Court Opinion

ID: 9624432
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:02:53.715454+00
Date Added: 2024-06-11T18:05:46.410131
License: Public Domain

WARNER, J.,
specially concurring.
The gist of the minority’s position is brought into sharp focus by the following question propounded by Mr. Justice Brand in his dissenting opinion, concurred in by Mr. Justice Lusk, and where it is asked: ‘ ‘ Can it be said that the defendant [director] can insure a reasonable return to the milk dealer if it is powerless to control the number of dealers who operate processing'plants in a given market area? * * *”
As I view the matter, the query so advanced by the minority presents the prime problem we are called upon to resolve in the instant appeal.
Having in mind the operating status of the applicant plaintiff, the question as presented assumes that the applicant dealer will utilize mill?; produced in the same production area from whence the marke't area *83customarily secures its quota of fluid milk for processing and distribution. In short, if plaintiff is licensed, there will be no disturbance in the pre-existing quotas of milk produced, processed or distributed by the applicant licensee in the market area in which he seeks to operate. Plaintiff merely offers to sell its “services”, as the word is hereinafter employed.
It is upon the minority’s question that I center my attention. In its correct answer, I submit, we will find justification for the conclusion of the majority.
It should be immediately apparent that the question is a challenge to the powers of the defendant director to stabilize the production and distribution of milk in a given area by the exercise of economic controls which have for their purpose the stifling of competition between dealers in that area, a concept which is tantamount to the creation of monopoly when applied.
It must also be evident to those who critically scan the opinions of the majority and minority that the fundamental point of separation centers around their respective interpretations of one of our relatively-recent decisions. The precedent which serves to divide us instead of pointing the way for united thought is State ex rel. Peterson v. Martin, 180 Or 459, 176 P2d 636, decided in 1947, with one judge dissenting. I shall hereinafter refer to it as the Martin case.
The clarity of the Martin holding is unfortunately obscured by certain irrelevant citations that account for much of the attendant confusion which contributes to the court’s present division. The thought of the majority concerning the Martin case is epitomized in the following statement:
“It is our belief that the defendant misconstrued the act when he entered his findings. He was not, according to our understanding, authorized to deny *84the application merely because he found that the Salem market area was receiving adequate service and that a grant of the plaintiff’s application would have an adverse effect upon present licensees— that is, the interveners. * * * Statements in State ex rel. Peterson v. Martin, supra, contrary to our holding in this case must be deemed withdrawn.”
With this statement I find myself in complete accord.
The nub of the minority thinking with reference to the Martin case finds expression in the dissent in these words: “* * * The decision [of the majority] is directly opposed to the decision in Peterson v. Martin, supra. * * *” Although not addressed specifically to the Martin case, the minority summarize their objections in these words:
“* * * If this court deprives the defendant of power to consider the economic effect of its action in granting or withholding processors’ licenses, the door will be opened for unrestricted competition at the very heart of the milk industry, with the result that the exercise of the other powers vested in the defendant and confirmed by this court will be ineffective for the accomplishment of the legislative purpose.”
To these conclusions of the minority I cannot subscribe.
Further evidence of the confusion and misunderstanding of the rule laid down in the Martin case is found in the divergent construction given to it by the parties to this appeal. The defendant claims it embodies the “precise question” presented in the instant matter. In my opinion, the plaintiff applicant more nearly and correctly captured the distinctions between the Martin case and the instant case which result in leaving the Martin case unimpaired as authority for the matter there ruled upon and of no value as determinative of the issues raised by the facts in this appeal. *85To these distinguishing features I will make later reference.
