Montana Milk Control Board v. Rehberg

376 P.2d 508, 141 Mont. 149, 1962 Mont. LEXIS 28
CourtMontana Supreme Court
DecidedNovember 28, 1962
Docket10389
StatusPublished
Cited by29 cases

This text of 376 P.2d 508 (Montana Milk Control Board v. Rehberg) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Montana Milk Control Board v. Rehberg, 376 P.2d 508, 141 Mont. 149, 1962 Mont. LEXIS 28 (Mo. 1962).

Opinion

MR. CHIEF JUSTICE JAMES T. HARRISON

delivered the Opinion of the Court.

This is an appeal from a judgment of the district court of Yellowstone County sustaining defendant’s amended demurrer to plaintiff’s amended complaint.

The plaintiff and appellant is the Montana Milk Control Board; the defendant and respondent is J. E. Rehberg doing business as Midland Guernsey Dairy Farms.

By its complaint, plaintiff alleges substantially the following. Defendant Rehberg owns and operates the Midland Guernsey Dairy Farms, and in his business Rehberg buys, bottles, and distributes milk through his retail dairy store and restaurant in Billings, Montana. Pursuant to the applicable provisions of the Revised Codes of Montana (R.C.M.1947, § 27-407), the Montana Milk Control Board promulgated Order No. 59-17 pertinent to Market Area No. II, wherein defendant does business, and which order set the minimum price for milk sold retail in half-gallon and one gallon containers at $0.47 and $0.90 respectively. In violation of this order the defendant did sell and is selling half-gallon and one gallon containers of milk for $0.45 and $0.85 respectively.

Plaintiff further alleges that if defendant’s conduct is allowed to continue, irreparable injury will result to the plaintiff and to milk producers and distributors in Market Area No. 11; that a general demoralization of the fluid milk marketing and dairy industry will result in Market Area No. II as well as in neigh *152 boring areas; that if the Order is not enforced the Montana Milk Control Board will lose the confidence of the dairy industry; that a major price war among the producers in the milk industry will result in loss of income to the producers; and, that an adequate suppiy of wholesome milk will be jeopardized.

Therefore, the plaintiff sought an injunction to restrain the defendant from selling milk for consumption at a price less than the minimum set by the Montana Milk Control Board.

By amended demurrer, in addition to alleging generally that the complaint does not state facts sufficient to constitute a cause of action, the defendant’s most serious allegations specifically assail the constitutionality of the Milk Control Act in the following particulars: ((1) that section 27-407, deprives the defendant of property without due process of law; and, (2) that there is an unconstitutional delegation of legislative power since the Montana Legislature did not sufficiently establish a legislative policy to fix prices, nor did the Legislature prescribe adequate standards and guides in attempting to delegate the powers. Defendant further attacks section 27-424, R.C.M.1947, on the ground that an injunction will not lie to enforce a penal statute.

The district court entered a judgment sustaining defendant’s amended demurrer and the cause is before this court on the pleadings alone.

In this case we are specifically concerned with sections 27-401 through 27-429, R.C.M.1947, an Act to supervise the milk industry in Montana, and which will hereinafter be referred to as the Act. This is by no means new legislation, the original Act having been enacted by the legislature in 1939, with substantial amendments thereto enacted in 1957 and 1959. Notwithstanding its long existence on the books, this court has never had to decide the constitutionality of the Act, however, we are not without authority and precedent in this area since courts of many of our sister states, as well as the United States Su *153 preme Court, have spoken on the constitutional issues raised by milk control statutes similar to our own.

Defendant contends the most fundamental deficiency of the Act to be, that it deprives him of property without due process of law in violation of Art. Ill, § 27, Montana Constitution. No authority need be cited for the basic and well-established proposition that the right to contract is a valuable property right protected by due process of law. However, it is equally basic and well-established that there is no absolute liberty to contract, such liberty being necessarily subordinate to reasonable restraint and regulation by the state in the exercise of its sovereign prerogative — police power. State v. Safeway Stores, Inc., 106 Mont. 182, 203, 76 P.2d 81 (1938). Hence, we must inquire into whether or not the price-fixing provisions of the Act abridge defendant’s liberty to contract under the protection of due process of law. These provisions of the Act in question will be hereafter set out.

Undoubtedly, the most notable case concerning the constitutionality of price-fixing regulations in the milk industry is Nebbia v. New York, 291 U. S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469 (1934), wherein the United States Supreme Court held that the fixing of prices in the milk industry constituted a valid exercise of police power. The defendant in the instant case recognizes that the Nebbia case, as well as the numerous cases following its rationale, are authority against his position; however, he contends that the reasoning of Nebbia and similar cases is erroneous.

To sustain his position defendant cites this court to two recent Southern cases, which hold their respective Milk Control Acts unconstitutional. Harris v. Duncan, 208 Ga. 561, 67 S.E.2d 692 (1951); Gwynette v. Myers, 237 S.C. 17, 115 S.E.2d 673 (1960). Both jurisdictions deciding the above-cited cases admit they are in the decided minority, however, each justifies its respective holding on the ground that the milk industry is not “affected with a public interest” in its state so as to allow price- *154 fixing in exercise of the police power. It should be noted that following the decision in Harris v. Duncan, the Georgia General Assembly in 1952, amended its Milk Control Act empowering parties to contract in accordance with provisions of the Act for the sale of milk, and, if the parties have failed to contract, the transaction shall be pursuant to an order of the milk control board setting minimum prices. See Georgia Laws 1952, at page 55 et seq. To date the constitutionality of this extensive amendment has not been decided.

As to Gwynette v. Myers, supra, it suffices to say that it is a three to two decision and against the great weight of authority, and, of course, this court is not bound by decisions of the Supreme Court of South Carolina.

The jurisdictions upholding their respective Milk Control Acts are numerous. We do not intend to burden this opinion with an exhaustive citation to those cases. However, for a more complete collation of milk control eases and history of milk control legislation than is herein deemed necessary, a 1961 case upholding Mississippi’s Milk Control Act is helpful. See Mississippi Milk Commission v. Vance, 240 Miss. 814, 129 So.2d 642 (1961).

The concept “affected with a public interest” has often been used to test the power of a state to fix prices. For example, this court in H. Earl Clack Co. v. Public Service Commission, 94 Mont.

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Bluebook (online)
376 P.2d 508, 141 Mont. 149, 1962 Mont. LEXIS 28, Counsel Stack Legal Research, https://law.counselstack.com/opinion/montana-milk-control-board-v-rehberg-mont-1962.