Stafford v. Wallace

after making the foregoing statement of the case, delivered the opinion of the court.

Section 316 of the Packers and Stockyards Act of 1921 makes applicable to suits for injunction against the orders of the Secretary of Agriculture, the same procedure, original and appellate, provided in the Act of October 22, 1913, c. 32, 38 Stat. 208 , 219, 220, for suits for injunction against the orders of the Interstate Commerce Commission. The latter act gives a right to a direct appeal to this court from the granting or refusing an interlocutory injunction. Hence the appeals herein are properly prosecuted.

In each bill the averments are sufficient, if. the act be invalid, to show equitable grounds for injunction in the severe penalties incurred for failure to comply with the act before- opportunity can be given to test 'its validity. Ex parte Young, 209 U. S. 123 .

We have framed the statement of the case, not for the purpose of deciding the issues of fact mooted Between the packers 'and their accusers before the Federal Trade Commission or the Cotnmittees on Agriculture in Congress, but only, to enable us to consider and discuss the act whose validity is here in question in the light of the environ

The Packers and Stockyards Act of 1921 seeks to regulate the business of the packers done in interstate commerce and forbids them to engage in unfair, discriminatory or deceptive practices in such commerce, or to subject any person to unreasonable prejudice therein, or to do any of a number of acts to control prices or establish a monopoly in the business. It cbnstitutes the Secretary of Agriculture a tribunal to hear complaints and make findings thereon, and to order the packers to cease any forbidden practice. An appeal is given to the Circuit "Court of Appeals from these findings and orders. They are to be enforced by the District Court by penalty if not appealed from and if disobeyed. Title III concerns the stockyards and provides for the supervision and control of the facilities furnished therein in connection with the receipt, purchase, sale on commission basis or otherwise, of five, stock and-its care, shipment, weighing or handling in interstate commerce. A stockyards is defined to be a place conducted for profit as a public market, with pens in which live stock are received and kept for sale or shipment in interstate commerce. Yards with a superficial area of less than 20,000 square feet are not within the act. Stockyard owners, commission men and dealers are recognized and defined and the two latter are required to register. The act requires that all rates and charges for services and fácilities in the stockyards and all practices in

The bills aver that the Secretary has given the notice which requires appellants to register and has announced proposed rules and regulations, prescribing the form of rate schedules, the. required reports, including daily accounts of receipts, sales and shipments, forbidding’ misleading reports to depress or enhance prices, prescribing proper feed and care of live stock, and forbidding a commission man.to sell live stock to another in whose business he is interested, without disclosing such interest to his principal.

The object to. be secured by the act is the free and unburdened flow of live stock from the ranges and farms of the West and the Southwest through the great stockyards and slaughtering' centers on the borders 'of ’that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East, or, still as live stock, to the feeding places and fattening farms in’ the Middle West or East for further preparation for the market.

. The chief evil, feared is the monopoly of the packers, enabling them unduly and arbitrarily to lower prices to

The stockyards are not a place of rest or final destination. Thousands of head of live stock arrive daily by

The act, therefore, treats the various stockyards of the country as great national public utilities to promote the flow of commerce from the ranges and farms of the West to the consumers in the East. It assumes that they conduct a business affected by a public use of a national character and subject to national regulation. That it is a business within the power of regulation by legislative action needs no discussion. That, has been settled since the case of Munn v. Illinois, 94 U. S. 113 . Nor is there any doubt that in the receipt of live stock by rail and in their delivery by rail the stockyards are an interstate commerce

The Swift Case presented to this court the sufficiency of a bill in equity brought against substantially the same-packing firms as those against whom this legislation is chiefly directed, charging them as a combination of a dominant proportion of the dealers in fresh .meat throughout the United States not to bid against each other in the live stock markets of the different States, to bid up prices for a few days in order to induce the cattle men to send their stock to the stockyards, to fix prices at -which they would sell, and to that end to restrict shipments of meat when necessary, to establish a uniform credit to dealers, and to keep a black list, to make uniform and improper charges for cartage, and finally to get less than lawful rates from the railroads to the exclusion of competitors, and all this in a conspiracy and single connected scheme- to monopolize the supply and distribution of fresh meats throughout the United States. In holding the bill good, this court said (p. 396):

“ The scheme as a whole seems to us to be within reach of the law. The constituent elements, as we have stated them, are enough to give to the scheme a body and, for all that we can say, to accomplish it. . . . It is suggested that the several acts charged are lawful and that intent can make no difference. But they are bound to

gether as parts of a single plan. The plan may make the parts unlawful. Aikens v. Wisconsin, 196 U. S. 194 , 206. The statute gives this proceeding against combinations in restraint of commerce among the States and against attempts to monopolize the same. Intent is almost essential to such a combination and is essential to such an attempt.”

Again (pp. 396 and 397):

“Although the combination alleged embraces restraint and monopoly of trade within a single State, its effect upon commerce among the States is not accidental, secondary, remote or merely probable. . . . Here the subject matter is sales and the very point of the combination is to restrain and monopolize commerce among the States in respect of such sales.”

