UNITED STATES v. A. L. A. SCHECHTER POULTRY CORPORATION et al.
No. 323.
Circuit Court of Appeals, Second Circuit.
April 1, 1935.
76 F.2d 617
Walter L. Rice, Sp. Asst. to Atty. Gen., Harold M. Stephens, Asst. Atty. Gen., Carl McFarland and Henry W. Edgerton, Sp. Assts. to Atty. Gen., J. William Fulbright and H. Stewart McDonald, Jr., Sp. Attys., U. S. Department of Agriculture, both of Washington, D. C., and Raymond J. Heilman, Asst. Counsel, National Recovery Administration, of Washington, D. C., for the United States.
Before MANTON, L. HAND, and CHASE, Circuit Judges.
MANTON, Circuit Judge.
The appellants were convicted on 19 counts of an indictment charging crimes in 60 counts. They were convicted of: (Count 1) Conspiracy to commit offenses against the United States by violating the
Appellants are wholesale marketmen engaged in the poultry business in the borough of Brooklyn, New York City. Their purchases were ordinarily made in the market in New York City, but sometimes in Philadelphia, Pa. The poultry bought by them is taken directly to their slaughterhouse markets and sold to retail dealers within 24 hours. The shares of stock of the corporations named in the indictment were owned, and the corporations controlled, by the individual appellants.
The evidence аt the trial established to the satisfaction of the jury that the poultry industry in the New York City area was beset with evil trade practices. The New York City market is the largest in the country and dominates the industry. In 1930, sales of 224,000,000 pounds of poultry were made in New York City; in 1933, 190,000,000 pounds were sold. This large volume, with the consequent market domination, places New York City in the position of being the medium by which prices for poultry throughout the country are measured. The markets in other large cities, as Chicago and St. Louis, maintain their prices in accordance with those current in New York, the difference being determined by the cost of freight and handling, and as to whether the poultry is coming from the west to the east, or the south to the north, the direction of flow depending upon the season. The farmer‘s price reflects the price current in the New York market, so that the demoralization of price structure in New York produces a similar situation, not only in other markets throughout the country, but also in all poultry farming
The practices of selling below cost, selective killing, bringing in uninspected poultry from outside the state, selling poultry unfit for human consumption, making possible a ready market for diseased and inferior poultry, were assigned as evils resulting in loss in the volume of business. New York presented a market for diseased poultry, and the evidence shows that diseased poultry was shipped almost exclusively to New York. Live poultry is a perishable commodity, and the presence of a few diseased chickens in a car frequently infects the whole carload. Such poultry, when sold, is necessarily disposed of through misrepresentations as to its condition, and causes distrust and a reluctance to purchase on the part of consumers. The presence of diseased poultry in the market caused a demand because of its cheap price. It narrowed the price range because good poultry, which could otherwise sell at a high price, had to meet the competition of the diseased poultry and drop in price. The avoidance of poultry inspection was a relatively simple matter in New York, and this was a material circumstance in conditioning the shipment of unfit poultry to that market. Poultry certain to be condemned in other markets because of its diseased condition, was shipped to New York. Lack of inspection requirements also induced fraudulent practices in the course of interstate shipment—such as overfeeding the poultry to increase its weight. The practice of selective killing, rather than straight killing, resulted in price cutting, and a lowering of prices received by the farmers and the interstate shippers. The control of prices by which poultry can be sold to the consumer is determined not only by the cost of the poultry but also by the wages paid to the employees in the poultry slaughterhouses.
The aрpellee argues that the payment of lower wages permits the employer to sell at a lower price than if he paid higher wages. Competition is thus affected. Lower wages resulted in price cutting, which in turn affects interstate commerce. It was also established that sales by wholesale marketmen to unlicensed operators, not subject to Health Department supervision, were a further cause of the industry‘s unfair practices. Such operators, being irresponsible and not disposed to make the necessary expenditures for the maintenance of sanitary places of business, sold at cut prices and initiated the sales of unfit poultry. There was evidence that these conditions brought about an industrial demoralization which, with all its adverse national consequences, needed correction and betterment. It is argued that no improvement was possible unless all the evil practices in the industry were controlled, and it was to accomplish this result that the Live Poultry Code for the Metropolitan area was adopted and approved.
Congress had the power, under the
Congress stated in section 1 of the
Appellants contend that the act as a whole, and section 3 thereof particularly, is uncоnstitutional in that it is an invalid delegation of legislative power by Congress to the President.
The Constitution provides that: “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.”
