Oregon Creamery Manufacturers Ass'n v. White

78 P.2d 572, 159 Or. 99, 1938 Ore. LEXIS 60

• Court: Oregon Supreme Court
• Decided: March 2, 1938
• Status: Published

Opinions

BELT, J.

This is a suit brought under the Uniform Declaratory Judgment Act to have the Oregon Agricultural Marketing Act (Ch. 65, Oregon Laws Special Session, 1935) declared unconstitutional and to enjoin the Director of Agriculture of the state of Oregon from exercising any authority thereunder. Prom a decree declaring the act unconstitutional and enjoining the Director of Agriculture, the defendants appeal.

There are two fundamental questions presented, (1) Have the plaintiffs alleged and proved a cause sufficient to justify the court in assuming jurisdiction under the declaratory judgment act? (2) Is the Oregon Agricultural Marketing Act unconstitutional?

The original Agricultural Marketing Act (Ch. 37, Oregon Laws Second Special Session, 1933, as amended by Ch. 250, Oregon Laws 1935) was held unconstitutional by this court in Van Winkle v. Fred Meyer, 151 Or. 455 (49 P. (2d) 1140). While a petition for rehearing was pending, the legislature enacted the marketing act now under consideration. In section 1 of the act in question, the purpose of the legislation is thus set forth:

“(1) Through the exercise of the administrative powers conferred upon the director of agriculture under this act, to establish and maintain such balance between the marketing and consumption of the agricultural commodities hereinafter specified, and such marketing conditions and practices therefor, as will reestablish prices to producers thereof at a level that will give said commodities a purchasing power (hereinafter referred to as ‘exchange value’) with respect to articles that said producers buy, equivalent to the purchasing power of said agricultural commodities in the base period of August, 1909, to July, 1914, including current interest, payments per acre on farm indebtedness secured by real estate, and tax payments on farm real estate, as contrasted with such interest payments and tax payments during said base period.

“(2) To protect the interest of the consumer by approaching the level of prices which it is declared to be the policy of the legislature to establish, by gradual correction of the current level at as rapid a rate as may be in the public interest and feasible in view of the current consumptive demand in local and other markets, and authorizing no action under this title which has for its purpose the maintenance of prices to producers above the level which it is herein declared to be the policy of the legislature to establish. ”

Section 2 defines terms as used in the act and provides that an “agricultural commodity” means a dairy product (except milk or cream produced for human con sumption in fresh fluid form) “deciduous fruit, berries, melons, tomatoes, and any vegetable, and any product or by-product thereof, intended for human food, and any regional or market classification of any such commodity or product. ’ ’

Section 3 provides for investigation by the Director as to “all matters pertaining to the production, processing, manufacture, handling, marketing, distribution, and sale, within this state” of all agricultural commodities covered by the act.

Section 4 provides that if the Director at any time finds: (1) That the current average farm price for any of the commodities is less, or is likely to be less, than the fair exchange value thereof for the current or next succeeding year; and (2) that conditions relative to the production, manufacturing, marketing, and consumption of any commodity are such that the exercise of any powers conferred on the Director would effectuate in whole or in part the declared purpose of the act, the Director shall immediately “institute, make effective, administer and enforce” certain marketing standards as provided in the act, “as he shall find administratively practicable and best calculated to effectuate the declared purpose of the act.”

Section 5 purports to authorize the Director to promulgate and enforce the following marketing standards:

(1) Limitation of production.

(2) Allotting production among producers.

(3) Allotting distribution among distributors.

(4) Control and distribution of surplus.

(5) Establishing “reserve pools ” and providing for the distribution of the net return from the sale thereof.

(6) Fixing prices at which commodities may be sold by the producer, wholesaler, and retailer.

(7) Regulating the price spreads of processors, handlers, and distributors.

(8) Requiring the filing of price schedules by producers, processors, and distributors.

(9) To specify and prohibit unfair trade practices.

(10) Further and incidental powers.

Section 9 purports to authorize the Director “from time to time” after reasonable notice and public hearing, to “terminate or suspend the operation of any or all marketing regulations under this act” as to any commodity “whenever he finds that said regulations obstruct or are unnecessary for accomplishment of the purposes of this act as to that commodity or product or that class of handlers thereof.”

Section 10 provides for review and appeal from the decision of the Director as to any regulation or act affecting persons operating under the act.

