Child v. Warne

This is an appeal from a judgment enjoining the Director of Agriculture from enforcing a marketing order for the promotion of California avocados. The plaintiffs, who appear here as respondents, are growers and handlers of avocados. The defendant, as an appellant herein, is the Director of Agriculture of the State of California. Other avocado growers and handlers filed a complaint in intervention in support of the order, and appear here as appellants.

The marketing order in question was issued by the Director of Agriculture pursuant to the California Marketing Act. (Agr. Code, div. 6, chap. 10, §§ 1300.10-1300.29.) The plaintiffs contend that, in making such order, the director did not comply with the procedure prescribed by that Act; that the order is invalid for this reason; and that the judgment of the trial court enjoining its enforcement was proper.

As applied to the facts in this case, the Act provides that no marketing order shall become effective until the director finds that such order has been assented to in writing by “producers” who produce not less than 65 per cent of the volume of avocados produced and by 51 per cent of the total number of “producers” so engaged. (Agr. Code, § 1300.16, subd. (a) (2) (B).) As a part of the process incident to the making of such a finding the director is required to prepare a list of names of the avocado “producers” who will be directly affected by the proposed marketing order and the volume of avocados produced or marketed by them in the preceding marketing season. (Agr. Code, §1300.13, subd. (d)(3).) The alleged invalidity of the marketing order under consideration stems from the manner in which the director prepared the aforesaid list for use in the subject proceeding.

A determination of the issue thus presented requires a consideration of the procedure adopted by the Agricultural Director as related to and governed by the purposes and provisions of the Marketing Act.

The purposes of the Act are set forth in section 1300.11 of the Agricultural Code; are concisely stated in Brock v. Superior Court, 109 Cal.App.2d 594 , 598 [ 241 P.2d 283 ]; and include the restoration and maintenance of adequate purchasing power for California agricultural producers. With

In preparing the list of avocado producers which was used in this ease, the director followed his interpretation of the statutory definition and not that contended for by the plaintiffs. The preparation of this list occurred in the course of the proceedings resulting in the issuance of the marketing order in question. Preliminarily, a group of persons associated with the avocado industry formed a committee, known as the Avocado Promotion Committee, and requested the Director of Agriculture to cause a public hearing to be held on a proposed marketing order for avocados. Section 1300.13

Some of the members of the Department of Agriculture who participated in the decision to send the December 10th letter testified that the thousand-pounds-or-less category was selected because this amount is the average production of four avocado trees; this number of trees would cover the average “back-yard grower”; at the prevailing price a thousand pounds of avocados was worth between $40 and $50; the

On December 10, 1959, being the date when the 1 ‘ thousand-pound” letter was mailed, a tally of the returns showed that assents to the marketing order had been received from 34.07 per cent of the 9,437 persons then on the director’s list of producers, representing 58.50 per cent of the volume. On February 15, 1960, a final tally was made which showed that assents to the marketing order had been received from 55.34 per cent of the 6,075 persons finally included on the director’s list, representing 70.99 per cent of the volume. Thereupon the director declared the marketing order effective.

Definition of “Producers”

A consideration of the purposes of the act, the legislative declaration of policy in connection therewith, other provisions thereof, and the language of the statutory definition sustains the position of the director that a producer is a person engaged in the business of producing or in the business of causing the production of avocados for market. The contention of the plaintiffs that a producer may be either (1) a person engaged in the business of producing avocados, or (2) a person causing the production of avocados regardless of whether he is or is not in the business of doing so, and that therefore, the term “producers” includes all persons growing avocados for the market, relies upon a strained construction of the language used in the statute. As heretofore noted, the code section in question defines a producer as “any person engaged within this State in the business of producing, or causing to be produced for market, any agricultural commodity as herein defined.” (Agr. Code, § 1300.12, subd. (d).) To accept the interpretation relied upon by the plaintiffs it is necessary to conclude that a person engaged in the business of producing avocados is a “producer” within the meaning of the statute providing he is so engaged in the State of California, but that a person who causes avocados to be produced for market is a “producer” whether he does so in the State of California or outside of the State of California. Clearly, this is not the intent of the act which is concerned with “California grown agricultural commodities.” (Agr. Code, § 1300.10, subd. (a).) If the modifying phrase “within this

Section 1300.10 of the Agricultural Code indicates the Legislature’s concern about the purchasing power of the producers of agricultural commodities; states that such purchasing power is “low in relation to that of persons engaged in other gainful occupations”; notes that such producers “are thereby prevented from maintaining a proper standard of living and from contributing their fair share to the support of the necessary governmental and educational functions”; and declares a policy “to aid agricultural producers in restoring and maintaining their purchasing power at a more adequate, equitable and reasonable level.” The succeeding section of that code (Agr. Code, § 1300.11) expressly declares that one of the purposes of the act is “To restore and maintain adequate purchasing power for the agricultural producers of this State.” (Subd. (f).) These provisions obviously refer to persons whose livelihood and consequent standard of living are directly related to their activities in connection with the production of agricultural commodities. Such persons are engaged in the business of producing agricultural commodities. Whether their activities constitute the actual production or constitute the causing of production are not factors which captured the attention of the Legislature. Within the realm under consideration, i.e., agricultural production, it was the extent of the activity of the persons engaged, i.e., as a business, and not the type of that activity, i.e., as producing or causing the production, which was the subject of governmental concern.

