Johnson v. Commissioner of Agriculture , 314 Mich. 548 ( 1946 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This case involves the constitutionality of certain provisions of Act No. 169, Pub. Acts 1929 (1 Comp. Laws 1929, § 5307 etseq.), as amended by Act No. 48, Pub. Acts 1931, and Act No. 236, Pub. Acts 1935 (Comp. Laws Supp. 1940, §§ 5316-1, 5317, 5319, Stat. Ann. § 12.601 et seq.). The validity of action by the State commissioner of agriculture under the provisions of said act is also in issue. Said measure is entitled:

"An act to regulate the production, handling, sale and disposition of milk, cream and other dairy products; to define different kinds of dairy products and prescribe standards for the same; to provide for the payment for milk and cream semimonthly; to provide for licenses in certain instances and for the revocation thereof and to fix penalties for the violation of this act and to repeal certain acts."

In accordance with the general purpose as indicated in the title the act makes provision for certain standards to be observed in the production and sale of dairy products and for the granting of licenses by the State commissioner of agriculture to applicants desiring to engage in the business of selling milk or cream. Provision is also made for the revocation of such licenses for cause, for the giving of written notice of such proposed revocation, appointing a time and place of hearing, and for appeal by way of certiorari in certain cases. Section 10a, added by the amendment of 1935,^* reads as follows:

"Every person, firm or corporation purchasing cream or milk for the purposes of reselling or of manufacturing the same into other products, shall pay the producer, unless otherwise provided by a written contract, semimonthly; payment shall be made on or before the first day of each and every month for all cream or milk received prior to the 15th day of the preceding month, and payment shall be made on or before the 15th day of each and every month for all cream or milk received prior to the first day of the same month. Whoever violates the provisions of this section shall be subjected to revocation of his license as provided in this act."

Prior to institution of the proceeding out of which this case arises, plaintiff held a number of licenses, referred to as dairy plant licenses and milk wagon licenses, issued to him under the statute by the commissioner of agriculture. Under date of November 19, 1942, the commissioner, the predecessor in office of the appellant, issued a notice, directed to plaintiff, that a hearing would be had on December 4, 1942, at a designated place in the city of Detroit, to determine whether certain licenses specified therein should be revoked because of plaintiff's alleged failure to comply with section 10a, above quoted, and also because of the sale of milk containing less than three per cent. butterfat, in violation of section 2 of the act. Objection was made by defendant's counsel to the sufficiency of this notice and, pursuant to stipulation, an amended notice was issued by the commissioner under date of December 7, 1942. Said amended notice specified particular instances of the violation of section 10a by plaintiff and also the date and place of sale of the milk referred to in the earlier notice. On December 18, 1942, a hearing was conducted by the commissioner under the amended notice, at which plaintiff was represented by counsel. Testimony in support of the claims set forth in the notice of hearing was taken and plaintiff's counsel also offered proofs.

Following the hearing, and under date of December 29, 1942, the commissioner of agriculture made an order revoking certain specified dairy plant and milk wagon licenses held by plaintiff. Three of the licenses ordered revoked, Nos. 81, 275, and 1018, were not specified in the notice of hearing as originally served but were added by amendment at the opening of the hearing before the commissioner. Following the issuance of the order of revocation plaintiff made application to the circuit court of Wayne county for a writ of certiorari, filing his petition on December 29, 1942, and thereupon an order was made for hearing on said petition on January 8, 1943. The writ was issued on January 11th, following. A subsequent hearing before the court resulted in a judgment vacating the order of the commissioner of agriculture. The trial court held that section 10a, above quoted, is unconstitutional for the following reasons:

"(1) Because it is an exercise of the police power, is unreasonable, and, therefore, amounts to a deprivation of property without due process of law.

"(2) That in many of its aspects its operation necessarily depends upon statutes which in and of themselves are an unlawful delegation of legislative authority."

The trial court was further of the opinion that the proceedings actually held before the commissioner of agriculture did not comply with the constitutional guaranties of due process of law. From the judgment entered in the circuit court defendant has appealed. The attorney general, appearing for defendant, has filed a brief asserting validity of the provisions of the statute involved in the case, and also claiming that the proceeding before the commissioner of agriculture conformed to the basic requirements for due process of law. No brief has been filed on behalf of plaintiff.

