State Ex Rel. North Carolina Milk Commission v. Galloway

107 S.E.2d 631 (1959) 249 N.C. 658

STATE of North Carolina, on relation of NORTH CAROLINA MILK COMMISSION,
v.
M. O. GALLOWAY.

No. 99.

Supreme Court of North Carolina.

March 18, 1959.

Lee & Lee, Asheville, for defendant, appellant.

Harris, Poe & Cheshire, Raleigh, for plaintiff, appellee.

PARKER, Justice.

The findings of fact by the Trial Judge are amply supported by substantial competent evidence and stipulations entered into by the parties. Therefore, such findings of fact are as binding as the verdict of a jury, and are conclusive on appeal. City of Goldsboro v. Atlantic Coast Line R. Co., 246 N.C. 101, 97 S.E.2d 486; St. George v. Hanson, 239 N.C. 259, 78 S.E.2d 885; State Trust Co. v. M. & J. Finance Co., 238 N.C. 478, 78 S.E.2d 327. The appellant in his brief makes no argument to the contrary.

The appellant in his brief states that all his assignments of error deal directly with (1) the power of the Court under the State Milk Commission Act to fix transportation rates for hauling milk of producers to the processing plant, and (2) whether the judgment violates appellant's rights under Article I, Section 7, and Article I, Section 17 of the North Carolina Constitution, and Section 1 of the 14th Amendment to the United States Constitution. Appellant does not contend that the Act as a whole is unconstitutional.

The question for our determination is, whether the language of the Act creating the North Carolina Milk Commission and conferring upon it the power to supervise, regulate and control the milk industry empowered the Milk Commission to fix the transportation rates for hauling milk of the producers to the processing plant, and if so, does the judgment entered violate appellant's rights as set forth in the parts of the State and Federal Constitutions specified by him in his brief. That Act was first enacted in 1953. Chapter 1338, 1953 Session Laws of North Carolina. With subsequent amendments it has been codified as Article 28B, Chapter 106, Agriculture, G. S. of N. C., Sections 106-266.6 to 106-266.21, inclusive.

The considerations which impelled the General Assembly to adopt the Act are found in its preamble on page 1323, Acts of 1953. The preamble states: "The facts herein set forth in this preamble are declared to be matters of legislative finding and determination." Among the facts set forth in the preamble to the Act are these: "Milk is a primary and necessary food for the children and adult population of the State. * * * It is vital to the public health and welfare of the people of the State that the production, transportation, processing, storage, distribution and sale of milk shall be carried on in a fair, just and equitable manner with purity of content, and the milk industry is a business or industry affecting the public health and interest; that it is necessary for the safety, health and welfare of the people of the State that this industry be subjected to some governmental restrictions, regulations and methods of inspection; that it is necessary to suppress unfair, unjust and destructive trade practices which are now being carried on in the production, marketing and distribution of milk and which tends to create a hazardous and dangerous condition with reference to the health and welfare of the people of the State." Other facts stated in the preamble, as well as the Act itself, make it plain that the General Assembly was also concerned with suppressing unfair and destructive trade practices, and with stabilizing the milk industry, so as to enable the producers to secure a fair price for their milk. These recitals in the preamble set the framework for the legislation.

There is no inherent power in the State Milk Commission to fix transportation rates for hauling milk of producers to a processing plant. If it has such power, it must be found in the Act.

G.S. § 106-266.8 declares the North Carolina Milk Commission to be an instrumentality of the State of North Carolina, and vested with power:

"(b) To investigate all matters pertaining to the production, processing, storage, distribution, and sale of milk for consumption in the State of North Carolina.

"(c) To supervise and regulate the transportation, processing, storage, distribution, delivery and sale of milk for consumption * * *.

"(d) To act as mediator or arbiter in any controversial issue that may arise among or between milk producers and distributors as between themselves, or that may arise between them as groups. * * *

"(g) To hold hearings, make and adopt rules and regulations and/or orders necessary to carry out the purposes of this article. * * *

"(j) The Commission, after public hearing and investigation, may fix prices to be paid producers and/or associations of producers by distributors in any market or markets, and may also fix different prices for different grades or classes of milk. In determining the reasonableness of prices to be paid or charged in any market or markets for any grade, quantity, or class of milk the Commission shall be guided by the cost of production and distribution, including compliance with all sanitary regulations in force in such market or markets, necessary operating, processing, storage and delivery charges, the prices of other foods and other commodities, and the welfare of the general public. * * *

"(m) The Commission may define after a public hearing what shall constitute a natural market area and define and fix limits of the milk shed or territorial area within which milk shall be produced to supply any such market area * * *."

