Source: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0317_0111_ZO.html
Timestamp: 2013-06-18 23:14:02
Document Index: 492514964

Matched Legal Cases: ['§ 339', '§ 8', '§ 1340', '§ 1281', '§ 728', '§ 331', '§ 1331', '§ 335', '§ 1335', '§ 302', '§ 1302', '§ 10', '§ 1340', '§ 335', '§ 1335', '§ 336', '§ 1336', '§ 1339', '§ 1335', '§ 1301', '§ 3', '§ 380', '§ 1301', '§ 1', '§ 728', '§ 8', '§ 1', '§ 1', 'art, 247', '§ 5', '§ 335', '§ 6', '§ 335', '§ 1335', '§ 339', '§ 1339', '§ 301', '§ 1301', '§ 1', '§ 10', '§ 10', '§ 728']

The appellee filed his complaint against the Secretary of Agriculture of the United States, three members of the County Agricultural Conservation Committee for Montgomery County, Ohio, and a member of the State Agricultural Conservation Committee for Ohio. He sought to enjoin enforcement against himself of the marketing penalty imposed by the amendment of May 26, 1941, [n1] to the Agricultural Adjustment Act of 1938, [n2] upon that part of his 1941 wheat crop which was available for marketing in excess of the marketing quota established for his farm. He also sought a declaratory judgment that the wheat marketing quota provisions of the Act, as amended and applicable to him, were unconstitutional because not sustainable [p114] under the Commerce Clause or consistent with the Due Process Clause of the Fifth Amendment.
The Secretary moved to dismiss the action against him for improper venue, but later waived his objection and filed an answer. The other appellants moved to dismiss on the ground that they had no power or authority to enforce the wheat marketing quota provisions of the Act, and, after their motion was denied, they answered, reserving exceptions to the ruling on their motion to dismiss. [n3] The case was submitted for decision on the pleadings and upon a stipulation of facts.
In July of 1940, pursuant to the Agricultural Adjustment Act of 1938, as then amended, there were established for the appellee's 1941 crop a wheat acreage allotment of 11.1 acres and a normal yield of 20.1 bushels of wheat an acre. He was given notice of such allotment in July of 1940, before the Fall planting of his 1941 crop of wheat, and again in July of 1941, before it was harvested. He sowed, however, 23 acres, and harvested from his 11.9 acres of excess acreage 239 bushels, which, under the terms of the Act as amended on May 26, 1941, constituted farm [p115] marketing excess, subject to a penalty of 49 cents a bushel, or $117.11 in all. The appellee has not paid the penalty, and he has not postponed or avoided it by storing the excess under regulations of the Secretary of Agriculture, or by delivering it up to the Secretary. The Committee, therefore, refused him a marketing card, which was, under the terms of Regulations promulgated by the Secretary, necessary to protect a buyer from liability to the penalty and upon its protecting lien. [n4]
The general scheme of the Agricultural Adjustment Act of 1938 as related to wheat is to control the volume moving in interstate and foreign commerce in order to avoid surpluses and shortages and the consequent abnormally low or high wheat prices and obstructions to commerce. [n5] Within prescribed limits and by prescribed standards, the Secretary of Agriculture is directed to ascertain and proclaim each year a national acreage allotment for the next crop of wheat, which is then apportioned to the states and their counties, and is eventually broken up into allotments for individual farms. [n6] Loans and payments to wheat farmers are authorized in stated circumstances. [n7]
The Act further provides that, whenever it appears that the total supply of wheat as of the beginning of any marketing year, beginning July 1, will exceed a normal year's domestic consumption and export by more than 35 percent, the Secretary shall so proclaim not later than May 15 prior to the beginning of such marketing year, and that, during the marketing year, a compulsory national marketing quota shall be in effect with respect to the marketing [p116] of wheat. [n8] Between the issuance of the proclamation and June 10, the Secretary must, however, conduct a referendum of farmers who will be subject to the quota, to determine whether they favor or oppose it; and, if more than one-third of the farmers voting in the referendum do oppose, the Secretary must, prior to the effective date of the quota, by proclamation suspend its operation. [n9]
should not be applied to the appellee because, [p117] as so applied, it was retroactive, and in violation of the Fifth Amendment, and, alternatively, because the equities of the case so required. 43 F.Supp. 1017. Its Judgment permanently enjoined appellants from collecting a marketing penalty of more than 15 cents a bushel on the farm marketing excess of appellee's 1941 wheat crop, from subjecting appellee's entire 1941 crop to a lien for the payment of the penalty, and from collecting a 15-cent penalty except in accordance with the provisions of § 339 of the Act as that section stood prior to the amendment of May 26, 1941. [n10] The Secretary and his codefendants have appealed. [n11]
