Source: http://www.chanrobles.com/usa/us_supremecourt/317/341/case.php
Timestamp: 2020-01-21 08:24:09
Document Index: 274863601

Matched Legal Cases: ['§ 8', '§ 9', '§ 10', '§ 11', '§ 301', '§ 1', '§ 41', '§ 601', '§ 8', '§ 10', '§ 302', '§ 1302', '§ 8']

3. A prorate marketing program under the California Agricultural Prorate Act, adopted by the State for regulating the handling, disposition, and prices of raisins produced in California, a large part of which go into interstate and foreign commerce, held not within the intended scope of, and not a violation of, the Sherman Act. P. 317 U. S. 350. chanrobles.com-red
(4) State regulations affecting interstate commerce are to be sustained not because they are "indirect", rather than "direct," not because they affect, rather than command the operations of interstate commerce, but because, upon a consideration of all the relevant facts chanrobles.com-red
APPEAL from a decree of a district court of three judges enjoining the enforcement, against the appellee, of a marketing program adopted pursuant to the California Agricultural Prorate Act. chanrobles.com-red
Appellee, a producer and packer of raisins in California, brought this suit in the district court to enjoin appellants -- the State Director of Agriculture, Raisin Proration Zone No. 1, the members of the State Agricultural Prorate Advisory Commission and of the Program Committee for Zone No. 1, and others charged by the statute with the administration of the Prorate Act -- from enforcing, as to appellee, a program for marketing the 1940 crop of raisins produced in "Raisin Proration Zone No. 1." After a trial upon oral testimony, a stipulation of facts and certain exhibits, the district court held that the 1940 raisin marketing program was an illegal interference with and undue burden upon interstate commerce, and gave judgment for appellee granting the injunction prayed for. 39 F.Supp. 895. The case was tried by a district court of three judges, chanrobles.com-red
The packers sell their raisins through agents, brokers, jobbers and other middlemen, principally located in other states or foreign countries. Until he is ready to ship the raisins, the packer stores them in the form in which they have been received from producers. The length of time that the raisins remain at the packing plants before processing and shipping varies from a few days up to two years, depending upon the packer's current supply of raisins and the market demand. The packers frequently place orders with producers for fall delivery, before the chanrobles.com-red
Upon the petition of ten producers for the establishment of a prorate marketing plan for any commodity within a defined production zone (§ 8), and after a public hearing (§ 9), and after making prescribed economic findings (§ 10) showing that the institution of a program for the proposed zone will prevent agricultural waste and conserve agricultural wealth of the state without permitting unreasonable profits to producers, the Commission is authorized to grant the petition. The Director, with the approval of the Commission, is then required to select a program committee from among nominees chosen by the qualified producers within the zone, to which he may add not more than two handlers or packers who receive the regulated commodity from producers for marketing. §§ 11, 14, 15. chanrobles.com-red
The seasonal proration marketing program for raisins with which we are now concerned became effective on September 7, 1940. This provided that the program committee should classify raisins as "standard," "substandard," and "inferior"; "inferior" raisins are those which are unfit for human consumption, as defined in the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq. The committee is required to establish receiving stations within the zone to which every producer must deliver all raisins which he desires to market. The raisins are graded at these stations. All inferior raisins are to be placed in the chanrobles.com-red
Appellee's bill of complaint challenges the validity of the proration program as in violation of the Commerce chanrobles.com-red
Appellee's allegations of irreparable injury are in general terms, but it appears from the evidence that he had produced 200 tons of 1940 crop raisins; that he had contracted to sell 762 1/2 tons of the 1940 crop; that he had dealt in 2,000 tons of raisins of the 1939 crop, and expected to sell, if the challenged program were not in force, 3,000 tons of the 1940 crop at $60 a ton; that the pre-season price to growers of raisins of the 1940 crop, before the program became effective, was $45 per ton, and that immediately afterward it rose to $55 per ton or higher. It also appears that, the district court having awarded the final injunction prayed, appellee has proceeded with the marketing of his 1940 crop and has disposed of all except twelve tons, which remain on hand. Although the district court found that the amount in controversy exceeds $3,000, we are of opinion that as the complaint assails the validity of the program under the antitrust laws, 15 U.S.C. §§ 1-33, the suit is one "arising under" a "law regulating commerce", and allegation and proof of the jurisdictional amount are not required. 28 U.S.C. §§ 41(1), (8); Peyton v. Railway Express Agency, 316 U. S. 350. The majority of the Court is also of opinion that the suit is within the equity jurisdiction of the court, since the complaint chanrobles.com-red
But it is plain that the prorate program here was never intended to operate by force of individual agreement or combination. It derived its authority and its efficacy from the legislative command of the state, and was not intended to operate or become effective without that command. We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its chanrobles.com-red
There is no suggestion of a purpose to restrain state action in the Act's legislative history. The sponsor of the bill which was ultimately enacted as the Sherman Act declared that it prevented only "business combinations." 21 Cong.Rec. 2562, 2457; see also at 2459, 2461. That its purpose was to suppress combinations to restrain competition and attempts to monopolize by individuals and corporations abundantly appears from its legislative history. See Apex Hosiery Co. v. Leader, 310 U. S. 469, 310 U. S. 492-93 and n. 15; United States v. Addyston Pipe & Steel Co., 85 F.2d 1, affirmed, 175 U. S. 175 U.S. 211; Standard Oil Co. v. United States, 221 U. S. 1, 221 U. S. 54-58.