Before referring again and more particularly to the Martin case, I feel it is appropriate to make some general observations. There is a sharp difference between the power to control and stabilize the distribution of the mill?: supply between producer and consumer and the power to insure adequate service. As I use “distribution” in the foregoing statement and hereafter employ it, I refer to the supply of mill?: in a given production area and the sufficiency thereof to meet the consumer demand in a given market area. When I refer to ‘ ‘ service ’ ’, I have in mind the mechanical agencies employed by the middlemen, i. e., the plants and facilities of the dealers or manufacturers who process the milk when received from the producers and the plants and physical devices employed by the distributors to thereafter further the delivery of the processed mill?: to the ultimate consumers. All must be licensed by the director. These definitions of “distribution” and “service” are so clearly warranted by a reading of the mill?: control act that no citation is necessary. Moreover, they must be kept clearly in mind if one is to understand better the basic cleavage in construction accorded by the respective opinions of the minority and majority in this matter.
It is my thesis that if we extend the true meaning and intent of the Martin case to give it character as authority for the proposition that the defendant is vested with the power to deny licenses on the grounds that there are already adequate facilities for service in a given market area and that the presence of one or more additional processors or dealers in that area might endanger the monetary return for those already there, we will thereby give adherence to an economic *86doctrine not contemplated by the legislature as either necessary or efficacious to accomplish the ends sought to be achieved by the milk control act. That doctrine could only and inevitably lead to the creation of monopoly, a species of economic practice abhorrent to the organic law of this state (Or Const, Art I, § 20).
It is true, as said in Savage v. Martin, 161 Or 660, 676, 681, 91 P2d 273, that “The evils which the Oregon Milk Control Law are intended to correct are chiefly economic ones” and that it was “enacted primarily to promote the public interest by relieving those in the milk industry from hazards to which it is exposed in an uncontrolled market.” However, these generalizations of legislative purpose cannot, with the exercise of judicial propriety, be construed to confer carte blanche authority upon the director to employ any and every economic device which the defendant might arbitrarily choose to attain the purpose and circumvent the evils referred to in Savage v. Martin, supra, even if in so doing he might safely terminate all hazards incident to an uncontrolled market. At least, he should not be invested with the power to do so unless it is clearly found within the periphery of the milk control act. I find nothing in the act which either expressly or by inference warrants a conclusion that legitimate competition among any number of dealers was intended to be suppressed or discouraged, nor is such an end essential to obtain the over-all purpose for which the act was designed. By legitimate competition I mean conduct on the part of the dealers which would not in and of itself work a revocation of a license for any of the reasons set out in § 34-1006, OCLA.
It should also be observed that anything said in Savage v. Martin, supra, cannot be appropriately or effectively invoked as support for the minority’s opin*87ion in the instant appeal, for therein it is said, at page 679: “It should also be remembered that we are not concerned with a case involving the licensing provisions of the law and the right of a person to engage in the milk industry. # * *” Here we are confronted with the precise question which the court declined to pass upon in the Savage case.
Speaking broadly, the over-all formula laid down by the legislature in the milk control act, as its chosen vehicle for combatting the then-prevailing evils of maldistribution of milk and demolition of price structure, provided for the equalization of distribution of the milk supply by the creation of fixed production and marketing areas, with boundaries natural to the areas served. These boundaries rightly become barriers against the flow of milk into them from other districts. The legislature also provided for the establishment of minimum prices to be paid by the processor to the producer, the dealer to the processor and the consumer to the dealer. Thus was provision made to insure a constant market for the dairyman and a constant milk supply for the public, coupled with a reasonable return for all, immutable as to the hazards of maldistribution of supply and the fluctuating prices which had previously prevailed. That these two over-all controls were sufficient to accomplish the intended legislative result is attested by the generally-recognized stability which has prevailed in the mill?; industry since the law’s first enactment 20 years ago. The destructive and disruptive practices which then existed have, in the main, been mastered and all done to date without the necessity of specifically reposing in any official, as was done in New York, an express power to deny the issuance of a license to a processor or dealer if “the issuance of the license will not tend to a destruc*88tive competition in a market already adequately served.”