The holding of the court below that the Secretary's speech invalidated the referendum is manifest error. Read as a whole and in the context of world events that constituted his principal theme, the penalties of which he spoke were more likely those in the form of ruinously low prices resulting from the excess supply, rather than the penalties prescribed in the Act. But, under any interpretation, the speech cannot be given the effect of invalidating the referendum. There is no evidence that any voter put upon the Secretary's words the interpretation that impressed the court below or was in any way misled. There is no showing that the speech influenced the outcome of the referendum. The record, in fact, does not show that any, and does not suggest a basis for even a guess as to how many, of the voting farmers dropped work to listen to "Wheat Farmers and the Battle for [p118] Democracy" at 11:30 in the morning of May 19th, which was a busy hour in one of the busiest of seasons. If this discourse intended reference to this legislation at all, it was, of course, a public Act, whose terms were readily available, and the speech did not purport to be an exposition of its provisions.
It is urged that, under the Commerce Clause of the Constitution, Article I, § 8, clause 3, Congress does not possess the power it has in this instance sought to exercise. The question would merit little consideration, since our decision in United States v. Darby, 312 U.S. 100, [n12] sustaining the federal power to regulate production of goods for commerce, except for the fact that this Act extends federal regulation to production not intended in any part for commerce, but wholly for consumption on the farm. The Act includes a definition of "market" and its derivatives, so that, as related to wheat, in addition to its conventional meaning, it also means to dispose of
by feeding (in any [p119] form) to poultry or livestock which, or the products of which, are sold, bartered, or exchanged, or to be so disposed of. [n13]
Appellee says that this is a regulation of production and consumption of wheat. Such activities are, he urges, beyond the reach of Congressional power under the Commerce Clause, since they are local in character, and their effects upon interstate commerce are, at most, "indirect." In answer, the Government argues that the statute regulates neither production nor consumption, but only marketing, and, in the alternative, that, if the Act does go beyond the regulation of marketing, it is sustainable as a "necessary and proper" [n15] implementation of the power of Congress over interstate commerce.
The Government's concern lest the Act be held to be a regulation of production or consumption, rather than of marketing, is attributable to a few dicta and decisions of this Court which might be understood to lay it down that activities such as "production," "manufacturing," and [p120] "mining" are strictly "local" and, except in special circumstances which are not present here, cannot be regulated under the commerce power because their effects upon interstate commerce are, as matter of law, only "indirect." [n16] Even today, when this power has been held to have great latitude, there is no decision of this Court that such activities may be regulated where no part of the product is intended for interstate commerce or intermingled with the subjects thereof. We believe that a review of the course of decision under the Commerce Clause will make plain, however, that questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as "production" and "indirect" and foreclose consideration of the actual effects of the activity in question upon interstate commerce.
For nearly a century, however, decisions of this Court under the Commerce Clause dealt rarely with questions of what Congress might do in the exercise of its granted power under the Clause, and almost entirely with the permissibility of state activity which it was claimed discriminated against or burdened interstate commerce. During this period, there was perhaps little occasion for the affirmative exercise of the commerce power, and the influence of the Clause on American life and law was a negative one, resulting almost wholly from its operation as a restraint upon the powers of the states. In discussion and decision, the point of reference, instead of being what was "necessary and proper" to the exercise by Congress of its granted power, was often some concept of sovereignty thought to be implicit in the status of statehood. Certain activities such as "production," "manufacturing," and "mining" were occasionally said to be within the province of state governments and beyond the power of Congress under the Commerce Clause. [n17]
It was not until 1887, with the enactment of the Interstate Commerce Act, [n18] that the interstate commerce power began to exert positive influence in American law and life. This first important federal resort to the commerce power was followed in 1890 by the Sherman Anti-Trust Act [n19] and, thereafter, mainly after 1903, by many others. These statutes ushered in new phases of adjudication, which required the Court to approach the interpretation of the Commerce Clause in the light of an actual exercise by Congress of its power thereunder.