True, a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring that their action is lawful, Northern Securities Co. v. United States, 193 U. S. 197, 193 U. S. 332, 193 U. S. 344-47, and we have no question of the state or its municipality becoming a participant in a private agreement or combination chanrobles.com-red
The state, in adopting and enforcing the prorate program, made no contract or agreement and entered into no conspiracy in restraint of trade or to establish monopoly, but, as sovereign, imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit. Olsen v. Smith, 195 U. S. 332, 195 U. S. 344-345; cf. Lowenstein v. Evans, 69 F.9d 8, 910.
The Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C. §§ 601 et seq., authorizes the Secretary chanrobles.com-red
We may assume that the powers conferred upon the Secretary would extend to the control of surpluses in the raisin industry through a pooling arrangement such as was promulgated under the California Prorate Act in the present case. See United States v. Rock Royal Co-op., 307 U. S. 533; Currin v. Wallace, supra. We may assume also that a stabilization program adopted under the Agricultural Marketing Agreement Act would supersede the state act. But the federal act becomes effective only if a program is ordered by the Secretary. Section 8c(3) provides that, whenever the Secretary of Agriculture "has reason to believe" that the issuance of an order will tend to effectuate the declared policy of the Act with respect to any commodity, he shall give due notice of an opportunity for a hearing upon a proposed order, and § 8c(4) provides that, after the hearing, he shall issue an order if he finds and sets forth in the order that its issuance will tend to effectuate the declared policy of the Act with respect to the commodity in question. Since the Secretary has not given notice of hearing and has not proposed or promulgated any order regulating raisins, it must be chanrobles.com-red
It is evident, therefore, that the Marketing Act contemplates the existence of state programs at least until such time as the Secretary shall establish a federal marketing program, unless the state program in some way conflicts with the policy of the federal act. The Act contemplates that each sovereign shall operate "in its own sphere, but can exert its authority in conformity, rather than in conflict, with that of the other." H.Rep. No. 1241, 74th Cong., 1st Sess. pp. 22-23; S.Rep. 1011, 74th Cong., 1st Sess. p. 15. [Footnote 2] The only suggested possibility of conflict is between the declared purposes of the two acts. The object of the federal statute is stated to be the establishment, by exercise chanrobles.com-red
The declared objective of the California Act is to prevent excessive supplies of agricultural commodities from "adversely affecting" the market, and although the statute speaks in terms of "economic stability" and "agricultural waste", rather than of price, the evident purpose and effect of the regulation is to "conserve agricultural wealth of the state" by raising and maintaining prices, but "without permitting unreasonable profits to producers." § 10. The only possibility of conflict would seem to be if a state program were to raise prices beyond the parity price prescribed by the federal act, a condition which has not occurred. [Footnote 4] chanrobles.com-red
That the Secretary has reason to believe that the state act will tend to effectuate the policies of the federal act so as not to require the issuance of an order under the latter is evidenced by the approval given by the Department of Agriculture to the state program by the loan agreement between the state and the Commodity Credit Corporation. [Footnote 5] By § 302 of the Agricultural Adjustment Act of 1938, 52 Stat. 43, 7 U.S.C. § 1302(a), the Commodity Credit Corporation is authorized "upon the recommendation of the Secretary and with the approval of the President, to make available loans on agricultural commodities. . . ." The "amount, terms, and conditions" of such loans are to be "fixed by the Secretary, subject to the approval of the Corporation and the President." Under this authority, the Commodity Credit Corporation made loans of $5,146,000 to Zone No. 1, secured by a chanrobles.com-red
pledge of 109,000 tons of 1940 crop raisins in the surplus and stabilization pools. These loans were ultimately liquidated by sales of 76,000 tons to packers and 33,000 tons to the Federal Surplus Marketing Administration, an agency of the Department of Agriculture, [Footnote 6] for relief distribution and for export under the Lend-Lease program. [Footnote 7] The loans were conditional upon the adoption by the state of the present seasonal marketing program. We are informed by the Government, which at our request filed a brief amicus curiae, that, under the loan agreement, prices and sales policies as to the pledged raisins were to be controlled by a committee appointed by the Secretary, and that officials of the Department of Agriculture collaborated in drafting the 1940 state raisin program. chanrobles.com-red
We have no occasion to decide whether the same conclusion would follow if the state program had not been adopted with the collaboration of officials of the Department of Agriculture and aided by loans from the Commodity chanrobles.com-red
The governments of the states are sovereign within their territory save only as they are subject to the prohibitions of the Constitution or as their action in some measure conflicts with powers delegated to the National Government, chanrobles.com-red
In applying the mechanical test to determine when interstate commerce begins and ends (see Federal Compress Co. v. McLean, 291 U. S. 17, 291 U. S. 21 and cases cited; Minnesota v. Blasius, 290 U. S. 1 and cases cited) this Court has frequently held that, for purposes of local taxation or regulation, "manufacture" is not interstate commerce even though the manufacturing process is of slight extent. Crescent Oil Co. v. Mississippi, 257 U. S. 129; Oliver Iron Co. v. Lord, 262 U. S. 172; Utah Power & Light Co. v. Pfost, 286 U. S. 165; Hope Gas Co. v. Hall, 274 U. S. 284; Heisler v. Thomas Colliery Co., 260 U. S. 245; 286 U. S. 245; Thompson v. Consolidated Gas Co., 300 U. S. 55, 300 U. S. 77; cf. Bayside Fish Co. v. Gentry, supra. A state is also free to license and tax intrastate buying where the purchaser expects in the usual course of business to resell in interstate commerce. Chassaniol v. Greenwood,@ 291 U. S. 584. And no case has gone so far as to hold that a state could not license or otherwise regulate the sale of articles within the state because the buyer, after processing and packing them, will, in the normal course of business, sell and ship them in interstate commerce.
