U.S. Supreme Court UNITED STATES v. ROCK ROYAL CO-OP., INC., 307 U.S. 533 (1939)

[Page 307 U.S. 533, 541]

Broadly speaking, these defenses were based upon erroneous representations alleged to have been made by officials and by certain private organizations to bring about the approval of the Order and upon an alleged conspiracy of the same private organizations to create a monopoly by means of the Order. The motion to strike these defenses having been overruled, the Dairymen's League Cooperative Association, hereinafter called the League, and the Metropolitan Cooperative Milk Producers Bargaining Agency, Inc., hereinafter called the Agency, were permitted to intervene to combat them.

The answers also challenged the two orders and the Act as contrary to the Fifth and Fourteenth Amendments to the Constitution, U.S.C.A., and the Act as involving improper delegation of legislative power. The Central New York Cooperative Association denied the power of the Congress to enact the legislation under the Commerce Clause and set up as a further defense that it was not subject to either order.

After a hearing upon the merits, the District Court dismissed the complaints. The state order was eliminated from consideration on the understanding, not questioned here, that the milk of all four defendants is covered by the Federal Order, if valid. It was further held that Sections 8c(5)(B)(ii) and 8c(5)(F) of the Act, 7 U.S.C.A. 608c(5)(B)(ii ), (F), violate the due process clause of the Fifth Amendment, that the Order is discriminatory and takes property without compensation, that approval of the producers was secured by unlawful misrepresentation and coercion and that important provisions of the Order, authorizing payments to cooperative and proprietary handlers, have no basis in the Act. United States v. Rock Royal Co-operative, D.C., 26 F.Supp. 534, 544, 545, 548, 550, 553. As the unconstitutionality of certain sections of an Act of Congress was one ground of the decision an appeal was allowed directly to this Court. [Footnote 3]

[Page 307 U.S. 533, 542]

The Statute. [Footnote 4] The controversy revolves almost entirely around Order No. 27. Back of the Order is the statute under which it was issued, the Agricultural Marketing Agreement Act of 1937 which reenacted and amended certain provisions of the Agricultural Adjustment Act. [Footnote 5]

[Page 307 U.S. 533, 547]

son to believe that the issuance of an order will tend to effectuate the declared policy of the Act with respect to any commodity or product thereof, and after notice and an opportunity for hearing. It is necessary also for the Secretary of Agriculture to set forth in such order a finding upon the evidence introduced at the hearing that the issuance of the Order and of the terms and conditions thereof will tend to effectuate the declared policy. [Footnote 7] When, as here, the commodity is milk, the Act requires8 that the Order contain one or more of terms specified in Section 8c(5) and no others, except certain terms common to all orders and set out in Section 8c(7). These terms, as used in the Order under examination, will be referred to later. Orders may only be issued9 after hearing upon a marketing agreement which regulates the handling of the commodity in the same manner as the order. Without special determination of the Secretary of Agriculture and approval of the President, orders are not to become effective unless approved by handlers as required by the Act. [Footnote 10]

[Page 307 U.S. 533, 549]

be paid to purchasers and to be charged to consumers. [Footnote 11] A later New York act, the Rogers-Allen Act,12 authorized the state commissioner to cooperate with the Federal authorities acting under the present Marketing Agreement Act, and to issue orders supplementary to those of the Federal Government to be carried out under joint administration.

The problems concerned with the maintenance and distribution of an adequate supply of milk in metropolitan centers are well understood by producers and handlers. In the milkshed and marketing area of metropolitan New York these problems are peculiarly acute. [Footnote 13] It is generally recognized that the chief cause of fluctuating prices and supplies is the existence of a normal surplus which is necessary to furnish an adequate amount for peak periods of consumption. This results in an excess of production during the troughs of demand. As milk is highly perishable, a fertile field for the growth of bacteria, and yet an essential item of diet, it is most desirable to have an equate production under close sanitary supervision to meet the constantly varying needs. The sale of milk in metropolitan New York is ringed around with requirements of the health departments to assure the purity of the supply. Only farms with equipment approved by the health authorities of the marketing area and operated in accordance with their requirements are permitted to market their milk. More than sixty thousand dairies located in the states of New York, Connecticut, Massachusetts, Maryland, New Jersey, Pennsylvania and Vermont hold certificates

[Page 307 U.S. 533, 559]

within its terms. A study of the official form of the Order would have cleared up any misconception created by the language. The Secretary of Agriculture declared that three-fourths of the producers affected by the Order approved its terms. The litigants do not deny that three-fourths of the voters voted for the institution of the Order. 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 resolution.