By the
We think this was a lawful exercise of a lawfully delegated power. In Buttfield v. Stranahan, 192 U. S. 470, 24 S. Ct. 349, 355, 48 L. Ed. 525, the court said: “We may say of the legislation in this case, as was said of the legislation considered in Field v. Clark [143 U. S. 649, 12 S. Ct. 495, 36 L. Ed. 294], that it does not, in any real sense, invest administrative officials with the power of legislation. Congress legislated on the subject as far as was reasonably practicable, and from the necessities of the case was compelled to leave to executive officials the duty of bringing about the result pointed out by the statute. To deny the power of Congress to delegate such a duty would, in effect, amount but to declaring that the plenary power vested in Congress to regulate foreign commerce could not be efficaciously exerted.”
It has been often stated that the legislative powers vested in Congress by the Constitution must be exercised by Congress alone, and cannot be delegated to any other branch of the government. This proposition has been reannounced in Panama Refining Co. v. Ryan, 293 U. S. 388, 55 S. Ct. 241, 248, 79 L. Ed. 446. It was there said: “The Congress manifestly is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested.” The court held that
But
The principle of these decisions is that without delegation the powers conferred upon Congress by the Constitution would often be incapable of exercise. Congress would be factually impotent. To deny the right to dеlegate would be “to stop the wheels of government” and bring about confusion, if not paralysis, in the conduct of the public business. Union Bridge Co. v. United States, 204 U. S. 364, 27 S. Ct. 367, 374, 51 L. Ed. 523. This principle was reannounced in the Panama Refining Co. Case, supra; the court saying: “Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the national Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislаture is to apply.” To be sure “there are limits of delegation which there is no constitutional authority to transcend.” Panama Refining Co. Case, supra. The limits are that Congress, and Congress alone, can declare the legislative policy; that it alone can point out the result to be accomplished. If such is done, it cannot be said that the delegation is unlawful. J. W. Hampton, Jr., & Co. v. United States, supra. The delegated power, if confined within proper limits, if the circumstances calling for its exercise and restraint are adequately confined, is lawful. United States v. Shreveport Grain & Elevator Co., 287 U. S. 77, 53 S. Ct. 42, 77 L. Ed. 175; Home Bldg. & Loan Ass‘n v. Blaisdell, 290 U. S. 398, 54 S. Ct. 231, 78 L. Ed. 413, 88 A.
In the instant case, the authority delegated to the President, by
That the standard is broad, that the limitations are not too confining, that the scope of power invested in the President is of great magnitude, is a necessary and essential factor if the results sought to be accomplished by Congress are to be attained. Congress desired that all business compete on a fair basis, and that obstructions to commerce be removed, that the productive capacity of our industries be more fully utilized, that the consumption of products be increased, and that industry be rehabilitatеd. The project, the complexity of conditions, presented a situation with which Congress was powerless to contend without delegating to some other department the power to attend to the innumerable details thereof.
Congress declared the emergency, declared its purpose and will, and gave to the President the power to exercise the means deemed necessary by it to achieve the desired end. His power to approve Codes was, however, limited to those which he found (a) admitted equitably to membership in the association all those engaged in the same trade or industry; (b) were submitted by an association truly representative of the trаde or industry; (c) would not oppress or discriminate against small enterprises; (d) would not promote monopolies; (e) would give employees the right to organize and bargain collectively; (f) would insure compliance by an employer with maximum hours of labor and minimum wages; and (g) would tend to effectuate the policy of the act.
This section was an effective means of the congressional exercise of its constitutional functions. It was both flexible and practicable. The President was to make detailed regulations in conformance with the general standards in order that the congressional purpose might be realized. Thus we have a valid delegation.
Error is assigned fоr the refusal to sustain the demurrer to counts 4, 5, and 60 because ordinances and regulations of the city of New York therein referred to were not pleaded. Section 22 of the Code prohibits the sale of live poultry which has not been inspected and approved in accordance with the rules, regulations, or ordinances of the particular area. These counts deal with this subject without reference to the particular provisions of the city ordinances. Judicial notice may be taken of these provisions by the court. Martin‘s Adm‘r v. B. & O. R. R., 151 U. S. 673, 14 S. Ct. 533, 38 L. Ed. 311; Kaye v. May (C. C. A.) 296 F. 450. The Poultry Code which will be judicially noticed by this court (Thornton v. United States, supra) contemplates inspection in accordance with the Sanitary Code (§ 22). Sincе judicial notice is taken, it was unnecessary to plead such laws. Pennington v. Gibson, 16 How. (57 U. S.) 65, 81, 14 L. Ed. 847.
