Gwynette v. Myers , 237 S.C. 17 ( 1960 )

Oxner, Justice

(dissenting).

While the question is a difficult one, I am not persuaded beyond a reasonable doubt that our Constitution forbids the legislature from controlling the price at which milk may be sold. We have repeatedly said that every presumption will be made in favor of the constitutionality of a legislative enactment and that a statute will be declared unconstitutional “only when its invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the Constitution.” Moseley v. Welch, 209 S. C. 19, 39 S. E. (2d) 133, 137.

The preamble to the Act reads:

“Whereas, approximately ninety per cent of the fluid milk sold in the United States is either under state or federal price control; and,

“Whereas, all states bordering on South Carolina have some control over milk pricing, the following findings of fact with respect to the dairy industry are hereby made:

“1. Milk is referred to by all authorities on human nutrition as ‘nature’s most nearly perfect human food.’

“2. Because of its highly perishable nature, its production and distribution have been surrounded by more costly sanitary requirements than those of any other commodity.

“3. Milk cannot be kept in constant and adequate supply for consumers unless the high cost of maintaining these sanitary precautions is returned to producers.

“4. Dairy farming fits logically into our modern agricultural diversification program and is contributing substantially to the agricultural and industrial stability of the State.

“5. The perishable nature of milk, the necessity for immediate disposition and delivery by the producer, the seasonal effects on production, and the variations in consumption, make it advisable to find markets and use in seasons of excess production, and to take such steps as are found expedient to stabilize the industry in areas affected by adverse conditions.

“6. The present Dairy Commission does not have the power to prevent price wars, unfair trade practices and chaotic marketing conditions with their attendant consequences to producers, distributors and consumers.

“7. The General Assembly finds that the enactment of this legislation will be of benefit to the producers, distributors and consumers of dairy products and the public generally.”

The foregoing facts are presumptively correct and must be accepted if the law-making body could have rationally believed them to exist. Richards v. City of Columbia, 227 S. C. 538, 88 S. E. (2d) 683; Mills Mill v. Hawkins, 232 S. C. 515, 103 S. E. (2d) 14.

It is apparent from the foregoing findings that the Legislature concluded that the milk industry is affected by elements of instability peculiar to the business, necessitating special control, and sought to invoke the police power for the protection of the health, safety and welfare of the general public, as well as the welfare of those engaged in the milk industry.

Legislation having the same paramount purpose has been enacted in a number of States and sustained by every court that has considered it except one. The first decision was People v. Nebbia, 1933, 262 N. Y. 259, 186 N. E. 694. In that case the Court upheld a New York statute drastically regulating the milk industry, including the price at which milk might be sold by stores to consumers. The enactment of this legislation resulted from an extensive legislative investigation which disclosed destructive and demoralizing competitive conditions and unfair trade practices in the milk industry causing the income of the farmers to be reduced below the cost of production and endangering the supply of pure and wholesome milk. This decision was affirmed by the United States Supreme Court in Nebbia v. People of State of New York, 1934, 291 U. S. 502, 54 S. Ct. 505, 510, 78 L. Ed. 940, 89 A. L. R. 1469. It was there held that the price fixing features of this statute did not constitute a denial of the equal protection of the laws or due process guaranteed by the Fourteenth Amendment. Mr. Justice Roberts, speaking for the majority of the Court, pointed out that neither property rights nor contract rights are absolute and that the guaranty of due process “demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained.” In the course of the opinion, it was said: “We may as well say at once that the dairy industry is not, in the accepted sense of the phrase, a public utility. We think the appellant is also right in asserting that there is in this case no suggestion of any monopoly or monopolistic practice. It goes without saying that those engaged in the business are in no way dependent upon public grants or franchises for the privilege of conducting their activities. But if, as must be conceded, the industry is subject to regulation in the public interest, what constitutional principle bars the state from correcting existing maladjustments by legislation touching prices? We think there is no such principle. The due process clause makes no mention of sales or of prices any more than it speaks of business or contracts or buildings or other incidents of property. The thought seems nevertheless to have persisted that there is something peculiarly sacrosanct about the price one may charge for what he makes or sells, and that, however able to regulate other elements of manufacture or trade, with incidental effect upon price, the state is incapable of directly controlling the price itself. This view was negatived many years ago.” The Court concluded: “If the law-making body within its sphere of government concludes that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer’s interests, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulation adopted fixes prices reasonably deemed by the Legislature to be fair to those engaged in the industry and to the consuming public. And this is especially so where, as here, the economic maladjustment is one of price, which threatens harm to the producer at one end of the series and the consumer at the other. The Constitution does not secure to any one liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of the people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the Legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.”

