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FREEMAN v. CANNED DAIRY PRODS.

June 23, 1966

Orville L. FREEMAN, Secretary of Agriculture of the United States, Petitioner,
v.
CANNED DAIRY PRODUCTS, INC., Respondent



The opinion of the court was delivered by: ROSENBERG

 This matter is here on an application by the petitioner, Orville L. Freeman, Secretary of Agriculture, for an order requiring the respondent, Canned Dairy Products, Inc., to testify and produce documentary evidence as required by a subpoena duces tecum issued on October 6, 1965 and served upon the respondent. The subpoena duces tecum was issued and served under the provisions of the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C. § 601 et seq. *

 The Department of Agriculture is conducting an investigation under the provisions of the Marketing Agreement Act to determine whether various handlers subject to regulation under the Delaware Valley or New York-New Jersey marketing orders have violated or are violating directly or indirectly, alone or in concert with others, any of the terms or provisions of the marketing orders by means of unlawful rebates, refunds, kickbacks, or other unlawful actions resulting in non-payment to producers and cooperative associations of producers of the minimum prices required to be paid for milk pursuant to the orders.

 In the conduct of its investigations, the Secretary of Agriculture is empowered "to require by subpoena the attendance and testimony of witnesses and the production" of documentary evidence "relating to any matter under investigation." (7 U.S.C. § 610(h), incorporating 15 U.S.C. § 49) *fn1" This power has been validly delegated to and may be exercised by the Director of the Dairy Division, Consumer and Marketing Service, United States Department of Agriculture, who issued the subpoena involved here. Freeman v. Fidelity-Philadelphia Trust Co., 248 F. Supp. 487 (E.D. Pa. 1965).

 The respondent Canned Dairy, a milk broker, is not a regulated "handler" of milk under the Act. However, it is now established that the subpoena power extends to and may be exercised over third parties who are not being investigated or proceeded against. In the Fidelity-Philadelphia case, supra, it was held that if the subpoena was otherwise valid, the respondent was not exempt from compliance because it was a bank and not a milk handler subject to regulation under the Milk Marketing Act. In Freeman v. Brown Bros. Harriman & Co., 357 F.2d 741, C.A.2, 1966, it was held that the Secretary had authority to subpoena the accounts of a milk broker who was not subject to the provisions of the marketing Act.

 At the hearing on this matter, the respondent raised preliminary questions of lack of jurisdiction and improper venue. These contentions were abandoned by the respondent, but two questions remain for our consideration.

 First, the respondent contends that the subpoena has been complied with. The parties agree that the respondent has furnished the records called for in Paragraph 2 of the subpoena:

 
"[financial records] which relate directly or indirectly to volumes of milk handled, brokered or sold for each month during the period December 1963 through July 1965, to [five named companies]."

 Paragraph 1 of the subpoena calls for all financial records

 
"which relate directly or indirectly to volumes of milk handled, brokered or purchased for each month during the period December 1963 through July 1965, from Harmony Dairy * * * or Coshocton Dairy Cooperative Company * * * and which relate to financial settlements made for such milk or for any services rendered in connection therewith with these or other persons."

 Pursuant to this paragraph, the respondent has produced those records which relate to milk "purchased" from Coshocton and Harmony and the records relating to services rendered in connection with such purchases. The Secretary here seeks inforcement of the subpoena as it relates to the records of milk "handled" or "brokered" from Coshocton and Harmony.

 The respondent urges the interpretation of the subpoena to be that Paragraph 1 calls only for records relating to the purchase of milk from Coshocton or Harmony, and that records relating to the brokerage or handling of Coshocton or Harmony milk is restricted by Paragraph 2 to that which eventually reaches five named companies. This interpretation seems contrary to the explicit language of the subpoena.

 The two paragraphs, while to some extent overlapping, are not co-extensive. Paragraph 1 deals with records of all milk handled, brokered or purchased from Coshocton and Harmony, no matter what the final destination; paragraph 2 deals with records of all milk, regardless of source, ...


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