VAN VALKENBURGH, Circuit Judge.
This is the third time this case has come before this court, and a better understanding of the issues now presented requires a recapitulation of the successive steps of the litigation in this court and in the Supreme Court of the United States.
The proceeding was instituted by an order of the Secretary of Agriculture in April 1930. An order presenting rates followed in May 1932. Upon rehearing, granted in July 1932, a new order was made on June 14, 1933. The order of June 14, 1933, was attacked in this court, so far as it prescribed maximum charges for selling livestock, as illegal, arbitrary, and as depriving the plaintiff commission men of their property without due process of law.
The outstanding allegation in the bill, in support of the contention that the order was null and void because plaintiffs had been denied a fair and full hearing, was the charge set forth in paragraph IV that the Secretary had delegated to assistants, purporting to be acting Secretaries of Agriculture, powers and authorities vested by the Packers and Stockyards Act, 7 U.S.C. A. § 181 et seq., solely in the Secretary. That the hearings, such as were granted, were held before such subordinates, who made the findings and conclusions incorporated in said order. That the secretary himself signed the order, but that his sole information with respect to the proceeding was derived from consultation with employees for the Department of Agriculture, largely out of the presence of plaintiffs or their representatives.
Counsel for the secretary moved to strike the paragraph from the bills on the ground that this was a purely departmental administrative proceeding, and this court improvidently indulged that contention and sustained the motion to strike. Subsequently, under misconception of the limitations imposed upon the review of such proceedings, the order was sustained and the bills of complaint were dismissed. D.C., 8 F. Supp. 766.
On appeal to the Supreme Court the decree of this court was reversed and some very pertinent and instructive rulings were made with respect to proceedings under the Packers and Stockyards Act. Morgan v. United States, et al., 298 U.S. 468, 56 S.Ct. 906, 911, 80 L.Ed. 1288. It was there held that:
There is “no basis for the contention that the authority conferred by section 310 of [548]*548the Packers and Stockyards Act [7 U.S.C. A. § 211] is given to the Department of Agriculture, as a department in the administrative sense. * * *
“The proceeding is not one of ordinary administration, conformable to the standards governing duties of a purely executive character. It is a proceeding looking to legislative action in the fixing of rates of market agencies. * * *
“A proceeding of this sort requiring the taking and weighing of evidence, determinations of fact based upon the consideration of the evidence, and the making of an order supported by such findings, has a quality resembling that of a judicial proceeding. * * *
“To give the substance of a hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determinations must consider and appraise the evidence which justifies them. That duty undoubtedly may be an onerous one, but the performance of it in a substantial manner is inseparable from the exercise of the important authority conferred. * * *
“Facts and circumstances must not be considered which should not legally influence the conclusion. * * *
“In determining whether in conducting an administrative proceeding of this sort the Secretary has complied with the statutory prerequisites, the recitals of his procedure cannot be regarded as conclusive. Otherwise the statutory conditions could be set at naught by mere assertion. If upon the facts alleged the ‘full hearing’ required by the statute was not given, plaintiffs were entitled to prove the facts and have the Secretary’s order set aside.”
The conclusion was that the district court erred in striking out the allegations of Paragraph IV of the bills of complaint. The decree was reversed and the cause remanded with directions that the defendants therein should be required to answer the allegations contained in that paragraph, and that the question whether plaintiffs had had a proper hearing should be determined.
At the next hearing before this court, constituted as at present, the majority reached the conclusion that the secretary gave plaintiffs that hearing to which the law entitled them, and entered a decree dismissing the bills. Morgan v. United States, D.C., 23 F.Supp. 380, 384. The writer was unable to concur in that conclusion, and the reason for dissent was epitomized in the following language: “It is impossible, in my judgment, to read the testimony of the Secretary without recognizing that he carried into the final determination reached this conception of the proceeding as one belonging to his department in an administrative sense. The examinations he made were casual and perfunctory in the extreme. He' says his final determination represented his reactions to the findings of the men in the Bureau of Animal Industry. He accepted these findings because he regarded his subordinates as in a better position than himself to make the decision. In his view ‘the phrase “Secretary of Agriculture” is perhaps used in connections with regard to laws of this sort in the broad sense as well as in the narrow sense’.”
