Court Opinion

ID: 9623595
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:37:21.089272+00
Date Added: 2024-06-11T18:05:31.559637
License: Public Domain

ALLEN, Circuit Judge
(dissenting).
I cannot agree with the conclusions of my colleagues. There is no equitable justification for interference by this court with the fulfillment of the declared legislative will of the nation because of the circumstances under which a marketing excess of wheat was established for plaintiff’s farm.
The question of the legal effect of alleged infirmities in the referendum on quota provisions for the 1941 crop of wheat is substantially identical in every material respect with that considered by the Supreme Court in United States v. Rock Royal Co-operative, Inc., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446. That case held that an order issued by the Secretary of Agriculture pursuant to the Agricultural Marketing Agreement Act, 7 U.S.C.A. § 601 et seq., was valid and enforceable. The order fixed minimum prices to be paid producers for milk sold to dealers and disposed of by them in a designated market area comprising the city of New York and adjacent counties. Just as here, a favorable referendum of farmers was made a condition upon the operation and effectiveness of wheat marketing quotas, so in that case the Marketing Agreement Act required that an order fixing prices to the producers should be made only on condition that such provision was "approved or favored” by' a specific proportion of the producers of the milk covered in such order. Title 7, U.S.C. § 608c (9) (B). There a pamphlet issued by the Department of Agriculture prior to the referendum and publications of private organizations contained statements to the effect that dealers would be required to pay all producers the uniform price established, whereas the order made it clear that the uniform price was not applicable to milk sold outside the market area or to milk handled by cooperatives. The Supreme Court held that the validity of the referendum had not been affected.
Here the alleged misrepresentation claimed to have vitiated the submission of the wheat quota referendum is extracted from a radio speech of the Secretary of Agriculture made some twelve days before the referendum. He said that “farmers should not be penalized because they have provided insurance against shortages of food.” The plaintiff claims this language is misleading because of the provision in the amendment to the Act which increased the penalty on the farm marketing excess from 15 to 49 cents per bushel. The context of the Secretary’s speech makes it clear that he was speaking of penalties in the form of ruinously low prices which result from an excess supply of any basic farm commodity. No reference to enforcement provisions of any legislation, new or old, could reasonably be understood to be intended from the reference to low prices as penalties, for the Secretary went on to say:
“The nation also wants other protection given agriculture. One expression of this wish is the national farm programs. These programs protect all farmers. Since the second world war began, commodity loans have stood between wheat producers and the economic blitzkrieg.
“Without the programs, wheat prices would be threatening the low record of 1932 instead of being within striking distance of parity as they are now.”
Other statements significant of the intended emphasis are as follows:
“Average prices of wheat to Kansas growers in mid-May were about 80 cents. This compares with about 45 cents to Canadian farmers (United States money). Leaving out government payments, American producers will receive over twice as much for this year’s wheat as Canadian growers.”
“High prices without adjustment of supply are certain to be followed by ruinously low prices. We know that from experience.”
It is not claimed that the speech was intended to mislead producers, and considered as a whole, it would not have a natural tendency to mislead. As in United States v. Rock Royal Co-operative, Inc., supra [307 U.S. 533, 59 S.Ct. 1006, 83 L.Ed. 1446], “there is no evidence that any producer misunderstood.” The Secretary declared as a fact and it is not denied that the requisite proportion of the participants voted in favor of the institution of quotas. In *1021the language of the Supreme Court, “There is no authority in the courts to go behind this conclusion of the Secretary to inquire into the influences which caused the producers to favor” the proposed action. United States v. Rock Royal Co-operative, Inc., supra.
While the plaintiff presents a case of possible hardship, I do not think that the penalty provisions operate so retroactively or so arbitrarily as to violate the Fifth Amendment.
In Mulford v. Smith, 307 U.S. 38, 59 S.Ct. 648, 83 L.Ed. 1092, .the crop of tobacco, which was subjected to a penalty insofar as it exceeded certain quotas and was marketed, had been planted in seed beds before the Act was passed, had matured and was ready for marketing before producers received notice of the quota allotted to their respective farms. In that case it was claimed that since the producers complaining were unable to process their tobacco and make it fit to be held for sale in a later year, the penalty amounted to a tax upon production and was so oppressive as to be invalid. The Supreme Court held that the fact that certain producers had not provided facilities for processing and storing the excess tobacco was of no legal significance.