The coercion by the League and the Agency, exercised upon the handlers after the adoption of the Order to force or induce them to acquiesce in its operation, is of the same indirect character as the alleged misrepresentation. It is the partisan coercion of the producer seeking to compel dealer support of the plan by the threat of the use of his economic power over his own milk. The coercion was ineffective upon these defendants. Producers' organizations urged in their papers and meetings diversion of milk from handlers to influence them to agree to the Order. Such efforts could not have had an effect on the prior vote of the producers. It is quite true that the League which itself cast two-thirds of the favorable votes was in a position to cast more than one-third of the total qualified vote against the Order. This arises from the provision of the Act, authorizing cooperatives to express the approval or disapproval for l of their members or patrons. [Footnote 17] This is not an unreasonable provision, as the cooperative is the marketing agency of those for whom it votes. If the power is in the Congress to put the order in effect, the manner of the demonstration of further approval is likewise under its control. These associations of producers of milk have a vital interest in the establishment of an efficient marketing system. This ade-

[Page 307 U.S. 533, 560]

quately explains their interest in securing the adoption of an order believed by them to be favorable for this purpose. If ulterior motives of corporate aggrandizement stimulated their activities, their efforts were not thereby rendered unlawful. [Footnote 18] If the Act and Order are otherwise valid, the fact that their effect would be to give cooperatives a monopoly of the market would not violate the Sherman Act or justify the refusal of the injunction.

Correlation of Order and Act. There is another phase of the argument against the Order which is not affected by the validity of the Act or its application in the Order and therefore is ready for disposition before the constitutional questions need be reached. Defendants contend there is no statutory basis for the sections of the Order exempting cooperatives from the payment of the uniform price19 and authorizing payments to them and certain handlers from the producer settlement fund. [Footnote 20]

[Page 307 U.S. 533, 561]

to pay uniform prices for the milk it purchases. 21 This requirement to pay uniform prices arises from the provisions of Article IV that it shall pay minimum prices. The two are the same except for the deduction of certain service payments. The cooperatives are excepted from the payment. The burden of payment is laid directly upon Jetter while others are excepted. None of the defendants, on the other hand, is in a position to raise the issue of lack of statutory authority for the payments authorized by Article VII, Sections 5 and 6. Whether cooperative or not, the defendant corporations have no financial interest in the producer settlement fund. All defendants pay into, or draw out of, that fund in accordance with their utilization of the milk delivered to them by their patrons. The defendants' profit or loss depends upon the spread each receives between the class price and sale price. If the deductions from the fund are small or nothing, the patron receives a higher uniform price but the handler is not affected. [Footnote 22]

[Page 307 U.S. 533, 563]

treatment has been accorded marketing cooperatives by state and Federal legislation alike. [Footnote 25] Indeed the Secretary is charged by this Act to 'accord such recognition and encouragement to producer-owned and producer- controlled cooperative associations as will be in harmony with the policy toward cooperative associations set forth in existing Acts of Congress, and as will tend to promote efficient methods of marketing and distribution.' [Footnote 26] These agricultural cooperatives are the means by which farmers and stockmen enter to the processing and distribution of their crops and livestock. The distinctions between such cooperatives and business organizations have repeatedly been held to justify different treatment. [Footnote 27] Frost

[Page 307 U.S. 533, 564]

v. Corporation Commission28 in fact recognized the validity of such classification. The Commission was enjoined from issuing a license for the operation of a cooperative cotton gin, under a proviso directing it to do so on petition of 100 citizens and taxpayers without the showing of public necessity required for other ginners. The applicant was organized for profit, though dividends were limited, and its membership was not confined to producers. The court thought the distinctions had no reasonable relation to the subject of the legislation, special opportunities for cooperatives. It was said the Court had 'no reason to doubt' that the classification was valid as applied to true cooperatives. [Footnote 29]

The producer cooperative seeks to return to its members the largest possible portion of the dollar necessarily spent by the consumer for the product with deductions only for modest distribution costs, without profit to the membership cooperative and with limited profit to the stock cooperative. It is organized by producers for their mutual benefit. [Footnote 30] For that reason, it may be assumed that it will seek to distribute the largest amounts to its patrons.

[Page 307 U.S. 533, 565]

The commodity handled by a cooperative corresponds for some purposes to the capital of a business corporation. Either may cut sale prices below cost, one as long as its members will deliver, the other as long as its assets permit. When proprietary corporations lower sales prices, they naturally seek to lower purchase prices. Their profit depends on spread. On the other hand, the cooperative cannot pass the reduction. All the selling price less expense is available for distribution to its patrons. As its own members bear the burden of price cutting, it was reasonable to exempt it from the payment of the fixed price. The cooperative member measures his return by the market or uniform price the business handler pays. In commodities with the wide market of staple dairy products, quotations are readily available. If distributions do not equal open prices, the cooperators' reactions would parallel those of stockholders of losing businesses. Neither the Act nor the Order protects anyone from lawful competition, nor is it essential that they should do so. 31 We do not find an unreasonable discrimination in excepting producers' cooperatives from the requirement to pay a uniform price.

