Case Name: In the Matter of Mayflower Farms, Inc., Appellant, against Charles H. Baldwin, as Commissioner of Agriculture and Markets of the State of New York, et al., Respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1935-04-16
Citations: 267 N.Y. 9
Docket Number: 
Parties: In the Matter of Mayflower Farms, Inc., Appellant, against Charles H. Baldwin, as Commissioner of Agriculture and Markets of the State of New York, et al., Respondents.
Judges: 
Reporter: New York Reports
Volume: 267
Pages: 9–21

Head Matter:
In the Matter of Mayflower Farms, Inc., Appellant, against Charles H. Baldwin, as Commissioner of Agriculture and Markets of the State of New York, et al., Respondents.
(Argued February 25, 1935;
decided April 16, 1935.)
Seymour Ellenbogen and Bernard Ellenbogen for appellant.
Henry S. Manley for respondents.

Opinion:
Hubbs, J.
Appellant is a domestic corporation engaged in the sale of milk at wholesale to stores in New York city. It was organized in May, 1933. In April, 1934, it made application for a milk dealer's license. A hearing was held upon the application and it was found that appellant was engaged in selling an unadvertised brand of milk, that is, milk not having a well-advertised trade name. The application was denied for the reason that appellant had violated a price-fixing order by selling milk at the unadvertised price which was one cent per quart below the price fixed by respondent for the sale of milk having a well-advertised trade name. It was decided that as appellant was not engaged in the milk business on April 10, 1933, it was not entitled to avail itself of the one cent unadvertised price differential provided for in section 258-q of the Agriculture and Markets Law (Cons. Laws, ch. 69) which became effective April 1, 1934. Chapter 158, section 317, subdivision c, of the Laws of 1933, was substantially the same as chapter 126, section 2 (258-q), of the Laws of 1934, which reads as follows:
" It shall not be unlawful for any .milk dealer who [at the time this act shall take effect is] since April tenth, nineteen hundred thirty-three has been engaged continuously in the business of purchasing and handling milk not having a well advertised trade name in a city of more than one million inhabitants to sell fluid milk in bottles to stores in such city at a price not more than one cent per quart below the price of such milk sold to stores under a well advertised trade name, and such lower price shall also apply on sales from stores to consumers; provided that in no event shall the price of such milk not having a well advertised trade name, be more than one cent per quart below the minimum price fixed [by the board] for such sales to stores in such a city." .
The words in brackets were eliminated in the revision of the law in 1934 and the words in italics were added. The effect is to leave the date April 10th, 1933, the same in both enactments.
The sole constitutional question urged is that the provision of section 258-q allowing unadvertised dealers to sell milk at a lower price than advertised dealers, provided they were engaged in the business on April 10th, 1933, and preventing unadvertised dealers who became such subsequent to that date from selling at a lower price, is unconstitutional and void in that it violates section 1 of the 14th Amendment of the United States Constitution.
The constitutionality of the emergency legislation embodied in the milk regulation law, chapter 158 of the Laws of 1933, in various phases has been passed upon by the courts. People v. Nebbia (262 N. Y. 259; affd., 291 U. S. 502) passed upon the price fixing provision and held it to be constitutional. In Matter of Eisenberg Farms, Inc., v. Baldwin (265 N. Y. 662) this court decided that the differential clause in favor of co-operative associations which permitted them to pay to producers less than the price fixed by the Commission for milk was constitutional. The case of Borden's Farm Products Co. v. Baldwin (7 Fed. Supp. 352; reversed and remanded to the court to make findings of fact in 293 U. S. 194, without passing upon the constitutional question) involved the question of the constitutionality of the unadvertised differential provision in its entirety. The statutory court provided for by section 266 of the Judicial Code (28 U. S. C. A. § 380) held it to be constitutional in an opinion by Judge Learned Hand.
The opinions in those cases have stated in great detail the conditions in the milk producing and marketing business in the State at and prior to the date of the enactment in question. They call attention to the fact that the statute was enacted after careful and extended investigations by committees of the Legislature into the milk business as a whole. They point out the chaotic condition existing in the business and the injurious effect produced thereby upon the farmers of the State engaged in milk production, upon the public health and general welfare.
We do not feel called upon to restate the conditions so fully stated in those opinions. We confine our discussion to the single question of whether the Legislature exceeded its power in fixing a specific date, the date when the original statute became effective, April 10, 1933, as the date after which unadvertised dealers not in business at that time were prohibited by the effect of the act from selling milk at a price less than that at which advertised dealers were required to sell.