The distinctions which the plaintiff advances do not distinguish the Mulford case. The plaintiff complains that his entire crop of wheat is now subject to a lien in favor of the United States for the amount of the penalty. The assertion is made that “Wheat farmers, under the provisions of the Act as amended on May 26, 1941, are denied the privilege of storing their wheat, any part of it, without paying the penalty of 49 cents a bushel on all of the excess production.” This statement is misleading. It is true only if storing is given the meaning of “storing without compliance with the Act,” for the resolution adopted May 26, 1941, Public Law 74 — 77th Congress expressly provides, paragraph 4: “Until the producers on any farm store deliver to the Secretary, or pay the penalty on, the farm marketing excess of any crop of corn or wheat, the entire crop of corn or wheat, as the case may be, produced on the farm shall be subject to a lien in favor of the United States for the amount of the penalty.” (Italics added.) 55 Stat. 204.
This clearly means that the lien and the penalty may be avoided by storage of the excess. This conclusion is reenforced by paragraph 6 of the same amendment, which reads: “Whenever the planted acreage of the then current crop of corn or wheat on any farm is less than the farm acreage allotment for such commodity, the total amount of the commodity from any previous crops required to be stored in order to postpone or avoid payment of penalty shall be reduced by that amount which is equal to the normal production of the number of acres by which the farm acreage allotment exceeds the planted acreage. The provisions of section 326(b) and (c) of the Act shall be applicable also to wheat.”
Penalties, therefore, may be avoided by planting acreage below the allotment for a later year or by yields in a subsequent year which are below normal either for the particular farm or for the nation as a whole. Title 7, U.S.C.A. § 1326 (b) and (cj.
The Act does not purport to control production, but only sale or use. It had been passed some two and a half years before the plaintiff’s crop was planted, and it is stipulated that plaintiff had notice of his farm acreage allotment in July, 1940, before the planting of his 1941 crop of wheat. An exaction is not necessarily unconstitutional because retroactive. Milliken v. United States, 283 U.S. 15, 21, 51 S.Ct. 324, 75 L.Ed. 809. “In each case it is necessary to consider the nature of the tax and the circumstances in which it is laid before it can be said that its retroactive application is so harsh and oppressive as to transgress the constitutional limitation.” Welch v. Henry, 305 U.S. 134, 147, 59 S.Ct. 121, 126, 83 L.Ed. 87, 118 A.L.R. 1142. It is not so harsh or oppressive here. While the monetary value of plaintiff’s wheat crop has been so increased by the stimulating affect of the Act upon wheat prices that the increased price more than compensates for any penalty that plaintiff may be required to pay, it is even more significant that plaintiff was informed that Congress had undertaken to regulate the supply of wheat available for market by the imposition of penalties. Milliken v. United States, supra. The Act had been amended in material respects before plaintiff planted his wheat in the fall of 1940, and he could reasonably anticipate that Congress would make further amendments if they were deemed advisable. One amendment previously made showed that Congress intended to make whatever changes were appropriate to avoid circumvention of the basic purposes of the Act, for it had *1022expanded the meaning of “market” so as to include- in the case of wheat, feeding to poultry or livestock. 54 Stat. 727, Sec. 3, approved July 2, 1940, 7 U.S.C.A. § 1301.
Congress may impose penalties in aid of the exercise of any of its granted powers. Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 393, 60 S.Ct. 907, 84 L.Ed. 1263. The authority of the Federal Government over interstate commerce does not differ in extent or character from that retained by the states over matters within their jurisdiction. United States v. Rock Royal Co-operative, Inc., supra, 307 U.S. at pages 569, 570, 59 S.Ct. 993, 83 L.Ed. 1446. If the commerce clause is a sufficient source of power, controls adopted in its exercise are unconstitutional “only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the Legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.” Nebbia v. New York, 291 U.S. 502, 539, 54 S.Ct. 505, 517, 78 L.Ed. 940, 89 A.L.R. 1469. Here the classification of wheat subject to penalty and wheat free from penalty is an “integral and essential feature” of the Act. Adequate administrative procedure with court review has been provided to insure fair allocation of quotas. Cf. Railroad Commission of Texas v. Rowan & Nichols Oil Co., 310 U. S. 573, 60 S.Ct. 1021, 84 L.Ed. 1368; Id., 311 U.S. 614, 61 S.Ct. 66, 85 L.Ed. 390; Id., 311 U.S. 570, 61 S.Ct. 343, 85 L.Ed. 358. Discrimination between cooperating and non-cooperating producers is a constitutional • means of securing compliance. “ * * * the Fifth Amendment, unlike the Fourteenth, has no equal protection clause.” Sunshine Anthracite Coal Co. v. Adkins, supra, 310 U.S. at page 401, 60 S.Ct. at page 916, 84 L.Ed. 1263.