Plaintiffs process and distribute approximately 75 per cent of the butter in the state of Oregon, or 22,000,000 pounds of butter annually, having a value of $13,000,000. The record discloses that the Director has made a preliminary investigation of ‘ ‘ all matters pertaining to the processing and distribution of butter within the state of Oregon, as provided in section 3 of the act, but that:

“ * * * it does not appear as a result of said investigation, or otherwise, that the current average farm price for such agricultural commodities as are alleged to be processed and marketed by plaintiffs herein is less than the fair exchange value thereof, or that the average farm price of such commodities is likely to be less than the fair exchange value thereof for the period in which the production of that commodity during the current or next succeeding marketing year is normally or will be marketed, or that the conditions of and factors relating to the production, pro cessing, manufacturing, marketing and consumption of butter within the state of Oregon are such that the exercise of any one or more of the administrative powers conferred upon the Director of Agriculture by said act would effectuate in whole or in part the declared purpose thereof. ’ ’

The record also shows that whether or not further investigations shall be made or whether “any of the terms of marketing standards * * * shall be made effective, is wholly contingent upon conditions

* * * which do not appear as a result of investigations heretofore made by the Director of Agriculture to exist at this time, and whether or not such conditions shall arise at any future time is uncertain and contingent upon facts or circumstances not now known to exist, and which may never arise. ’ ’

The gravamen of plaintiffs’ complaint is specifically set forth as follows:

“That a controversy exists between the plaintiffs and the defendants as to the constitutionality of said statute and as to the extent of the power and authority, if any, of said Director thereunder and that said controversy and the investigations now being conducted by said Director and the existence of said statute as an apparent part of the law of the State of Oregon to which plaintiffs and the members of the Oregon Creamery Manufacturers Association are subject in the conduct of their said business have created a condition of doubt and uncertainty among the plaintiffs and the members of said Association and other persons and corporations engaged in said industry and among the banks with whom the plaintiffs and the members of said Association do business, mailing it impossible for plaintiffs and the members of said Association adequately to formulate their plans for the operation or expansion of their respective businesses and said condition of uncertainty has and is injuring the credit of plaintiffs and the members of said Association and diminishing and destroying their ability to borrow funds necessary to finance the operation and expansion of their respective businesses and is restricting and curtailing the volume thereof.”

To support the above allegations, plaintiffs offered evidence which may be thus briefly summarized:

Mr. Earle F. Kaufman, financial correspondent for the Union Central Life Insurance Company, had never read the marketing act in question, but, after a recital to him of its various provisions, he was permitted, in answer to a hypothetical question, to say that he would consider the statute an adverse factor in passing upon the application for loans by persons operating under the statute. The witness admitted, however, that his company had never refused credit to the plaintiffs upon the ground that the statute was in existence. As a matter of fact the witness said, “We haven’t had any applications from a dairyman.”

Robert E. Cavett, a manufacturing retailer in the creamery business, in answer to a question as to the effect of the statute upon his business, said, “The fact that it is on our statute books, it has a bearing of uncertainty of what we can do and what we might be able to do.” Witness further testified in substance that it was the fear and apprehension concerning the exercise of authority which the statute vested in the Director which prevented his company from expanding its business.

Frank Hettwer, secretary and manager of the Mount Angel Co-operative Creamery, testified to the same general effect as did Mr. Cavett. He also stated:

“Q. Did you know that the director of agriculture was powerless to promulgate any regulations unless as a result of his investigation certain facts appeared? A. Yes, I realize that; but I also realize that he was supposed to base bis judgment on prices that were in effect back in 1909 to 1914, and those prices could not be had. I know that, too.

“ Q. And yet you are afraid he might act under that, something impossible for him to determine? A. Yes, because it was a very dangerous law, to let him have control, because there was no way to form his opinion and decision as to what prices were then and now, so it meant that he might step in at any time and go ahead with the act, without having anything to base it on, because he could presume that prices were different than what they were or are at the present time. It allowed him a groundless base, you might say, to work on.”

N. L. Kirchem, president and manager of the Oregon City Creamery Company, testified, in substance, that the act in question was instrumental in preventing an expansion of his company’s business and that “our bankers informed us it was a good thing to lay off a while and watch.” Kirchem testified that, on behalf of the company, he applied for a loan which the bank refused. In response to the question, “Was that (referring to the statute) the sole ground upon which the bank refused you credit?” he answered, “Well, I don’t know why they refused it. They advised me it wasn’t a good thing to do.”

The above is a condensed statement of all the evidence introduced as a basis for the plea that the court assume jurisdiction and declare the act unconstitutional. At the conclusion of the plainiffs’ case in chief, the court denied the motion of defendants for an involuntary nonsuit and, upon failure of defendants to introduce evidence, entered a decree in favor of plaintiffs in accordance with the prayer of their complaint.

Is this a proper case, in the light of the record, to invoke the beneficent provisions of the Uniform Declaratory Judgment Act? The answer to this vital question depends upon whether the evidence discloses the existence of a justiciable controversy between adverse parties.

Section 2-1401, Oregon Code 1930, provides:

‘ ‘ Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.”