Again (pp. 398 and 399), in answer to the objection that what was charged did not constitute a case involving commerce among the States, the court said:

“ Commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one State, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stock yards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce. What we say is true at least of such a purchase by residents in another State from that of the seller and of the cattle.”

The- application of the commerce clause of the Constitution in the Swift Case was the result of the natural development of interstate commerce under modern conditions. It was the inevitable recognition of the great

The principles of the Swift Case have become a fixed rule of this court in the construction and application of the commerce clause. Its latest expression on the subject is found in Lemke v. Farmers Grain Co., ante, 50. In that case it was held, on the authority of the Swift Case, that the delivery and sale of wheat by farmers to local grain elevators in North Dakota to be shipped to Minneapolis, when practically all the wheat purchased by such elevators was so shipped and the price was fixed by that in the Minneapolis market less profit and freight, constituted a course of business and determined the interstate character of the transaction. Accordingly a state statute which sought to regulate the price and profit of such sales and was found to interfere with the free flow of interstate commerce, was declared invalid as a violation of the commerce ciause.- Similar confirmation of the principle of the Swift Case is to be found in Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282 ; Eureka Pipe Line Co. v. Hallanan, 257 U. S. 265 ; United Fuel Gas Co. v. Hallanan, 257 U. S. 277 ; Western Union Telegraph Co. v. Foster, 247 U. S. 105 , 113; United States v.

In United States v. Ferger, 250 U. S. 199 , the validity of an act of Congress punishing forgery and utterance of bills of lading for fictitious shipments in interstate commerce was in question. It was contended that there was and could be no commerce in a fraudulent and fictitious bill of lading, and therefore that 'the power of Congress could not embrace such pretended bill. In upholding the act, this court, speaking through Chief Justice White, answered the objection by saying:

“ But this mistakenly assumes that the power of Congress is to be necessarily tested by the intrinsic existence of commerce in the particular subject dealt with, instead of by relation of that subject to commerce and its effect upon it. We say mistakenly assumes, because we think it clear that if the proposition were sustained it would, destroy the power of Congress to regulate, as obviously that power, if it is to exist, must include the authority to deal with ' obstructions to interstate commerce (In re Debs, 158 U. S. 564 ) and with a host of other acts which, because of their relation to and influence upon interstate

commerce, come within the power of Congress to regulate, although they are not interstate commerce in and' of themselves,”

The Transportation Act of 1920 presents a close analogy to this case. It authorizes supervision by the Interstate Commerce Commission of intrastate commerce where it is so carried on as to work undue, unreasonable advantage or preference in favor of persons or localities in intrastate commerce, as against those in interstate commerce, or any undue, unjust or unreasonable discrimination against interstate commerce itself. Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 U. S. 563 . That case followed the Minnesota Rate Cases, 230 U. S. 352 , 432, 433; Shreveport Case, 234 U. S. 342 , 351; Illinois Central R. R. Co. v. State Public Utilities Commission, 245 U. S. 493 ; Baltimore & Ohio R. R. Co. v. Interstate Commerce Commission, 221 U. S. 612 , 618; Southern Ry. Co. v. United States, 222 U. S. 20 , 26, 27; Second Employers’ Liability Cases, 223 U. S. 1 , 48, 51. The principle of these cases is thus clearly stated by the court in the Minnesota Rate Cases (p. 399):

“ The authority of Congress extends to every part of interstate commerce, and to every instrumentality or agency by which it is carried on; and the full control by Congress of the subjects committed to its regulation is not to be denied or thwarted by the commingling of interstate and intrastate operations. This is not to say that the Nation may deal with the internal concerns of the State, as such, but that the. execution by Congress of its constitutional power to regulate interstate commerce is not limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally controls the latter. This conclusion necessarily results from the supremacy of the national power within its appointed sphere.” •

“ So, again, the line is distinct between this case and Hopkins v. United States, 171 U. S. 578 . All that was decided there was that the local business of commission merchants was not commerce among the States, even if what the brokers were employed to sell was an object of such commerce. The brokers were not-like the defendants before us, themselves the buyers and sellers. They only furnished certain facilities for the sales. Therefore, there again the effects of the combination of brokers upon the commerce was only indirect and not within the apt. Whether the case would have been different if the combination had resulted in exorbitant charges, was left open; In Anderson v. United States, 171 U. S. 604 , the defendants were buyers and sellers at the stock yards, but their agreement was merely not to employ brokers, or to recognize yard-traders, who were not members of their association. Any yard-trader could become a member of the association on complying with the conditions, and there was said to be no feature of monopoly in the case. It was held that the combination did not directly regulate commerce between the States, and, being formed with a different intent, was not within the act. The. present case is more like Montague & Co. v. Lowry, 193 U. S. 38 .”