In H. P. Hood & Sons v. Du Mond, 336 U. S. 525, 69 S. Ct. 657, 660, 93 L. Ed. 865, it is said: “Production and distribution of milk are so intimately related to public health and welfare that the need for regulation to protect those interests has long been recognized and is, from a constitutional standpoint, hardly controversial. Also, the economy of the industry is so eccentric that economic controls have been found at once necessary and difficult. These have evolved detailed, intricate and comprehensive regulations, including price-fixing. They have been much litigated but were generally sustained by this Court as within the powers of the State over its internal commerce as against the claim that they violated the Fourteenth Amendment.”

Also, see Hegeman Farms Corporation v. Baldwin, 293 U. S. 163, 55 S. Ct. 7, 79 L. Ed. 259; Borden’s Farm Products Co. v. Ten Eyck, 297 U. S. 251, 56 S. Ct. 453, 80 L. Ed. 669; Highland Farms Dairy v. Agnew, 300 U. S. 608, 57 S. Ct. 549, 81 L. Ed. 835.

The right of a State to control the price at which milk may be sold has been sustained by the following State courts: Franklin v. State ex rel. Alabama State Milk Control Board, 1936, 232 Ala. 637, 169 So. 295; Jersey Maid Milk Products Co. v. Brock, 1939, 13 Cal. (2d) 620, 91 P. (2d) 577; State v. Stoddard, 1940, 126 Conn. 623, 13 A. (2d) 586; Shiver v. Lee, Fla. 1956, 89 So. (2d) 318; Albert v. Milk Control Board, 1936, 210 Ind. 283, 200 N. E. 688; Schwegmann Brothers Giant Super Markets v. McCrory, 1959, 237 La. 768, 112 So. (2d) 606; Johnson v. Michigan Milk Marketing Board, 1940, 295 Mich. 644, 295 N. W. 346; State ex rel. North Carolina Milk Commission v. Galloway, 1959, 249 N. C. 658, 107 S. E. (2d) 631; In re Opinion of the Justices, 1937, 88 N. H. 497, 190 A. 713; State ex rel. State Board of Milk Control v. Newark Milk Co., 1935, 118 N. J. Eq. 504, 179 A. 116; Savage v. Martin, 1939, 161 Or. 660, 91 P. (2d) 273; Rohrer v. Milk Control Board, 1936, 322 Pa. 257, 186 A. 336; State v. Auclair, 1939, 110 Vt. 147, 4 A. (2d) 107; Reynolds v. Milk Commission of Virginia, 1935, 163 Va. 957, 179 S. E. 507; State ex rel. Finnegan v. Lincoln Dairy Co., 1936, 221 Wis. 1, 265 N. W. 197, 851.

The only decision that we have found to the contrary is Harris v. Duncan, 1951, 208 Ga. 561, 67 S. E. (2d) 692.

In all of these cases the unique nature of the milk industry in relation to the health and general welfare of the people is emphasized. In Savage v. Martin, supra, 161 Or. 660, 91 P. (2d) 273, 281, the Court said: “Laws prescribing minimum prices for milk are justified by the courts on the ground, among others, that the industry is not only a basic one, which merely concerns the economic welfare and the health of the people, but also a unique one. The public need is for a constant daily supply of pure wholesome milk. In certain markets the demand fluctuates as does the supply. Milk is a highly perishable product which cannot be stored, but must be sold as fluid milk within a few hours after it is produced; otherwise, it is disposed of in factory channels at lower prices.”

Substantially the same view is expressed in Shiver v. Lee, Fla., 89 So. (2d) 318, 322, supra, as follows: “Milk is perishable and cannot long be stored; it is an excellent host for bacteria; it is essential to a balanced diet; babies could not subsist without it, in fact it is their primary medium of diet for the first year and it is settled that it is essential to the health of adults.”

In Rohrer v. Milk Control Board, supra, 322 Pa. 257, 186 A. 336, 340, the Court said: “The milk industry is not only absolutely vital to the health and well-being of the whole people, and especially growing children, but it is also unique and in a class by itself, because (1) milk cannot be kept by the producer, but must be delivered to the dealer within twenty-four hours of production; (2) the supply must exceed the demand by a reasonable margin in order to provide for emergencies, and this excess over the normal demand be put to less profitable uses and consequently paid for at a smaller price; (3) the method of payment is based on how it is utilized by the dealer, who reports to the producer the uses made of it; (4) it must be handled with the utmost care from start to finish, and is hedged about by a host of sanitary regulations, for the protection of the public, because it is a most fertile field for the growth of bacteria. These facts make the dairy farmer or producer dependent for his return on the use to which the dealer to whom he delivers it puts it. His commodity and the price he receives for it are so far out of his control that, as a matter of fact, his supposed freedom of contract is largely illusory and at the mercy of the dealer unless the Legislature intervenes for his protection; not primarily for his benefit, but only secondarily or incidental to the main purpose of promoting the public welfare by seeing to it that an adequate supply of pure milk is available at a price reasonable to the public, the dealer, and the producer.”

