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O.V. HANDY BROS. CO. v. WALLACE

October 9, 1936

O.V. HANDY BROS. CO. et al.
v.
WALLACE, Secretary of Agriculture, et al.



The opinion of the court was delivered by: KIRKPATRICK

KIRKPATRICK, District Judge.

The plaintiffs, who are engaged in various branches of the poultry business in the city of Philadelphia, brought this suit in equity for an injunction to restrain the enforcement of the Amendment of August 14, 1935 (relating to live poultry dealers and handlers) to the Packers and Stockyards Act, enacted as title 5 of that act (7 U.S.C.A. § 218 et seq.). The consitutionality of the amendment is attacked, upon the grounds that it contains an unlawful delegation of legislative power to the Secretary of Agriculture and that it transgresses the Commerce Clause.

 Summarized, the pertinent provisions are that the Secretary of Agriculture is authorized and directed to designate cities where "various unfair, deceptive, and fraudulent practices and devices" exist. Thereafter, all persons in the designated area are forbidden to engage in any service or facility in connection with the handling in interstate commerce of live poultry, unless they first obtain licenses from the Secretary of Agriculture, who may require information and may determine the fitness of any applicant for license. By section 202 of the Packers and Stockyards Act (7 U.S.C.A. § 192), which title 5 (7 U.S.C.A. § 218 et seq.) makes applicable to the poultry industry, a number of specific business practices are set out in detail and forbidden. Section 505, tit. 5 (7 U.S.C.A. § 218d), provides that violations of any of these specific provisions shall result in loss of license. Section 502 of title 5 (7 U.S.C.A. § 218a) imposes a fine or imprisonment upon any person engaging in transactions in interstate commerce in the poultry business without a license.

 The effect of the act, therefore, upon any one of these plaintiffs is this: If he does not buy, sell, etc., or handle poultry in interstate commerce, the act does not touch him. If he is engaged in interstate transactions, he must apply for a license under the alternative penalties of going out of the business or of subjecting himself to fine or imprisonment. He may or may not be granted a license. If he is refused he may of course have recourse to the courts for a review of such refusal. If he obtains his license, he must thereafter abstain from all the practices forbidden by section 202 of the Packers Act (7 U.S.C.A. § 192), and must also submit to regulations as to rates, charges, keeping of records, etc. If he fails to do so, he loses his license and consequently his right to do business.

 On January 6, 1936, the Secretary of Agriculture made an order designating the city of Philadelphia as a city where unfair practices, etc., exist. In order to dispose now of one phase of the case, I find as a fact that this order was made after an investigation and hearing, was not arbitrary or capricious, and was a bona fide and informed exercise of the discretion vested in the Secretary of Agriculture by the Act.

 Thereafter, two representatives of the Department of Agriculture came to Philadelphia and met with certain of the poultry dealers including some of the plaintiffs. At this meeting the statement was made by one of the Department's representatives that, "Everybody in the business would have to get a license." Blank forms of application were sent to persons engaged in the business, including the plaintiffs.

 On February 17 the plaintiffs brought this suit for injunction.

 On March 6 the Secretary of Agriculture issued a notice to the Philadelphia poultry trade in which it was specifically stated that he would not require licenses from any person not engaged in interstate commerce. In addition, through his counsel he has asserted at the hearing that no person not engaged in interstate commerce will be required to take a license or be prosecuted in the event of failure to do so.

 I do not regard the question of constitutionality under the Commerce Clause (article 1, § 8, cl. 3) as now before the court. The act limits itself to persons handling, etc., poultry "in" interstate commerce. It is not an act which necessarily deals with transactions which are intrastate. It must be conceded that some poultry dealers in Philadelphia are engaging and will engage in some transactions in interstate commerce. As to such persons and such transactions the act may lawfully apply.

 The line beyond which the act itself does not propose to go is more sharply drawn than it would have been if the phrase used had been "affecting interstate commerce." There is consequently no occasion at the present time to attempt to apply to any specific instance the distinction, discussed in Schechter Poultry Corporation v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570, 97 A.L.R. 947, between transactions directly affecting interstate commerce and those which indirectly affect it.

 If it were the fact that the Secretary of Agriculture is proceeding to transgress the act itself and to apply it to objects of intrastate commerce which it does not in terms cover, a different question would be presented. The only evidence to this effect is the testimony of two or three of the plaintiffs as to certain general statements made by an agent of the Department. In view of the Secretary's official notice to the poultry trade of March 6, 1936, and of the statement of counsel, I do not think the record justifies a finding that he proposes to apply the act to any but interstate transactions.

 So far, nothing has been actually accomplished to put the act into operation beyond the designation of Philadelphia as a city where unfair, deceptive, and fraudulent practices exist. In the event that there should be an attempt to extend the penalties of the act to persons or transactions not within its terms, the question, whether injunctive relief is proper or whether a defense to the penalty proceeding is the only remedy, is one which will probably have to be met at that time. As it is, no opinion is now expressed.

 The other ground upon which the act is attacked is that of unconstitutional delegation of legislative power. In reviewing the cases in which the courts have had occasion to deal with this question, we find a considerable variety in the extent to which such ...


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