Mont. Dept. of Bus. Reg. v. Hartfor

• Court: Montana Supreme Court
• Decided: January 19, 1976
• Docket: 13053
• Status: Published

Opinion

No. 13053

I N THE SUPREME COURT O THE STATE O M N A A F F OTN

MONTANA DEPARTMENT O BUSINESS REGUTATION, F MILK CONTROL DIVISION, on behalf of t h e STATE O MONTANA, e t a l . , F P l a i n t i f f s and A p p e l l a n t s , -vs - HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation, e t a l . , Defendant and Respondent. - - - - - - - - - - - - - - I - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

M N A A DEPARTMENT OF BUSINESS REGULATION, OTN MILK CONTROL DIVISION, R e l a t o r and P l a i n t i f f , 'VS - BEST DAIRY FARMS, a Montana Corporation, Respondent and Defendant.

Appeal from: D i s t r i c t Court of t h e Eighteenth J u d i c i a l D i s t r i c t , Honorable ~ a c k Shanstrom, Judge p r e s i d i n g . D.

Counsel of Record:

For Appellants :

James H. ElcFarland argued, Helena, Montana Geoffrey B r a z i e r argued, Helena, Montana

For Respondents:

Drysdale, McTJean 6 S c u l l y , Bozeman, Montana James J. S c r e n a r argued, Bozeman, Montana

Submitted: December 10, 1975

Filed : Mr. J u s t i c e Wesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court.

This i s an a p p e a l from a summary judgment e n t e r e d by

t h e d i s t r i c t c o u r t i n G a l l a t i n County, t h e Honorable J a c k D. Shanstrom p r e s i d i n g . The summary judgment was f o r d e f e n d a n t s

i n two c o n s o l i d a t e d c a s e s . P l a i n t i f f i s t h e Montana Department of Business Regula-

t i o n , Milk C o n t r o l D i v i s i o n . Defendants a r e Best Dairy Farms, a c o r p o r a t i o n , l i c e n s e d and bonded a s a d i s t r i b u t o r under t h e Montana Milk C o n t r o l Act, and i t s s u r e t i e s under t h e s t a t u t o r y milk d i s t r i b u t o r ' s bond. P l a i n t i f f and c e r t a i n named milk producers f i l e d s u i t

a g a i n s t H a r t f o r d Accident and Indemnity Company and ire man's Fund under s e c t i o n 27-426,, R.C.M. 1947, t o e n f o r c e payment t o milk producers supplying Best Dairy Farms f o r t h e i r p r o d u c t . Subsequently p l a i n t i f f f i l e d s u i t a g a i n s t Best Dairy Farms and t h e c a s e s were c o n s o l i d a t e d f o r t r i a l . T r i a l was had w i t h o u t a j u r y and summary judgment was g r a n t e d t o d e f e n d a n t s and t h e c a s e d i s - missed on i t s m e r i t s .

During a p e r i o d between September 1969 and A p r i l 1970, an a u d i t of t h e monthly r e p o r t s and s u p p o r t i n g p l a n t r e c o r d s of Best Dairy Farms was made by a u d i t o r s of t h e Eoard of Milk C o n t r o l .

The r e s u l t s of t h i s a u d i t i n d i c a t e d t h a t t h e sum of $14,686.40 had been s y s t e m a t i c a l l y deducted from t h e payments t o 24 producers

of Best Dairy Farms, and shown a s "miscellaneous d a i r y charges".

The d e d u c t i o n s were based on $0.03 p e r hundredweight (from $3.00 p e r hundredweight) on all milk s o l d by t h e producers t o Best Dairy Farms. The "miscellaneous d a i r y charges" were i n f a c t an amount agreed t o by t h e producers t o r e n t a machine f o r packaging milk i n one g a l l o n c o n t a i n e r s i n o r d e r t o meet

c o m p e t i t i o n and s o t h a t t h e producers would c o n t i n u e t o r e c e i v e II a b e t t e r p r i c e f o r package milk r a t h e r than cheese milk" which had a lower p r i c e . The packaging machine was l e a s e d f o r $245 per month and t h e producers o r a l l y agreed t o pay t h e l e a s e p r i c e by a d e d u c t i o n of t h e $0.03 p e r hundredweight. T h i s maneuver, a s o r t of c o o p e r a t i v e v e n t u r e by t h e d i s t r i b u t o r and i t s producers by o r a l agreement, was r e p o r t e d a s "miscellaneous d a i r y charges".