In view of the peculiar characteristics of the milk industry and its relation to the health and public welfare of the people, I do not think legislative price fixing manifestly and plainly constitutes a denial of either the equal protection clause or the due process clause of our Constitution. It is true that in Rogers-Kent, Inc. v. General Electric Co., 231 S. C. 636, 99 S. E. (2d) 665, 669, we declined to “follow the crowd” and held our “Fair Trade Act” unconstitutional. But as there pointed out, the Act applied to every product bearing the trademark, brand or name of the producer with no distinction between commodities affected with a public interest and those that were not. I am still of the opinion that a general price fixing statute is obnoxious to the constitutional guaranty of due process of law. But here I think it may be reasonably said that the Act under consideration has a real and substantial relation to the health and welfare of the general public.

It is suggested that if this Act is upheld, the Legislature could authorize prices to be fixed on meat, flour, fish, vegetables or any other article of food. Apprehension of a somewhat similar nature has been expressed before. See the dissenting opinion of Mr. Justice Field in Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77. But we are not now called upon to determine what other articles of food, if any, are so “affected with a public interest” as to justify price fixing by statute. As pointed out by Mr. Justice Roberts in Nebbia v. People of State of New York, supra, 291 U. S. 502, 54 S. Ct. 505, 511, 78 L. Ed. 940, 89 A. L. R. 1469, “a regulation valid for one sort of business, or in given circumstances, may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts.”

It is interesting to note that the Supreme Court of California after sustaining a statute similar to the one now under attack, held invalid a statute authorizing a board to establish minimum price schedules for cleaning, dyeing and pressing services. State Board of Dry Cleaners v. Thrift-D-Lux Cleaners, 40 Cal. (2d) 436, 254 P. (2d) 29. And although the Supreme Court oí Indiana had held that the Legislature of that State could fix prices at which milk might be sold, it held invalid a statute authorizing a State Board to fix minimum prices for barber service. State Board of Barber Examiners v. Cloud, 220 Ind. 552, 44 N. E. (2d) 972. In both of these decisions the milk cases were distinguished.

General recognition seems to have been given by the learned County Judge to some of the views herein expressed when he said that “production and distribution of milk are reasonably related to public health and welfare.” But he concluded that price controls at the retail level “are not reasonably related to or required by the interest of the producers, distributors or the public.” He stated in his order: “When the store operator purchases from the distributor at the established wholesale prices, and the producer íeceives from the distributor the price fixed and required by the Act, it is difficult to see how the interest of either, or of the public at large thereafter can be prejudiced or threatened by the store operator selling at such prices as they should see fit.”

The Legislature evidently concluded that the price at which milk was sold at retail was inseparably connected with the evil sought to be remedied. I cannot say that such a conclusion is unreasonable or arbitrary. Most of the statutes of the other States include price fixing at the retail level. But in none of the cases sustaining them is there any recognition of the distinction made by the Court below. Such a vital consideration could not have been overlooked. The writer of the majority opinion in this case evidently concluded that in so far as the public interest was concerned, there was no distinction in principle between fixing prices at retail and at wholesale, for no reference is made to it in the opinion.

The wisdom of fixing the price of milk either at the wholesale or the retail level may from an economic standpoint be debatable. But here we are only concerned with the power of the Legislature and not whether such power should be exercised.

If I am correct in my view that the Legislature may control the price of milk, there is no doubt that such authority may be delegated to an administrative agency provided the Legislature fixes adequate standards by which such agency is to be governed or lays down a well defined and intelligent principle to which such agency must conform. South Carolina State Highway Department v. Harbin, 226 S. C. 585, 86 S. E. (2d) 466. The question as to whether the statute under consideration establishes an adequate standard to govern the Dairy Commission in fixing prices at retail is not included in the grounds of demurrer and I intimate no opinion thereabout. Cp. State v. Stoddard, supra, 126 Conn. 623, 13 A. (2d) 586.

It is also suggested that the allegations of the complaint disclose no necessity for price fixing in the instant case. But I think this should be determined on the trial of the case.

I would overrule the demurrer.

Stukes, C. J., concurs.