The term “business” is defined generally as “ ‘that which occupies the time, attention, and labor of men for purposes of livelihood or for profit; a calling for the purpose of a livelihood.’ ” (City of Los Angeles v. Cohen, 124 Cal.App.

It is reasonable to conclude that the Marketing Act under consideration was intended to assist those who were occupied in the production of avocados for the purpose of making a substantial contribution to their livelihood; that such persons would be engaged in the business of producing avocados; that persons not so engaged, even though their incidental activities resulted in the production of avocados, were not the intended beneficiaries of the act; and that these incidental activities were not the intended subjects of regulation by the act.

It is noteworthy that before issuing a marketing order the director is required to find that the proposed order will tend to reestablish or maintain a price level such as will provide a purchasing power for the subject commodity “which is adequate to maintain in the business of producing such agricultural commodity such number of producers as is required to provide such supply of the quantities and qualities of such agricultural commodity as is necessary to fulfill the normal requirements of consumers thereof.” (Agr. Code, § 1300.14, subd. (a)(1).) (Emphasis added.) If the plaintiffs’ interpretation of the term “producers” is used in applying the foregoing code provisions, the object thereof would be to maintain “in the business of producing” the subject commodity such number of persons, who either are engaged in the business of producing that commodity or who produce such commodity even though they are not engaged in the business of doing so, as is necessary to supply the needs of consumers. (Emphasis

The conclusion of the trial court that, “The definition of a producer of avocados includes both persons engaged in the business of producing avocados and persons who caused to be produced for market quantities of avocados” was erroneous.

Preparation of Producers List

The plaintiffs also contend that in preparing the final list of producers upon which he based his finding that the requisite assents had been given to the proposed marketing order, the director did not follow the procedure prescribed by the statute; that the list prepared from the reports furnished by the handlers was the true final list; that the use of the thousand-pound letter involved an arbitrary method of determination not contemplated by the statute; that in striking the names of approximately 2,900 avocado growers from the producers’ list originally compiled, the director acted arbitrarily; and, therefore, the judgment of the trial court enjoining enforcement of the marketing order was proper.

Section 1300.13, subdivision (d)(3) of the Agricultural Code requires the director to prepare a list of producers from the reports filed with him by the handlers and from information otherwise available to him, “including any proper corrections.” One source of such information is the testimony and evidence which the director is required to receive at the time of the public hearing, which precedes the issuance of the proposed marketing order, with respect to the sufficiency of the lists on file with him at that time. (Agr. Code, § 1300.13, subd. (c)(4).) However, the statute clearly indicates that this is not the sole source of such information. The method of developing other sources and obtaining additional information is a matter which lies within the discretion of the director. (Dickey v. Raisin Proration Zone No. 1, 24 Cal.2d 796 , 809-811 [ 151 P.2d 505 , 157 A.L.R. 324 ]; California Drive-In Restaurant Assn. v. Clark, 22 Cal.2d 287 , 302-303 [ 140 P.2d 657 , 147 A.L.R. 1028 ]; see Highland Farms Dairy v. Agnew, 16 P.Supp. 575, 586.) Unless the method adopted is so unreasonable as to constitute arbitrary or capricious action the determination by the director in the selection thereof is final. (Rible v. Hughes, 24 Cal.2d 437 , 445 [ 150 P.2d 455 , 154 A.L.R. 137 ]; Ray v. Parker, 15 Cal.2d 275 , 311 [ 101 P.2d

The contention of the plaintiffs that the list compiled from the reports filed by the handlers, subject only to corrections based on evidence and testimony received at the public hearing, requires an assumed intention by the Legislature to vest in the handlers the authority to determine whether their customers are engaged in the business of producing avocados rather than to vest such authority in its agent, the Director of Agriculture. The indulgence in such an assumption is unreasonable.