B. Unpriced Milk. Another discrimination is said to reside in that part of the Order which limits minimum prices to milk 'sold in the marketing area or which passes through a plant in the marketing area.' Other milk, though from the same production area, is 'unpriced milk' and does not figure in the computation of the uniform price. Where both priced and unpriced milk are dealt in by a handler, he must furnish a statement to the producer showing the percentage of his milk paid for at the uniform price. [Footnote 32] The defendants handle only milk which is sold in the marketing area. They assert that an un-

[Page 307 U.S. 533, 567]

'actual price' paid for milk sold in the marketing area is reduced. The price paid for all milk sold by proprietary handlers in that area is the uniform price. Unpriced milk from the same producer may be bought for less. The average paid the producer may be below the minimum but for the part sold in the marketing area or passing through plants there located the minimum is paid. This is all that justifies the language of the finding that 'the handler, by blending, is thereby permitted to pay producers for all milk at less than the Order price. ...'

c. Nearby Differentials. Provision is made by the Order for special differentials of 20 cents on milk from certain counties located most favorably to the marketing area. [Footnote 33] This is to enable handlers to pay the producers at these plants. [Footnote 34] The five cent difference is absorbed by the handlers. The Act authorizes such an arrangement. 8c(5)(A). This was found discriminatory as between producers by the District Court but there was no finding or conclusion of law as to any discrimination against defendants. The District Court was of the opinion this was unfair to these defendants who have no patrons in these counties. Here the defendants urge further advantages from this arrangement to their competitors who have patrons in these counties because near locations, freight differentials considered, have lower transportation costs. The differential increases milk prices to the producers. This payment tends to stimulate production. Larger production means more benefit from the freight advantage to competitors. The discrimination seems fanciful and remote. It would not justify a court in overturning the Secretary's determination of the propriety of the differentials on evidence found by the lower court to be substantial. Such an administrative determination carries a presumption of the existence of a state

[Page 307 U.S. 533, 568]

of facts justifying the action far too strong to be overturned by such suggestions as are made here. [Footnote 35]

II. Constitutionality of the Act.

A. Minimum Prices. The Act authorizes and the Order undertakes the fixing of minimum prices for the purchase of milk 'in the current of interstate or foreign commerce, or which directly burdens, obstructs, or affects, interstate or foreign commerce' in milk. [Footnote 36] There is no challenge to the fact that the milk of all four defendants reaches the marketing area through the channels of interstate commerce. Nor is any question raised as to the power of the Congress to regulate the distribution in the area of the wholly intrastate milk. It is recognized that the Federal authority covers the sales of this milk, as its marketing is inextricably intermingled with and directly affects the marketing in the area of the milk which moves across state lines. [Footnote 37]

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merce. [Footnote 38] We have likewise held that where sales for interstate transportation were commingled with intrastate transactions, the existence of the local activity did not interfere with the Federal power to regulate inspection of the whole. [Footnote 39] 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. [Footnote 40] Power to establish quotas for interstate marketing gives power to name quotas for that which is to be left within the state of production. [Footnote 41] Where local and foreign milk alike are drawn into a general plan for protecting the interstate commerce in the commodity from the interferences, burdens and obstructions, arising from excessive surplus and the social and sanitary evils of low values, the power of the Congress extends also to the local sales.

This power over commerce when it exists is complete and perfect. [Footnote 42] It has been exercised to fix a wage scale for a limited period,43 railroad tariffs44 and fees and charges for live-stock exchanges. [Footnote 45]

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merce. Since Munn v. Illinois, this Court has had occasion repeatedly to give consideration to the action of states in regulating prices. [Footnote 46] Recently, upon a reexamination of the grounds of state power over prices, that power was phrased by this Court to mean that 'upon proper occasion and by appropriate measures the state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells.' 47

The power of a state to fix the price of milk has been adjudicated by this Court. [Footnote 48] The people of great cities depend largely upon an adequate supply of pure fresh milk. So essential is it for health that the consumer has been willing to forego unrestricted competition from low cost territory to be assured of the producer's compliance with sanitary requirements, as enforced by the municipal health authorities. It belongs to that category of commodities that for many years has been subjected to the regulatory power of the state. A thorough exposition of the milk situation in the New York shed was made in the Nebbia case. There is nothing to add to what was there said, save to point out that since that decision, we have held that a state cannot prohibit the sale of imported milk where the extra-state purchase price was below the prescribed minimum 49 and that a Pennsylvania regulatory

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law, including minimum prices, plied in the absence of Federal legislation to milk purchased in Pennsylvania for shipment into the New York marketing area.50. In Hegeman Farms Corp. v. Baldwin,51 this Court sustained again the New York Milk Control Statute against the complaint that the price limits were arbitrary. A variation in prices to be charged the consumer between dealers who had and dealers who had not well advertised trade names was upheld. [Footnote 52] The power enjoyed by the states to regulate the prices for handling and selling commodities within their internal commerce53 rests with the Congress in the commerce between the states.

[Page 307 U.S. 533, 573]

Common funds for equalizing risks are not unknown and have not been considered violative of due process. The pooling principle was upheld in workmen's compensation,55 bank deposit insurance,56 and distribution of benefits in the Transportation Act. [Footnote 57]

The defendants rely particularly upon Thompson v. Consolidated Gas Utilities Corp.,58 and Railroad Retirement Board v. Alton. [Footnote 59] In the Thompson case, the Texas Railroad Commission ordered proration of gas production in the Panhandle. It was assumed that proration to prevent waste and protect correlative rights in a pool was valid but it was held that the proration order in issue was for none of these purposes. It was for the 'sole purpose ... to compel those (with market outlets) ... to purchase gas from potential producers' who have no market. This was not deemed to be reasonably related to the conservation of gas or the protection of correlative rights. In the Retirement Board case, the pooling principle was involved but was found to be invalid because the burdens on the roads were not equalized with the benefits. Entry on service was made at different age levels for different roads. Employees seventy or older were required to retire. Some roads had none. Solvent and insolvent roads were liable alike. All carriers were treated as a single employer. It was these provisions, deemed unequal, which led to the conclusion that the manner of pooling of funds denied due process. In this case, the pooling has differentials to cover the variations of quality and location.

