Case Name: FILBURN v. HELKE et al.
Court: United States District Court for the Southern District of Ohio
Jurisdiction: United States
Decision Date: 1942-03-14
Citations: 43 F. Supp. 1017
Docket Number: No. 118
Parties: FILBURN v. HELKE et al.
Judges: Before ALLEN, Circuit Judge, and NEVIN and DRUFFEL, District Judges.
Reporter: Federal Supplement
Volume: 43
Pages: 1017–1023

Head Matter:
FILBURN v. HELKE et al.
No. 118.
District Court, S. D. Ohio, W. D.
March 14, 1942.
Webb R. Clark and Harry N. Routzohn, both of Dayton, Ohio, for plaintiff.
Calvin Crawford, U. S. Atty., of Dayton, Ohio, and John S. L. Yost and W. Carroll Hunter, Sp. Assts. to the Atty. Gen., for defendants.
Before ALLEN, Circuit Judge, and NEVIN and DRUFFEL, District Judges.

Opinion:
DRUFFEL, District Judge.
The above entitled action was submitted to this three judge court organized undei Section 3 of the Act of August 24, 1937, 28 U.S.C.A. § 380a, after argument, upon the pleadings and agreed stipulation of facts from which it appears that plaintiff is a farmer who has been engaged in producing wheat among other products on a farm in Montgomery County, Ohio. Under the provisions of the Agricultural Adjustment Act of 1938, as amended, 7 U.S.C.A. § 1281 et seq., a wheat acreage allotment of 11.1 acres and a normal yield of 20.1 bushels an acre were established for plaintiff's farm in July, 1940, for the 1941 wheat crop.
In the fall of 1940 plaintiff planted 23 acres of wheat which produced in July, 1941, 462 bushels, which amounted to 239 bushels farm marketing excess over the fixed allotment. At the time of planting the acreage in excess of the allotment, Section 339 of the Act provided: "Any farmer who, while farm marketing quotas are in effect, markets wheat in excess of the farm marketing quota for the farm on which such wheat was produced, shall be subject to a penalty of 15 cents per bushel of the excess so marketed."
In due time, the defendant Claude R. Wickard, Secretary of Agriculture, pursuant to the Act, issued a proclamation relating to the national marketing quota, at the same time calling for a national referendum on May 31, 1941, of wheat farmers planting more than fifteen acres of wheat (fifteen acres or less are exempt from the Act) to approve or disapprove of the quota allotment, etc., and also issued instructions as to the referendum.
On May 19, 1941, Mr. Wickard made a radio address to the farmers of the United States, in which he strongly urged an affirmative vote of more than the necessary twodhirds of eligible wheat fanners in the national referendum, saying among other things:
" To make wise decisions, we need to know the facts. What then, in view of the vote on May 31, are some of the facts about wheat? For one thing, we have a record amount of old wheat on hand and a bumper crop in prospect. That is something to be looked at with satisfaction on one hand and with alarm on the other. Because of the uncertain world. situation, we deliberately planted several million extra acres of wheat this year. Farmers should not be penalized because they have provided insurance against shortages of food. The nation wants fanners safeguarded against unfair penalties. The nation also wants other protection given agriculture. As you all know, parity is one of the most important objectives of the national farm programs and will continue to be a goal,
"Only last week, the Senate and House sént to the White House a bill calling for an 85 percent of parity loan for wheat
"But no wheat loan will be made unless wheat farmers vote for marketing quotas and without the loan there is no hope for parity on wheat in 1941. So parity for wheat is up to the wheat farmers themselves.
"The law provides that wheat loans will not be made if wheat growers vote down marketing quotas. The continuance — or discontinuance. — of government loans on wheat is at stake in this referendum on May 31. To put it bluntly, no quotas, no loans. And, judging from prices in Canada, rejection of marketing quotas on May 31 would just about cut the price of wheat in this country in half.
"I wish that corn and wheat farmers were able to vote on marketing quotas before they plant their crops, instead of after-wards as is the case now. Cotton, tobacco, and rice farmers vote on quotas before they plant and I see no good reason for denying this privilege to wheat and corn growers. I am sorry that the legislation authorizing loans at 85 percent of parity did not change the time for voting on wheat and corn quotas. This provision was recommended by the Department of Agriculture and we plan to recommend it to Congress again. Yet the fact that the referendum on wheat quotas comes after the crop is almost ready for harvest in no way alters the significance of the vote."
In the national referendum 81% voted in favor'of the marketing quotas and 19% were opposed to the quotas.
On May 26, 1941, the bill referred to by Mr. Wickard, relating to wheat marketing quotas under the Act of 1938, as amended, was approved. The Act as thus amended provided for an increase in loans on wheat equal to 85% of the parity price of wheat. It also provided during any marketing year the quotas are in effect, the producer shall be subject to a penalty on the farm marketing excess at the rate of one-half of the basic rate of the loan on the commodity, and that the entire crop of wheat produced on the farm shall be subject to a lien in favor of the United States for the amount of the penalty.
Plaintiff for his cause of action complains that the excess of 239 bushels of wheat has been subjected to a penalty of 49 cents per bushel by the defendant county committee; that his entire crop of wheat is subject to a lien for the payment thereof, and unless paid he would be refused a marketing card, which is necessary for plaintiff to sell his crop of wheat.