On appeal to the Supreme Court the decree was again reversed and the order of the Secretary held void for failure to allow the full hearing before the Secretary required by the Packers and Stockyards Act. 304 U.S. 1, 58 S.Ct. 773, 999, 82 L. Ed. 1129.
The Secretary of Agriculture at the outset was firmly of the opinion that the authority conferred by section 310 of that Act is given to the Department of Agriculture as a department in the administrative sense. Despite the holding of the Supreme Court in the first Morgan case fhat there is no basis for this contention (298 U.S. loc. cit. 481, 56 S.Ct. 906, 80 L.Ed. 1288), he in effect still adhered to this view, as witness his deposition taken in the former hearing, in which, having been referred to as the “ratemaker” under the terms of the Act, he said: “Yes, that is correct. I would think, however, that the phrase ‘Secretary of Agriculture’ is perhaps used in connections with regard to laws of this sort in the broad sense as well as the narrow sense.”
In the second Morgan opinion, 304 U.S. loc. cit. 18, 58 S.Ct. loc. cit. 776, 82 L.Ed. 1129, the court said:
“The substance of his action is stated in his answer to the question whether the order represented his independent conclusion, as follows:
“ ‘My answer to the question would be that that very definitely was my independent conclusion as based on the findings of the men in the Bureau of Animal Industry. I would say, I will try to put it as accurately as possible, that it represented my [549]*549own independent reactions to the findings of the men in the Bureau of Animal Industry.’
“Save for certain rate alterations, he ‘accepted the findings.’ ”
The following language of that opinion, 304 U.S. loc.cit. 20, 21, 58 S.Ct. loc.cit. 777, 82 L.Ed. 1129, has especial pertinency to the inquiry now before us:
“The requirements of fairness are not exhausted in the taking or consideration of evidence, but extend to the concluding parts of the procedure as well as to the beginning and intermediate steps.
“The answer that the proceeding before the Secretary was not of an adversary character, as it was not upon complaint but was initiated as a general inquiry, is futile. It has regard to the mere form of the proceeding and ignores realities. In all substantial respects, the Government acting through the Bureau of Animal Industry of the Department was prosecuting the proceeding against the owners of the market agencies. The proceeding had all the essential elements of contested litigation, with the Government and its counsel on the one side and the appellants and their counsel on the other. It is idle to say that this was not a proceeding in reality against the appellants when the very existence of their agencies was put in jeopardy. Upon the rates for their services the owners depended for their livelihood, and the proceeding attacked them at a vital spot. This is well shown by the fact that, on the merits, appellants are here contending that under the Secretary’s order many of these agencies, although not found to be inefficient or wasteful, will be left with deficits instead of reasonable compensation for their services, and will be compelled to go out of business. And to this the Government responds that if as a result of the prescribed rates some agencies may be unable to continue, because through existing competition there are too many, that fact will not invalidate the order. While we are not now dealing with the merits, the breadth of the Secretary’s discretion under our rulings applicable to such a proceeding, Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524; Acker v. United States, 298 U.S. 426, 56 S.Ct. 824, 80 L.Ed. 1257, places in a strong light the necessity of maintaining the essentials of a full and fair hearing, with the right of the appellants to have a reasonable opportunity to know the claims advanced against them as shown by the findings proposed by the Bureau of Animal Industry”.
The holding was that, as the hearing was fatally defective, the order of the Secretary was invalid. An effort to establish a case for rehearing was rejected, and the case was remanded to the district court for further’proceedings in conformity with the opinion rendered.