I t i s t h i s deduction t h a t t h e Board determined was a d i l u t i o n of minimum p r i c e paid t o t h e producers and t h u s a v i o l a t i o n . Those d e d u c t i o n were made from May 1965 t o t h e completion of t h e a u d i t . Following a d m i n i s t r a t i v e d e t e r m i n a t i o n s , t h e d i s t r i b u t o r was o r d e r e d t o r e p a y t h e t o t a l amount of $14,686.40 t o t h e 24 producers. Best Dairy Farms met w i t h t h e producers and s u b s e q u e n t l y i s s u e d checks t o each. Only one producer o u t of t h e 24 a c c e p t e d h i s refund. The o t h e r s e i t h e r cashed t h e check and w r o t e o u t t h e i r p e r s o n a l check back t o Best Dairy Farms o r simply d i d n o t p i c k up t h e i r checks. They each f e l t morally o b l i g a t e d t o a b i d e by t h e i r o r i g i n a l agreement t o r e n t t h e packaging machine and t - d i d n o t o r a r e n o t now c l a i m i n g - a y--h i n g a g a i n s t Rest Dairy Farms o r i t s bonding companies. With t h i s remarkable s t a t e of a f f a i r s , t h e Board has pursued t h e m a t t e r a l l t h e way t o t h i s Court c l a i m i n g t h a t t h e "miscellaneous d a i r y charges" "JC JC ? ; was n o t h i n g more than an a r t f u l l y c o n t r i v e d s u b t e r f u g e whereby t h e primary means of If a c h i e v i n g t h e purpose of t h e Act were e f f e c t i v e l y circumvented. To add more t o t h e puzzle of why t h e c a s e i s h e r e , B e s t Dairy Farms s o l d o u t and i s no l o n g e r i n b u s i n e s s . The ~ o a r d ' s b r i e f on a p p e a l s t a t e s t h a t "The end r e s u l t was t h a t funds t o which some producers were e n t i t l e d under t h e Act r e p o s e among t h e a s s e t s and r e s o u r c e s of t h e d i s t r i b u t o r and have inured t o i t s b e n e f i t , a r e s u l t which none of i t s c o m p e t i t o r s i s known t o 11 enjoy. The Board u r g e s two i s s u e s on +peal, one o f which i s controlling. That i s s u e i s whether t h e d i s t r i c t c o u r t e r r e d i n g r a n t i n g summary judgment and d i s m i s s i n g t h e c a s e on i t s m e r i t s . The d i s t r i c t c o u r t i n e f f e c t found t h a t t h e r e i s no j u s t i c i a b l e i s s u e presented, N producer, a l l e g e d t o have been o s h o r t e d , has f i l e d any claim---although r e q u e s t e d t o do so a s s e c t i o n 27-426, R.C.M. 1947, provides. The s u r e t i e s a r e c l e a r l y exonerated a s provided i n s e c t i o n 30-406, R.C.M. 1947, by performance by Best Dairy Farms i n complying w i t h t h e refund order. To f i n d any j u s t i c i a b l e i s s u e i s l i k e g r a s p i n g s p a g h e t t i . The end r e s u l t i s t h e same--the d i s t r i b u t o r paid---the producers, except one---paid baclc. N one owes anyone anything. o The Board urges "public p o l i c y " a s r e q u i r i n g i t t o pursue the matter. The law does n o t r e q u i r e i d l e a c t s , s e c t i o n 49-124, R.C.M. 1947. Nor does i t r e q u i r e i m p o s s i b i l i t i e s , s e c t i o n 49-123, R.C.M. 1947. I t does d i s r e g a r d t r i f l e s , s e c t i o n 49-125, R.C.M.

1947. The purpose of t h e Milk Control Act of providing a con- t i n u o u s source of pure, wholesome milk i n t h e p u b l i c i n t e r e s t ( T i t l e 27, Chapter 4 , Revised Codes of Montana, 1947) and t o e l i m i n a t e u n f a i r and demoralizing t r a d e p r a c t i c e s i n t h e milk i n d u s t r y has been accomplished. Nothing remains. Finding no e r r o r , t h e judgment i s a f f i r m e d .

'add Justices.