Appellants argue that there is no evidence to warrant the conviction for con-
The majority of the court are of the opinion that count 46 (violation of the Code provisions as to wages), and count 55 (as to hours per week for slaughterhouse employees), cannot be sustained. Each of the counts of this indictment must stand upon its own footing. These provisions of the Code forbade employment for more than 48 hours per week and required a minimum wage of 50 cents per hour. These counts are invalid because they have no direct concern with interstate commerce. They were the wages paid at the slaughterhouses to employees not directly еngaged in interstate commerce; the number of hours of labor per week and the wages paid cannot be said to affect interstate commerce; they may affect intrastate commerce. Therefore the conviction on counts 46 and 55 are reversed. The evidence fully sustained the convictions on all the other counts of the indictment.
We have considered the other errors assigned and find no justification for reversal.
Reversed in part; affirmed in part.
L. HAND, Circuit Judge, concurs in separate opinion.
CHASE, Circuit Judge, concurs, and concurs in Circuit Judge L. HAND‘S opinion.
L. HAND, Circuit Judge (concurring).
I am one of the majority who think that counts 46 and 55 should be reversed, and the question at stake has enough importance to justify a statement of my reasons. It is always a serious thing to declаre any act of Congress unconstitutional, and especially in a case where it is part of a comprehensive plan for the rehabilitation of the nation as a whole. With the wisdom of that plan we have nothing whatever to do; and were only the Fifth Amendment involved I should be prepared to read the powers of Congress in the broadest possible way. Moreover, the phrase “fair competition” seems to me a definite enough cue or ground plan for the elaboration of a code. Federal Trade Commission v. R. F. Keppel & Bro., 291 U. S. 304, 54 S. Ct. 423, 78 L. Ed. 814; Frischer & Co. v. Elting, 60 F.(2d) 711 (C. C. A. 2); Sears, Roebuck & Co. v. Fed. Trade Comm. (C. C. A. 7) 258 F. 307, 6 A. L. R. 358. Assuming that the preamble of the whole statute will not serve alone (Panama Refining Co. v. Ryan, 293 U. S. 388, 55 S. Ct. 241, 79 L. Ed. 446), practices generally deemed unfair in any trade may I think be made the basis of a delegated power, which is obliged to conform to the varying needs of many industries. But the extent of the power of Congress to regulate interstate commerce is quite another matter and goes to the very root of any federal system at all. It might, or might not, be a good thing if Congress were supreme in all respects, and the states merely political divisions without more autonomy than it chose to accord them; but that is not the skeleton or basic framework of our system. To protect that framework there must be some tribunal which can authoritatively apportion the powers of government, and traditionally this is the duty of courts. It may indeed follow that the natiоn cannot as a unit meet any of the great crises of its existence except war, and that it must obtain the concurrence of the separate states; but that to some extent at any rate is implicit in any federation, and the resulting weaknesses have not hitherto been thought to outweigh the dangers of a completely centralized government. If the American people have come to believe otherwise, Congress is not the accredited organ to express their will to change.
In an industrial society bound together by means of transport and communication as rapid and certain as ours, it is idle to seek for any transaction, however apparently isolated, which may not have an effect elsewhere; such a society is an elastic medium which transmits all tremors throughout its territory; the only question is of their size. In the case at bar such activities as inspecting the fowls after they have arrived, licensing dealers, and requiring reports, are directed at least in part to the control of their importation, and it is not necessary that they should impinge directly upon the importation itself. So
The only ground here for bringing hours and wages within the scope of Congress’ power is because the raw material on which the men work is substantially all imported into the state; they make dressed poultry out of live fowls. If Congress can control the price of their labor, I cannot see why it may not control the rent of the buildings where the fowls are stored, the сost of the feed they eat while here, and of the knives and apparatus by which they are killed and dressed. All these are necessary factors in the product and all have as much and as little effect upon the importation of the fowls to be killed and dressed as the labor, which is indeed little more than half the cost. There comes a time when imported material, like any other goods, loses its interstate character and melts into the domestic stocks of the state which are beyond the powers of Congress. So too there must come a place where the services of those who within the state work it up into a finished product are to be regarded as domestic activities. Industrial Ass‘n of San Francisco v. U. S., 268 U. S. 64, 45 S. Ct. 403, 69 L. Ed. 849. Generally the two will coalesce. Work upon material become domestic, can scarcely be other than domestic work; in this it differs from inspection and its ancillary accompaniments. For although inspection is immediately concerned with goods that have arrived, they are ordinarily still in transit; and moreover even were they not, the purpose is directly to control the importation of future goods, like the purpose of the conspiracy in Bedford Cut Stone Co. v. Journeyman Stone Cutters’ Association, 274 U. S. 37, 47 S. Ct. 522, 71 L. Ed. 916, 54 A. L. R. 791. But labor done to work up materials begins only after the transit is completed in law as well as in fact, and it is not directed towards the importation of future materials; it is a part of the general domestic activities of the state and is as immune as they from congressional regulation.
CHASE, Circuit Judge, concurs in this opinion.