When it first dealt with this new legislation, the Court adhered to its earlier pronouncements, and allowed but [p122] little scope to the power of Congress. United States v. Knight Co., 156 U.S. 1. [n20] These earlier pronouncements also played an important part in several.of the five cases in which this Court later held that Acts of Congress under the Commerce Clause were in excess of its power. [n21]
Not long after the decision of United States v. Knight Co., supra, Mr. Justice Holmes, in sustaining the exercise of national power over intrastate activity, stated for the Court that "commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business." Swift & Co. v. United States, 196 U.S. 375, 398. It was soon demonstrated that the effects of many kinds of intrastate activity upon interstate commerce were such as to make them a proper subject of federal regulation. [n22] In some cases sustaining the exercise of federal power over intrastate matters, the term "direct" [p123] was used for the purpose of stating, rather than of reaching, a result; [n23] in others, it was treated as synonymous with "substantial" or "material"; [n24] and in others it was not used at all. [n25] Of late, its use has been abandoned in cases dealing with questions of federal power under the Commerce Clause.
The Court's recognition of the relevance of the economic effects in the application of the Commerce Clause, exemplified [p124] by this statement, has made the mechanical application of legal formulas no longer feasible. Once an economic measure of the reach of the power granted to Congress in the Commerce Clause is accepted, questions of federal power cannot be decided simply by finding the activity in question to be "production," nor can consideration of its economic effects be foreclosed by calling them "indirect." The present Chief Justice has said in summary of the present state of the law:
Whether the subject of the regulation in question was "production," "consumption," or "marketing" is, therefore, not material for purposes of deciding the question of federal power before us. That an activity is of local character may help in a doubtful case to determine whether Congress intended to reach it. [n26] The same consideration might help in determining whether, in the absence of Congressional action, it would be permissible for the state [p125] to exert its power on the subject matter, even though, in so doing, it to some degree affected interstate commerce. But even if appellee's activity be local, and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as "direct" or "indirect."
Many countries, both importing and exporting, have sought to modify the impact of the world market conditions on their own economy. Importing countries have taken measures to stimulate production and self-sufficiency. The four large exporting countries of Argentina, [p126] Australia, Canada, and the United States have all undertaken various programs for the relief of growers. Such measures have been designed, in part at least, to protect the domestic price received by producers. Such plans have generally evolved towards control by the central government. [n27]
Differences in farming conditions, however, make these benefits mean different things to different wheat growers. There are several large areas of specialization in wheat, and the concentration on this crop reaches 27 percent of the crop land, and the average harvest runs as high as [p127] 155 acres. Except for some use of wheat as stock feed and for seed, the practice is to sell the crop for cash. Wheat from such areas constitutes the bulk of the interstate commerce therein.
The maintenance by government regulation of a price for wheat undoubtedly can be accomplished as effectively by sustaining or increasing the demand as by limiting the supply. The effect of the statute before us is to restrict the amount which may be produced for market and the extent, as well, to which one may forestall resort to the market by producing to meet his own needs. That appellee's own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the [p128] scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial. Labor Board v. Fairblatt, 306 U.S. 601, 606 et seq.; United States v. Darby supra at 123.
The statute is also challenged as a deprivation of property without due process of law contrary to the Fifth Amendment, both because of its regulatory effect on the appellee and because of its alleged retroactive effect. The court below sustained the plea on the ground of forbidden retroactivity, "or, in the alternative, that the equities of the case as shown by the record favor the plaintiff." 43 F.Supp. 1017, 1019. An Act of Congress is not to be refused application by the courts as arbitrary and capricious and forbidden by the Due Process Clause merely [p130] because it is deemed in a particular case to work an inequitable result.