On July 22, 1933, as a condition of the interlocutory stay order granted to petitioners in their attack upon the validity of the Secretary’s rate order of June 14, 1933, this court ordered the payment into court by petitioners of the difference between the rates established by tariffs of petitioners published prior to June 14, 1933, and the lower rates fixed by the Secretary’s order of the latter date. This deposit was conditioned to await the outcome of the litigation then pending. These deposits made with the clerk of the ^District Court between July 22, 1933, and November 1, 1937, aggregated the sum of $586,093.32. On this last named date new advanced rate schedules for petitioners became effective by consent. United States v. Morgan, et al., 304 U.S. 1, 58 S.Ct. 773, 999, 82 L.Ed. 1129, was finally decided May 31, 1938, and on June 7, 1938, defendants filed in this court a motion for an order staying the distribution of these monies, alleging that the Secretary had reopened the proceeding in which the invalid order of June 14, 1933, was entered; that the Secretary would determine by an order, as of June 14, 1933, what rates may reasonably be charged by petitioners to their clients for services rendered, thereby assuring that said monies would be disposed of with equity and law. June 11, 1938, petitioners filed answer to this motion, and a petition for restitution to them of the impounded funds. July 2, 1938, this court overruled defendants’ motion and sustained petitioners’ application for restitution. See D.C., 24 F.Supp. 214. On appeal, the Supreme Court reversed the latter order of this court, holding that, in arresting excess payments under schedule rates this court acted as a court of equity, “charged both with the responsibility of protecting the fund and of disposing of it according to law, and free in the discharge of that duty, to use broad discretion in the exercise of its powers in such manner as to avoid an unjust or unlawful result”. United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 801, 83 L.Ed. 1211.
[550]*550In the reopened proceeding the Secretary, upon June 20, 1939, has entered a new order holding that the rates and charges collected during the period between July 22, 1933, and November 1, 1937, were unjust and unreasonable and prescribing, as just and reasonable, the identical rates prescribed in the invalid order of June 14, 1933. A motion of respondents prays the court to require petitioners to show cause, if any, why such order does not constitute an appropriate basis for the distribution of said funds now in the registry of this court. In response to this motion petitioners filed a return praying that the motion of respondents herein be denied and that the moneys deposited in the registry of the court be distributed to 'petitioners. In support of this prayer many specifications of error and irregularity are assigned. .
The first, and perhaps the foremost, of these, is the charge that the market agencies were denied the fair hearing required by the due process clause and were denied an impartial tribunal as the trier of the facts. The Secretary overruled petitioners’ motion and affidavit of bias and prejudice filed August 12, 1938, and their motion to suppress the Report and Recommendations of the trial examiner filed February 17, 1939.
An examination of the opinion of the Supreme Court in previous appeals discloses that the June 14, 1933, order of the Secretary had been held invalid because a full and fair hearing had not been accorded, to petitioners, because the Secretary had not addressed himself to the evidence and upon that evidence had conscientiously reached the conclusions deemed to justify them, but, on the contrary, had accepted, and adopted as his own, findings made by subordinates in the Bureau of Animal Industry who were the real prosecutors of these proceedings against the owners of these market agencies — proceedings in which “the very existence of their agencies were put in jeopardy”: In support of their charge of bias and prejudice, which, in this case, consists of an alleged preconceived conviction, concerning the issue involved, petitioners put in evidence a letter of the Secretary to the New York Times in regard to this impounded fund. This letter was sent on May 8, 1938, which was between the date of the Supreme Court’s decree, invalidating his order, and the handing down of its opinion denying a rehearing. In this letter the Secretary displays impatient disapproval of the Supreme Court’s action, and, in effect, brings an appeal from it to the bar of public opinion. He insists, despite that ruling, that this impounded fund (which he mistakenly places at $700,000) rightfully belongs to the farmers, of which, he says, they had been deprived “by some finely-drawn rules of judicial procedure.” The letter emphasizes his fixed opinion that this money should be distributed to the shippers of livestock, notwithstanding he interpreted the Supreme Court’s decree to the contrary. By this letter he publicly announced his determination and prejudgment of what the result of any future proceeding should be. His reopening order was dated June 2, 1938, and as the first step in the proceeding he presented the former invalidated proceedings, findings of fact, conclusions and order as tentative findings. He permitted the filing of exceptions thereto, and designated the same examiner to hear additional evidence. Thereafter the Secretary himself heard oral argument in March 1939. By the government no additional evidence was introduced. It is clear, from the record presented to this court, that the object of the Secretary, through this reopened hearing, was to procure the validation nunc pro tunc of the fatally defective order of June 14, 1933. His conception was that the only error found by the Supreme Court in the prior proceeding which led to the invalidation of that order was the failure to permit a full argument on these findings and conclusions with full understanding of the issues presented.