Section 2-1402, Oregon Code Supplement 1935, provides:

“Any person * * # whose rights, status, or other legal relations are affected by a * * * statute * # * may have determined any question of construction or validity arising under any such * * * statute, * * * and obtain a declaration of rights, status or other legal relations thereunder.”

That courts have quite universally established the rule that no relief can be had under the declaratory judgment act unless there is an actual bona fide controversy between adverse parties, see numerous cases in notes 12 A. L. R. 66; 19 A. L. R. 1127; 50 A. L. R. 45; 68 A. L. R. 117. Also see 33 C. J. 1101.

In State ex rel. La Follette v. Dammann, 220 Wis. 17 (264 N. W. 627, 103 A. L. R. 1089), it is said:

“The requisite precedent facts or conditions which the courts generally hold must exist in order that declaratory relief may be obtained may be summarized as follows: (1) there must exist a justiciable controversy; that is to say, a controversy in which a claim of right is asserted against one who has an interest in contesting it; (2) the controversy mnst be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy, that is to say, a legally protectible interest; and, (4) the issue involved in the controversy must be ripe for judicial determination.” Citing Borchard, Declaratory Judgments, pp. 26-27.

In City of Salem v. Oregon-Washington Water Service Co. et al., 144 Or. 93 (23 P. (2d) 539), this court quotes with approval the well-established rule as thus stated in Petition of Kariher, 284 Pa. 455 (131 Atl. 265):

“* * * jurisdiction will never be assumed unless the tribunal appealed to is satisfied that an actual controversy, or the ripening seeds of one, exists between the parties.”

The following significant language is also noted in the City of Salem case:

“* * * In this day of countless laws a mere charge that some one ‘contends and asserts’ the invalidity of a particular law, ordinance or charter amendment surely does not confer jurisdiction upon the courts to summons him in so as to end the controversy. If we were to take the opposite view the courts would find themselves engulfed in a mass of litigation involving every citizen in the state. ’ ’

The writer dissented from the declaration rendered in that case but, after further consideration of the questions involved, is convinced that the decision is sound.

Borchard in his splendid text on Declaratory Judgments (p.26) says:

“* * * an action for a declaratory judgment must exhibit all the usual conditions of an ordinary action, except that accomplished physical injury need not necessarily be alleged. It is sufficient if a dispute or controversy as to legal rights is shown, which, in the court’s opinion, requires judicial determination — that is, in which the court is convinced that by adjudication a useful purpose will be served. The requisites of justiciability must be present.

“Not only must the plaintiff prove his tangible interest in obtaining a judgment, but the action must be adversary in character, that is, there must be a controversy between the plaintiff and a defendant having an interest in opposing his claim. Unless the parties have such conflicting interests, the case is likely to be characterized as one for an advisory opinion, and the controversy as academic, a mere difference of opinion or disagreement not involving their legal relations, and hence not justiciable.”

Deciding hypothetical cases is not a judicial function. Neither can courts, in the absence of constitutional authority, render advisory opinions. A declaratory judgment has the force and effect of an adjudication. Hence, to invoke this extraordinary statutory relief there must be an actual controversy existing between adverse parties. Particularly should this be so when a court is asked to declare that a co-ordinate branch of the government has exceeded its power by passing a statute in violation of the fundamental or basic law. No court should declare an act unconstitutional unless it is necessary to do so: 6 R. C. L. 76.

In Electric Bond and Share Company v. Securities and Exchange Commission, 303 U. S. 419 (58 S. Ct. 678, 82 L. Ed. 643, decided March 28, 1938, the court in refusing to invoke the Federal Declaratory Judgment Act, said:

“The District Court did not err in dismissing the cross bill. Defendants are not entitled to invoke the Federal Declaratory Judgment Act in order to obtain an advisory decree upon a hypothetical state of facts. See New Jersey v. Sargent, 269 U. S. 328; United States v. West Virginia, 295 U. S. 468; Ashwander v. Ten nessee Valley Authority, 297 U. S. 288, 324; Anniston Manufacturing Co. v. Davis, 301 U. S. 337, 355. By the cross bill, defendants seek a judgment that each and every provision of the Act is unconstitutional. It presents a variety of hypothetical controversies which may never become real. We are invited to enter into .a speculative inquiry for the purpose of condemning •statutory provisions the effect of which in concrete situations, not yet developed, cannot now be definitely perceived. We must' decline that invitation. Anniston Manufacturing Co. v. Davis, supra.”