In the instant case, the director had information which led him to believe that persons not actually engaged in the business of producing avocados nevertheless appeared as producers on the reports submitted to him by the handlers; that the avocados which they marketed came from a few trees grown at their place of residence; that the value thereof was small; and that the returns therefrom were not likely to constitute a substantial part of their livelihood. In the light of this information the director determined that the status of those growers listed in the reports of the handlers as producers but who marketed only a small volume of fruit should be the subject of further inquiry; that the expense involved in a person to person investigation was prohibitive; and that an appropriate method for obtaining further information would be through a letter directed to the grower and the reply made by him, expressed either in a return letter or by his action in making no answer to the inquiry. This method simulated that provided by the statute for determining the extent of producer assent to a proposed marketing order. The selection of the subjects of this inquiry from those who marketed a thousand pounds or less was based on the reasons heretofore noted, i.e., that this amount of avocados ordinarily would be produced by four trees or less; would return $50 or less; and, from the experience of the director, would be grown on a homeowner’s lot, not as a business, but as an incident to the use of his property as a dwelling. The action of the director in concluding that his original list of producers contained the names of persons who were not in the business of producing avocados and should be corrected; in selecting a letter of inquiry and a method of reply as the means of further investigation ; in choosing the subjects of his further investigation

The plaintiffs claim that the selection of the thousand-pounds-or-less category was capricious and arbitrary because it made a distinction without reason between the grower who raised 1,000 pounds and the grower who raised 1,001 pounds. The object of the further inquiry was to ascertain whether growers listed as producers actually were engaged in the business of producing. Obviously, to attain this objective it was not necessary to canvass all of the persons whose names appeared on the original list. Where the line should be drawn between investigation and noninvestigation was a proper subject of discretion; the determination made is supported by appropriate reasons; and no fine measure of distinction should be applied to this type of administrative action. (Cf. Weiss v. State Board of Equalization, 40 Cal.2d 772 , 777 [ 256 P.2d 1 ]; Ferrante v. Fish & Game Commission, 29 Cal.2d 365 , 371-374 [ 175 P.2d 222 ] ; Torres v. Department of Alcoholic Beverage Control, 192 Cal.App.2d 541 , 550 [ 13 Cal.Rptr. 531 ].) Furthermore, the plaintiffs’ complaint is not directed to the inclusion of growers in the list of producers but to the exclusion of growers therefrom; all growers marketing more than one thousand pounds were included in the list; not all growers in the thousand-pounds-or-less category were excluded; the latter merely were the subject of further investigation; and the manner of investigation and the method of investigation were not unreasonable.

The plaintiffs also claim that the director permitted each grower in the thousand-pounds-or-less category to determine for himself whether he was in the business of producing avocados; that such a conclusion results from the type of investigation made, i.e., a letter of inquiry with a formulated yes or no reply; and that such a procedure constituted capricious and arbitrary action. Preliminary to his decision to circularize growers in the thousand-pounds-or-less category, the director had concluded, from his experience and the information coming to him through various sources, that many persons who marketed small quantities of avocados were not engaged in the business of producing avocados; that these persons were the so-called back-yard growers who had four trees or less; that the average production of four trees or less was a thousand pounds or less; that the average return from

Complaint also is directed to the fact that the list in its final form was not prepared until a considerable time after the public hearing at which interested persons were entitled to give “testimony and evidence with respect to the accuracy and sufficiency of the lists on file with the director” (Agr. Code, § 1300.13, subd. (c)(4)); that in the meantime the assent forms had been mailed to those on the original list; that some of these forms had been returned; and that some of them who assented might not have done so if they had been informed that the “back-yard growers” were to be excluded from the program. As heretofore noted, the statute does not specify the time within which the director is to complete the list upon which he will act; but does indicate that corrections may be made after the public hearing; and vests in the director the authority to select the sources of information upon which to base such corrections. (See Ray v. Parker, supra, 15 Cal.2d 275 , 306-308.) Although the statute prescribes a public hearing at which, among other things, testimony and evidence respecting the sufficiency of the producer lists on file with the director may be received, this hearing is of that type which now customarily precedes legislative action; is a step in the process of legislation; is quasi legislative in character; and is not the sole source of information upon which the statutorily prescribed administrative action may be based. (Ray v. Parker, supra, 15 Cal.2d 275 , 304-307; Brock v. Superior Court, supra, 109 Cal.App.2d 594 , 605-606.) The Legislature prescribed the method of procedure followed by the director. No constitutional question is involved. If that procedure is unfair the Legislature and not the court is the

It also is contended that the director’s action in revising the original lists was motivated by pressure exerted by the Avocado Promotion Committee. Submission to this pressure, it is argued, constituted arbitrary and capricious action which invalidated the subsequent proceeding. Whatever may have instigated the investigation leading to the revision of the original lists is of no consequence under the circumstances in this case, because the action of the director which followed was within the confines of the procedure outlined by the statute and was not arbitrary or capricious. The motive which prompted this action would not affect its established nature.

The director was required to prepare a list of producers, i.e., persons engaged in the business of producing or causing the production of avocados. He prepared such a list. The evidence establishes that in doing so he conformed to the procedure prescribed by the statute. His action was administrative in character. The legislative standard given him to guide his action was adequate (Holloway v. Purcell, 35 Cal.2d 220 , 231 [ 217 P.2d 665 ] ; Jersey Maid Milk Products Co. v. Brock, 13 Cal.2d 620 , 641-645, 650, 652-656 [ 91 P.2d 577 ]), although, as in most instances, this standard was defined in general terms, i.e., to prepare a list of persons engaged in the business of producing or causing the production of avocados.