It is clear from this that if the bill in the Swift Case had averred that control of the stockyards and the commission men was one of the means used by the packers to make arbitrary prices in their plan of monopolizing the interstate commerce, the acts of the stockyards owners and commission men would have been regarded as directly affecting interstate commerce and within the Anti-Trust Act. Congress has found an evil to be apprehended and to be prevented by the act here in question, in the

. Again, if the result of the combination of commission men in the Hopkins Case,had been to impose exorbitant charges on the passage of the live stock through the stockyards from one State to another, the case would have been different, as the court suggests. The effect on. interstate commerce in such a case would have been direct. Similarly in the Anderson Case if the combination of, dealers had been directed to collusion with the commission men to secure sales at unduly low prices to the dealers and to double commissions, or to practice any other fraud or oppression calculated to decrease the price received by the shipper and increase the price to the purchaser in the passage of live stock through the stockyards in interstate commerce, this would have been a direct burden on such commerce and within the AntiTrust Act.

The other cases relied on by appellants are less relevant to this discussion than the Anderson and Hopkins Cases. Some of them are tax cases. As to them it is well to bear in mind the words of the court in the Swift Case (p. 400):

“ But we do not mean to imply that the rule which marks the point at which state taxation or regulation becomes permissible necessarily is beyond the scope of interference by Congress in cases where such interference is deemed necessary for the protection of commerce among the States.”

Thus, take the case of Bacon v. Illinois, 227 U. S. 504 , Bacon had purchased grain in transit from a western State to the east. He exercised the power under his con

“ The question, it should be observed, is not with respect to the extent of the power of Congress to regulate interstate commerce, but whether a particular exercise of state power in view of its nature and operation must be deemed to be in conflict with this paramount authority.”

Moreover, it will be noted that even in tax cases where the tax is directed against a commodity in an actual flowing and constant stream out of a State from which the owner may withdraw part of it for use or sale in the State before it reaches the state border, we have held that a tax on the flow is a burden on interstate commerce which the State may not impose because such flow in interstate commerce is an established course of business. United Fuel Gas Co. v. Hallanan, 257 U. S. 277 ; Eureka

“ In short, 'the great body of the gas starts for points outside the State and goes to them. That the necessities of business require a much smaller amount destined to points within the State to be carried undistinguished in the same pipes does not affect the character of the major transportation. Neither is the case as to. the gas sold to the three companies changed by the fact that the plaintiff, as owner of the gas, and the purchasers after they receive it might change their minds before the gas leaves the State and that the precise proportions between local and outside deliveries may not have been fixed, although they seem to have been. The typical and actual course of events marks the carriage of the greater part as commerce .among the States and theoretical possibilities may be left out of account. There is no break, no period of deliberation, but a steady flow ending as contemplated from the beginning beyond the state line. Ohio R. R. Commission v. Worthington, 225 U. S. 101 , 108. United States v. Reading Co., 226 U. S. 324 , 367. Western Union Telegraph Co. v. Foster, 247 U. S. 105 , 113.”

The case of Blumenstock Brothers Advertising Agency v. Curtis Publishing Co., 252 U. S. 436 , is easily distin-. guished from the one at the bar. There it was merely held that an attempt of a publisher to monopolize the business of publishing advertising matter in magazines resulting in refusal' of such publisher to accept advertisements in his magazines was too remote in its relation to the interstate commerce of circulating magazines. . The court said:

“ This case is wholly unlike International Textbook Co. v. Pigg, 217 U. S. 91 , wherein there was a continuous interstate traffic in textbooks and apparatus for a course of study pursued by means of correspondence, and the movements in interstate commerce were held to bring the.sub

jeet-matter within the .domain of federal control, and to exempt it from the burden imposed by state legislation.”

Pennsylvania R. R. Co. v. Knight, 192 U. S. 21 , relied on by counsel for appellants and said to be exactly applicable to the casé at bar, was an effort by the Pennsylvania Railroad Company to secure immunity from city regulation for a cab system which it ran in New York to and from its station to points in New York City, on the ground that it was part of interstate commerce. -This court held that because it was independent of the railroad transportation, and not included iñ the contract of railroad carriage, it did not come within interstate commerce. The case was distinguished in the Swift Case (p. 401) from cartage for delivery of the goods when part of the contemplated transit.'' There is nothing in the case to indicate that if such an agency could be and were used in a conspiracy unduly and constantly to monopolize interstate passenger traffic, it might not be brought within federal'restraint.

As already noted, the word “ commerce ” when used in the act is defined to be interstate and foreign commerce. Its provisions are carefully drawn to apply only to those practices and obstructions'which in the judgment of Congress are likely to affect interstate commerce prejudicially. Thus construed and applied, we think' the act clearly within congressional power and valid.

Other objections are made to the act and its provisions as violative of other limitations of the Constitution, but the only one seriously pressed was that based on the Commerce Clause and we do not deem it‘ necessary to discuss the others.

The orders of the District Court refusing the interlocutory injunctions are

Affirmed.

Mr. Justice McReynolds dissents'.

Mr. Justice Day did not sit in these cases and took no part in their decision. '