Wallace v. Hudson-Duncan & Co.

98 F.2d 985, 1938 U.S. App. LEXIS 3377
CourtCourt of Appeals for the Ninth Circuit
DecidedSeptember 20, 1938
Docket8716
StatusPublished
Cited by17 cases

This text of 98 F.2d 985 (Wallace v. Hudson-Duncan & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wallace v. Hudson-Duncan & Co., 98 F.2d 985, 1938 U.S. App. LEXIS 3377 (9th Cir. 1938).

Opinion

DENMAN, Circuit Judge.

This is an appeal by the Secretary of Agriculture from a decree of the district court holding that certain provisions of the Secretary’s Order, given.under the Agricultural Adjustment Act, 7 U.S.C.A. § 601 et seq., violate the Constitution and directing the Secretary to exempt the appellee from its operation.

Appellee, hereinafter called the Company, is a corporation engaged in the states of Oregon and Washington in the business of packing, processing, and distributing unshelled walnuts, both in intrastate and interstate commerce. It is not a grower of walnuts, but markets them through its wholesale and retail stores or sells them to other distributors. Its bill below asked a declaratory decree 1 that the regulatory provisions of the Order of the Secretary of Agriculture, made for the walnut industry in Oregon, Washington and California, under the authority of the Agricultural Adjustment Act, as amend *987 ed, 7 U.S.C.A. § 601 et seq., impose an unlawful obligation upon the Company.

The order is purposed to create a parity in' the price of unshelled walnuts with non-agricultural commodities by diminishing the supply in the consuming markets with a consequent price rise. It imposes on the Company an obligation to contribute a percentage of its intended shipments to a Control Board or in lieu thereof certain payments to the Board as a consideration for engaging in interstate commerce in that commodity. Noncompliance with the regulation would require the Company to market the walnuts only in the state in which it acquired them.

The Secretary, on the Company’s petition to him, had ruled that the order and obligation are lawful. On the Company’s bill to review the Secretary’s ruling, the district court declared the order and obligation unlawful, as violating the Fifth Amendment of the federal Constitution, U.S.C.A.Const. Amend. 5, and made its decree directing the Secretary to make a ruling exempting the Company from the operation of his order. The Secretary brings this appeal.

At the hearing below, the Company opposed the admission of evidence bearing on the reasonableness of the order and it was excluded on the Company’s stipulation that it was “not raising any question of fact whatsoever” and was “raising no question as to the reasonableness of the order”.

Hence, we are required to assume there is not “any question of fact” that, as found by Congress in section 1 of the Act, 7 U.S.C.A. § 601, there exists a disparity between the price of walnuts and other commodities, causing the destruction of the purchasing power of walnut growers for industrial products; that the orderly exchange of walnuts for other commodities has broken down; and- that the agricultural assets supporting the national credit thus have been seriously impaired. We have held in Edwards v. U. S., 9 Cir., 91 F.2d 767, 783-785, that it is within the police power of Congress in its area of regulation of interstate commerce, to remove or ameliorate these economic evils.

The Secretary in making the Order in question, is admitted formally to have complied with the provisions of the Act regarding hearings, the securing of a marketing agreement, the determining of an allotment to each shipper in interstate and foreign commerce in the crop year provided, the creation of a control board and the conferring on it of the power to dispose of the surplus to be given it by the packer by sale or donation to charity, and the approval of the order by the requisite portion of the growers of walnuts.

The Order of the Secretary provides for the regulation of walnut shipments in interstate .and .foreign commerce by a limitation of the amount of the Company’s and other packers’ intended interstate shipments and the control and disposition of a “surplus” found to be destroying the desired price parity. More specifically, the Order in effect requires that a packer, such- as the Company, either (1) must sell or hold all the walnuts it acquires in the state of acquisition; or (2) export from the state not more than a percentage of its intended shipments determined by the Secretary for each “crop year”, i. e. from September 1 to the succeeding August 31, upon the consideration of the delivery of the remainder of such intended export to a Control Board. The Board may sell the walnuts it receives to purchasers abroad or to shelters within the United States, at prices fixed by the Board, or may eliminate all or part of them from the market by donation or sale to charitable institutions in the United States, *988 with provisions thát such sales or donations shall not enter the channels of trade in the United States as unshelled walnuts. The Board also has the power to release to interstate shipment through the contributing packers all or portions of the surplus delivered to it, if, in its opinion, the proper control of the interstate market warrant's, it. The proceeds of the disposition of the surplus and payments of credit value by the shippers are to be ratably apportioned and distributed to them by the Board; or (3) may export from the state all its intended interstate shipments upon the consideration of a payment to the Board, not of what the packer has sold them for, but of a certain “credit value”, fixed for all shippers by the Board, of the surplus walnuts which otherwise would have been delivered to the Board.

Section 8c (6) (A) 2 of the Act authorizing a “limitation” of shipments warrants the provisions of the Secretary’s Order for delivery of a limiting portion of the packers’ intended shipments to the Board, the “surplus”, with the Board’s power to feed this surplus into the market, or otherwise limit the amount reaching the market by donations to charitable organizations. The Order is also authorized under 8c(6) (D) z of the Act, providing for the determining of the existence and extent of the surplus of walnuts and for the control and “elimination” of such surplus. The Board’s control of the surplus is to this extent establishing successive “reserve pools” of the walnuts provided for by 8c(6) (E)z of the Act. Since the Act authorized the provisions of the Order, the questions left for our determination are those raised as to the constitutional lawfulness of these provisions.

We agree with the statement of the Company’s brief of the portion of the Order with relation to the surplus that if the Company is to ship unshelled walnuts in interstate or foreign commerce “The order requires delivery of a percentage of the ‘individual supply’ handled or to be handled by a packer. [A ‘packer’ is defined as any processor or distributor of unshelled walnuts.] The ‘individual supply’ is defined as the walnuts packed during a crop year up to that time, and ‘handling’ is defined among other things, as a sale for shipment [or to ship] in interstate commerce. Delivery is required of walnuts ‘to be’ handled. Hence a delivery is required of walnuts to be sold in interstate commerce, but which have neither been sold nor shipped in interstate commerce, and the delivery is required to be ‘before shipment’. To subject a person to the requirement to deliver, it is not even necessary that the walnuts have left the orchard where they were produced.

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Bluebook (online)
98 F.2d 985, 1938 U.S. App. LEXIS 3377, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wallace-v-hudson-duncan-co-ca9-1938.