[Page 307 U.S. 533, 574]

C. Delegation. There are three issues of delegation presented: (1) the delegation of authority to the Secretary of Agriculture to establish marketing areas; (2) the delegation of authority to producers to approve a marketing order without an agreement of handlers; and (3) the delegation of authority to cooperatives to cast the votes of producer patrons.

From the earliest days the Congress has been compelled to leave to the administrative officers of the Government authority to determine facts which were to put legislation into effect and the details of regulations which would implement the more general enactments. It is well settled, therefore, that it is no argument against the constitutionality of an act to say that it delegates broad powers to executives to determine the details of any legislative scheme. This necessary authority has never been denied. [Footnote 60] In dealing with legislation involving questions of economic adjustment, each enactment must be considered to determine whether it states the purpose which the Congress seeks to accomplish and the standards by which that purpose is to be worked out with sufficient exactness to enable those affected to understand these limits. Within these tests the Congress needs specify only so far as is reasonably practicable. [Footnote 61] The present Act, we believe, satisfies these tests.

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farmers at a level that will give agricultural commodities a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period.' To accomplish this, the Secretary of Agriculture is directed to issue orders, whenever he has reason to believe the issuance of an order will tend to effectuate the declared policy of the act. Unlike the language of the National Industrial Recovery Act condemned in the Schechter case, 295 U.S. page 538, 55 S.Ct. page 846, 97 A.L.R. 947, the tests here to determine the purpose and the powers dependent upon that conclusion are defined. In the Recovery Act the Declaration of Policy was couched in most general terms. [Footnote 62] In this Act it is to restore parity prices, Section 2. Under the Recovery Act, general welfare might be sought through codes of any industry, formulated to express standards of fair competition for the businesses covered. Here the terms of orders are limited to the specific provisions, minutely set out in 8c(5) and (7). While considerable flexibility is provided by 8c(7)(D),

[Page 307 U.S. 533, 576]

it gives opportunity only to include provisions auxiliary to those definitely specified.

The Secretary is not permitted freedom of choice as to the commodities which he may attempt to aid by an order. The Act, Section 8c(2 ), limits him to milk, fresh fruits except apples, tobacco, fresh vegetables, soybeans and naval stores. The Act authorizes a marketing agreement and order to be issued for such production or marketing regions or areas as are practicable. A city milkshed seems homogeneous. This standard of practicality is a limit on the power to issue orders. It determines when an order may be promulgated.

It is further to be observed that the Order could not be and was not issued until after the hearing and findings as required by Section 8c(4). Public hearings were held at Albany, Malone, Syracuse, Elmira, and New York from May 16 to June 7, 1938, with four days' recess. Nearly three thousand pages of testimony were introduced, eighty-eight documentary exhibits and some twenty briefs by interested parties were filed. On July 23, 1938, the Secretary, in the Federal Register, notified the public of his findings and the terms of the Order and again invited comment. Numerous parties again filed briefs. A right by statute is given handlers to object to the Secretary to any provision of an order as not 'in accordance with law,' with the privilege of appeal to the courts. Section 8c(15)(A) and (B). Even though procedural safeguards cannot validate an unconstitutional delegation, they do furnish protection against an arbitrary use of properly delegated authority. [Footnote 63]

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[B] of the Act it is provided that any order shall become effective notwithstanding the failure of 50 percent the handlers to approve a similar agreement, if the Secretary of Agriculture with the approval of the President determines, among other things, that the issuance of the order is approved by two- thirds of the producers interested or by interested producers of two- thirds of the volume produced for the market of the specified production area. By subsection (19) it is provided that for the purpose of ascertaining whether the issuance of such order is approved 'the Secretary may conduct a referendum among producers.' The objection is made that this is an unlawful delegation to producers of the legislative power to put an order into effect in a market. In considering this question, we must assume that the Congress had the power to put this Order into effect without the approval of anyone. Whether producer approval by election is

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necessary or not, a question we reserve, a requirement of such approval would not be an invalid delegation. [Footnote 64]

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Milk Control of New York permitting the marketing in the manner described.

Section 8c(5)(A) authorizes an order to classify milk and fix minimum prices which all handlers shall pay for milk purchased from producers. Section 8c(5) (C) authorizes the equalization pool and the handlers' payment to this settlement fund. It is urged that cooperatives which merely act as agents for their members are not included in handlers purchasing from producers. This is said to be definitely shown by the provisions of 8c(5)(F) providing that nothing contained in the subsection shall be construed to prevent a Capper-Volstead cooperative from making distribution to its 'producers in accordance with the contract.' The Order defines a handler as including a cooperative association 'with respect to any milk received from producers at any plant operated by such association or with respect to any milk which it causes to be delivered' to other handlers. Under the provisions of the Order, Article VII, Sections 8 and 9, cooperative handlers as other handlers equalize their purchases by payment into the producer settlement fund, even though they are not required to pay the uniform price to their producers by reason of the exception of Article VII, Section 1, and the provisions of 8c(5)(F), as explained, 59 S. Ct. 1007, 83 L.Ed. --.