At the hearing on plaintiff's application to the circuit court for writ of certiorari, held January 8, 1943, defendant moved to dismiss the proceeding because plaintiff had failed to procure the issuance of a writ within a period of ten days following the order of the commissioner of agriculture. The motion was denied and defendant now claims that such denial was erroneous. The provision of the statute governing the appeal is found in section 13^** of the act, reading as follows:

"Any person, firm, association, or corporation who feels aggrieved at the decision of the commissioner in refusing or revoking a license, may appeal from said decision within 10 days by writ of certiorari to the circuit court of the county in which such person resides, or in case of a firm, association or corporation, the county in which is located its principal place of business."

It is claimed in substance that the statute must be construed as requiring the issuance of the writ of certiorari within the 10-day period following the decision of the commissioner of agriculture. With this interpretation of the statute we are not in accord. We think it was the intention of the legislature to require that the application for the writ should be submitted to the circuit court within the time limited, but that it was not intended to make the right of review contingent on action by said court before the expiration of the 10-day period. In the instant case plaintiff filed his application on the same day that the order of the commissioner was issued. It was set for hearing on the tenth day thereafter and the writ finally issued three days later. Plaintiff acted with the measure of diligence required by the statute and the motion to dismiss was properly denied.

The principal question in the case arises from the holding of the trial court that section 10a, above quoted, is unconstitutional. In determining this question every reasonable doubt and intendment must be resolved in favor of the legislative action. In the early case of Sears v. Cottrell, 5 Mich. 251, it was said (p. 259):

"No rule of construction is better settled in this country, both upon principle and authority, than that the acts of a State legislature are to be presumed constitutional until the contrary is shown; and it is only when they manifestly infringe some provision of the Constitution that they can be declared void for that reason. In cases of doubt, every possible presumption, not clearly inconsistent with the language and the subject matter, is to be made in favor of the constitutionality of the act.

"The power of declaring laws unconstitutional should be exercised with extreme caution, and never where serious doubt exists as to the conflict."

This rule has been repeatedly quoted and applied in subsequent decisions in this State. Bowerman v. Sheehan, 242 Mich. 95 (61 A.L.R. 859); Cady v. City of Detroit, 289 Mich. 499; Inre Phillips, 305 Mich. 636.

Under the police power, the State may regulate the production, sale and distribution of milk, cream, and other dairy products. The protection of the public health is involved. Milk is a necessary article of food and the public welfare is served by measures reasonably designed to encourage production and sale for consumption. In the enactment of Act No. 236 of 1935, incorporating section 10a in the prior statute, it is fair to assume that the legislature had in mind encouraging the production and sale of milk and cream by protecting those engaged in the business from financial loss due to inability to collect for products sold. Parties desiring to avoid the mandatory provisions of the statute may do so by taking advantage of the provision of section 10a with reference to written contracts. Under such provision the parties may, by written agreement, make such arrangement as to payment as may be mutually satisfactory.

The validity of statutory provisions requiring purchasers of milk and other dairy products intended for resale to consumers to give bond or other security to insure payment to purchasers has arisen in other States and such provisions have been sustained against objections on constitutional grounds. Obviously, the purpose of such requirement with reference to security for payment is identical with the purpose of section 10a, above quoted. The object sought to be obtained is the fostering of the business of producing milk, cream and other dairy products and their marketing for distribution and resale. Among cases of this character is People v. Perretta, 253 N.Y. 305 (171 N.E. 72, 84 A.L.R. 636). It was there said, in upholding the validity of a legislative enactment requiring the filing of a bond to secure payment for milk purchased by dealers from producers:

