Case Name: In the Matter of Edward G. Grimsteed, Jr., Petitioner, against Daniel J. Carey, as Commissioner of Agriculture and Markets of the State of New York, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1956-04-05
Citations: 1 A.D.2d 985
Docket Number: 
Parties: In the Matter of Edward G. Grimsteed, Jr., Petitioner, against Daniel J. Carey, as Commissioner of Agriculture and Markets of the State of New York, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 1
Pages: 985–988

Head Matter:
(April 5, 1956)
In the Matter of Edward G. Grimsteed, Jr., Petitioner, against Daniel J. Carey, as Commissioner of Agriculture and Markets of the State of New York, Respondent.

Opinion:
Memorandum by the Court.
This is a proceeding under article 78 of the Civil Practice Act to review the determination of the Commissioner of Agriculture and Markets denying petitioner's application to sell milk at wholesale and retail in the towns of Hastings, West Monroe and Constantia, and in the villages of Central Square and Cleveland, all in Oswego County. After a hearing, the commissioner denied petitioner's application mainly upon a finding that the granting of the license would tend to a destructive competition in a market already adequately served. (Agriculture and Markets Law, § 258-e.)
The area in which petitioner desires to distribute milk is largely rural in character, with a total population of approximately 6,000. There are three dealers now licensed to sell milk at wholesale and retail in the towns of Hastings and Constantia, two are licensed for the town of West Monroe and the village of Cleveland, and one dealer has permission to sell in the village of Central Square. These dealers are McMahon's of Central Square, Inc., Byrne Dairy, Inc., of Syracuse, Iseneker Dairy Inc. of Rome, Netherland Dairy Inc. of Syracuse and Arthur Van Ry of Constantia. Some indication of the limited volume of the business conducted by these dealers may be shown by reference to the amount of milk sold by two of them. In the three towns and two villages comprising the area involved, McMahon's sells daily 693 quarts at retail and 724 quarts at wholesale; in the village of Cleveland, Iseneker sells 600 quarts a week, both at retail and wholesale; and in the town of Constantia, its weekly sales are 720 quarts at retail and 420 quarts at wholesale.
All of the milk used by McMahon's is purchased from Byrne Dairy, Inc., and each day the milk is transported from Syracuse to a cooler in Central Square and thence distributed on routes. The Byrne plant at Syracuse has a capacity of 17,000 quarts for an eight-hour shift. At the time of the hearing, it was processing 13,000 quarts, or about 78% of capacity. McMahon's purchases 15% of the Byrne Dairy output. Petitioner estimates that he would sell 350 quarts daily if he were granted a license. His sales would be largely to customers now being served by other licensees. McMahon's and Byrne Dairy would lose customers. This would cause Byrne to operate at a still lower percentage of capacity and result in a higher unit cost of operation. Other licensees would also lose customers and be forced to operate at a higher unit cost.
The present highly competitive nature of the market as a whole, the rural character of much of the area involved, the comparatively small population in the area, the number of licensees serving it, the relationship between the present output and capacity of the Byrne plant, and the demonstrated increase in the unit cost of operations to licensees in the event the application is granted furnish the preponderance of evidence necessary to sustain the finding that granting the license would tend to a destructive competition. (Matter of Friendship Dairies v. Du Mond, 284 App. Div. 147; Matter of Jones v. Commissioner of Agriculture & Markets, 1 A D 2d 920.)
Denial of a new license on the basis of a tendency to a destructive competition has been specifically limited by the Legislature to eases where the " market [is] already adequately served". (Agriculture and Markets Law, § 258-c.) Whether the market was adequately served was an issue at the hearing. An inspector employed by the Department of Agriculture and Markets testified that he sampled opinion in the area for which petitioner seeks a license and found that there was general satisfaction with the milk delivered by the present dealers and no serious complaints about the service. Petitioner swore several witnesses who testified to specific instances of receiving a poor grade of milk and unsatisfactory service. However, on the whole record, we do not regard respondent's finding that the market is adequately served as being contrary to the weight of the evidence.
We find no merit to petitioner's contentions that the determination was influenced by factors which did not constitute statutory grounds for denial and that the administrative proceeding was conducted in an arbitrary and prejudicial manner and without due process of law.
Determination confirmed, without costs.