Court Opinion

ID: 9733340
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:03:49.490969+00
Date Added: 2024-06-11T18:26:40.652667
License: Public Domain

Hall, J.
(dissenting). The important issue in this ease is whether New Jersey may validly fix the minimum price for the sale of milk and milk products in this state by a processor-dealer (National) to a Pennsylvania customer (Penn Eruit) *490for transportation and resale by that customer to consumers through its stores in that state.
There is no question but that the ultimate sales to consumers in Pennsylvania comply with the laws of that state. Pennsylvania has specifically held that the purchases from appellant in New Jersey violate no law of Pennsylvania and so do not adversely affect any protected interest of that state. Milk Control Commission v. Penn Fruit Co., 410 Pa. 242, 188 A. 2d 705 (Sup. Ct. 1963).
The milk processed by appellant at its New Jersey plant is produced 29% in this State and the remaining 71% in Maryland, Delaware and Pennsylvania, with the greatest proportion coming from Maryland. (188 A. 2d, at pp. 706-707.) Milk and milk products processed in appellant’s plants in other states and brought to the New Jersey plant for distribution to customers in New Jersey and Pennsylvania are produced in states other than New Jersey. There is no contention that the original producers did not receive from National the price required to be paid them by the laws of the state of production and there is no evidence that the payment of such prices to New Jersey producers in the future would be endangered by reason of the price and manner by which National has been selling to Penn Eruit in New Jersey.
Nor do I see any justification for respondent’s conclusion that the appellant’s method of using its New Jersey plant for distribution in New Jersey and Pennsylvania of all its milk products, no matter where processed or produced, was not followed for a legitimate purpose but as a subterfuge to attempt to evade milk control regulations of New Jersey and Pennsylvania. Such an evil intent should never be ascribed without clear proof. On the contrary, it seems evident to me that appellant’s method of doing business is entirely proper and designed to accomplish efficiency and economy in accordance with its business judgment. There is eoncededly no evidence that Penn Eruit has transported any of the milk, purchased from National and taken to Pennsylvania, back into New Jersey for retail sale in its stores here nor should there *491be any innuendo that it intends so to do in the future. Of course, it undoubtedly adopted deliberately the present means of purchasing milk from appellant in New Jersey for its Pennsylvania stores for economic reasons of its own; it has a perfect right to do that and is not to be condemned for it unless the price paid violates some valid and constitutionally applicable law or regulation of this State. That Penn Eruit may obtain an economic advantage over its Pennsylvania competitors is not relevant. The situation is no different from that where, for example, a New Jersey processor-dealer purchases milk produced in another state where the prescribed minimum price to the producer is lower than that required to be paid by his competitors who obtain their milk from New Jersey producers. This he may not be prevented from doing. Baldwin v. G. A. F. Seelig, 294 U. S. 511, 55 S. Ct. 497, 79 L. Ed. 1032 (1935). See also Highland Farms Dairy v. Agnew, 300 U. S. 608, 57 S. Ct. 549, 81 L. Ed. 835 (1937).
The preamble to the New Jersey Milk Control Act, N. J. S. A. 4:12A-1, et seq., L. 1941, c. 274, pp. 713-714, recites (as did the original statute, L. 1933, c. 169) a legislative declaration of emergency affecting the milk industry of the State (to continue until the Legislature designates the termination thereof) and the necessity of control, “in the interest of the health and welfare of the citizens of this State * * * to prevent possible curtailment of a sufficient supply of fresh, wholesome, sanitary milk for our citizens * * *.” It particularizes by stating the existence or threat of unfair, unjust, destructive or demoralizing practices 'likely to result in the demoralization of the agricultural interests of this State engaged in the production of milk” and prescribes the key to regulation by declaring the policy and intent of the statute to be to prevent such practices “by providing a reasonable return for the milk producer * * *,” i. e., the New Jersey farmer producing milk.
The provisions of the statute with which we are concerned, empowering the Director of the Office of Milk Industry to fix prices, go beyond the preamble. N.J.S.A. 4:12A-22. This *492section authorizes the fixing of minimum prices to be paid to the producer (now supplanted in North Jersey by a federal marketing area order and about to be supplanted in the rest of the State by the promulgation of a similar order), to be charged by milk dealers to other milk dealers, processors, sub-dealers and stores, to be charged by processors to subdealers, to be charged by subdealers to stores and to be charged to consumers' under various methods of distribution, “as will best insure a sufficient quantity of fresh, pure and wholesome milk to the inhabitants of this State.” (Emphasis supplied) In fixing such prices, “[t]he director may take into consideration * * * the amount necessary to yield a reasonable return to the producer and to the milk dealer, processor or subdealer.” (Emphasis supplied)