We do not agree. In its effort to control total supply, the Government gave the farmer a choice which was, of course, designed to encourage cooperation and discourage noncooperation. The farmer who planted within his allotment was, in effect, guaranteed a minimum return much above what his wheat would have brought if sold on a world market basis. Exemption from the applicability of quotas was made in favor of small producers. [n30] The farmer who produced in excess of his quota might escape penalty by delivering his wheat to the Secretary, or by storing it with the privilege of sale without penalty in a later year to fill out his quota, or irrespective of quotas if they are no longer in effect, and he could obtain a loan of 60 percent of the rate for cooperators, or about 59 cents a bushel, on so much of his wheat as would be subject to penalty if marketed. [n31] Finally, he might make other disposition of his wheat, subject to the penalty. It is agreed [p131] that, as the result of the wheat programs, he is able to market his wheat at a price "far above any world price based on the natural reaction of supply and demand." We can hardly find a denial of due process in these circumstances, particularly since it is even doubtful that appellee's burdens under the program outweigh his benefits. It is hardly lack of due process for the Government to regulate that which it subsidizes.
It is not to be denied that, between seed time and harvest, important changes were made in the Act which affected the desirability and advantage of planting the excess acreage. The law, as it stood when the appellee planted his crop, made the quota for his farm the normal or the actual production of the acreage allotment, whichever was greater, plus any carry-over wheat that he could have marketed without penalty in the preceding marketing year. [n32] The Act also provided that the farmer who, while quotas were in effect, marketed wheat in excess of the quota for the farm on which it was produced should be subject to a penalty of 15 cents a bushel on the excess so marketed. [n33] Marketing of wheat was defined as including disposition "by feeding (in any form) to poultry or livestock which, or the products of which, are sold, bartered, or exchanged, . . ." [n34] The amendment of May 26, [p132] 1941, made before the appellee had harvested the growing crop, changed the quota and penalty provisions. The quota for each farm became the actual production of acreage planted to wheat, less the normal or the actual production, whichever was smaller, of any excess acreage. [n35] Wheat in excess of this quota, known as the "farm marketing excess" and declared by the amendment to be "regarded as available for marketing," was subjected to a penalty fixed at 50 percent of the basic loan rate for cooperators, [n36] or 49 cents, instead of the penalty of 15 cents which obtained at the time of planting. At the same time, there was authorized an increase in the amount of the loan which might be made to noncooperators such as the appellee upon wheat which "would be subject to penalty if marketed" from about 34 cents per bushel to about 59 cents. [n37] The entire crop was subjected by the amendment to a lien for the payment of the penalty.
The penalty provided by the amendment can be postponed or avoided only by storing the farm marketing excess according to regulations promulgated by the Secretary or by delivering it to him without compensation; [p133] and the penalty is incurred and becomes due on threshing. [n38] Thus, the penalty was contingent upon an act which appellee committed not before, but after, the enactment of the statute, and, had he chosen to cut his excess and cure it or feed it as hay, or to reap and feed it with the head and straw together, no penalty would have been demanded. Such manner of consumption is not uncommon. Only when he threshed, and thereby made it a part of the bulk of wheat overhanging the market, did he become subject to penalty. He has made no effort to show that the value of his excess wheat consumed without threshing was less than it would have been had it been threshed while subject to the statutory provisions in force at the time of planting. Concurrently with the increase in the amount of the penalty, Congress authorized a substantial increase in the amount of the loan which might be made to cooperators upon stored farm marketing excess wheat. That appellee is the worse off for the aggregate of this legislation does not appear; it only appears that, if he could get all that the Government gives and do nothing that the Government asks, he would be better off than this law allows. To deny him this is not to deny him due process of law. Cf. Mulford v. Smith, 307 U.S. 38.
1. 55 Stat. 203, 7 U.S.C. (Supp. No. I) § 1340.
2. 52 Stat. 31, as amended, 7 U.S.C. § 1281 et seq.
3. Because of the conclusion reached as to the merits, we need not consider the question whether these appellants would be proper if our decision were otherwise.
4. Wheat -- 507, §§ 728.240, 728.248, 6 Federal Register 2695, 2699-2701.
5. § 331, 7 U.S.C. § 1331.