It is for this reason that the present case is to be distinguished from Lemke v. Farmers Grain Co., 258 U. S. 50, and Shafer v. Farmers Grain Co., 268 U. S. 189, on which appellee relies. There, the state regulation held invalid was of the business of those who purchased grain within the state for immediate shipment out of it. The Court was of opinion that the purchase of the wheat for shipment out of the state without resale or processing was a chanrobles.com-red
Such regulations by the state are to be sustained not because they are "indirect", rather than "direct," see DiSanto v. Pennsylvania, supra; cf. Wickard v. Filburn, supra, not because they control interstate activities in such a manner as only to affect the commerce, rather than to command its operations. But they are to be upheld because, upon a consideration of all the relevant facts and circumstances, it appears that the matter is one which may appropriately be regulated in the interest of the safety, health and wellbeing of local communities, and which, because of its local character, and the practical difficulties involved, may never be adequately dealt with chanrobles.com-red
Examination of the evidence in this case and of available data of the raisin industry in California, of which we may take judicial notice, leaves no doubt that the evils attending the production and marketing of raisins in that state present a problem local in character and urgently demanding state action for the economic protection of those engaged in one of its important industries. [Footnote 9] Between 1914 and 1920, there was a spectacular rise in price of all types of California grapes, including raisin grapes. The price of raisins reached its peak, $235 per ton, in 1921, and was followed by large increase in acreage, with accompanying reduction in price. The price of raisins in most chanrobles.com-red
The history of the industry, at least since 1929, is a record of a continuous search for expedients which would stabilize the marketing of the raisin crop and maintain a price standard which would bring fair return to the producers. [Footnote 11] It is significant of the relation of the local interest in maintaining this program to the national interest in interstate commerce that, throughout the period from 1929 until the adoption of the prorate program for chanrobles.com-red
the 1940 raisin crop, the national government has contributed to these efforts either by its establishment of marketing programs pursuant to Act of Congress or by aiding programs sponsored by the state. Local cooperative market stabilization programs for raisins in 1929 and 1930 were approved by the Federal Farm Board, which supported them with large loans. [Footnote 12] In 1934, a marketing agreement for California raisins was put into effect under § 8(2) of the Agricultural Adjustment Act of 1933, as amended, 48 Stat. 528, which authorized the Secretary of Agriculture, in order to effectuate the Act's declared policy of achieving parity prices, to enter into marketing agreements with processors, producers and others engaged in handling agricultural commodities "in the current of or in competition with, or so as to burden, obstruct, or in any way affect, interstate or foreign commerce." [Footnote 13] chanrobles.com-red
Raisin Proration Zone No. 1 was organized in the latter part of 1937. No proration program was adopted for the 1937 crop, but loans of $1,244,000 were made on raisins of that crop by the Commodity Credit Corporation. [Footnote 14] In aid of a proration program adopted under the California Act for the 1938 crop, a substantial part of that crop was pledged to the Commodity Credit Corporation as security for a loan of $2,688,000, and was ultimately sold to the Federal Surplus Commodities Corporation for relief distribution. [Footnote 15] Substantial purchases of raisins of the 1939 crop were also made by Federal Surplus Commodities Corporation, although no proration program was adopted for that year. [Footnote 16] In aid of the 1940 program, as we have already noted, the Commodity Credit Corporation made loans in excess of $5,000,000, and 33,000 tons of the raisins pledged to it were sold to the Federal Surplus Marketing Administration. [Footnote 17] chanrobles.com-red
In comparing the relative weights of the conflicting local and national interests involved, it is significant that Congress, by its agricultural legislation, has recognized the distressed condition of much of the agricultural production of the United States, and has authorized marketing procedures, substantially like the California prorate program, for stabilizing the marketing of agricultural products. Acting under this legislation, the Secretary of Agriculture has established a large number of market stabilization programs for agricultural commodities moving in interstate commerce in various parts of the country, including seven affecting California crops. [Footnote 18] All involved attempts chanrobles.com-red