These findings, however, had been made by representatives of the Bureau of Animal Industry, who had been found to be active prosecutors for the government in this contested litigation, and had been made upon evidence to which the Secretary had not addressed himself in the sense contemplated by the Act. Moreover, the rates and charges prescribed in the invalidated order were rates prescribed for future observance, and were not based upon actual experience.
By the terms of Section 310 of the Act, 7 U.S.C.A. § .211, it is provided that the Secretary may, after full and fair hearing, determine and prescribe what will be the just and reasonable rates or charges to be thereafter observed. In other words, such an order is necessarily a forecast and is to be judged solely by the conditions existing. That order has been declared invalid, and neither it nor the findings, made [551]*551or purported to have been made as a result of the discredited proceedings, are entitled to weight in the inquiry now before us. This is a proceeding in equity to determine to whom the impounded fund should be distributed, and the decision depends upon a determination of the reasonableness of those rates in the light of actual experience instead of prophecy. The invalidated order and the so-called findings- upon which it was based have no standing as proper bases of this inquiry. The secretary upon reopening the case assumed the burden of determining that the money would be disposed of “in accordance with equity and law”. He introduced río new evidence in support of this burden, but contented himself with dependence upon the previous invalid order and findings as a basis. He was apparently of opinion that a perfunctory argument on this basis would rehabilitate the rates prescribed as of June 14, 1933.
We have before us, as had the Secretary not only proof that the rates prescribed June 14, 1933, were not reasonable, but also that at the time of this reopened hearing “it is now possible as it has never been before, to determine just and reasonable rates and to prove them to be such beyond question”. This information is gathered from a “Memorandum for the Secretary” presented to him on June 13, 1939 (just one week before the order of June 20, 1939), by C. A. Kitchen, Associate Chief of the Bureau of Animal Industry. This memorandum, while too lengthy for incorporation in this writing contains matter of crucial importance, and is of itself sufficient to condemn the order under consideration as a basis in equity for the distribution of the impounded fund.
We refer only briefly to some of the important statements. He recites that he has read the proposed order in Docket 311, and certain questions have occurred to him which he submits to the Secretary for consideration. A first observation is that “the proposed order does not modify the rates set out in your order of June 14, 1933”, although “the structure of the rates in your order of June 14, 1933, and in the proposed order may be open to criticism in certain particulars”.
He especially thinks the rate for so-called yearling cattle should be brought to the' attention of the secretary. He states in this connection that the reduction made by the order of June 14, 1933, was most pronounced in the rates applying to yearling cattle, and that this appears to be the vulnerable point in that, and this, rate structure. Cattle of the class defined in the order as yearling cattle make up, as he says, a large proportion of the cattle received in the Kansas City market. He suggests that the conditions which prompted the modification order of November 1, 1937, did not suddenly come into being on that date, but it was reasonable to assume that they had obtained for sometime prior thereto, and the charges made in the cattle tariff are prima facie recognition of the fact that the rates of June 14, 1933, which are confirmed by the proposed order, were not reasonable for the entire period during which the funds were impounded. He clearly suggests that the severe reduction in the rates for yearling cattle in this and the order of June 14, 1933, especially is without justification, and forecasts that “the Department may be subject to criticism for having acted in an arbitrary manner”. Of great significance is the statement that “it is now possible, as it has never been before, to determine just and reasonable rates and to prove them to be such beyond question” ; that, “in effect such a determination must have been made as a basis for the modification of November 1, 1937”.