Cooperative contracts are of two general types, sale and agency. [Footnote 65] The Central New York Cooperative operates under the agency type.

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thorizes all orders, Section 8c(1), makes no distinction. The orders are to be applicable to 'processors, associations of producers, and others engaged in the handling of commodities. The reports on the bill show no effort to differentiate. [Footnote 66] Neither do the debates in Congress. The statutory provisions for equalization of the burdens of surplus would be rendered nugatory by the exception of 'agency' cooperatives. The administrative construction has been to include such organizations as handlers. [Footnote 67] With this we agree. As here used the word 'purchased' means 'acquired for marketing.' Subsection (A) cannot be construed as freeing agents, cooperative or proprietary, from the requirement to account at the minimum prices for milk handled.

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keting area and an arbitrary price fixed for 'unpriced' milk. The effect upon a handler whose trade is solely in the marketing area is disastrous. The lower price paid by those who are permitted to blend makes it possible for them to resell the milk in the marketing area, in which no resale price is fixed, at a cut rate which is destructive of their competitors' business. And there is evidence that handlers, cooperative and proprietary, have taken advantage of the terms of the order to cut the price of milk to consumers in the marketing area to the disadvantage of their competitors.

The appellants make no answer to the appellees' attack on this feature of the order. The opinion of this court states that the detriment to the smaller handlers who sell milk for use only in the marketing area is the result of competitive conditions which the order does not affect. But it is evident that the order freezes the minimum price which is to be paid by many handlers and leaves the price of other handlers who compete with them open to reduction by the device of blending.

There is nothing in the Act which authorizes the discrimination worked by the order permitting handlers, whether proprietary or cooperative, to blend the prices of unpriced milk with that of milk, sold in the marketing area. Section 8c(5)(F), as I read it, prohibits such a practice by cooperatives. If the order had provided that milk sold in New Jersey should be accounted for to the pool at its actual value and had the milk so sold been accounted into the pool, competitors could not have obtained the advantage which so seriously injures the business of appellees. As the order is drawn and administered it inevitably tends to destroy the business of smaller handlers by placing them at the mercy of their larger competitors. I think no such arrangement was contemplated by the Act, but that, if it was, it operates to deny the appellees due process of law.

I think that the decree should be affirmed.

The CHIEF JUSTICE joins in this opinion so far as it relates to the invalidity of the order on the ground stated; Mr. Justice McREYNOLDS and Mr. Justice BUTLER also join in this opinion. Footnotes

Footnote 1 Act of June 3, 1937, 50 Stat. 246, 7 U.S.C.A. 601 et seq.

Footnote 2 As authorized by N.Y.Laws 1937, c. 383. See Noyes v. Erie & Wyoming Farmers Co-op. Corp., 170 Misc. 42, 10 N.Y.S.2d 114.

Footnote 3 Sec. 2, Act of Aug. 24, 1937, 50 Stat. 752, 28 U.S.C. 349a, 28 U. S.C.A. 349a.

Footnote 4 Pertinent portions of the Act are as follows:

Act, Sec. 8c(1). 'The Secretary of Agriculture shall, subject to the provisions of this section, issue, and from time to time amend, orders applicable to processors, associations of producers, and others engaged in the handling of any agricultural commodity or product thereof specified in subsection (2) of this section. ...'

(2) 'Orders issued pursuant to this section shall be applicable only to the following agricultural commodities and the products thereof (except products of naval stores * * , or to any regional, or market classification of any such commodity or product: Milk, fruits (including pecans and walnuts but not including apples and not including fruits, other than olives, for canning), tobacco, vegetables (not including vegetables, other than asparagus, for canning), soybeans ... and naval stores as included in the Naval Stores Act (sections 91 to 99 of this title) and standards established thereunder (including refined or partially refined oleoresin).'

(3) 'Whenever the Secretary of Agriculture has reason to believe that the issuance of an order will tend to effectuate the declared policy of this title (chapter) with respect to any commodity or product thereof specified in subsection (2) of this section, he shall give due notice of and an opportunity for a hearing upon a proposed order.'

(4) 'After such notice and opportunity for hearing, the Secretary of Agriculture shall issue an order if he finds, and sets forth in such order, upon the evidence introduced at such hearing (in addition to such other findings as may be specifically required by this section) that the issuance of such order and all of the terms and conditions thereof will tend to effectuate the declared policy of this title (chapter) with respect to such commodity.'

(5) 'In the case of milk and its products, orders issued pursuant to this section shall contain one or more of the following terms and conditions, and (except as provided in subsection (7)) no others:'(A) Classifying milk in accordance with the form in which or the purpose for which it is used, and fixing, or providing a method (Footnote 4 continues on next page.)

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Footnote 5 Act of May 12, 1933, 48 Stat. 31, as amended Aug. 24, 1935, 49 Stat. 750, 7 U.S.C.A. 601 et seq.

Footnote 6 Sec. 8c(2).

Footnote 7 Sec. 8c(4).

Footnote 8 Sec. 8c(5).

Footnote 9 Sec. 8c(10).