The Act in G.S. § 106-266.6 defines "Market" as meaning "any city, town, or village of the State, or any two or more cities and/or towns and/or villages and surrounding territory designated by the Commission as a natural marketing area."

Our Act follows closely the Virginia Act on the same subject. Much of the language is verbatim in the two statutes. G.S. § 106-266.8(b), (c), (d) and (g), and Code of Virginia, Section 3-352(b), (c), (d) and (g) are nearly verbatim. "Market" as defined in G.S. § 106-266.6 is identical with "Market" as defined in Code of Virginia, Section 3-346.

G.S. § 106-266.8(j), as above set forth, grants the State Milk Commission the power to fix prices to be paid producers of milk by distributors. The Virgina Act in Section 3-359 gives identical power to its Milk Commission in the same words, with this proviso that the Virginia Milk Commission has the additional power to "fix the minimum and maximum wholesale and retail prices to be charged for milk in any market."

In Southside Co-op. Milk Producers Ass'n v. State Milk Commission, 198 Va. 108, 92 S.E.2d 351, 356 (April 1956), the Court said: "The Commission, under Code, § 3-352(c), has supervisory authority over all the facets of the industry, including transportation and delivery. * * * In view of the very broad powers conferred upon the Commission to make, adopt, and enforce all rules, regulations, or orders necessary to carry out the provisions of the Act, § 3-352 (g), we do not think that the designation of places for delivery of milk to the distributor, and the regulation of hauling allowances to distributors for transporting such milk to their processing plants are beyond the authority of the Commission. We find nothing in the evidence to justify the contention that the Commission has been unreasonable, arbitrary or discriminatory in designating certain producers to make delivery at Norfolk and others at Amelia, nor do we find that the effect of setting different prices based on the cost of hauling is in violation of the Act under consideration. We cannot say that the Commission, in an overall view of all the facts and circumstances involved, including a consideration of the interests of the industry and the public, exceeded its authority or abused its discretion in entering the orders complained of."

The validity of the Virginia Statute was sustained by the Supreme Court of Appeals of Virginia. Reynolds v. Milk Commission of Virginia, 163 Va. 957, 179 S.E. 507. A large part of the opinion was devoted to the constitutionality of such regulation of the milk industry, rather than to a consideration of the validity of specific provisions of the Act. It would seem from a study of the opinion that the Court held that legislative power had not been invalidly delegated to the Commission. The Federal District Court, with a Circuit Judge and two District Judges sitting and with Circuit Judge Soper writing the opinion, also sustained the Virginia Act. Highland Farms Dairy v. Agnew, D.C.E.D.Va.1956, 16 F. Supp. 575, which decision was affirmed by the United States Supreme Court, Highland Farms Dairy v. Agnew, 300 U.S. 608, 57 S. Ct. 549, 81 L. Ed. 835. In 1950 the validity of the Virginia Act was again sustained by the Supreme Court of Appeals of Virginia, this time against attacks on specific grounds, one of which was that the Act unlawfully delegated to private persons the power of legislation. Board of Supervisors of Elizabeth City County v. State Milk Commission, 191 Va. 1, 60 S.E.2d 35.

G.S. § 106-266.8(c) gives to the State Milk Commission the specific power to supervise and regulate almost the entire milk industry, including the transportation of milk for consumption. G.S. § 106-266.8(j) gives to the Milk Commission express power, after public hearing and investigation, to fix prices to be paid producers of milk by distributors, and establishes sufficient standards for its guidance by setting forth in the statute a reasonably clear formula to govern the Milk Commission in determining the reasonableness of the prices to be paid to the producers of milk by the distributors. This leaves to the Milk Commission its proper administrative function. There is a sedulous protection against abuse of power by the Milk Commission provided in G.S. § 106-266.17, which requires that when an appeal is taken from an order of the Milk Commission, the proceeding shall be heard de novo in the Superior Court. If the Milk Commission should not have the power to regulate and to fix transportation rates for the distributor hauling milk of the producers to the processing plant, as the Trial Court aptly said in its judgment, "the delegation of the power to the Milk Commission to fix prices to be paid producers by distributors would be meaningless, inasmuch as a distributor by unreasonable hauling charges could prevent the producer (sic) from receiving reasonable compensation for his milk." In view of the very broad powers conferred upon the Milk Commission by G.S. § 106-266.8(g) to hold hearings, make and adopt rules and regulations and orders necessary to carry out the purposes of the Act, we hold that the Milk Commission, and the Superior Court on appeal, had the power, fairly implied from the language of the Act and essential to putting into effect its declared purposes and objects, to regulate and to fix transportation rates for distributors in North Carolina hauling milk of their producers in North Carolina to their processing plant in North Carolina—all intrastate business—, and that sufficient standards for their guidance in regulating and fixing such hauling prices is to be fairly implied from G.S. § 106-266.8(j).