The Secretary testifies (record 98) that he read this memorandum. He made no changes in his findings and did not act in any way in reliance upon this memorandum in connection with this proceeding. This attitude accords with the treatment received by petitioners who, both at the original hearing, and in this later one, consistently urged virtually the same matters upon the Secretary and examiner, but without success. The order as made ignored the pertinent suggestions of Mr. Kitchen, who at this time has taken over the administration of the Packers and Stockyards Act which formerly was in the Bureau of Animal Industry.
In our judgment the Kitchen memorandum, ignored by the Secretary, as he says, standing alone, but certainly in connection with the offers of proof by petitioners, proves conclusively that no effort was made to ascertain the actual reasonableness of rates during the impounding period, although it was then possible to determine them from actual experience instead of from hypothesis and forecast. On the contrary it confirms the fact that the obj ect of the Secretary, and of those in the department by whom these rates were originated, was to validate the rates prescribed by the [552]*552invalid order of June 14, 1933. In our judgment also it establishes the fact that by-reason of a preconceived and fixed erroneous conception of the authority conferred upon him by the Packers and Stockyards Act, the Secretary denied to petitioners the fair hearing required by the due process clause before an impartial tribunal as the trier of the fact.
We are to remember that in the discharge of our duties and responsibilities as a Court of Equity, we are enjoined to use broad discretion in the exercise of equitable powers in such manner as to avoid an unjust or unlawful result.
The Secretary seems to regard the permission to obtain the aid of assistants in the department, who may “sift and analyze” evidence taken by an examiner, to confer upon him the right without more to accept and adopt the views of such subordinates, who are, in most cases, as in this, the actual prosecutors against the market agencies. There must, however, be a hearing in a substantial sense. Sifting and analyzing by others is not enough. “To give the substance of a hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determinations must consider and appraise the evidence which justifies them.” This, the Secretary did not do, as appears from his testimony here. The following statement is typical of the manner in which he examined and appraised the testimony tendered by petitioners in support of their proposed findings and their exceptions to the Master’s report: “It is my recollection that Mr. Brooke’s (the examiner) conclusion in hearing Mr. Bates’ testimony was not such that he felt his testimony had any — -that great validity should be attached to his testimony. I accepted Mr. Brooke’s judgment in that respect”.
So it was generally that Mr. Brooke, not the Secretary appraised the testimony offered. The judgment in the second Morgan appeal was based upon the fact that a fair hearing was denied both because proper argument was denied, and because evidence had not been properly appraised. At this final hearing the correction claimed was perfunctory merely and unsubstantial. Before the examiner facts and circumstances relevant to the hearing were excluded from consideration and no relief was obtained by exceptions taken before the Secretary. The rulings of the examiner were arbitrary in many cases, and were uniformly sustained upon exceptions to the Master’s report. In one case the chief accountant for the Packers and Stockyards Division of the Department of Agriculture was asked whether he assisted in the preparation of the order in the Kansas City proceeding. The object, of course, was to show by whom in fact the findings and order were formulated, it having already been held that they were not framed in any legal sense by the Secretary himself. Counsel for the government interposed “objection to this particular question and all other questions of the same tenor for the reason that the Secretary’s order speaks for itself” and therefore that such questions “are not germane to any issue in this proceeding”. But in the first Morgan case, (298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288) the Supreme Court expressly held that “the Secretary’s recitals of his procedure in such cases are not conclusive on the question whether the statutory requirements were obeyed”.
It is to be remembered that findings and order are challenged on the ground, among others, that petitioners did not have a full and fair hearing before an unbiased tribunal, with evidence duly appraised and considered by the statutory trier of the facts. In such case the reports and testimony of subordinates are not privileged. We have here no communications affecting the interest of government in its sovereign capacity, but rather the question of whether petitioners are to be deprived of their livelihood, as the Supreme Court opinion says, by a proceeding which lacks the essential features of due process.
