BORDEN‘S FARM PRODUCTS CO., INC. v. BALDWIN, COMMISSIONER OF AGRICULTURE AND MARKETS OF NEW YORK, ET AL.
No. 296
Supreme Court of the United States
Argued November 6, 7, 1934. Decided December 3, 1934.
293 U.S. 194
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
The New York Milk Control Law of April 10, 1933,1 in authorizing the Milk Control Board to fix minimum prices for sales of fluid milk in bottles by milk dealers to stores in a city of more than one million inhabitants, established a differential of one cent a quart in favor of dealers not having a “well advertised trade name.”2 The Milk Control Board determined that the phrase “well advertised trade name” referred to four dealers, of which the complainant, Borden‘s Farm Products Company, Inc., is one.3 The authority of the Board terminated on March 31, 1934. An amended act was passed to take effect April 1, 1934,4 which placed the milk control in a division of the Department of Agriculture and Markets. This Act continues the differential of one cent a quart in sales of fluid milk in bottles by dealers to stores, in favor of dealers not hav
Complaining that the fixing of this differential, in respect to sales of the same commodity, was an invasion of rights guaranteed by the Fourteenth Amendment, plaintiff brought this suit to enjoin enforcement. An interlocutory injunction was sought and a court of three judges was convened. Defendants moved to dismiss the complaint upon the grounds that it failed to state a cause of action in equity and that the provision of the statute was constitutional. Affidavits were presented on both sides and the case was heard on the motion for injunction and the motion to dismiss. In view of the cumulative penalties provided, the court had no doubt of its jurisdiction to pass upon the question of constitutionality. Dealing with the case in that aspect, the court held that the complaint did not state a cause of suit and dismissed it for that reason. The court regarded the application for an interlocutory injunction as necessarily falling with the complaint and hence made no findings of fact. 7 F. Supp. 352, 354. The plaintiff appeals.
We turn to the allegations of the complaint. Plaintiff sets forth the full text of the acts of 1933 and 1934 and of the applicable orders. By the order of the Commissioner
Plaintiff alleges that the maintenance of this differential, with the consequent privilege to its competitors and restraint upon itself, is “arbitrary, oppressive and discriminatory” and has “no relation to the protection of the public health or the public welfare or to any of the objects or purposes” for which the statute was enacted, and upon this ground plaintiff charges that the statutory provision violates the due process and equal protection clauses of the Fourteenth Amendment. Inability to obtain a license, unless plaintiff agrees in writing to comply with the statute and orders, and the prohibitive character of the penalties prescribed, are assigned as affording the basis of equitable jurisdiction.
We have frequently said, especially in confiscation cases, that a mere general allegation of repugnance to the Fourteenth Amendment is not enough to state a cause of action to restrain the enforcement of a statute or administrative order. See Aetna Insurance Co. v. Hyde, 275 U. S. 440, 447; Public Service Comm‘n v. Great Northern Utilities Co., 289 U. S. 130, 136, 137; Hegeman Farms Corp. v. Baldwin, ante, p. 163. But in determining the sufficiency of the allegations of the complaint we cannot fail to take note of the nature and effect of the legislative action which is assailed. Both nature and effect are apparent. We have here a novel, if not a unique, provision. The legislature does not purport to exercise an authority merely to fix prices, or minimum prices, or to make different prices for different grades of milk, but attempts to establish for the respective dealers different minimum prices for the same grade of milk, bought and sold at the same time and place and under precisely the same conditions aside from the use of a well advertised trade name. There is no uncertainty as to the effect of
In this inquiry, we again observe the limited operation of the provision. It is restricted to the city of New York, and to sales of bottled milk to and by stores. It does not apply to retail delivery direct to consumers and not through stores. It relates solely to minimum prices. It is not addressed to any practice in the industry, or trade in relation to production, handling or selling, apart from the trade name employed. As to all such matters, a dealer with a well advertised trade name is subject to the same strict requirements as are all other dealers. The price to the producer, the farmer, is not affected by the differential. He receives the same price for his milk whether it is sold by dealers with well advertised trade names or otherwise. We have had occasion to note that “Save the conduct of railroads, no business has been so
The ground chiefly urged is that the provision is intended as a precaution against monopoly. We turn to the expressed criterion of the statute. That criterion does not refer to restraint of trade in any of its connotations, or to any coercive action or unfair practice, or to any combination or concert. The provision for the differential is silent as to the use of any monopolizing methods or as to any monopolistic achievement. While dealers having well advertised trade names are grouped for the purpose of the differential, the statute is directed not at concerted action, but at the individual members of the group which are not shown to be, or, for the application
The suggestion has been made that the provision for the differential may find support in a supposed policy to increase the sales of milk, that more milk may be sold than if the price were uniformly maintained. This suggestion does not appear to be sponsored by the Attorney
Putting aside fanciful considerations, the argument at the bar has presented the case in its essential features. It is shown that the legislature was inspired by the fear that in a competitive market, under strict regulation and with a scheme of minimum prices, dealers without well advertised brands, the so-called independent dealers, would be at a disadvantage. The aim was not at advertising but at its natural result. “Well advertised” means well known. In setting up the differential, the legislature did not deal with monopoly in the ordinary sense of the term, but with an aggregate of economic advantages, lawfully and severally acquired, and possessed in varying degrees by the separate concerns having well known brands. The legislature put all these in one class and placed it under a handicap. For this discrimination, a special justification is urged. Respondent‘s counsel contend that the fixing of the differential was an effort to continue a condition which had obtained before the Milk Control law was enacted; that, previously, milk of the independent dealers had sold at lower prices than the milk of the well known brands; that in establishing price control, the legislature sought to preserve opportunities in competition which in actual practice the independent dealers had thus enjoyed and to prevent their trade from being destroyed by the operation of a scheme of uniform prices. The argument is that the legislature was confronted with a “practical situation“; that “the independents were to be deprived
The factual basis of this contention is disputed and there are no findings disclosing it. Appellant asserts that there was not at any time any customary or accepted difference in price between the milk sold by it under its trade name and the milk of its competitors who are now favored by the fixed differential. And reference is made to the disturbed state of the trade, preceding the enactment of the Milk Control law, and to the effect of the ban imposed by local ordinance upon the sale of “loose milk,” which led to changes in methods of distribution and to price adjustments from time to time in order to meet competition.