The result has been the establishment of an octopus-like price control structure, which, it may be parenthetically observed, extends considerably beyond that now in force in the neighboring states of New York, and, to some extent, that in effect in Pennsylvania.1 Its nature and operative effect have important relation to this case. The minimum price paid the New Jersey farmer, the intended basic beneficiary of the law, by a dealer is the same no matter how his milk is distributed to the ultimate fluid milk consumer. The price the dealer-processor has to charge varies greatly, however, depending upon the method of distribution. Taking the prices involved in this case with respect to a quart of Grade A milk in the particular marketing area, as prescribed by *493Order 60-2, if the dealer sells directly to a store, he must charge a minimum delivered price of 27 cents, the same price a subdealer must charge a store. If he sells to a sub-dealer, the minimum price is only 22 cents, including delivery, with a reduction for cartage allowance if the sub-dealer picks up his milk at the dealer’s depot. This is the price at which National sold to Penn Eruit.2 If the sub-dealer sells to a store, the minimum is the afore-mentioned 27 cents. The minimum price a store must charge the consumer, whether it buys from a dealer or subdealer, is 29 cents. Home delivery, by either dealer or subdealer, carries a minimum of 3014 cents.
It is plain to see that these classifications result in subsidization of the subdealer at the expense of the consumer who wishes to purchase milk at a store, the cheapest possible outlet. This, the Director candidly conceded at oral argument. The 22-cent dealer-subdealer price, less cartage allowance, is presumably based on a fair return to the dealer. The dealer-store price of 27 cents gives the dealer an additional profit of 5 cents, less the cost of delivery to the store, in order that the subdealer-middleman may remain in business and make a profit on his wholesale store sales and retail home deliveries. I have strong doubt that this differential is constitutionally valid, even from an intrastate point of view. See Lamport Dairy Farm,, Inc. v. Hoffman, 37 N. J. 598 (1962). Beside state constitutional questions, Eederal equal protection may be involved as well as whatever is left of economic substantive due process. As to the latter, a state police power law or regulation must not only be reasonable, but “the means selected shall have a real and substantial relation to the object sought to be attained.” Nebbia v. New York, 291 U. S. 502, 525, 54 S. Ct. 505, 511, 78 L. Ed. 940, 950 (1934). (While the question was not raised by appellant’s brief in this fashion, it was explored at oral argument.) *494But if valid as far as intrastate transactions are concerned, the matter still has bearing on the question of federal uneon-stitutionality with respect to interstate transactions.
As has been indicated, the New Jersey producer gets no more or no less for his milk destined for fluid consumption whether his dealer, after processing, sells it to a New Jersey subdealer or store or delivers it himself to a family doorstep, or whether the dealer sells it for distribution without the State. And since the Legislature has not even attempted to provide that the dealer may not sell his processed milk as he pleases, as far as destination or method of distribution is concerned, interstate sales cannot be said to adversely affect a sufficient supply of fresh, wholesome, sanitary milk for New Jersey citizens. It would certainly seem that no New Jersey producer, subdealer, store or consumer can be injured, directly or indirectly, by the price which a dealer charges for milk which goes to another state for distribution. No object of the bounty, so to speak, of the New Jersey regulatory scheme being harmed thereby, it consequently should follow that New Jersey has no realistic, legitimate interest warranting protection by state price regulation of such a sale.
The majority assumes, as is the fact, that New Jersey’s insistence on National’s charging Penn Fruit its dealer-store price for what is obviously a transaction in interstate commerce, no matter where title may technically pass or delivery take place, is a state regulation of such commerce. I agree, of course, that not every such regulation is an unconstitutional burden by any means, for it is axiomatic by this time not only that the burden must be undue, but also that ordinarily state control over subjects relating to the health, life and safety of its citizens will not be struck down even though it may affect the commerce of the country. The latest expression of the prevailing approach is found in Head v. New Mexico Board of Examiners in Optometry, 374 U. S. 434, 83 S. Ct. 1759, 10 L. Ed. 2d 983 (1963). But, as Justice Brennan mentioned in his concurring opinion in the same case, "[s]uch regulation might well exceed the scope of *495the State’s legitimate interests * * *. Cf. Bibb v. Navajo Freight Lines, Inc., 359 U. S. 520, 79 S. Ct. 962, 3 L. Ed. 2d 1003; Southern Pacific Co. v. Arizona ex. rel. Sullivan, 325 U. S. 761, 775, 65 S. Ct. 1515, 1523, 89 L. Ed. 1915.” 83 S. Ct., at p. 1772. If it does, and is more than an incidental burden, it is violative of the commerce clause. As previously pointed out, in my opinion, application of New Jersey’s price regulations to the interstate sale of milk here involved does exceed the scope of this state’s legitimate interest and, in fact, serves no worthy local interest at all. Its effect is certainly more than incidental. I take it the clear implication of Highland Farms Dairy v. Agnew, supra, 300 U. S. 608, 57 S. Ct. 549, 81 L. Ed. 835 is that the sale before us is not properly subject to price regulation by New Jersey.