The Act as applied to wheat is a valid exercise of the federal commerce power. The tobacco marketing quota provisions have been so upheld. Mulford v. Smith, supra. A like decision has been reached as to the provisions relating to cotton. Troppy v. La Sara Farmers Gin Co., Inc., 5 Cir., 113 F.2d 350. Denial of the same validity to wheat regulation, as a regulation of interstate and foreign commerce, as has been accorded to the-.-tobacco ,and cotton regulations of the Act, would result in an incongruous exercise of the federal commerce power.
It is no longer open to question that Congress has the power to protect interstate commerce “from interference or injury due to activities which are wholly intrastate.” National Labor Relations Board v. Fainblatt, 306 U.S. 601, 307 U.S. 609, 59 S.Ct. 668, 671, 83 L.Ed. 1014. “Activities conducted within state lines do not by this fact alone escape the sweep of the Commerce Clause. Interstate commerce may be dependent upon them.” United States v. Rock Royal Co-operative, Inc., supra, 307 U.S. at page 569, 59 S.Ct. at page 1011, 83 L.Ed. 1446.
It is trüe that Congress has no power to regulate intrastate transactions which affect commerce only indirectly. A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947. But where it is claimed that the local activity sought to be regulated does not directly affect commerce, decision should not be made by examination of the effect of isolated individual activityj but must include due regard to the total effect of the attempted regulation. United States v. Darby, 312 U.S. 100, 123, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430.
Title 7, U.S.C.A. § 1331, reads as follows:
“Wheat is a basic source of food for the Nation, is produced throughout the United States by more than a million farmers, is sold on the country-wide market and, as wheat or flour, flows almost entirely through instrumentalities of interstate and foreign commerce from producers to consumers.
“Abnormally excessive and abnormally deficient supplies of wheat on the countrywide market acutely and directly affect, . burden, and obstruct interstate and foreign -commerce. Abnormally excessive supplies overtax the facilities of interstate and foreign transportation, congest terminal markets and milling centers in the flow of wheat from producers to consumers, depress the price of wheat in interstate and foreign commerce, and otherwise disrupt the orderly marketing of such commodity in such commerce. Abnormally deficient supplies result in an inadequate flow of wheat and its products in interstate and foreign commerce with consequent injurious effects to the instrumentalities of such commerce and ■with excessive increases in the prices of wheat and its products in interstate and foreign commerce.
******
“The conditions affecting the production and marketing of wheat are such that, with*1023out Federal assistance, farmers, individually or in cooperation, cannot effectively prevent the recurrence of such surpluses and shortages and the burdens on interstate and foreign commerce resulting therefrom, maintain normal supplies of wheat, or provide for the orderly marketing thereof in interstate and foreign commerce.
“ * * * The provisions hereof for regulation of marketings by producers of wheat whenever an abnormally excessive supply of such commodity exists are necessary in order to maintain an orderly flow of wheat in interstate and foreign commerce under such conditions.”
The stipulation of facts now before us amply supports these legislative findings. It loilows that regulation of the supply of wheat that normally moves in interstate or foreign commerce must be upheld as an appropriate means reasonably adapted to the regulation of interstate commerce. Since regulation of the supply of wheat available for sale in interstate commerce but actually used within the state of its origin is drawn into a general plan for the protection of interstate commerce in the commodity from the interferences, burdens and obstructions arising from excessive surplus and the social evils of low values, the power of Congress extends to it as well. United States v. Rock Royal Cooperative, Inc., supra, 307 U.S. at page 569, 59 S.Ct. 993, 83 L.Ed. 1446. The regulation of prices there upheld had no more direct or substantial relation to the flow of goods in interstate commerce than does control of supply. The local activities regulated not only affect interstate commerce but also affect the exercise of the granted power of Congress to regulate interstate commerce in sufficient measure that such regulation is an appropriate and hence permissible means of attaining that legitimate end. See United States v. Darby, supra, 312 U.S. at page 118, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430.
The bill of complaint should be dismissed.