For the present purpose, it is sufficient to say that these arguments are addressed to particular trade conditions in the city of New York, which largely lie outside the range of judicial notice. Counsel refer to the affidavits submitted on the motion for injunction. And we are asked to extract from various tables and statements in the reports of the legislative committee, which were not addressed to the fixing of the differential here in question, sufficient data upon which to predicate a judgment. But
Respondents invoke the presumption which attaches to the legislative action. But that is a presumption of fact, of the existence of factual conditions supporting the legislation. As such, it is a rebuttable presumption. Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 78–80; Hammond v. Schappi Bus Line, 275 U. S. 164, 170–172; O‘Gorman & Young v. Hartford Insurance Co., 282 U. S. 251, 256–258. It is not a conclusive presumption, or a rule of law which makes legislative action invulnerable to constitutional assault. Nor is such an immunity achieved by treating any fanciful conjecture as enough to repel attack. When the classification made by the legislature is called in question, if any state of facts reasonably can be conceived that would sustain it, there is a presumption of the existence of that state of facts, and one who assails the classification must carry the burden of showing by a resort to common knowledge or other matters which may be judicially noticed, or to other legitimate proof, that the action is arbitrary. Lindsley v. Natural Carbonic Gas Co., supra; Clarke v. Deckebach, 274 U. S. 392, 397; Lawrence v. State Tax Comm‘n, 286 U. S. 276, 283. The
Respondents’ counsel, referring to the difficulties of price regulation, say that “Apparently the fixing of prices by government discovered as many troubles as were loosed from Pandora‘s box.” This complexity of problems, however, makes it the more imperative that the Court in discharging its duty, in sustaining governmental
As the court below said, no precedents come very close to the instant case. In Rast v. Van Deman & Lewis Co., supra, the facts were fully disclosed (pp. 345–347), and it was held that the use of profit-sharing coupons and trading stamps constituted a distinct method of doing business justifying license taxes (p. 357). The Court pointed out that the complainants’ schemes did not rest with mere advertising, with “identification and description, apprising of quality and place,” where the “acquisition of the article to be sold constitutes the only inducement to its purchase” according to the “practice of old and familiar transactions,” but that those schemes tempted by a promise of a value greater than the article sold and hence might be thought to be a “lure to improvidence” (p. 365). See, also, Tanner v. Little, 240 U. S. 369. In Tax Commissioners v. Jackson, supra, where a license tax with respect to chain store operation was upheld, evidence had been received and considered by the District Court, but that court did not go beyond a partial summary of the facts and general conclusions of law. We said that had Equity Rule 70½ been in force at the time of the trial, we should feel constrained to remand the case with directions to make findings of fact (p. 533); but in the circumstances the Court proceeded to summarize the proofs, and, on a full examination of the factual differences between chain stores and individually owned units, reached the conclusion that these differences afforded a basis for the tax assailed (pp. 534–536, 541). See, also, Liggett Co. v. Lee, 288 U. S. 517, 532.
The importance of adequate findings of fact in relation to controlling economic conditions was emphasized in Chastleton Corp. v. Sinclair, 264 U. S. 543. The suit had
Another illustration is found in Hammond v. Schappi Bus Line, supra, involving the validity of a city ordinance regulating motor traffic in designated parts of the city‘s streets. The lower courts had not made findings upon crucial questions of fact. There were affidavits below, which, we said, “are silent as to some facts of legal significance; lack definiteness as to some matters; and present serious conflicts on issues of facts that may be decisive.” We held that before the questions of constitutional law, both novel and of far-reaching importance, were passed upon by this Court, “the facts essential to their decision should be definitely found by the lower courts upon adequate evidence.” (pp. 171, 172.) Concluding that the case had not been appropriately prepared for final disposition, we remanded it for proceedings in the District Court, “with liberty, among other things, to allow amendment of the pleadings.” This procedure was in accordance
A similar course should be taken here. While the complaint is lacking in the specific and definite allegations as to trade conditions which would be appropriate to the plaintiff‘s assertions in supporting its attack on the statute, we think that the plaintiff should not be refused standing in court upon the allegations made. As we do not approve the procedure adopted below, we do not pass upon the ultimate question of the constitutionality of the statute. The plaintiff should be permitted to proceed with the cause; the motion for preliminary injunction should be heard and decided, and the cause should proceed to final hearing upon pleadings and proofs; the facts should be found and conclusions of law stated as required by Equity Rule 70½.
The decree is reversed and the cause is remanded for further proceedings in conformity with this opinion.
Reversed.
MR. JUSTICE STONE and MR. JUSTICE CARDOZO concur in the result in the following memorandum:
We are in accord with the view that it is inexpedient to determine grave constitutional questions upon a demurrer to a complaint, or upon an equivalent motion, if there is a reasonable likelihood that the production of evidence will make the answer to the questions clearer.
Since our brethren find that likelihood to be present in this case, and are content to postpone an adjudication of the merits, we refrain from any discussion of the validity of the statute on the basis of facts within the range of judicial notice, and assent to the judgment recommended in the opinion of the court.