In New York city there are four large corporations engaged in the milk business. Their brands of milk are highly advertised and well known to all retail dealers and purchasers of milk. They have come to be known as the advertised companies. There were hundreds of small dealers who sold unadvertised brands and they are known as the unadvertised dealers. They purchase their milk from about 50,000 independent farmers. When the Legislature determined upon the policy of regulating and fixing the price at which milk could be sold it was confronted by the fact that the unadvertised dealers could not successfully compete with the advertised dealers, if required to sell their unadvertised milk at the same price at which the advertised dealers sold. Prior to that time the unadvertised dealers had sold milk about one cent per quart less than the price charged by advertised dealers. The market was familiar with that condition and as a result, farmers selling milk to the dealers had become divided into two classes, one selling to the advertised dealers which owned and operated large and extensive plants in favorable localities for collecting and shipping milk, and the other, known as independent farmers, selling to the unadvertised dealers, less favorably equipped, but still, on the whole, having large sums invested in their business. It was believed that the effect of establishing a uniform price at which milk should be sold by all dealers would be to drive the unadvertised dealers out of business and work a practical confiscation of their property. • That would also deprive about 50,000 farmers of a market for their milk and leave them unprotected. At the same time it would consolidate the entire milk business of New York city in the four large advertised companies.
To meet the situation, the Legislature enacted the provision allowing a differential price in favor of the unadvertised dealers and that provision has thus far been held to be constitutional. (Borden's Farm Products Co. v. Baldwin, supra.)
The effect of the act was to maintain the competitive position of the two classes of dealers in the same condition which existed before the enactment. Before the enactment, any person could go into the milk business at any time and sell his milk at any price at which he chose to sell it. The result had been that small dealers would attempt to break into the business by underselling which usually resulted in financial disaster to themselves and to the farmers from whom they had purchased their milk on credit. It also resulted in a general tendency to keep the price of milk paid to farmers down to a point where it demoralized the whole milk business. The primary purpose of the Legislature was to correct that condition by the establishment of a uniform fair price at which milk could be sold. We have held that the act in that respect was constitutional (People v. Nebbia, supra), although its practical effect would be, without the differential clause, to prevent new dealers from entering the field, as no new dealer could hope successfully to compete with the established advertised dealers selling well-known advertised brands.
Appellant does not question the power of the Legislature to provide for the fixing of a uniform price for the sale of milk, but argues that when it provided for fixing a uniform price and then because of the factual situation provided for a differential in favor of those unadvertised dealers then engaged in the business, it thereby in effect prohibited all others from engaging in the business as unadvertised dealers and exceeded its power. It urges that such limitation has no reasonable relation to the main purpose of the act but constitutes an arbitrary, discriminatory and unreasonable limitation which denies to it the equal protection of the law.
If the Legislature believed the limitation had a reasonable relation to the purpose which it desired to accomplish by the enactment and the facts reasonably justified that belief, then it acted within its jurisdiction and it is not for the courts to determine that it acted unwisely, although the effect of its action may deprive the appellant and others so situated from engaging in the milk business as unadvertised dealers during the emergency period specified in the act.
The Legislature in effect provided that all milk dealers must sell at a uniform price, but owing to the factual situation it also provided that those engaged in the business as unadvertised dealers at the date of the original enactment should have the benefit of the differential. The act does not prevent by its terms others from engaging in the business provided they sell at the uniform price, neither does it prevent others from becoming unadvertised dealers. It only has that effect during the period of the emergency specified in the act. We believe that the Legislature could have reasonably determined from the facts before it that new competition in the unadvertised class of dealers during the emergency period would have an injurious effect upon the result which it attempted to accomplish by the enactment.
It had before it evidence of the disastrous effect of unlimited competition in the business at the time of the enactment and prior thereto. It was attempting to stabilize the industry during a limited period only and it bad the authority to enact any law which it deemed advisable to accomplish that purpose, provided the law so enacted had a reasonable relation to that purpose.
The act not only had the effect of limiting to those engaged in the unadvertised milk business at the date of the first act the privilege of the differential, but it also prevented the large holding companies, known as advertised dealers, from dissolving those companies and permitting the subsidiary corporations thereof from engaging in the sale of milk in competition with the unadvertised dealers and enjoying the privilege of selling at one cent per quart less than the uniform price. It might reasonably anticipate such action on the part of the large holding companies. It might also reasonably foresee that such action would result in driving unadvertised dealers from the field, with great financial loss to them and to thousands of farmers who were dependent upon them for a market for their milk, thus tending to defeat the very purpose which the differential clause was enacted to prevent.
" The Constitution does not secure to anyone liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of the people" (pp. 538, 539). " If one embarks in a business which public interest demands shall be regulated, he must know regulation will ensue." (Nebbia v. New York, 291 U. S. 502, 534.)
We believe that the provision of the statute in question has a reasonable relation to the legislative purpose which was in itself legal and that it is neither arbitrary nor discriminatory.
The order should be affirmed, with costs.