Footnote 10 Sec. 8c(8).

Footnote 11 Certain of these powers were upheld in Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 89 A.L.R. 1469.

Footnote 12 N.Y.Laws 1937, c. 383.

Footnote 13 Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 89 A. L.R. 1469; Baldwin v. Seelig, 294 U.S. 511, 55 S.Ct. 497, 101 A.L.R. 55; Hegeman Farms Corp. v. Baldwin, 293 U.S. 163, 55 S.Ct. 7.

Footnote 14 Pertinent portions are as follows:

Order, Article VI, Section 1. 'Net Pool Obligation of Handlers.-The net pool obligation of any handler for milk received from producers during each month shall be a sum of money computed for such month as follows:'1. Determine the total quantity of milk in each class at each plant;'2. Subtract from the quantity of milk in each class the quantity of such milk received from other plants or from other handlers;'3. Subtract pro rata out of each class the quantity of milk received from the handler's own farm;'4. Subtract from the remaining quantity of milk in each class, the quantity of each to which the prices in section 1 of Article IV do not apply, which result shall be known as the 'net pooled milk' in each class;'5. Multiply the total quantity of net pooled milk in each class, at all plants of the handler combined, by the respective class prices set forth in section 1 of article IV and add together the resulting sums;'8. Deduct 20 cents per hundredweight for all net pooled milk received from producers at plants in the counties or portions of counties listed below in this section. The result thus obtained shall be known as the 'handler's net pool obligation."'Counties-New Jersey: Hunterdon, Somerset, Essex, Union, Morris, Warren, Sussex, Passaic. New York: Columbia, Dutchess, Nassau, Orange, Putnam, Suffolk, Westchester. Connecticut: Litchfield. Massachusetts: Berkshire. Towns in Ulster County, New York: Marbletown, Hurley, Kingstown, Ulster, Rosendale, Esopus, New Paltz, Lloyd, Gardiner, Plattekill, Marlborough, Shawangunk.'Sec. 2. Computation of the Uniform Price.-The market administrator shall, on or before the 14th day of each month, audit for mathematical correctness and obvious errors the final report submitted for the preceding month by each handler and, on the 14th day of such month, compute from all of such corrected reports the uniform price in the following manner:'1. Combine into one total the net pool obligations of all handlers;

Footnote 15 4 Fed.Reg. 1259.

Footnote 16 3 Fed.Reg. 2100.

Footnote 17 Section 8c(12).

Footnote 18 Cf. Isbrandtsen-Moller Co. v. United States, 300 U.S. 139, 145, 57 S.Ct. 407, 410; California Water Service Co. v. City of Redding, 304 U.S. 252, 254, 58 S.Ct. 865, 866.

Footnote 19 Article VII, Section 1.

Footnote 20 Article VII, Sections 5 and 6.

Footnote 21 Article VII, Section 1.

Footnote 22 Currin v. Wallace, 306 U.S. 1, 18, 59 S.Ct. 379; Board of Trade of Chicago v. Olsen, 262 U.S. 1, 42, 43 S.Ct. 470, 479; Oliver Iron Mining Co. v. Lord, 262 U.S. 172, 181, 43 S.Ct. 526, 530; Gorieb v. Fox, 274 U.S. 603, 606, 47 S.Ct. 675, 676, 53 A.L.R. 1210; cf. Carmichael v. Southern Coal Co., 301 U.S. 495, 513, 57 S.Ct. 868, 874, 109 A.L.R. 1327; Steward Machine Co. v. Davis, 301 U.S. 548, 598, 57 S.Ct. 883, 895, 109 A.L.R. 1293.

Footnote 23 Article I, Section 1, subsec. 6.

Footnote 24 42 Stat. 388, 7 U.S.C.A. 291, 292.

Footnote 25 United States-The Clayton Act, 6, 38 Stat. 731, 15 U.S.C.A. 17; Robinson-Patman Act, 4, 49 Stat. 1528, 15 U.S.C.A. 13b; Capper- Volstead Act, 42 Stat. 388, 7 U.S.C.A. 291, 292; War Finance Corporation Act, 40 Stat. 506, as amended 42 Stat. 181, 182; The Grain Futures Act, 42 Stat. 1000, 7 U.S.C.A. 7; The Agricultural Marketing Act, 46 Stat. 19, 12 U.S.C.A. 1141j.

States-See Hanna, The Law of Cooperative Marketing Associations (1931 ), c. 3.

Footnote 26 Agricultural Adjustment Act, Sec. 10(b), 48 Stat. 37, as amended by Sec. 16(b)(1) of the Act of August 24, 1935, 49 Stat. 767, as adopted by Sec. 1(h) of the Act of June 3, 1937, 50 Stat. 246, 7 U.S.C.A. 610(b).