In my opinion, there is no occasion to overrule the Martin case but rather clarify the holding in terms of the facts there existent and limit it as authority to its true and what I think was its intended meaning, that is, that the director has authority to deny a dealer’s license to conduct business in a given market area when, in so doing, the dealer will increase the supply of milk limited to that area for distribution, and, in all probability, in so doing cause a pro tanto diminution in the amount necessary to supply some other market area. What the director in fact did in that case was to prevent a maldistribution of the mill? supply. It was not predicated upon what might be said to have been an economic impact adverse to any other dealers already serving the Sheridan market. In so doing, he was enforcing one of the prime objectives of the act and was authorized by § 34-1009, OCLA.
The Martin ease is, therefore, not in conflict with the majority holding in this matter. It adds nothing thereto nor does it subtract anything therefrom. As warrant for these conclusions, I quote from the Martin case (180 Or 473):
* # As the administrator had determined that the Sheridan market was already adequately served, and that the granting of a license to an additional distributor to sell milk therein would be economically wasteful, not in the public interest, and harmful to a stabilized production and distribution of fluid milk and cream for human consumption, we are of the opinion that the refusal of the administrator to permit Mr. Martin to enter the Sheridan market area was a reasonable exercise of a valid discretionary power vested in the administrator by the Act. * # *”
*89It may also be appropriately observed that Martin had theretofore been licensed to distribute milk in the Willamina market; and it is, therefore, a fair assumption that the maldistribution of the milk produced by him in increasing the Sheridan supply would have been reflected by depletion correspondingly in the amount of milk necessary to meet adequately the needs of the Willamina market.
The court in the Martin case could have rested its holding upon the provisions of § 34-1009, OCLA, but, unfortunately, encumbered that opinion with irrelevant citations bespeaking broader economic powers than there claimed by the director. The clarity of the holding was further clouded by other references which have had the effect of obscuring the true holding of that case and impairing it as clear-cut authority. The majority opinion very appropriately notes: “* * * That decision contains language which lends support to the defendant’s claim * * I will now refer to some examples productive of the confusion in thought which have followed in the wake of that case.
The court in the Martin case apparently leaned heavily, but unnecessarily, upon two New York decisions construing the milk control act of that state. They are Matter of Dusinberre v. Noyes, 284 NY 304, 31 NE2d 34 (decided December 3, 1940) and Application of Dellwood Dairy Co., 263 App Div 923, 32 NYS2d 411 (decided January 21, 1942). The latter case of the lower court, although citing no authority, follows the tenor of and is in accord with the Dusinberre decision. It, therefore, adds nothing by way of analysis to the holding made by the highest court of appeal in that state, and for the same reason adds nothing to the force of our holding in the Martin case. *90It is merely repetitive of the rule earlier expressed in the Dusinberre case.
From the quoted portion of Matter of Dusinberre v. Noyes, supra, found in the Martin case at page 470, it will also be observed that the New York decision holds that the commissioner (in Oregon, the director) is expressly invested by § 258c of the milk law of that state (ch 126, Laws of New York, 1934) with statutory power, among other things, to issue the license if “ the issuance of the license will not tend to a destructive competition in a market already adequately served”. (Italics mine.) Section 258c of the New York milk law relates to the refusal, suspension or revocation of licenses and in function corresponds to § 34-1006 of the Oregon milk control act; but, as the court expressly said in the Martin case, no violations of § 34-1006 were involved in that case.
The approval which we apparently and so needlessly gave to the New York cases above referred to now comes back to confound us. Witness the defendant now resting on this ostensible sanction in the Martin case by his citation of the New York cases here as authority for his premise for the economic powers of the defendant contended for in this matter and evidently in support of his proposition that the Martin case involved the “precise question” presented by this appeal.