The burden exists of establishing not only a reasonable schedule of rates, but the equitable disposition of the impounded fund. In fact the latter was the real object of the reopened proceeding. This burden rests primarily upon the Secretary. This can no longer be regarded strictly as a proceeding under the Packers and Stockyards Act, which provides that after full investigation and hearing the Secretary “may determine and prescribe what will be the just and reasonable rate or charge, or rates or charges, to be thereafter observed in such case * * * and what regulation or practice is or will be * * * thereafter followed”. Sec. 310 (a) 42 Stat. 159, 166. 7 U.S.C.A. § 211 (a). To this end, in an original proceeding, a reasonable forecast, based upon dependable existing and established facts, may be indulged. In the present case, however, the Secretary [553]*553is not prescribing for the future. Whatever order may result is not to be applied to future transactions.
The object to be aimed at should be, as stated by the Secretary in his reopening order, “to assure that moneys will be disposed of with equity and law”, to be effected by a court of equity free in the discharge of its duty “to use broad discretion in the exercise of its powers in such manner as to avoid an unjust or unlawful result”. The question then to be determined is to whom should this impounded money be distributed, and the answer to that question depends upon the reasonableness of the rates charged for the impounding period — not hypothetical rates alone, but actual rates in so far as such can be determined. We are now dealing with a past stage of livestock commission transactions; and we are told by the Chief of the Packers and Stockyards Administration, formerly Associate Chief of the Bureau of Animal Industry, that just one week prior to the issuance of this order it was then possible “as it has never been before, to determine just and reasonable rates and to prove them to be such beyond question”. He concedes that any modification of the Jun.e 14, 1933, order might be heralded as an admission of error on the part of the Department. At any rate the Secretary refused to avail himself of this data, and reaffirme.d the .exact rates purporting to have been established by the invalidated order of June 14, 1933, although warned by his said subordinate that there was a vulnerable point in that rate structure which might expose the proposed order to criticism.
As stated by government counsel, the Secretary, instead of availing himself of the data available for determining actually reasonable rates; chose rather to act upon the old hypothetical record, casting upon petitioners the- burden of producing evidence, lodged in the records of the department, and tendered to the Secretary for use before the order complained of was issued. Throughout this reopened proceeding the Secretary relied upon the appraisal of evidence by his subordinates. That was true at the former hearing, and the resulting order was- held to be invalid, largely on that ground. -Nothing was added to the old record by. the government, and the same rulings were-made although the attention of-the Secretary was critically called to errors in the rate structure.
An examination of this entire record, including the testimony of the Secretary at the hearing, and the exhibits offered, convinces that the reopened proceeding, no more than that resulting in the invalid order of June 14, 1933, satisfies the requirements of due process in the administration of this section of the Packers and Stockyards Act. No attempt was made to ascertain the reasonable rates applicable to the business of the impounding period from the standpoint of available actual experience, but, on the contrary, the sole object was the patent purpose to validate the rates prescribed by the invalid order of June 14, 1933, in accordance with a preconceived construction of the Packers and Stockyards Act.
The rates in existence prior to the order of June 14, 1933, were the legal rates until found to be unreasonable by valid order. We think that not only should the present order be invalidated, but also that this prolonged litigation should be ended by restitution to the market agencies of the impounded monies which resulted from commissions earned under the provisions of rates then in force, and not since effectively challenged. The opportunity to determine the reasonableness of these rates “beyond question” was tendered by the Associate Chief of the Bureau of Animal Industry himself, but the offer was ignored as in conflict with the obvious purpose of avoiding what “might be widely heralded as an admission of error on the part of the Department”, in prescribing the rates improvidently forecast by the invalid order of June 14, 1933.
The records of the Clerk of this court show approximately 1,870,000 separate items of the impounded funds, arising out of a multitude of transactions, with a correspondingly large number of shippers. The amount of such deposits are of comparatively small significance to the shippers, while to the petitioners they involved the very existence of their market agencies.
A decree will be entered in conformity with these conclusions.
' Counsel may with due expedition submit for the consideration of the court such findings and conclusions as they may deem appropriate.