Footnote 27 Flint v. Stone Tracy Co., 220 U.S. 107, 173, 31 S.Ct. 342, 357, Ann.Cas.1912B, 1312; Brushaber v. Union Pacific Railroad Co., 240 U.S. 1, 21, 36 S.Ct. 236, 243, L.R.A.1917D, 414, Ann.Cas. 1917B, 713; Chicago Board of Trade v. Olsen, 262 U.S. 1, 40, 43 S.Ct. 470, 478; Liberty Warehouse Co. v. Burley Tobacco Growers' Cooperative Association, 276 U.S. 71, 89, 48 S.Ct. 291, 294. The Government furnishes us with a collection of state cases approving the special advantages given co-operatives: Tobacco Growers' Coop. Asso. v. Jones, 185 N.C. 265, 117 S.E. 174, 33 A.L.R. 231. Kansas Wheat Growers v. Schulte, 113 Kan. 672, 216 P. 311; Brown v. Staple Cotton Growers Co-op. Asso., 132 Miss. 859, 96 So. 849; Northern Wisconsin Co-op. T.P. v. Bekkedal, 182 Wis. 571, 197 N.W. 936; Dark Tobacco Gr. Co-op. Asso. v. Dunn, 150 Tenn. 614, 266 S.W. 308; Minnesota Wheat Growers v. Huggins, 162 Minn. 471, 203 N.W. 420; List v. Burley Tobacco Growers' Co-op. Asso., 114 Ohio St. 361, 151 N.E. 471; Dark Tobacco Growers' Co-op. Asso. v. Robertson, 84 Ind.App. 51, 150 N.E. 106; Potter v. Dark Tobacco Growers Co- op., 201 Ky. 441, 257 S.W. 33; Harrell v. Cane Growers Co-op., 160 Ga. 30, 126 S.E. 531; Nebraska Wheat Growers v. Norquest, 113 Neb. 731, 204 N.W. 798; Warren v. Alabama Farm B. Cotton Association, 213 Ala. 61, 104 So. 264; Manchester Dairy System v. Hayward, 82 N.H. 193, 132 A. 12, 19; Clear Lake Co-operative Live Stock Association v. Weir, 200 Iowa 1293, 206 N.W. 297; Hollingsworth v. Texas Hay Asso., Tex.Civ.App., 246 S.W. 1068; Washington Cranberry Asso. v. Moore, 117 Wash. 430, 201 P. 773, 204 P. 811, 25 A.L.R. 1077; Poultry Producers v. Barlow, 189 Cal. 278, 208 P. 93; Oregon Growers Co-op. Asso. v. Lentz, 107 Or. 561, 212 P. 811; South Carolina Cotton Growers English, 135 S.C. 19, 133 S.E. 542; Milk Producers Marketing Co. v. Bell, 234 Ill.App. 222 and Barns v. Dairymen's Co- operative Association, Inc., 200 App.Div. 624, 222 N.Y.S. 294.

Footnote 28 , 49 S.Ct. 235.

Footnote 29 Id., 278 U.S. page 523, 49 S.Ct. page 238.

Footnote 30 Cf. N.Y. Co-Operative Corporations Law, Consol.Laws, c. 77.

Footnote 31 New Orleans, M. & T. Railroad Co. v. Ellerman, 105 U.S. 166; Alabama Power Co. v. Ickes, 302 U.S. 464, 480, 58 S.Ct. 300, 304.

Footnote 32 Order, Article VII, Section 1.

Footnote 33 Order, Article VI, Section 1.

Footnote 34 Order, Article VII, Section 2.

Footnote 35 Borden's Farm Products v. Baldwin, 293 U.S. 194, 209, 55 S.Ct. 187, 191; Pacific States Box & Basket Co. v. White, 296 U.S. 176, 185, 56 S. Ct. 159, 163.

Footnote 36 Section 8c(1).

Footnote 37 Stafford v. Wallace, , 42 S.Ct. 397, 23 A.L.R. 229; Board of Trade of Chicago v. Olsen, 262 U.S. 1, 43 S.Ct. 470; Houston, East and West Texas Ry. v. United States, 234 U.S. 342, 351, 352 S., 34 S.Ct. 833, 836; Minnesota Rate Cases, Simpson v. Shepard, 230 U.S. 352, 399, 33 S.Ct. 729, 739, 48 L.R.A.,N.S., 1151, Ann.Cas.1916A, 18; Labor Board Cases, National Labor Relations Board v. Jones & Laughlin Steel Corp., , 57 S.Ct. 615, 108 A.L.R. 1352; Currin v. Wallace, 306 U.S. 1, 59 S.Ct. 379; Mulford v. Smith, 307 U.S. 38, 59 S.Ct. 648, 83 L.Ed. --, decided April 17, 1939; National Labor Relations Board v. Fainblatt, 306 U.S. 601, 59 S.Ct. 668, decided April 17, 1939.

Footnote 38 Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 291 S., 42 S.Ct. 106, 108; Lemke v. Farmers' Grain Co., 258 U.S. 50, 54, 42 S.Ct. 244, 246; cf. Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 10, 49 S.Ct. 1, 3 10, 49 S.Ct. 1, 3

Footnote 39 Currin v. Wallace, , 59 S.Ct. 379.

Footnote 40 Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 220, 59 S.Ct. 206.

Footnote 41 Mulford v. Smith, supra, note 37.

Footnote 42 Gibbons v. Ogden, 9 Wheat. 1, 196; Minnesota Rate Cases, Simpson v. Shepard, 230 U.S. 352, 398, 33 S.Ct. 729, 739, 48 L.R.A.,N.S., 1151, Ann.Cas.1916A, 18.

