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National Dairy Products Co. v. Milk Control Board

Decided: December 3, 1945.

NATIONAL DAIRY PRODUCTS COMPANY, ELMER BROWN AND GEORGE HAGEMANN, ET AL., PROSECUTORS,
v.
MILK CONTROL BOARD OF THE STATE OF NEW JERSEY, DEFENDANT



On certiorari.

For the prosecutors, Frank K. Sauer and Jay F. Dailey.

For the defendant, Walter D. Van Riper, Attorney-General, and John F. Bruther, Deputy Attorney-General.

Before Justices Donges, Heher and Colie.

Heher

The opinion of the court was delivered by

HEHER, J. By an order made on September 8th, 1944, after a public hearing on due notice, the Honorable Arthur F. Foran, State Director of Milk Control, increased 3/8c per quart the existing minimum price of class I milk (in glass or paper containers) charged by processors to subdealers in the State's Marketing Area No. 4. It was therein recited that on the prior February 22d, the Federal Office of Price Administration had permitted (by Order No. G-4) an increase of 1/2c per quart in the price of such milk chargeable by processors to subdealers in that area, based upon findings that "the present margin of 5 1/2c per quart is higher than those of subdealers in any other part of New Jersey," and that "a subdealer margin of 5c per quart on to-the-home retail sales is sufficient to permit profitable operation of wholesale and retail routes;" that proof was adduced before the director "showing a continued loss by processors in 1944 of more than 1/2c per quart," and "moderate profits" by subdealers "but not as great as indicated in the opinion given by OPA, accompanying order No. G-4;" and that it was requisite that there be "an adjustment in the minimum price" of milk of this class between processors and subdealers in order to insure a "continued supply" to subdealers, "as far as production will permit," and thus render available to the public "a sufficient supply of fresh, wholesome, sanitary milk," in accordance with the design of chapter 274 of the

Laws of 1941. Pamph, L., p. 713; N,J.S.A. 4:12A-1, et seq.

While they did not participate in the proceedings before the director, prosecutors, all subdealers, took an appeal from the order to the State Board of Milk Control. That tribunal found that "the processors have sustained loss;" that "the net spread of the subdealers is sufficient to justify an increase of 1/4c per quart;" and that such increase "will be beneficial to the processors and will give them relief and will alleviate their distressed situation." Certiorari was allowed to review this latter determination.

The first insistence is that the action taken by the director was based, not only upon evidence submitted at the public hearing, but also matters revealed by "a private investigation" conducted by him, and that there was "in fact no evidence in support of the need of processors generally" in the area in question "for an increase in the minimum price to be charged by them of subdealers," and no proof that the subdealers "could absorb this cost and at the same time be assured of a reasonable return."

Sections 21 and 22 (N.J.S.A. 4:12A-21, 4:12A-22) authorize the director to fix minimum milk prices "by investigation and proof, as the emergency permits," while section 23 (N.J.S.A. 4:12A-23) makes a "public hearing" after notice by "public advertisement" as therein provided a prerequisite to the exercise of the price-fixing authority; and it would seem to be implicit in the latter provision that the action taken shall not be made to rest upon undisclosed evidence or information dehors the record which the parties in interest have had no opportunity to test for trustworthiness and explain or rebut. Railroad Commission of California v. Pacific G. & E. Co., 302 U.S. 388; 58 S. Ct. 334; 82 L. Ed. 319; Ohio Bell Telephone Co. v. Public Utilities Commission, 301 U.S. 292; 57 S. Ct. 724; 81 L. Ed. 1093; St. Joseph Stock Yards Co. v. United States, 298 U.S. 38; 56 S. Ct. 720; 80 L. Ed. 1033; Morgan v. United States, 298 U.S. 468; 56 S. Ct. 906; 80 L. Ed. 1288; Interstate Commerce commission v. Louisville, &c., N.R. Co., 227 U.S. 88; 33 S. Ct. 185; 57 L. Ed. 431; Trustees of Saratoga

Springs v. Saratoga Gas, E. L. and P. Co., 191 N.Y. 123; 83 N.E. Rep. 693; Atchison, T. and S.F. Railway Co. v. Commerce Commission, 335 Ill. 624; 167 N.E. Rep. 831. This regulatory power must be exercised ...


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