6. § 335, 7 U.S.C. § 1335.
7. §§ 302(b)(h), 303, 7 U.S.C. §§ 1302(b)(h), 1303; § 10 of the amendment of May 26, 1941, 7 U.S.C. (Supp. I), § 1340(10).
8. § 335(a), 7 U.S.C. § 1335(a).
9. § 336, 7 U.S.C. § 1336.
10. 7 U.S.C. § 1339. This imposed a penalty of 15› per bushel upon wheat marketed in excess of the farm marketing quota while such quota was in effect. See also amendments of July 26, 1939, 53 Stat. 1126, 7 U.S.C. § 1335(c), and of July 2, 1940, 54 Stat. 727, 7 U.S.C. § 1301(b)(6)(A), (B).
11. 50 Stat. 752-753, § 3, 28 U.S.C. § 380a.
12. See also Gray v. Powell, 314 U.S. 402; United States v. Wrightwood Dairy Co., 315 U.S. 110; Cloverleaf Co. v. Patterson, 315 U.S. 148; Kirschbaum Co. v. Walling, 316 U.S. 517; Overnight Transportation Co. v. Missel, 316 U.S. 572.
13. 54 Stat. 727, 7 U.S.C. § 1301(b)(6)(A), (B).
14. §§ 1, 2, of the amendment of May 26, 1941; Wheat -- 507, § 728.251, 6 Federal Register 2695, 2701.
15. Constitution, Article I, § 8, cl. 18.
16. After discussing and affirming the cases stating that such activities were "local," and could be regulated under the Commerce Clause only if by virtue of special circumstances their effects upon interstate commerce were "direct," the opinion of the Court in Carter v. Carter Coal Co., 298 U.S. 238, 308, stated that:
17. Veazie v. Moor, 14 How. 568, 573-574; Kidd v. Pearson, 128 U.S. 222.
18. 24 Stat. 379, 49 U.S.C. § 1 et seq.
19. 26 Stat. 209, 15 U.S.C. § 1 et seq.
20. See also Hopkins v. United States, 171 U.S. 578; Anderson v. United States, 171 U.S. 604.
21. Employers' Liability Cases, 207 U.S. 463; Hammer v. Dagenhart, 247 U.S. 251; Railroad Retirement Board v. Alton R. Co., 295 U.S. 330; Schechter Corp. v. United States, 295 U.S. 495; Carter v. Carter Coal Co., 298 U.S. 238; cf. United States v. Dewitt, 9 Wall. 41; Trade-Mark Cases, 100 U.S. 82; Hill v. Wallace, 259 U.S. 44; Heisler v. Thomas Colliery Co., 260 U.S. 245, 259-260; Oliver Iron Co. v. Lord, 262 U.S. 172, 178-179; Utah Power & Light Co. v. Pfost, 286 U.S. 165.
22. Northern Securities Co. v. United States, 193 U.S. 197; Swift & Co. v. United States, supra; Loewe v.Lawlor, 208 U.S. 274; Baltimore & Ohio R. Co. v. Interstate Commerce Commission, 221 U.S. 612; Southern Ry. Co. v. United States, 222 U.S. 20; Second Employers' Liability Cases, 223 U.S. 1; United States v. Patten, 226 U.S. 525.
23. United Leather Workers v. Herkert Co., 265 U.S. 457, 471; cf. Apex Hosiery Co. v. Leader, 310 U.S. 469, 511; Di Santo v. Pennsylvania, 273 U.S. 34, 44 (dissent); Northern Securities Co. v. United States, 193 U.S. 197, 395; Standard Oil Co. v. United States, 221 U.S. 1, 66-69.
24. In Santa Cruz Co. v. Labor Board, 303 U.S. 453, 466-467, Chief Justice Hughes said:
25. Baltimore & Ohio R. Co. v. Interstate Commerce Commission, 221 U.S. 612; Second Employers' Liability Cases, 223 U.S. l; Interstate Commerce Commission v. Goodrich Transit Co., 224 U.S. 194.