"The legislature has a wide discretion in protecting the public from the dishonest or irresponsible. (Roman v. Lobe, 243 N.Y. 51 [152 N.E. 461, 50 A.L.R. 1329];People v. Teuscher, 248 N.Y. 454 [162 N.E. 484].) The question is how to apply the test. Is it a public evil to permit irresponsible persons and corporations to operate milk-gathering stations although they may engage in many other legal callings at will? If so, milk gatherers may be put into a particular class (New York, ex rel. Bryant, v. Zimmerman, 278 U.S. 63 [49 Sup. Ct. 61, 73 L. Ed. 184, 62 A.L.R. 785]). In the Beakes Case (People v. Beakes Dairy Co.), Kellogg, P.J., in a dissenting opinion in the Appellate Division (179 A.D. 942 [166 N.Y. Supp. 209]), states the conditions which called forth the law as follows: ``It is vital to the public welfare that the cities of the State be supplied with pure and wholesome milk. It is of the utmost importance to the public welfare that the farmers should be induced to produce milk for use in the cities and that the persons purchasing and shipping milk for city use shall be responsible persons so that the seller shall receive pay for his milk. It is a fact too well known to need discussion that the farming community has suffered great damage by irresponsible persons buying on credit their milk for shipment to the large cities without paying therefor. Such transactions naturally tend to convince the farmer that it is better for him to limit his production of milk or take it to the home factory to be manufactured there, dealing with people whom he knows rather than to sell it for city use. It is apparently recognized as impracticable that the payments should be made to the farmer upon the delivery of each sale of milk. When a person seeks to buy milk from the farmers of the State to ship to the cities of the State for use and consumption, his transactions affect the public interest, and the welfare of the farming community means the welfare of the public, and the State may properly protect the farmer from irresponsible dealers who seek his milk for shipment to the cities. This law, as we have indicated, has more than one aspect. It naturally benefits the farmers, but it guarantees the city a supply of milk. The farmer is not naturally a financier, and when he produces the milk he should be reasonably assured that he is to have its value, and the State may prevent irresponsible people from taking away his milk without giving some reasonable surety that it will be paid for. In the absence of some such provision, the shipment of milk to the cities would fall off and be greatly limited.'

"The producer of milk for the city market desires to find a ready purchaser near at hand to take his product from the source of supply to the point of consumption. He cannot peddle his product from door to door or hold it to await a rise in market prices or a cash purchaser. He must sell it to milk gatherers; deliver it fresh and often on credit. Such are the conditions of the market peculiar to the handling of milk. The law deals with a definite class, i.e., the milk gatherers. It is not wholly for the benefit of the farmer. If it gives him ``a club to aid in the collection of debts which is not given to other creditors' (State v. Latham, 115 Me. 176 [98 A. 578, L.R.A. 1917 A, 480]), it gives it to him to keep open the stream of milk flowing from farm to city as well as to guard him from financial loss."

The supreme court of Pennsylvania reached a like conclusion inHarrisburg Dairies, Inc., v. Eisaman (1940), 338 Pa. 58 (11 Atl. [2d] 875). Of like import is Ziegler v. Brown, 28 Ohio Op. 263, where a similar provision of an Ohio statute was sustained. Citing Nebbia v. New York, 291 U.S. 502 (54 Sup. Ct. 505, 78 L. Ed. 941, 89 A.L.R. 1469), and People v.Perretta, supra, the court said:

"It is not for this court to determine the wisdom of the legislature in the enactment of this law but to determine only whether the legislature in its enactment has transcended its powers in violation of the Ohio Constitution and the Constitution of the United States. It is fundamental that the legislature is primarily the judge of the necessity of such an enactment and that every possible presumption is in favor of its validity as set forth in the decision of Nebbia v. New York, supra. It is only if and when the act in question is clearly violative of constitutional authority that a court may set aside the legislative enactment.

"As this court views it, the public good, health and welfare is best served by a strict regulation of the production, marketing, sale and distribution of milk which is a most essential item of our daily diet. The State is acting wholly within its authority when it imposes requirements such as are contained in this act so long as the regulations are not unreasonable, arbitrary or capricious, and that the means selected have a real and substantial relation to the object sought to be attained. The State of Ohio has here sought to adopt an economic policy reasonably deemed to promote the public welfare in the production, distribution, marketing and sale of milk by legislation adapted to its purpose. This court is therefore, on the highest judicial sanction ``without authority either to declare such policy, or when it is declared by the legislature, to override it.'"

The supreme court of California in People v. Perry,212 Cal. 186 (298 P. 19, 76 A.L.R. 1331), upheld the constitutionality of a statute imposing penalties on purchasers of fruit representing themselves to be cash purchasers but failing to make payment. In answering the objection that the act was an unreasonable interference with freedom of contract and also that it was in violation of the due process of law clauses of the State and Federal Constitutions, it was said (p. 194):

"The act in question has for its obvious purpose the protection of the growers and producers of deciduous fruits in the State of California against the fraudulent conduct and acts of unconscionable persons who, representing themselves to be cash buyers, purchase and receive the delivery and ownership of their said products, and having done so, wilfully fail or refuse to pay for the same upon demand and in accordance with the terms and conditions of their purchase thereof. The statute in so providing in nowise interferes with the freedom of contracts and works no deprivation of either liberty or property when it undertakes to visit severe penalties upon those who, thus representing themselves to be cash buyers of the grower's or producer's products, undertake to defraud such grower or producer out of the price and profit of his product with which he has thus been induced to part ownership and to rely upon the purchaser's promise to pay upon demand."

