People v. Nebbia ( 1933 )

Pursuant to the provisions of section 312, subdivision (b) of the Agriculture and Markets Law (Laws of 1933, chap. 158) the Milk Control Board, established under this statute, by order fixed the minimum price to be charged for milk by stores to consumers at nine cents a quart in bottles. By subdivision (e) of this section, sale at less than the minimum price so fixed is declared to be unlawful and no method or device, by combining the price of milk with another commodity, whereby milk is sold at a price less than the price fixed by the Board, shall be lawful.

Defendant, a retail grocer in Rochester, sold to a consumer for eighteen cents two bottles of milk and a loaf of bread. This device whereby the milk was sold at less than nine cents a quart constitutes a plain violation of the statute and the Board's order. No problem, except the validity of that part of the statute authorizing price-fixing and the order issued in pursuance thereof is before us.

Disregarding for the moment this legislation as founded upon an assumed emergency as that term is recognized by this court and the Supreme Court of the United States, and viewing it merely as if it were an enactment adopted during a time of normal prosperity, its conflict with section 6 of article I of the New York Constitution and with the Fourteenth Amendment of the Federal Constitution is scarcely open to doubt. Of course the production, distribution and exchange of milk, in so far as public health may be protected and fraud prevented, are subject to the operation of the police power (Polinsky v. People, 73 N.Y. 65; Fischer v. St.Louis, 194 U.S. 361; People ex rel. Lieberman v. Van DeCarr, 199 U.S. 552; Bellows v. Raynor, 207 N.Y. 389;People v. Beakes Dairy Co., 222 N.Y. 416, 427; People v.Perretta, 253 N.Y. 305), but legislative authority in respect to sanitary regulation as an exertion of the police power may be and is "quite distinct from the power to fix prices." (Tyson v.Banton, 273 U.S. 418, 430.) A Minnesota statute similar in its nature to the one before us and branding as a crime the purchase for manufacture or sale of milk, cream or butter fat at a higher price in one locality than the price paid in another has been held to infringe the liberty of contract guaranteed by the Fourteenth Amendment. (Fairmont Creamery Co. v. Minnesota,274 U.S. 1, 7.) In that case the opinion of the State court declared that dairying was perhaps the largest productive industry in Minnesota and held that the police power extended not only to public health and morals but also to guarding the welfare of a great industry. The Supreme Court, however, conceding that the real evil at which the statute was aimed was the payment of excessive prices by powerful buyers for the purpose of destroying competition and that the statute undertook to require every buyer to adhere to a uniform price fixed by a single transaction, reversed the State court and decided that such legislation was a clear infringement of private rights. Although milk production is a very important industry, the business of the grocer, "the dairyman," the butcher, the baker, the shoemaker and the tailor, as stated by the Supreme Court in New State Ice Co. v.Liebmann (285 U.S. 262, 277), bears no such relation to the public as to warrant its inclusion in the category of businesses charged with a public use. Conceding that in New York as well as in Minnesota dairying is a business in which the prosperity of the entire State in large measure is involved, nevertheless it is a private business and the Supreme Court has decided that the production or sale of food cannot be subjected to legislative regulation on the basis of a public use. (New State Ice Case, supra; Wolff PackingCo. v. Court of Industrial Relations, 262 U.S. 522.) These decisions are founded upon interpretations of State statutes in times of peace and of course do not profess to construe the war power of Congress. Natural monopolies by which exorbitant charges might be inflicted upon the public and which, without governmental regulation, would be subject to arbitrary control by their owners are undoubtedly affected by a public use. However, neither in New York nor elsewhere can the milk business be so classified. The reasons for the enactment of this statute are not that charges are too high or that a monopoly exists but that they are too low and competition is too keen. The purpose is not to reduce the price but to raise it. This policy constitutes an inversion of all recognized methods of constitutional regulation of private business. Such a business may not be converted into public business by legislative fiat. (Producers Transp. Co. v.Railroad Comm., 251 U.S. 228, 230; People ex rel. DurhamRealty Corp. v. LaFetra, 230 N.Y. 429, 442.)

