For the prosecutors, Edward M. Currie.
For the defendant Milk Control Board, Anthony M. Hauck, Jr.
Before Justices Parker, Heher and Perskie.
The opinion of the court was delivered by
HEHER, J. Prosecutors challenge two orders, Nos. 43-7 and 43-8, promulgated on July 19th, 1943, by the Honorable Arthur F. Foran, State Director of Milk Control, after a public hearing on notice to the parties in interest, and affirmed by the Milk Control Board on August 3d, 1943, following the hearing de novo of an appeal taken by prosecutors, prescribing $3.83 per hundredweight as the "minimum price to be paid to producers for Class I milk," as defined in the existing regulations, i.e., milk used primarily for drinking purposes. By other regulations, the state was divided into five marketing areas, Nos. 1 to 5, inclusive. Order No. 43-7 applies to areas 3, 4 and 5, comprising all the counties north of Mercer County, and No. 43-8 applies to areas 1 and 2, embracing Mercer County and all the counties to the south thereof. There is a common minimum price; the differences otherwise have no importance here. These orders were made in the purported exercise of the authority conferred by chapter 274 of the laws of 1941. Pamph. L., p. 713; N.J.S.A. 4:12A-1, et seq. Orders issued the prior May 17th, Nos. 43-3 and 43-4, fixed the same minimum price, but on the hearing of an appeal taken by the present prosecutors to the Milk Control Board, the orders were withdrawn for want of due notice of the proceedings.
In his determination of facts incorporated in both sets of orders, the director found that the price of $3.60 per cwt., set by his orders Nos. 42-1 and 42-2, effective February 5th, 1942, "is, in view of economic conditions, too low for the proper operation of the industry;" and in his findings embodied in Orders Nos. 43-3 and 43-4, he also certified that the proofs established to his satisfaction that the "minimum price which should be paid to producers" for milk of this particular class "should be at least $4.10 per hundredweight to maintain a sufficient supply of milk in New Jersey," but that the Federal Office of Price Administration had barred "an increase greater than 23c. per hundredweight to the producers," and would permit "no increase in the prices to be paid by consumers." There was no such conclusion in
the orders under review. By amendment G-7 to Maximum Price Regulation No. 329, effective May 5th, 1943, the Federal Office of Price Administration granted an increase of 23c. per cwt., or 1/2c. per quart, in the "ceiling" or maximum price to be paid to producers for this type of milk, or a total of $3.83 per cwt., but allowed no increase in the resale price to be charged by the dealers and processors.
Prosecutors all conduct an intrastate business. They are either "milk dealers" or "processors," as defined in section 1 of the cited statute. The former class comprises wholesalers, while the latter includes both wholesalers and retailers. Both purchase milk from producers, and pasteurize and bottle it. Processors sell "only to or through subdealers, milk dealers or other processors," while milk dealers "sell" or "distribute" milk, purchased or received on consignment from producers, "to consumers or stores or other milk dealers or processors, * * * except for consumption on the premises of the producers." It is prosecutors' insistence, in brief, that they will be unable to "absorb" the additional cost thus placed upon them, without a corresponding increase in price to their subdealers and the consumers, and that this burden will result in their economic ruin.
There is no contention that the increase of price in favor of the producers, considered in the light of production costs, is unwarranted or in any degree excessive. Indeed, it is said that it is "definitely established" by the proofs that the increase thus granted is insufficient "to maintain production of milk in this state," and therefore will not subserve the statutory purpose, and so the orders are void. It is pointed out that since the making of the pre-existing orders, production and operating costs have risen substantially, both for the producers and the milk dealers and processors, and are still rising. It is stated that the price of milk to the consumer has increased but 19% since the year 1939, while other food-stuffs have advanced in price approximately 46%, and that the consumers' purchasing power has been augmented sufficiently to enable them to bear the enlarged production costs. And it is urged that these particular regulations are "arbitrary,
capricious and discriminatory," and bear no reasonable relation to the essential object of the statute, in that they will render it impossible for the distributors to continue business, except at a substantial loss, and yet will provide a "wholly inadequate sum" for the producers. This is termed a formula based upon an unsound economy in disservice of the policy of the statute. Recognizing that thereby the minimum price was merely raised to the level of the maximum price fixed by the subsisting federal regulation, the latter is likewise denounced as vicious in the same particulars. It is also asserted that the ...