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Abbott''s Dairies Inc. v. Armstrong

Decided: January 18, 1954.


For reversal -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For affirmance -- None. The opinion of the court was delivered by Jacobs, J. Heher, J. (for reversal). Heher, J., concurring in result.


These are consolidated appeals from price fixing orders issued by the Director of the Office of Milk Industry of our State Department of Agriculture. We have certified the appeals on our own motion under R.R. 1:10-1.

On March 31 and April 1, 1953 the Director conducted public hearings during which representatives of milk producers, distributors and consumers were heard fully. On April 16, 1953 he issued orders which set minimum prices for the sale of designated grades of milk in certain situations and in addition set "fixed" or identical minimum and maximum prices for the sale of designated grades of milk by dealers to consumers and schools. The appellants do not

question the validity of the minimum prices set by the Director. However, they attack the fixed prices to consumers and schools contending: (1) that while the milk control statute provides for minimum prices it does not empower the Director to impose any fixed or maximum prices; (2) that the statute may not constitutionally grant such power; (3) that the orders setting fixed prices applied only to certain areas within the State and since they were not statewide they were invalid, and (4) that the findings of fact which accompanied the orders contained nothing whatever which bore on fixed or maximum prices and were therefore insufficient. These contentions will be considered in the full light of the history, purpose and terminology of the legislation. See 3 State Milk and Dairy Legislation (1941), p. 1; Mortenson, Milk Distribution as a Public Utility (1940), p. 7; The New Jersey Department of Agriculture 1916-1949 (1950), p. 247.

During the first World War the Federal Government adopted emergency measures which were designed to insure a constant supply of milk to consumers; included were regulations aimed at excess charges and profiteering. Postwar economic conditions through the Twenties were such that no need appeared for any price controls within the industry. In the Thirties, however, the situation changed radically. Production of milk increased while consumer purchasing power decreased. Milk prices dropped and farmers were unable to meet their costs. In an effort to impel higher prices farmers struck, milk was dumped and there was violence and bloodshed, all to no avail. The demoralizing trade practices were endangering the constant flow of wholesome milk to consumers and the demands for governmental control, federal and state, became insistent. In 1933 Congress enacted the Agricultural Adjustment Act and in April of the same year New York passed the first of the state milk control acts. New York's statute provided that the board shall ascertain what prices for milk will best protect the industry and insure a sufficient quantity of pure and wholesome milk, shall fix minimum prices, and may fix maximum

prices. In Nebbia v. New York, 291 U.S. 502, 54 S. Ct. 505, 78 L. Ed. 940 (1934), the defendant was convicted of selling milk below the price of nine cents which had been set by the board as the minimum price for a quart of milk on its sale by a store to a consumer. The Supreme Court upheld the New York statute and the defendant's conviction; it found that the milk industry was subject to regulation in the public interest and that the board's order was not "arbitrary, discriminatory or demonstrably irrelevant" to the policy which the Legislature was constitutionally free to adopt.

In May 1933 New Jersey's original Milk Control Act was adopted. L. 1933, c. 169. It described the nature of the emergency in the industry and created a Milk Control Board, empowered in Article III "to supervise and regulate" the entire milk industry in those matters required to prevent unfair, unjust, destructive and demoralizing trade practices. Article V dealt with the licensing of milk dealers and provided that licenses could be refused or revoked in various situations, including any instance where "the licensee has been a party to a combination to fix prices contrary to the provisions" of the act. Article VI provided that no licensee shall operate under any mutual or secret understanding with any other licensee "whereby the price for fluid milk to be paid to producers in this State is fixed or reduced or the price to be paid by the consumers for such milk is fixed or increased" pursuant to such agreement. Article VII provided that the board may "ascertain, determine and fix" such prices to be paid "to the producer and to be charged the consumer for milk" as will best protect the supply of milk and "insure a sufficient quantity of pure and wholesome milk to the inhabitants of this State, having special regard to the health and welfare of children and be most in the public interest." Article VII was amended in June 1933 and May 1934, in respects which are not material here. L. 1933, c. 255; L. 1934, c. 132.