It appears from the findings of fact that some of the milk hauled on Route 11 comes from Spartanburg County, South Carolina. The question whether the transportation-fixing regulation can be made applicable to this milk brought from South Carolina without violating the commerce clause of the Federal Constitution, art. 1, § 8, cl. 3, is not presented for decision, and that question is expressly reserved for decision, if and when it should arise. Baldwin v. G. A. F. Seelig, 294 U.S. 511, 55 S. Ct. 497, 79 L. Ed. 1032, 101 A.L.R. 55.

A State Legislature, in the exercise of the police power, may delegate to a Milk Control Commission or Board the power to fix prices in respect to milk and its products on intrastate business, so long as the Legislature sets the standard in the Act, leaving to the Commission or Board its proper administrative function. 22 Am.Jur., Food, p. 865; Annotations: 101 A.L.R. 65; 110 A.L.R. 646; 119 A.L.R. 245, where the cases are assembled. The authority of a State Legislature, in the exercise of the police power, to regulate the price of milk through the agency of an administrative board was upheld in Nebbia v. People of State of New York, 291 U.S. 502, 54 S. Ct. 505, 78 L. Ed. 940, 89 A.L.R. 1469. The same principle of law applies to the regulation of hauling rates here, and the granting of such power to the Milk Commission here is not an unlawful delegation of legislative power.

The new system of rates for hauling milk by the distributor in the instant case replaced a system of hauling charges manifestly unfair. The transportation rates for hauling milk decreed here are neither arbitrary, nor discriminatory, nor irrelevant to the legislative purpose of the Act. When such is the case, regulations of the prices are generally regarded as within the constitutional powers of the States, and as not denying the equal protection of the laws. 16A C.J.S. Constitutional Law § 516, p. 370; 22 Am.Jur., Food, p. 865; Borden's Farm Products Co. v. Ten Eyck, 297 U.S. 251, 56 S. Ct. 453, 80 L. Ed. 669; Hegeman Farms Corp. v. Baldwin, 293 U.S. 163, 55 S. Ct. 7, 79 L. Ed. 259; Nebbia v. People of State of New York, supra; Annotations: 101 A.L.R. 72; 110 A.L.R. 654; 119 A.L.R. 249; 11 Am.Jur., Constitutional Law, Section 282; Knudsen Creamery Co. of California v. Brock, 37 Cal. 2d 485, 234 P.2d 26 —rehearing denied 26 July 1951.

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."

So far as this appellant and other milk producers in North Carolina affected by the judgment entered here are concerned, the parts of the Act challenged on appeal are constitutional, and the judgment deprives him and them of no rights given them by Article I, Section 17, of the State Constitution and by Section 1 of the 14th Amendment to the Federal Constitution.

Article I, Section 7, of the North Carolina Constitution and Article I, Section 4, of the Virginia Constitution are substantially identical. The Virginia Supreme Court of Appeals has sustained their Act in Reynolds v. Milk Commission of Virginia, supra, and in Board of Supervisors of Elizabeth City County v. State Milk Commission, supra. The same Virginia Act has been sustained in Highland Farms Dairy v. Agnew, supra, in the Federal District Court of Virginia and in the U. S. Supreme Court. Our Act does not violate Article I, Section 7, of the State Constitution.

Outside the power granted to the Federal Government, the power of the Legislature of North Carolina to enact statutes is without limit, except as restrained by the Constitution of North Carolina. Courts ought not to pronounce any act of the Legislature unconstitutional unless it is plainly so.

To sustain the contentions of the appellant would strike at the heart and purpose of the legislation, and would seriously hamper the North Carolina Milk Commission, and the Superior Court on appeal, in exercising the powers and duties conferred upon them by the Act.

The judgment appealed from is affirmed, with this reservation that the question as to whether the transportation-fixing regulations here can be made applicable to the milk hauled from South Carolina without violating the commerce clause of the Federal Constitution is not presented on this appeal for decision, and is not decided.

Affirmed.

RODMAN, J., not sitting.