I do not think it can be soundly said that this State’s price regulation of the National-Penn Eruit sale is saved because, if it were not, administrative difficulties would arise in verifying the interstate terminus of milk so sold and some of it might be brought back to New Jersey stores, which would thereby obtain it at less than the fixed dealer-store price for intrastate sales of that character. The case is not factually like Milk Control Board v. Eisenberg Farm Products, 306 U. S. 346, 59 S. Ct. 528, 83 L. Ed. 752 (1939), relied upon to support the thesis. There the matter of payment of state-fixed producer prices for milk being shipped directly to another state was involved — a subject in which the producer state had a vital interest, for the economic welfare of all its dairy farmers. That in itself might well be enough to sustain a price regulation at that level applicable no matter what the destination of the milk. In any event, differing scales of payment obviously would make it practically impossible to assure producers of the state-fixed minimum for their intrastate milk. This is not true here. Subterfuge should not be presumed as the probable course of conduct. The whole thesis seems in any event to be so trifling as not to warrant recognition.
It is further suggested that, somehow, the dealer-store and dealer-subdealer price dichotomy redounds to the indirect and *496ultimate benefit of the New Jersey producer, rather than just to the subdealer. I fail to follow the thought and I have earlier pointed out why I believe there is no realistic relationship. But, considering the idea more broadly, the answer to this kind of argument was best stated by Justice Cardozo in Baldwin v. G. A. F. Seelig, supra, 294 U. S. 511, 55 S. Ct. 497, 79 L. Ed. 1032, where, in striking down a New York provision prohibiting the sale of milk bought outside the state unless the price paid to the producers was one that would be lawful upon a like transaction within the state, he said;
“The argument is pressed upon us, however, that the end to be served by the Milk Control Act is something more than the economic welfare of the farmers or of any other class or classes. The end to be served is the maintenance of a regular and adequate supply of pure and wholesome milk, the supply being put in jeopardy when the farmers of the state are unable to earn a living income. Nebbia v. New York, [291 U. S. 502, 54 S. Ct. 505, 78 L. Ed. 940, 89 A. L. R. 1469], supra. Price security, we are told, is only a special form of sanitary security; the economic motive is secondary and subordinate; the state intervenes to make its inhabitants healthy, and not to make them rich. On that assumption we are asked to say that intervention will be upheld as a valid exercise by the state of its internal police power, though there is an incidental obstruction to commerce between one state and another. This would be to eat up the rule under the guise of an exception. Economic welfare is always related to health, for there can be no health if men are starving. Let such an exception be admitted, and all that a state will have to do in times of stress and strain is to say that its farmers and merchants and workmen must be protected against competition from without, lest they go upon the poor relief lists or perish altogether. To give entrance to that excuse would be to invite a speedy end of our national solidarity. The Constitution was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.” (291 U. S. 502, 54 S. Ct. 505, 79 L. Ed., at p. 1038).3
*497I would reverse the determination and order of the Director finding appellant guilty of selling milk to Penn Emit below the minimum price.
For modification — Chief Justice Weintraub, and Justices Jacobs, Erancis, Proctor, Schbttiito and Haneman — 6.
For reversal — Justice Hall — 1.

 For a comprehensive review and analysis of state milk price regulation, its history, basis and effect, see Note, “Government Regulation of Prices: A Study of Milk Control in Pennsylvania,” 109 U. Pa. L. Rev. 555 (1961). It is interesting to note that in recent years two states, Georgia and South Carolina, have declared their statutes unconstitutional on economic substantive due process grounds, ibid., at p. 566, and others have substantially modified or abandoned regulations, presumably because the scheme could not be made to work effectively or fairly. The upsetting interstate aspects of the industry, as well as the impact of superseding federal marketing area orders fixing producer prices, very probably has had a good deal to do with this change in attitude by many states in late years.

 I thoroughly agree with the majority that there is no sound basis for justifying this price, as conforming to New Jersey’s price schedule, on the thesis that Penn Fruit is, in effect, a subdealer.

 This contention was referred to in Read, supra, 83 S. Ct. 1759 as one “in which a state seeks to justify a statute as a health measure on the attenuated theory that the economic well being of a profession or industry will assure better performance in the public interest.” (Emphasis supplied) Baldwin is cited. 83 S. Ct., at p. 1762, 31 L. W., at p. 4644, n. 4.