The divergence of opinion in the courts as to what constitutes a proper case in which to render a declaration depends upon the viewpoint as to what constitutes a justiciable controversy. Some courts have apparently assumed a hostile attitude towards the declaratory judgment and, unmindful of its purpose and function, have required facts sufficient to show the accrual of a cause of suit. Such a restricted use defeats the very purpose and intendment of the act. Other courts have gone to the other extreme and have invoked the statute to adjudicate matters which have never reached the stage of actual controversy nor the “ripening seeds” of a controversy, but are purely speculative and remote.

In our opinion, plaintiffs’ case is not ripe for judicial determination. No controversy exists between adverse parties. It is conceded that the Director of Agriculture has pormulgated no rules or regulations'under the statute, nor has he threatened to do so. We agree that plaintiffs are not obliged to wait until the Director undertakes to enforce some rule or regulation to their damage. We cannot, however, concur in the view that there is reasonable ground for complaint before any rules or regulations have been promulgated. The mere existence of a statute purporting to authorize, the Director, under certain conditions, to promulgate and enforce rules and regulations establishing marketing standards, as set forth in the act, does not of itself create a justiciable controversy. It will be time enough for plaintiffs to complain when the Director exercises any authority purported to be vested in him by the act. Neither does mere difference of opinion as to the constitutionality of the act afford adequate ground for invoking a judicial declaration having the effect of an adjudication: Borchard, Declaratory Judgments, p. 55. The claim of plaintiffs for relief — in its ultimate analysis — is that they fear the Director might promulgate and enforce some regulation or rule which might affect their business. It may be that this legislation tends towards uncertainty and confusion in the operation of the business in which plaintiffs are engaged, but that criticism might apply to various legislative enactments. Courts, however, insist upon an actual controversy— not a mere difference of opinion concerning the validity of a statute — before jurisdiction will be assumed under the declaratory judgment act.

Plaintiffs rely strongly upon Taylor v. Haverford Township, 299 Pa. 402 (149 Atl. 639). That case involved the constitutionality of a zoning ordinance. Taylor owned land materially affected by the ordinance. It had the effect of placing his lot in an area restricted to residential purposes. Taylor petitioned to have Ms property classified as belonging to a semi-business zone. Such application was denied. Under that factual situation, the court properly assumed jurisdiction under the declaratory judgment act and passed upon the constitutionality of the zoning ordinance. There, as distinguished from the case at bar, issue was joined over a matter substantially affecting the jural relations of the petitioner. A clear-cut dispute existed between one who had asserted a right and one who had denied the same. Plainly, the case of Taylor v. Haverford Township, supra, is not in point.

Faulkner v. Keene, 85 N. H. 147 (155 Atl. 195), cited by plaintiffs, also concerned the use of property in the city of Keene which had enacted a zoning ordinance. Plaintiffs had contracted to sell certain land to the Standard Oil Company for a filling station, upon condition that the consent of the city could be obtained. Faulkner, the owner, made application to the city for a license to so use the property, but such application was denied. Hence, there was an actual controversy between adverse parties.

It is urged — but not by counsel — that the decisión herein overrules Multnomah County Fair Association v. Langley, 140 Or. 172 (13 P. (2d) 354). In our opinion, it does not do so. An examination of the issues in the Langley case plainly shows a real controversy, whereas there is none in the case at bar. In the complaint in Multnomah County Fair Association v. Langley, supra, it is alleged:

“The defendants and each of them claim and assert that the said method of conducting said races so adopted and followed by plaintiff violates one, or the other, or both of said statutes, and that they will arrest and prosecute the plaintiff and its agents if said method of conducting said races is followed, and defendants have arrested and are now prosecuting agents of plaintiff for the conduct of said races in the manner and according to method hereinbefore stated.”

The motion of the defendants for judgment on the pleadings admitted the truth of the above allegations. Certainly a justiciable controversy existed in that case, but how can it reasonably be contended that the decision rendered therein is controlling here?

It would greatly extend this opinion to review the numerous cases relative to the question as to what factual situation must exist before a declaration may be had by virtue of the declaratory judgment act. Suffice it to say no case has been cited — and none has been found after diligent research — which extends the scope of this procedural act to cover a matter so speculative, remote and uncertain as is disclosed by the record in this case.

We are not unmindful that the lower court saw fit to assume jurisdiction of the cause. It is argued that the discretion thus exercised should not be disturbed on appeal unless this court can say there was an abuse thereof. There was no dispute as to the facts. It remained for the court to say, as a matter of law, whether a proper case for a declaration existed. Under such circumstances, no legal discretion was involved.

Having reached the conclusion that no justiciable controversy exists, it follows that the constitutionality of the marketing act in question is not before the court. That question will be reserved for decision when an actual controversy arises.

Neither party will recover costs or disbursements.

The decree of the lower court is reversed and the cause dismissed.

Kelly, J., not sitting. Bean, C. J., and Bailey and Lusk, JJ., concur.