Our original Milk Control Act did not confine the board to the fixing of minimum prices; indeed, nowhere in [14 NJ Page 325] the entire act did the word "minimum" appear. Article III which vested the general rule-making power in the board made no mention of prices. And Article VII which vested the specific price fixing power in the board did not limit it to minimum prices but, on the contrary, afforded authority to ascertain, determine and fix producer and consumer prices. Taken in its generally accepted meaning, this language clearly encompassed authority to prescribe a price which would be both minimum and maximum. Cf. McKann v. Irvington, 133 N.J.L. 63, 67 (Sup. Ct. 1945), affirmed 133 N.J.L. 575 (E. & A. 1946). Statutory language is to be given its ordinary meaning in the absence of specific intent to the contrary. See Board of National Missions v. Neeld, 9 N.J. 349, 353 (1952); Grogan v. DeSapio, 11 N.J. 308, 323 (1953); General Public Loan Corp. v. Director, Div. of Taxation, 13 N.J. 393, 400 (1953). While it is true that the immediate evil in 1933 was price cutting, it does not at all follow that the Legislature intended to restrict the board to the imposition of minimum prices. The legislative intervention was grounded entirely upon the public interest and the Legislature may properly have believed that in undertaking to exercise control over the milk industry it ought empower its administrative agent not only to fix, if necessary, minimum prices fair to the industry but also, if necessary, maximum prices fair to the consuming public. The New York statute which served as the prototype for our act was also impelled by the 1933 economic situation, but the New York Legislature, having undertaken to exercise milk control in the public interest, not only directed the fixing of minimum prices but also afforded explicit authority to fix maximum prices. Although our Legislature did not use the word "maximum," it likewise did not use the word "minimum" and the comprehensive language it did use was appropriately designed to include both. In State Board of Milk Control v. Newark Milk Co., 118 N.J. Eq. 504, 521 (E. & A. 1935), our original act was sustained and though the court had no occasion to consider whether the board had power to fix maximum prices, it did note that the plainly

expressed legislative objective was "the maintenance of a price level that will yield only a reasonable return for the producers' labor and investment, and thus insure an adequate supply of wholesome milk." In rejecting the attack on the constitutionality of the act the Court of Errors and Appeals embraced fully the views expressed in the Nebbia case, supra, where Justice Roberts concluded his oft-cited opinion with the following pertinent remarks (291 U.S., at p. 538, 54 S. Ct., at page 516, 78 L. Ed., at p. 957):

"The lawmaking bodies have in the past endeavored to promote free competition by laws aimed at trusts and monopolies. The consequent interference with private property and freedom of contract has not availed with the courts to set these enactments aside as denying due process. Where the public interest was deemed to require the fixing of minimum prices, that expedient has been sustained. If the lawmaking 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."

On April 1, 1935 an order setting minimum prices of milk sold by dealers to stores was entered and was later attacked on the ground that Article VII of the act authorized the fixing of the price to be paid to a producer and the price to be charged to a consumer but did not permit the fixing of price for milk sold by dealers to stores. This contention was sustained in Supplee-Wills-Jones Milk Co. v. Duryee, 116 N.J.L. 75 (Sup. Ct. 1935), where the court [14 NJ Page 327] found: (1) that the special price-fixing power in Article VII was not broad enough to extend to sales by dealers to stores, and (2) that the general rule-making power in Article III could not be invoked to supply the omission since it made no specific reference to prices and could not therefore be construed to embody any price-fixing authority. But cf. Gaine v. Burnett, 122 N.J.L. 39 (Sup. Ct. 1939), affirmed 123 N.J.L. 317 (E. & A. 1939). However, this was corrected when the Legislature passed the Milk Control Act of 1935 (L. 1935, c. 175). This act was intended as a continuation of L. 1933, c. 169, which was about to expire under its express terms. In section 700 the special price-fixing power was rephrased to relate solely to minimum prices and to include sales by dealers to stores and others. At the same time, however, the general rule-making power in section 301 was enlarged to include specific authority "to fix the price at which milk is to be bought or sold." The purpose of the Legislature seems fairly evident. It dealt in detail in section 700 with the immediately pressing problem of fixing minimum prices, and to guard against omissions (cf. Supplee-Wills-Jones Milk Co. v. Duryee, supra) and provide in the public interest for price-fixing beyond the minimum prices contemplated in the special power, it expressly granted in section 301 a general power to fix prices, including maximum as well as minimum. The suggestion is made that the special power in section 700 was exclusive and that the general power in section 301 merely had reference thereto. But acceptance of this suggestion would, in effect, strike out as surplusage the specific grant in section 301 of comprehensive power to fix milk prices; to do this would not only run counter to basic rules of statutory construction but would also disregard the legislative history which discloses that the price fixing language was deliberately included in the general rule making power of the 1935 act after its omission from the comparable provision of the 1933 act had become an issue in Supplee-Wills-Jones Milk Co. v. Duryee, supra. See Hoffman v. Hock, 8 N.J. 397, 406 (1952), where Justice Ackerson recently restated for this court the

well-recognized rule that a "construction that will render any part of a statute inoperative, superfluous or ...

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