See, also, People v. Beakes Dairy Co., 222 N.Y. 416 (119 N.E. 115, 3 A.L.R. 1260); Rawson v. Department of Licenses,15 Wash. 2d 364 (130 Pac. [2d] 876); Sullins v. Butler,175 Tenn. 468 (135 S.W.[2d] 930). In the two cases last cited statutes providing for revocation of an automobile driver's license for failure to pay a judgment based on negligent operation of an automobile were upheld on the theory that it was within the power of the legislature to impose such requirement as an incident of operation under a license. In reaching the conclusion indicated, the Tennessee court referred to other decisions emphasizing that the purpose of such legislation was to protect the public against improper conduct in the operation of automobiles. To accomplish such purpose, it was recognized that the legislature of the State had acted within the limits of its powers in making provision for the revocation of a license under the circumstances indicated. See, also, Surtman v. Secretaryof State, 309 Mich. 270.

In Cofman v. Ousterhous, 40 N.D. 390 (168 N.W. 826, 18 A.L.R. 219), the plaintiff's license to conduct a cream station was revoked by the State dairy commissioner because of failure to observe certain requirements of the State statute governing operation of the business. As in the case at bar, plaintiff brought a writ of certiorari to review the action taken, attacking the constitutionality of the statute. The act was upheld, although it made no specific provision for judicial review, the court holding that the remedies by mandamus and certiorari were available to redress any wrong suffered through arbitrary or unreasonable action on the part of officers charged with enforcement of the law. It was also suggested that plaintiff, having obtained a license under the law, was in no position to attack the validity of the statute providing for the issuance and revocation of such license.

In Jersey Maid Milk Products Co., Inc., v. Brock, 13 Cal. 2d 620 (91 Pac. [2d] 577), and in Ray v. Parker, 15 Cal. 2d 275 (101 Pac. [2d] 665), a California statute providing for the revocation of the license of a distributor of milk or cream, for violation of the statute, or of any provision of the stabilization and marketing plan formulated thereunder, was upheld.

It is uniformly recognized that, if the legislature may require a license in the first instance for the carrying on of a certain business or occupation, provision may be made for refusal to renew such license, and for the revocation thereof on reasonable grounds. Such decisions do not rest on the theory of punishment for violation of statutory or regulatory requirements but, rather, on the basis of protection to the public. The power of revocation is subject to the limitation that it may not be arbitrarily exercised. This court, in People v. Riksen, 284 Mich. 284 (116 A.L.R. 116), in sustaining a municipal ordinance, said:

"Under this ordinance the mayor may suspend a license for violation of a city ordinance, violation of the terms of the license or for undesirable business practices. A fair construction of this section of the ordinance indicates that the mayor may not arbitrarily suspend a license. The ordinance directs a standard for his guidance and conditions under which suspension may be accomplished. The only discretion the mayor has under the terms of this ordinance is to determine whether there has been a violation of the ordinance for any of the reasons mentioned."

Under the statute here involved, it may be said that the question for determination by the State commissioner of agriculture, in a proceeding instituted for the purpose of revoking a license granted under the statute, is whether the licensee has violated a provision of said statute, or any lawful regulation adopted thereunder. In the case at bar the specific inquiry was whether plaintiff had, in fact, violated section 10a and, also, whether he had violated section 2 of the act, by sale of milk containing less than the prescribed percentage of butterfat. We are, therefore, concerned solely in this case with the revocation of a license because of the licensee's failure to comply with provisions of the statute. Under the authorities above cited, it cannot be said that the legislature exceeded its powers, or violated any provision of the State or Federal Constitution, in the enactment of the statutory provisions assailed in this case and in providing therein for the revocation of licenses for violation of such provisions. The requirements imposed by the act with reference to obtaining licenses to carry on business thereunder are clearly within the police power of the State. Such provisions are designed for the protection of the public and the provisions with reference to revocation of licenses are designed to accomplish the same purpose. That a license may be revoked for failure to obey the provisions of the statute or ordinance under which such license is granted is too firmly established to be open to question. It is our conclusion that the provisions of Act No. 169, Pub. Acts 1929, as amended, the validity of which was assailed by plaintiff in the trial court, are not unconstitutional because arbitrary and unreasonable or because they operate to deprive plaintiff of property rights without due process of law.^***