The points tendered in support of the validity of this enactment emphasize its transient duration and the legislative declaration of the existence of an emergency. Section 300 recites that the law is enacted in the exercise of the police power of the State and that its purposes generally are to protect the public health and public welfare. This legislative declaration is entitled to great respect but it is not conclusive on the courts. (Block v. Hirsch, 256 U.S. 135, 154.) "Happily for all, the fundamental guaranties of the Constitution can not be freely submerged if and whenever some ostensible justification is advanced and the police power invoked." (Adams v. Tanner,244 U.S. 590, 594, 595.) In so far as any parts of this statute may fairly tend to promote public health, they should and will be sustained, but the mere recitation to the effect that uneconomic trade practices as conducted at the time of the passage of the act imperil the supply of pure milk and constitute a menace to health and that the danger is immediate and impending does not justify price-fixing. Because the statute rehearses that the present acute economic emergency has broken down the orderly production and marketing of milk, courts are not foreclosed from drawing on common knowledge and common experience. The markets are and, prior to the passage of this act, were flooded with a plethora of wholesome milk. In People ex rel. Durham RealtyCorp. v. LaFetra (supra) the existence of danger to public health, safety and morals was within the knowledge of every one. The legislative declaration narrated notorious facts. When the rent legislation was enacted, the housing emergency created by the absence of construction was so acute and the extortion and oppression by landlords taking advantage of a dense population's necessities were so brutal that more than one hundred thousand dispossess proceedings which affected nearly a half million human beings in the city of New York were then pending. Profiteering and oppression had become general. Public safety was imperiled by probable riots growing out of resistance to evictions, public health was endangered both by exposure to the elements and by congestion in crowded tenements by those who would be forced from more spacious habitations. Thus was presented, as truly described by Judge POUND in his opinion in that case, "a problem of the utmost gravity, calamitous in its possibilities" (p. 438). Inadequacy of housing facilities in cities had become a matter of world wide concern and of world wide knowledge.

In relation to the dairy industry, common knowledge compels the courts to conclude that, instead of imminent danger of impairment of public health, safety or morals, the real emergency is a commercial one arising in part from those factors which have contributed to the widespread business depression from which few if any of our inhabitants have been immune. To correct these conditions, resort to the drastic remedy of fining or imprisoning small retail storekeepers who insist upon their property right to contract for the sale of milk at a price satisfactory to themselves and their customers is not a valid exercise of the police power. To bargain for the exchange of goods is no less a property right than the lawful power to contract for the rendition of services (Exchange Bakery Restaurant, Inc., v. Rifkin, 245 N.Y. 260), and is protected by the Fourteenth Amendment. (Fairmont Creamery Co. v.Minnesota, supra.) If in fact the public health were endangered, a more rigid inspection of dairies and the revocation of licenses of those who failed to supply milk of the required standard of purity would constitute the obvious remedy. The special privilege conferred by this statute upon members of a particular class by increasing the price of their product at the expense of laborers, mechanics and all other members of society cannot be regarded as such a necessary or even fairly reasonable substitute remedy as to lie within legislative discretion and to warrant its sanction by the courts. The financial condition of the dairy farmer is and has been most distressing. The same is true respecting artisans, professional men and women, traders, laborers and members of every calling and occupation. Yet every one is aware that those who can afford to buy milk obtain a wholesome quality.

The police power, although "a dynamic agency, vague and undefined in its scope" (People ex rel. Durham Realty Corp. v.LaFetra, supra, p. 442), cannot rise superior to the Constitution. This great instrument of government is not a thing merely to be extolled in academic halls, to be the subject of juvenile orations and to be tolerated as innocuous only so long as its prohibitions are unnecessary in practical ways. It is not quiescent, it is vibrant. It cannot become obsolete until the States vote to amend or repeal it. It was designed to safeguard not only life and liberty but also property rights in times of stress and suffering when dispairing and desperate majorities in good faith seek by forbidden methods to correct temporary evils which, serious and distressing as they are, will prove less harmful and enduring than would the subversion of our fundamental principles of government. If the effort manifested by this statute to regulate private contract by fixation of prices on a product which does not constitute a public use be sustained, then the police power is not only undefined but it is boundless. Its operation will extend to every trade and every occupation. Each citizen will become enmeshed in an inextricable tangle of bureaucracies such as are now so prevalent in foreign countries but utterly alien to our institutions. Liberty will cease to exist. Since the warning was sounded in Matter of Jacobs (98 N.Y. 98, 114, 115), the Constitution, which of course was never intended as a document of perfect rigidity, has yielded to reasonably flexible and prudent interpretations by conservatively progressive judges, but the time has not yet come when the courts of this State ought to surrender to the doctrine that governmental prefects, in times of peace and plenty, may supervise the rearing of cattle or the price of milk. Until the people, in whom reside all political power, decide to amend their constitutions, the provisions of section 6 of article I of the New York Constitution and the Fourteenth Amendment of the Federal Constitution prevent, as valid, the recognition of the price-fixing element of this statute.

The judgment of conviction should be reversed and the information dismissed.

CRANE, LEHMAN, HUBBS and CROUCH, JJ., concur with POUND, Ch. J.; O'BRIEN, J., dissents in opinion; KELLOGG, J., not sitting.

Judgment affirmed.