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October 29, 1936

GANLEY et al.
WALLACE, Secretary of Agriculture; LEIGH v. SAME

The opinion of the court was delivered by: LUHRING

The plaintiffs are dairy farmers and produce milk for sale and consumption in the District of Columbia marketing area, which embraces the territory within the boundary lines of the District of Columbia. Those of the plaintiffs named in Equity No. 62521 are residents of the state of Maryland and the milk sold by them is produced in that state. The plaintiff in Equity No. 62536 resides in the state of Virginia, and the milk sold by him is produced there. Each of the plaintiffs is licensed by the Health Department of the District of Columbia to produce milk for shipment to and sale in the District.

The plaintiffs in Equity No. 62521 ship and sell their milk to the Highland Farms Dairy of Washington, D.C., under and by virtue of a written contract now subsisting between each of said plaintiffs and said dairy, whereby the dairy agrees to accept all milk within certain specified quantities, which the plaintiff consigns or causes "to have consigned" each day to the dairy, at a certain definite and fixed price per gallon.

 The plaintiff in Equity No. 62536 for the past three and a half years has sold his entire production of milk to the Model Farms Dairy, Inc., of Washington, D.C., under a contract which provides that the dairy will accept said milk and pay for said entire production on the basis of 60 per cent. of said milk delivered at the prevailing market price for basic milk plus differentials and premiums and 40 per cent. at the prevailing market price for surplus milk, with a minimum of fifteen cents per gallon for 4 per cent. milk.

 On the 17th day of September, 1936, the Secretary of Agriculture, by virtue of the authority conferred upon him by the Agricultural Adjustment Act, as amended, 7 U.S.C.A. ยง 601 et seq., promulgated an "order regulating the handling of milk in the District of Columbia Marketing Area," which became effective at 12:01 a.m., E.S.T., September 21, 1936.

 By the terms of this order all milk received by the handlers or distributors was classified, and minimum prices were fixed to be paid to associations of producers and to producers therefor. The order required periodic reports to be made by the handlers with respect to the quantity of milk or cream received and sold, including also the net amount paid to the producer, with the prices, premiums, deductions, and charges involved, together with a showing of the portion of such delivery which was in excess of the base of the producer.

 The order also made provision for the determination of uniform prices to be paid to the producer, and fixed a time and method of payment. The order created an agency to administer the order designated as a market administrator, and made provision for the payment of the expenses of administration by requiring each handler "who is not an association of producers" to pay "on or before the 15th day after the end of each delivery period," to the market administrator "a sum not exceeding 2 cents per hundredweight with respect to all Class I milk purchased by him during such delivery period from producers, or an association of producers, or produced by him, the exact amount to be determined by the Market Administrator subject to review by the Secretary."

 The bills were filed by the plaintiffs on the 20th day of September, 1936, and each bill challenges the validity of the order on constitutional grounds, and seeks an injunction both pendente lite and permanently to enjoin the Secretary of Agriculture and the market administrator from carrying out and enforcing its terms and provisions. Rules to show cause were issued September 30, 1936, returnable October 8, 1936, requiring the defendants to show cause why an injunction pendente lite should not issue in conformity to the prayers of the bills. Returns to the rules were filed by the defendants on October 8, 1936. Affidavits were filed by the parties, and, by consent, the cases were consolidated for hearing on the question of the sufficiency of the bills and the issuance of an injunction pendente lite.

 At the outset it is urged by the defendants in the returns to the rules to show cause that "the plaintiffs have no standing to maintain the suit" because (a) "neither the Agricultural Adjustment Act nor the order * * * requires the plaintiffs or any of them to do anything or to refrain from doing anything," and (b) that no penalty is provided by the act or order which may be enforced against the plaintiffs or any of them by the defendants or by any other person.

 It clearly appears from the allegations of the bills and the exhibits thereto that the plaintiffs are producers of milk which is sold and distributed in the so-called District of Columbia marketing area; and that the Secretary of Agriculture, having reason to believe that the issuance of a marketing agreement or order with respect to the handling of milk in this area would tend to re-establish prices of milk to producers of milk in such area at a level with the prices prevailing in a base period of August, 1924, to July, 1929, gave notice to these producers and others interested that a hearing would be had on the 20th day of July, 1936, on a proposed agreement and order, regulating the handling of milk in such area, and that at such time all interested parties were afforded an opportunity to be heard.

 The order here involved was promulgated after this hearing, and directly affects these plaintiffs. It not only classifies their production into two classes, that is in class I and class II milk, notwithstanding that the milk comes from the same herd and is of the same quality, but the order also limits the quantity of class I milk, which they may sell at a fixed minimum price. The order also prescribed the method for determining the price to be paid for their class II milk, and provides: "That the amount paid shall not be less than the equivalent of the standing offer of the Maryland-Virginia Milke Producers' Association to buy milk or cream for sale to manufacturers of ice cream sold at wholesale, on file with the Market Administrator on the date of such invoice." It is true that the order does not in terms compel the producer to do, or refrain from doing, any act. However, if he desires to sell, or contract to sell, his milk in the District of Columbia, or as here, to continue to sell the same, he must sell to a handler who is required, under a penalty of a fine not less than $50 or more than $500, to comply with the order.

 The case of Adkins v. Children's Hospital, 261 U.S. 525, 43 S. Ct. 394, 67 L. Ed. 785, 24 A.L.R. 1238, involved the act of September, 1918 (40 Stat. 960, c. 174), providing for the fixing of minimum wages for women and children in the District of Columbia, and answers the contention of the defendants that the plaintiffs have no standing to maintain the suit. In that case a Mrs. Lyons, a woman of 23 years of age, was employed by the Congress Hall Hotel as an elevator operator at a salary of $35 per month and two meals a day, but the hotel company was obliged to dispense with her services by reason of the order of the Minimum Wage Board and on account of the penalties prescribed by the act for its violation. The act did not require Mrs. Lyons to do anything or refrain from doing anything, nor was she subject to any penalty. Nevertheless, upon her petition, Mrs. Lyons was granted an injunction on the ground that the act was unconstitutional in that it interfered with the freedom of contract included, within the guaranties of the due process clause of the Fifth Amendment. The court said (261 U.S. 525, at page 554, 43 S. Ct. 394, 400, 67 L. Ed. 785, 24 A.L.R. 1238); "It is simply and exclusively a price-fixing law, confined to adult women (for we are not now considering the provisions relating to minors), who are legally as capable of contracting for themselves as men. If forbids two parties having lawful capacity -- under penalties as to the employer -- to freely contract with one another in respect of the price for which one shall render service to the other in a purely private employment where both are willing, perhaps anxious, to agree, even though the consequence may be to oblige one to surrender a desirable engagement and the other to dispense with the services of a desirable employee."

 See, also, the opinion of Mr. Justice Van Orsdel in the same case, Children's Hospital v. Adkins et al. (Lyons v. Adkins), 52 App.D.C. 109, 284 F. 613, 50 Wash. Law Rep. 721; and, also, Morehead v. People of State of New York, 298 U.S. 587, 56 S. Ct. 918, 80 L. Ed. 1347, 103 A.L.R. 1445, decided June 1, 1936.

 These plaintiffs, as we have seen, have contracted for the sale of their milk for a certain definite price. This price is fixed and determined by the parties. These contracts are abrogated by the order. Furthermore, the prices fixed by the order are not the same as those agreed upon. It is to be noted also that the power and authority to fix a minimum price for class II milk is delegated to the Maryland-Virginia Milk ...

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