Footnote 43 Wilson v. New, 243 U.S. 332, 346, 37 S.Ct. 298, 301, L.R.A.1917E, 938, Ann.Cas.1918A, 1024.

Footnote 44 34 Stat. 589, 49 U.S.C. 15(1), 49 U.S.C.A. 15(1).

Footnote 45 Tagg Bros. v. Moorhead, , 50 S.Ct. 220; Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 23 A.L.R. 229.

Footnote 46 Munn v. Illinois, 94 U.S. 113; Budd v. New York, 143 U.S. 517, 12 S.Ct. 468; Brass v. North Dakota, 153 U.S. 391, 14 S.Ct. 857; German Alliance Insurance Co. v. Lewis, 233 U.S. 389, 34 S.Ct. 612, L.R.A.1915C, 1189; O'Gorman & Young v. Hartford Insurance Co., 282 U.S. 251, 51 S.Ct. 130, 72 A.L.R. 1163; Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 89 A.L. R. 1469; West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 108 A.L.R. 1330; Townsend v. Yeomans, 301 U.S. 441, 57 S.Ct. 842.

Wolff Packing Co. v. Industrial Court, 262 U.S. 522, 43 S.Ct. 630, 27 A.L.R. 1280; Tyson & Bro. v. Banton, 273 U.S. 418, 47 S.Ct. 426, 58 A.L.R. 1236; Fairmont Creamery Co. v. Minnesota, 274 U.S. 1, 47 S.Ct. 506, 52 A.L.R. 163; Ribnik v. McBride, 277 U.S. 350, 48 S.Ct. 545, 56 A.L.R. 1327; Williams v. Standard Oil Co., 278 U.S. 235, 49 S.Ct. 115, 60 A.L.R. 596.

Footnote 47 Nebbia v. New York, 291 U.S. 502, 537, 54 S.Ct. 505, 516, 89 A.L.R. 1469.

Footnote 48 Id.

Footnote 49 Baldwin v. Seelig, , 55 S.Ct. 497, 101 A.L.R. 55.

Footnote 50 Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S. Ct. 528, February 27, 1939.

Footnote 51 293 U.S. 163, 55 S.Ct. 7.

Footnote 52 Borden's Co. v. Ten Eyck, 297 U.S. 251, 56 S.Ct. 453.

Footnote 53 Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 89 A. L.R. 1469; Townsend v. Yeomans, 301 U.S. 441, 57 S.Ct. 842.

Footnote 54 Supra, note 37.

Footnote 55 Mountain Timber Co. v. Washington, 243 U.S. 219, 37 S.Ct. 260, Ann.Cas.1917D, 642; New York Central Railroad Co. v. White, 243 U.S. 188, 37 S.Ct. 247, L.R.A.1917D, 1, Ann.Cas.1917D, 629.

Footnote 56 Noble State Bank v. Haskell, 219 U.S. 104, 31 S.Ct. 186, 32 L.R.A.,N.S., 1062, Ann.Cas.1912A, 487; Abie State Bank v. Bryan, 282 U.S. 765, 51 S.Ct. 252.

Footnote 57 New England Divisions Case, 261 U.S. 184, 43 S.Ct. 270; Dayton Goose Creek Railway v. United States, 263 U.S. 456, 44 S.Ct. 169, 33 A.L.R. 472.

Footnote 58 300 U.S. 55, 77, 78 S., 57 S.Ct. 364, 374, 375.

Footnote 59 , 355 et seq., 55 S.Ct. 758, 764.

Footnote 60 Panama Refining Co. v. Ryan, 293 U.S. 388, 421, 55 S.Ct. 241, 248; Schechter Corp. v. United States, 295 U.S. 495, 529, 55 S.Ct. 837, 842, 97 A.L.R. 947; Currin v. Wallace, , 59 S.Ct. 379.

Footnote 61 Buttfield v. Stranahan, 192 U.S. 470, 496, 24 S.Ct. 349, 355; United States v. Chemical Foundation, 272 U.S. 1, 12, 47 S.Ct. 1, 5; Monongahela Bridge Co. v. United States, 216 U.S. 177, 193, 30 S.Ct. 356, 360; United States v. Grimaud, 220 U.S. 506, 516, 31 S.Ct. 480, 482; Avent v. United States, 266 U.S. 127, 130, 45 S.Ct. 34, 35.

Footnote 62 'Section 1. A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.' 48 Stat. 195.

Footnote 63 Cf. Schechter Corp. v. United States, 295 U.S. at page 533, 55 S. Ct. at page 844, 97 A.L.R. 947.

Footnote 64 Currin v. Wallace, 306 U.S. 1, 15, 59 S.Ct. 379.

Footnote 65 Hanna, Law of Cooperative Marketing Associations, pp. 210, 256.

Footnote 66 House Report No. 1241, 74th Cong., 1st Sess.; Senate Report No. 1011, 74th Cong., 1st Sess.

Footnote 67 Costanzo v. Tillinghast, 287 U.S. 341, 345, 53 S.Ct. 152, 153; United States v. Chicago, North Shore & M.R. Co., 288 U.S. 1, 13, 14 S., 53 S.Ct. 245, 248, 249.

Footnote 68 Article VI, Section 1.