A further matter leading to the confusion stemming from the Martin case is found in its apparent and inappropriate reliance upon certain language of the preamble to the Oregon milk control act, which is there interpreted by the court to “include the establishment and maintenance of reasonable returns to producers and distributors, as well as the fixing of a reasonable price to be paid by the consumers”. (180 Or 468) This is the only deduction made by the court in that case *91concerning the legislative intent as drawn from the preamble. In essence, it is tantamount to saying that the director has power to fix prices, and that no one will venture to gainsay, for the only returns received by either producers or distributors are money returns made in accordance with prices previously established by the director. However, recourse to the preamble is not necessary to discover that self-evident truth, when it is reflected with great particularity in the mill*: code by § 34-1012, OCLA. It, therefore, follows that this observation in the opinion concerning the power of the director to establish and maintain “reasonable returns to producers and distributors” becomes an innocuous and valueless observation as a support to the court’s over-all conclusion that the director is empowered to refuse to issue a dealer’s license, if by so doing it will tend to disturb the milk distribution in a given market already adequately supplied, unless we further assume that the director, without the suggestion of any restraint or standard found within the four corners of the statute, also can, in the maintenance of reasonable returns, arbitrarily adopt any economic theory of his choosing, including the stifling of competition to accomplish that result.
No one can quarrel with the legislative declaration of the important purpose of the milk control act found in the preamble thereto (ch 72, Oregon Laws, 2d SS, 1933). However, there is a vast difference between the “broad aspects” of the milk problem, as set forth therein, and the mechanics for achieving a solution to the problems reflected by the recitals found in a preamble to an act. In 50 Am Jur, Statutes, 131, § 152, it is said:
“A preamble to a statute is an introductory or prefatory clause, following the title and preceding *92the enacting clause, explanatory of the reasons for its enactment and the objects sought to be accomplished. It is usually introduced by the word ‘whereas,’ meaning ‘considering that’ or ‘that being the case.’ It is not an essential or effective part of an act, the purview of which consists of all parts thereof after the preamble. The preamble cannot enlarge or confer powers, or cure inherent defects in the statute. There has been a gradual abandonment of the use of a preamble in statutes, but where it is inserted, it is not regarded as invalidating the law.”
“ * * * it is not an essential part of the act and neither enlarges nor confers powers * * Portland Van & Storage Co. v. Hoss, 139 Or 434, 445, 9 P2d 122, 81 ALR 1136. In doubtful cases, however, it may be considered in the process of construction. Sunshine Dairy v. Peterson et al., 183 Or 305, 317, 193 P2d 543. Recourse to the preamble in the Martin case, or even in the instant case, relating as they do to questions of the extent of the director’s powers of economic control, is not only unnecessary but becomes a self-defeating enterprise. The last “whereas” reads (ch 72, Oregon Laws, 2d SS, 1933):
“Whereas in order to protect the well-being of the people of the state of Oregon and promote the public welfare, the production, transportation, manufacture, storage, distribution and sale of milk and cream in the state hereby is declared a business, affecting the public health and interest which should he supervised and controlled in the manner hereinafter provided * * (Italics mine.)
The italicized words render it tantamount to saying : Look not here but to the body of the act itself, if one is to discover how far he can or cannot go in accomplishing the several ends sought to be attained by the recitals in this part of the preamble. Indeed, *93in Sunshine Dairy v. Peterson et al., supra, at page 320, we referred to these very words with the following observation: “The declaration in the preamble that the distribution and sale of milk should be ‘supervised and controlled in the manner hereinafter provided’ is no more indicative of the power of price fixing than the provision of section 34-1003. * * *” So, also, can it be said concerning § 34-1009, OCLA, in its relation to the powers of the director involving the issuance of licenses and the creation of market and production areas. Had the court in the Martin case observed and applied the rules of construction so cogently and pertinently applied in Sunshine Dairy v. Peterson et al., supra, I doubt if we would now be confronted with the division of opinion reflected by this appeal.
When we thus excise from the Martin case the irrelevant references found therein relating to the New York eases which it cites and those pertaining to the preamble, the true character of that holding becomes more readily apparent and renders it valueless as a support for defendant in the instant matter.