On the hearing in the circuit court plaintiff contended that the proceedings before the commissioner of agriculture were of such a character as to deprive plaintiff of a fair trial and, therefore, of due process of law. The court agreed with this claim, holding, in substance, that the notice of the hearing was not sufficient and that the hearing itself was not fairly conducted. The amended notice charged specific violations in connection with the purchase of milk from four different producers, and failure to pay therefor as required by section 10a. As to these alleged violations of the statute the notice was specific and not open to objection. The same is true as to the alleged violation of section 2 of the act in the sale of milk containing less than three per cent. of butterfat. On the hearing before the commissioner of agriculture testimony as to the failure of plaintiff to make payment for milk within the time prescribed by the statute, as set forth in the notice, was offered and received. Evidence of other violations of the statute, of like nature, was also introduced. Whether this was done for the purpose of showing that the violations of the statute specifically enumerated in the notice of the hearing were not due to mere oversight or inadvertence, or on the theory that such other violations might be shown as the basis for revoking the licenses, is not clear from the record. However, the evidence before the commissioner clearly indicated that plaintiff had violated, in the specific instances enumerated, the provisions of section 10a. In consequence, under the specific language of the statute, the licenses specified in the notice of hearing as served on plaintiff were subject to revocation.

Examination of the transcript of the proceeding before the commissioner does not indicate that the hearing was conducted in an unfair manner. A request by counsel for plaintiff that the matter be adjourned in order to permit him to produce a certain witness was denied, but the statement by counsel as to the nature and character of the testimony that such witness would give, if produced, indicates that it would have had no bearing on the issue before the commissioner, namely, whether plaintiff had violated the provisions of the statute as alleged in the notice of hearing. Under the circumstances, it cannot be said that the denial of the motion was unreasonable. Plaintiff's counsel cross-examined witnesses produced in support of the charges made and he also offered the testimony of witnesses for plaintiff. No reason is shown on the record for failure to produce other and additional proofs if plaintiff desired to offer such. The record indicates that the commissioner undertook to conduct the hearing fairly, with the purpose in mind of arriving at the actual facts.

In one particular, however, the action of the commissioner was, and is, open to objection. As before stated, the notice of hearing was amended at the outset of the proceeding before the commissioner in such manner as to include three licenses not specifically mentioned in the notice as issued and served. Section 12 of the act (1 Comp. Laws 1929, § 5318 [Stat. Ann. § 12.613]), reads as follows:

"Before revoking any license the commissioner of agriculture shall give written notice to the licensee affected stating that he contemplates the revocation of the same, giving his reasons therefor. Said notice shall appoint a time and place of hearing, which place of hearing shall in all cases be in the county where the licensee shall conduct his place of business. Said notice shall be mailed by registered mail to the licensee at least 10 days before the date set for the hearing or personal service rendered. The licensee may present such evidence of a relevant nature to the commissioner of agriculture as he deems fit and, after hearing all the testimony, the commissioner of agriculture shall decide the question in such manner as to him appears just and right."

Under the specific terms of the statute a licensee is entitled to be advised in the manner prescribed as to what license or licenses are being contemplated for revocation. Plaintiff was entitled to a 10-day notice, thus affording him an opportunity to prepare to offer his proof with reference to his acts under the licenses, the revocation of which is involved. In consequence, the amendment of the notice at the outset of the hearing before the commissioner was not in accord with the rights of plaintiff under section 12, above quoted. It follows that the three licenses referred to were improperly revoked by the commissioner.

The case is remanded to the circuit court for entry of judgment vacating the order of the commissioner insofar as said order undertook to revoke dairy plant licenses Nos. 81, 275 and 1018, and affirming said order as to the other licenses referred to therein. No costs are allowed.

BUTZEL, C.J., and BUSHNELL, SHARPE, BOYLES, REID, NORTH, and STARR, JJ., concurred.

^* Comp. Laws Supp. 1940, § 5316-1, Stat. Ann. § 12.611. — REPORTER.

^** 1 Comp. Laws 1929, § 5319, as amended by Act No. 48, Pub. Acts 1931 (Comp. Laws Supp. 1940, § 5319, Stat. Ann. § 12.614). — REPORTER.

^*** See U.S. Const. Am. 14; Mich. Const. 1908, art. 2, §§ 1, 16. — REPORTER.