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In re Application of Welsh Producers Cooperative Milk Marketing Association Inc.

Decided: June 6, 1956.

IN THE MATTER OF THE APPLICATION OF WELSH PRODUCERS COOPERATIVE MILK MARKETING ASSOCIATION, INC., FOR A LICENSE TO OPERATE AS A MILK DEALER IN THE STATE OF NEW JERSEY


Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.

Francis

The Director of the Office of Milk Industry refused to grant a milk dealer's license to appellant, Welsh Producers Cooperative Milk Marketing Association, Inc., under N.J.S.A. 4:12-1 et seq. The propriety of his action is challenged by this appeal.

The Milk Control Act invests the Director with broad authority to fix "the price at which milk is to be bought, sold, or distributed"; to "regulate conditions and terms of sale"; to "supervise, regulate and control the entire milk industry in the State of New Jersey, including the production * * * sale or resale," and to do everything necessary "to control or prevent unfair, unjust, destructive or demoralizing practices" in the industry. N.J.S.A. 4:12 A -21. More specifically, he may fix the minimum prices to be paid to the producer and the resale prices to be charged by milk dealers to other milk dealers and to consumers. N.J.S.A. 4:12 A -22.

Milk dealers are required to be licensed and they are forbidden to handle or sell in this State milk which is obtained from a producer or other milk dealer directly or

indirectly for a price less than the minimum fixed by the Director. N.J.S.A. 4:12 A -28, 29. And it is illegal for a licensee to operate under any "mutual or secret agreement, arrangement, combination, contract or common understanding, with any other licensee or person, firm, association or corporation, whereby the price for milk to be paid to producers in this State is reduced * * *." N.J.S.A. 4:12 A -30.

A milk dealer is defined to be any "person who sells * * * milk, including on consignment or for the account of a producer, or who purchases milk from producers or other milk dealers * * * and who, in addition thereto, pasteurizes in his own plant or bottles in his own plant for sale in this State * * *. Any dairy cooperative association organized under any law of this or any other State and engaged in this State in the handling of milk in this State , as hereinafter defined, is hereby declared to be a milk dealer * * *." N.J.S.A. 4:12 A -1. (Emphasis ours)

Section 31 expressly declares that the act shall not prevent "a producer co-operative * * * corporation approved by the director, which sells the milk of or for its members * * * from blending the proceeds of all its or their net sales either within or without the State, and so paying its members * * *." N.J.S.A. 4:12 A -31. The effect of this provision is that such a cooperative is not bound by the minimum prices set by the Director to be paid to producers. Since the organization would be composed of producers and would operate in their interest, the Legislature obviously did not intend to require it to pay the minimum fixed prices to the producers in the first instance, but rather to enable them by pooling their milk to sell it on a cooperative basis and to distribute the net proceeds of the sales.

Producer as used in the statute means "[a]ny person producing milk entirely for sale to a milk dealer or processor except for the milk produced for the use of himself and his family and the use of his employees and their families." N.J.S.A. 4:12 A -1.

Prior to the events to be discussed herein, the Director had established minimum prices to be paid by dealers to producers and also minimum resale prices to be charged by them to subdealers, stores and consumers.

Welsh Farms, Inc., is a licensed milk dealer, and in the course of its business regularly bought milk from 62 producers in northern New Jersey at the fixed minimum prices. Apparently in the fall of 1954 the Director indicated that he was contemplating the elimination of resale price control. Upon receipt of this information Welsh Farms, Inc. says it feared resale decontrol would cause a serious monetary loss if the mandate for minimum prices to the producer remained in existence. So it addressed a letter to its 62 producers advising them of the impending action of the Director. They were told also that if the resale prices were cancelled, Welsh Farms, Inc. could not continue to buy New Jersey milk at O.M.I. prices.

Two possible remedies were pointed out: (1) that Welsh Farms, Inc. would stop buying New Jersey milk (see Baldwin v. G.A.F. Seelig, Inc. , 294 U.S. 511, 55 S. Ct. 497, 79 L. Ed. 1032 (1935)), and (2) the immediate formation by the producers of a cooperative marketing association "which would then resell to us at prices we can afford to pay * * *." And the ominous statement was made that if a prompt solution could not be found, it would be necessary immediately to send out formal 30-day notices cancelling the purchasing arrangement between them. The letter was signed by the president of Welsh Farms, Inc., and concluded as follows:

"A general producers meeting will be held at the Long Valley Inn on Thursday, December 7th, at 7:30 p.m. Every producer should attend."

The record contains other evidence of like psychological and real pressure on the farmer producers for the ...


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