Inasmuch as my view concerning the Martin case is one of interpretation which does not require overruling that holding, there is no necessity for me to discuss the matters raised by the separate dissenting opinion of Mr. Justice Lusk.
Section 34-1012, OCLA, as amended by ch 397, Oregon Laws 1951, is the basis of the board’s authority to fix minimum prices and, insofar as pertinent, directs that
“The board shall ascertain what prices for milk in each locality and market area of the state will best protect the milk industry and insure a sufficient quantity of pure and wholesome milk in the public interest. The board shall take into *94consideration all conditions affecting the milk industry, including the price necessary to produce a reasonable return to the producer and to the milk dealer. In determining the minimum prices for each class in any market area, the board shall take into consideration the reasonable unit cost of each class of handling milk incurred by each such class mentioned * *
Predicated upon this statute, the minority opinion poses the question earlier quoted: ‘ ‘ Can it be said that the defendant can insure a reasonable return to the milk dealer if it is powerless to control the number of dealers who operate processing plants in a given market area?- * * *” The foregoing question clearly reveals the trend of the minority thinking, and its weakness is immediately exposed from the use of the phrase “insure a reasonable return to the milk dealer”. (Italics mine.) Those are precise words conveying a positive and significant meaning; and when employed by the scholarly author of the dissenting opinion, those words are not carelessly used and may be accepted as intending to give an exact definition of his theory of the scope of the administrative powers conferred by the milk control act. However, there is nothing in § 34-1012, nor, indeed, elsewhere in the act, which obligates the director to insure a reasonable return to any person or class of persons engaging in the milk industry. That section does not throw its cloak of protection around the individual dealer as might be implied from the question propounded. The “reasonable return” therein referred to is a reasonable return for all milk producers or dealers of a class operating within the areas affected by the minimum prices established by the determination of the board. The minimum price scale is not one of insurance or guarantee of reasonable, -or even profit*95able, return to the various licensed individuals or groups of persons operating in the area but is rather one of assurance against price cutting on the part of any of their competitors. A reasonable return, predicated upon a minimum average or representative price within a class, does not necessarily mean in a fiscal sense that every member of that class will be insured of a profit from dealing at minimum prices so established.
Those who cannot make a profit from such “reasonable return” must necessarily give way to those who can. The act was not designed to insure or guarantee the continuing of a profitable operation for every producer or processor who elects to invest capital in the milk industry. The legislative concern is for the industry as a whole and particularly comprehends the welfare of the consumer public. This end is, in the main, achieved and the economic hazards of the industry minimized by the two major powers which the act confers on the director and the board, i.e., the power to fix prices and the power to determine market areas of production and distribution, fortified with the power to license and penalize those who deviate from the price fixed or who traffic in districts beyond the areas so established.
The authority to “control”, enforced with the right to limit competition in a given area, connotes such a vast power, endowed as it is with the potentialities of destruction, that its exercise must necessarily be limited and constrained by standards found within the act sufficiently adequate to guide the person employing such a power and in his determination of the propriety of exercising it. More certainly is this true if its objective is to be construed as to guarantee or in*96sure a monetary return for any person or group of persons. The fact that we found standards for the guidance of the administrator in the Martin case (180 Or 473), in the action which he took therein, is not authority for concluding that such standards obtain for his direction in the exercise of the far-greater power to stifle competition in order to insure returns for dealers operating in a given market area. See the recent case of Demers v. Peterson, 56 Or Adv Sh 307, decided March 4, 1953, where we pointedly and emphatically spoke on this subject as follows:
“It is well established that the legislature cannot grant an administrative agency the power to regulate unless some standard or yardstick is provided in the act as a guide to the administrative agency; in other words, the authority to regulate may not be left wholly to the whim and caprice of such agency. Multnomah County v. Luihn et al., 180 Or 528, 542, 178 P2d 159; City of Portland v. Welch, 154 Or 286, 303, 59 P2d 228, 106 ALR 1188; Van Winkle v. Fred Meyer, Inc., 151 Or 455, 466, 49 P2d 1140. ’ ’
I search the milk control law in vain for any standards whereby the director can measure the limits of the exercise of such power as the minority would invest in him.
