauchamp, 231 US. 320; forbidding night work by women, Radice v. New York, 264 U.S. 292; reducing hours of labor for women, Muller v. Oregon, 208 U.S. 412; Riley v. Massachusetts, 232 U.S. 671; Miller v. Wilson, 236 U.S. 373; fixing the time for payment of seamen's wages, Patterson v. Bark Eudora, 190 U.S. 169; Strathearn S.S. Co. v. Dillon, 252 U.S. 348; of wages of railroad employes, St. Louis, I. M. & St.P. Ry. Co. v. Paul, 173 U.S. 404; Erie R. Co. v. Williams, 233 U.S. 685; regulating the redemption of store orders issued for wages, Knoxville Iron Co. v. Harbison, 183 US. 13; Keokee Consolidated Coke Co. v. Taylor, 234 U.S. 224; regulating the assignment of wages, Mutual Loan Co. v. Martell, 222 US. 225; requiring payment for coal mined on a fixed basis other than that usually practiced, McLean v. Arkansas, 211 U.S. 539; Rail & River Coal Co. v. Yaple, 236 U.S. 38; establishing a system of compulsory workmen's compensation, New York Central R. Co. v. White, 243 U.S. 188; Mountain Timber Co. v. Washington, 243 U.S. 219.
^ . Sales of stock or grain on margin, Booth v. Illinois, 184 U.S. 425; Brodnax v. Missouri, 219 U.S. 285; Otis v. Parker, 187 U.S. 606; the conduct of pool and billiard rooms by aliens, Clarke v. Deckebach, 274 U.S. 392; the conduct of billiard and pool rooms by anyone, Murphy v. California, 225 U.S. 623; the sale of liquor, Mugler v. Kansas, 123 U.S. 623; the business of soliciting claims by one not an attorney, McCloskey v. Tobin, 252 U.S. 107; manufacture or sale of oleomargarine, Powell v. Pennsylvania, 127 U.S. 678; hawking and peddling of drugs or medicines, Baccus v. Louisiana, 232 U.S. 334; forbidding any other than a corporation to engage in the business of receiving deposits, Dillingham v. McLaughlin, 264 U.S. 370, or any other than corporations to do a banking business, Shallenberger v. First State Bank, 219 U.S. 114.
^ . Physicians, Dent v. West Virginia, 129 U.S. 114; Watson v. Maryland, 218 U.S. 173; Crane v. Johnson, 242 U.S. 339; Hayman v. Galveston, 273 U.S. 414; dentists, Douglas v. Noble, 261 U.S. 165; Graves v. Minnesota, 272 U.S. 425; employment agencies, Brazee v. Michigan, 241 U.S. 340; public weighers of grain, Merchants Exchange v. Missouri, 248 U.S. 365; real estate brokers, Bratton v. Chandler, 260 U.S. 110; insurance agents, La Tourette v. McMaster, 248 U.S. 465; insurance companies, German Alliance Ins. Co. v. Lewis, 233 U.S. 389; the sale of cigarettes, Gundling v. Chicago, 177 U.S. 183; the sale of spectacles, Roschen v. Ward, 279 U.S. 337; private detectives, Lehon v. Atlanta, 242 U.S. 53; grain brokers, Chicago Board of Trade v. Olsen, 262 U.S. l; business of renting automobiles to be used by the renter upon the public streets, Hodge Co. v. Cincinnati, 284 U.S. 335.
^ . Champlin Refining Co. v. Corporation Comm'n, 286 U.S. 210. Compare Bandini Petroleum Co. v. Superior Court, 284 U.S. 8, 21-22.
^ . Contracts of carriage, Atlantic Coast Line v. Riverside Mills, 219 U.S. 186; agreements substituting relief or insurance payments for actions for negligence, Chicago, B. & Q. R. Co. v. McGuire, 219 U.S. 549; affecting contracts of insurance, Orient Ins. Co. v. Daggs, 172 US. 557; Whitfield v. Aetna Life Ins. Co., 205 U.S. 489; National Union Fire Ins. Co. v. Wanberg, 260 U.S. 71; Hardware Dealers Mut. F. I. Co. v. Glidden Co., 284 U.S. 151; contracts for sale of real estate, Selover, Bates & Co. v. Walsh, 226 U.S. 112; contracts for sale of farm machinery, Advance-Rumely Co. v. Jackson, 287 U.S. 283; bonds for performance of building contracts, Hartford Accident & Indemnity Co. v. Nelson Mfg. Co., 291 U.S. 352.
^ . Central Lumber Co. v. South Dakota, 226 U.S. 157.
^ . Rast v. Van Deman & Lewis Co., 240 U.S. 342.
^ . Van Camp & Sons Co. v. American Can Co., 278 U.S. 245.
^ . State statutes: Smiley v. Kansas, 196 U.S. 447; National Cotton Oil Co. v. Texas, 197 U.S. 115; Waters-Pierce Oil Co. v. Texas (No. 1), 212 U.S. 86; Hammond Packing Co. v. Arkansas, 212 U.S. 322; Grenada Lumber Co. v. Mississippi, 217 U.S. 433; International Harvester Co. v. Missouri, 234 U.S. 199.
^ . Slaughter-House Cases, 16 Wall. 36; Conway v. Taylor's Executor, 1 Black 603; Crowley v. Christensen, 137 U.S. 86.
^ . Madera Water Works v. Madera, 228 U.S. 454; Jones v. Portland, 245 U.S. 217; Green v. Frazier, 253 U.S. 233; Standard Oil Co. v. Lincoln, 275 U.S. 504.
^ . As instances of Acts of Congress regulating private businesses consistently with the due process guarantee of the Fifth Amendment, the court cites those fixing rates to be charged at private wharves, by chimney-sweeps and hackneys, cartmen, wagoners and draymen in the District of Columbia (p. 125).
^ . Peik v. C. & N.W. Ry. Co., 94 U.S. 164.
^ . See Wolff Packing Co. v. Industrial Court, supra; Tyson & Bro. v. Banton, 273 U.S. 418; Ribnik v. McBride, 277 U.S. 350; Williams v. Standard Oil Co., 278 U.S. 235.
^ . See McLean v. Arkansas, 211 U.S. 539, 547; Tanner v. Little, 240 U.S. 369, 385; Green v. Frazier, 253 U.S. 233, 240; O'Gorman & Young v. Hartford Fire Ins. Co., 282 U.S. 251, 257-258; Gant v. Oklahoma City, 289 U.S. 98, 102.
^ . See note 32, supra.
^ . Public Service Comm'n v. Great Northern Utilities Co., 289 U.S. 130; Stephenson v. Binford, supra. See the Transportation Act, 1920, 41 Stat. 456, §§ 418, 422, amending § 15 of the Interstate Commerce Act, and compare Anchor Coal Co. v. United States, 25 F.2d 462; New England Divisions Case, 261 U.S. 184, 190, 196.
^ . See Public Service Comm'n v. Great Northern Utilities Co., supra.

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