26. Cf. Federal Trade Commission v. Bunte Bros., 312 U.S. 349.
27. It is interesting to note that all of these have federated systems of government, not, of course, without important differences. In all of them, wheat regulation is by the national government. In Argentina, wheat may be purchased only from the national Grain Board. A condition of sale to the Board, which buys at pegged prices, is the producer's agreement to become subject to restrictions on planting. See Nolan, Argentine Grain Price Guaranty, Foreign Agriculture (Office of Foreign Agricultural Relations, Department of Agriculture) May, 1942, pp. 185, 202. The Australian system of regulation includes the licensing of growers, who may not sow more than the amount licensed, and who may be compelled to cut part of their crops for hay if a heavy crop is in prospect. See Wright, Australian Wheat Stabilization, Foreign Agriculture (Office of Foreign Agricultural Relations, Depart ment of Agriculture) September, 1942, pp. 329, 336. The Canadian Wheat Board has wide control over the marketing of wheat by the individual producer. 4 Geo. VI, c. 25, § 5. Canadian wheat has also been the subject of numerous Orders in Council. E.g., 6 Proclamations and Orders in Council (1942) 183, which gives the Wheat Board full control of sale, delivery, milling and disposition by any person or individual. See also Wheat Acreage Reduction Act, 1942, 6 Geo. VI, c. 10.
28. Swift & Co. v. United States, 196 U.S. 375; Stafford v. Wallace, 258 U.S. 495; Chicago Board of Trade v. Olsen, 262 U.S. l; Coronado Coal Co. v. United Mine Workers, 268 U.S. 295; United States v. Trenton Potteries Co., 273 U.S. 392; Tagg Bros. & Moorhead v. United States, 280 U.S. 420; Standard Oil Co. of Indiana v. United States, 283 U.S. 163; Currin v. Wallace, 306 U.S. l; Mulford v. Smith, 307 U.S. 38; United States v. Rock Royal Cooperative, supra; United States v. Socony-Vacuum Oil Co., 310 U.S. 150; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381; United States v. Darby, supra; United States v. Wrightwood Dairy Co., supra; Federal Power Commission v. Pipeline Co., 315 U.S. 575.
29. Cf. M'Culloch v. Maryland, 4 Wheat. 316, 413-415, 435-436; Gibbons v. Ogden, supra at 197; Stafford v. Wallace, 258 U.S. 495, 521; Chicago Board of Trade v. Olsen, 262 U.S. 1, 37; Helvering v. Gerhardt, 304 U.S. 405, 412.
30. Section 7 of the amendment of May 26, 1941 provided that a farm marketing quota should not be applicable to any farm on which the acreage planted to wheat is not in excess of fifteen acres. When the appellee planted his wheat the quota was inapplicable to any farm on which the normal production of the acreage planted to wheat was less than 200 bushels. § 335(d) of the Agricultural Adjustment Act of 1938, as amended by 54 Stat. 232.
31. §§ 6, 10(c) of the amendment of May 26, 1941.
32. § 335(c) as amended July 26, 1939, 53 Stat. 1126, 7 U.S.C. § 1335(c).
33. § 339, 7 U.S.C. § 1339.
34. § 301(b)(6)(A), (B), as amended July 2, 1940, 54 Stat. 727, 7 U.S.C. § 1301(b)(6)(A), (B).
35. By an amendment of December 26, 1941, 55 Stat. 872, effective as of May 26, 1941, it was provided that the farm marketing excess should not be larger than the amount by which the actual production exceeds the normal production of the farm wheat acreage allotment, if the producer establishes such actual production to the satisfaction of the Secretary, provision being made for adjustment of the penalty in the event of a downward adjustment in the amount of the farm marketing excess.
36. §§ 1, 2, 3 of the amendment of May 26, 1941.
37. Section 302(b) had provided for a loan to noncooperators of 60% of the basic loan rate for cooperators, which in 1940 was 64›. See United States Department of Agriculture Press Release, May 20, 1940. The same percentage was employed in § 10(c) of the amendment of May 26, 1941, and the increase in the amount of the loan is the result of an increase in the basic loan rate effected by § 10(a) of the amendment.
38. Wheat -- 507, § 728.251(b), 6 Federal Register 2695, 2701.