If we concede the soundness of the minority’s argument as reflected by their opinions, then we become parties to conferring a monopolistic advantage upon each already-licensed dealer. If the defendant is empowered to “insure a reasonable return” to each dealer by excluding the competition which would flow from the presence of newly-licensed dealers in the same area, then logic dictates that each previously-licensed dealer in the area should be subjected to a further control *97establishing a status in quo for all of them, lest any one of them might, by the enlargement or modernization of his previously-licensed operation, attain thereby a competitive advantage which would result in denying his fellow dealers in the same area the reasonable return which, the minority says, the milk control act is designed to insure to them. Such a course of reasoning is not only creative of monopoly but could stifle competition within a given market area to a point where producers and consumers could suffer from the want of modern or adequate facilities for the processing and distribution of the milk reserved to that area.
The evils flowing from the doctrine of insured reasonable return are so infinite and so readily discernible that no further statement by way of illustration is necessary to support condemnation of a rule which would give them countenance.
The doctrine of a controlled economy, which is the essence of what the minority here contend for, to be effective must be complete. To be successful it must comprehend and be addressed to a numerical control of every group and every class thereof engaged in some phase of the mill?; industry from producer to consumer. Applying the economic theory patent in the question of the minority, it is evident that an overplus of producers in a given area can work the same hazard to the stabilization of milk distribution in a production area which, the minority contend, may result from an overplus of processors in a given market area. It would be vain, indeed, for the director to hope to stabilize distribution or insure a reasonable return to the producer, as well as the dealer, by addressing himself solely to a numerical control of those engaged in the business of processing the producers’ mill? supply. Cer*98tainly, the minority would not venture to subscribe to a doctrine of control of such revolutionary extreme and of such far-reaching consequence. If they do, I submit that they cannot find anything in the act which expressly or inferentially gives support to such reasoning. The very absence of statutory language conferring such power upon the director eloquently bespeaks the want of a legislative intent to stabilize mill?; distribution by a numerical control of the parties engaged therein, solely upon the premise that their presence might impair the status quo of previously-licensed dealers or of those previously engaged in milk production or, indeed, by way of insuring a reasonable return to any or all of them.
“Surely,” say those dissenting, “the majority does not now intend to strike down the entire Act by judicial fiat. * * *” (Italics mine.) No doubt, this bit of exaggerated emphasis is inadvertent, but the concern manifested thereby suggests that unless we can give an emphatic negative answer to the minority’s economic question hereinbefore quoted and discussed, all values conferred by the act will be lost. It is an unreasonable conclusion conveying a thought not warranted by the facts in this case nor by the long history of the act’s successful administration without the powers the minority would add, nor by any reasonable forecast of what the future administration will be as a result of the majority opinion. However, if the “entire Act” is stricken by the character of “judicial fiat” which the minority pretend to find in the majority opinion, then how much better such a result than to open the economic Pandora box tendered by the minority, containing as it does new evils which will spring thence if we subscribe to a rule which insures *99a reasonable return to every dealer by restricting tbe number of Ms competitors in any given area.
It is not for this court to write the economic policy for this state. That is a legislative function. It is not for us to suffer our personal views on the relative value of divergent economic policies or theories to tincture our judicial expression. However, it is equally axiomatic that we are under obligation to cleave tenaciously to the apparent legislative intent and not allow it to be subverted by judicially countenancing the expansion of the powers of administrative officials to a point where such officials can, under the guise of discretion and without adequate standards of control, substitute their will, their theories or their standards in lieu of, and possibly contrary to, the evident legislative design.
For the reasons hereinabove assigned, I concur in the opinion of the majority.