By reason thereof plaintiff challenges the authority of the Secretary of Agriculture to construe said Act, as amended, retroactively as to the crop of wheat planted in the fall of 1940, and asserts that the referendum is invalid and the Act and amendments thereto are violative of Sections 4 and 9 of Article I of the Constitution and of the Fifth and Tenth Amendments thereto.
In the recent case of Mulford et al. v. Smith et al., 307 U.S. 38, 59 S.Ct. 648, 83 L.Ed. 1092, the Supreme Court considered questions relating to the claimed retroactive operation of the Tobacco Act, 7 U.S.C.A. § 1311 et seq., and upheld, the Act.
Upon analysis we believe the case at bar is clearly distinguishable from Mulford et al. v. Smith et al., aside from the difference in controlling provisions of the Wheat and Tobacco Acts, and should be placed in an entirely different category because of the circumstances surrounding the referendum and the fact that the law increasing the penalty was approved only five days prior to the national referendum held in forty wheat growing states.
Considering the fact that the law increasing the penalty to one-half of the 85% par ity loan and subjecting the entire wheat crop to a lien for the payment thereof became effective May 26, 1941, yet would be inoperative if more than one-third of the eligible wheat farmers opposed the quota in the May 31st referendum, it becomes important to determine whether or not the necessary two-thirds of the wheat farmers voluntarily voted affirmatively or were unintentionally misled in so voting in the referendum.
It is fully recognized by all that Congress has devoted much time in the past seve'ral years in a laudable effort to help the farmers, and as Mr. Wickard said: "parity is one of the most important objectives of the national farm programs and will continue to be a goal," and it is but natural that the several hundred thousands of wheat farmers, scattered all over the United States (559,630 voted), should look to the Secretary of Agriculture for advice and direction in a matter of such importance as the quota referendum, and when in his official capacity, the Secretary, in the nation-wide radio speech appealing for an affirmative vote for the quota, eleven days prior to the referendum, said: "To make wise decisions, we need to know the facts. Because of the uncertain world situation, we deliberately planted several million extra acres of wheat. Farmers should not be penalized because they have provided insurance against shortages of food," it would seem that the Secretary meant what he said and that the farmers voting affirmatively would not be penalized for the "deliberately planted" excess acreage beyond the law in effect at the time of planting. But the contrary was true, the bill to which Mr. Wickard referred greatly increased the penalty for the "deliberately planted" excess acreage and subjected the entire crop to a lien for the payment of the penalty.
Giving full credit to the Secretary for his zeal and his efforts to help the farmer to avoid ruinous wheat prices which he foresaw if the quota referendum failed, yet it would seem that the equities of the situation demanded that the Secretary also forewarn the farmers that in accepting the benefits of increased parity loans they were also subjecting themselves to increased penalties for the farm marketing excess.
In the Mulford et al. v. Smith et al., case, 307 U.S. 38, 46, and 47, 59 S.Ct. 648, 651, 83 L.Ed. 1092, the court say: "In the light of the fact that the appellants received notice of their quotas only a few days before the actual marketing season opened, the maintenance of actions based upon collection of the penalties would have been a practical impossibility. We are of opinion, therefore, that a case is stated for the interposition of a court of equity." Here but five days intervened between the time the law became effective and the favorable referendum which made it operable.
We have no precedent in point to guide us in a determination of the precise issues raised by the foregoing state of facts. However, in cases involving the validity of gift taxes a principle was approved which we think applicable here. The Supreme Court in Nichols v. Coolidge, 274 U.S. 531, 542, 47 S.Ct. 710, 714, 71 L.Ed. 1184, 52 A.L.R. 1081, say: "This court has recognized that a statute purporting to tax may be so arbitrary and capricious as to amount to confiscation and offend the Fifth Amendment" and in Welch v. Henry, 305 U.S. 134, 147, 59 S.Ct. 121, 125, 83 L.Ed. 87, 118 A.L.R. 1142, say: "In the cases in which this 'Court has held invalid the taxation of gifts made and completely vested before the enactment of the taxing statute, decision was rested on the ground that the nature or amount of the tax could not reasonably have been anticipated by the taxpayer at the time of the particular voluntary act which the statute later made the taxable event." (The voluntary act in the case at bar being the affirmative vote in the referendum.)
Under the circumstances we are obliged to hold that the amendment of May 26, 1941, 7 U.S.C.A. § 1330, 1340, in so far as it increased the penalty for the farm marketing excess over the fifteen cents per bushel prevailing at the time of planting and subjected the entire crop to a lien for the payment thereof, operated retroactively and that it amounts to a taking of plaintiff's property without due process, and also, or in the alternative, that the equities of the case as shown by the record favor the plaintiff.
In consideration whereof the court grants plaintiff's prayer to the extent that defendants be perpetually enjoined from collecting the penalty for the farm marketing excess over and above fifteen cents per bushel and from subjecting the entire crop to a lien for the payment thereof and from collecting said fifteen cents per bushel except in accordance with the provisions of Section 339 of the Agricultural Adjustment Act of 1938 as it was in effect prior to May 26, 1941.
In view of the foregoing we deem it unnecessary to pass on the other questions raised by plaintiff's bill of complaint. Brucker v. Fisher, 6 Cir., 49 F.2d 759-761; Piedmont & N. R. Co. v. Query, D.C., 56 F.2d 172-175.
NEVIN, District Judge, concurs.