A Milk Case
Smith
& Smith, Inc., a Massachusetts corporation, has long distributed milk and
its products to inhabitants of Boston. That city obtains about 90% of its fluid
milk from states other than Massachusetts. Dairies located in New York State
since about 1900 have been among the sources of Boston's supply, their
contribution having varied but during the last ten years approximately 8%. The
area in which Smith & Smith has been denied an additional license to make
interstate purchases has been developed as a part of the Boston milkshed from which both the Smith & Smith Company and
a competitor have shipped to Boston.
The
state courts have held and it is conceded here that Smith & Smith’s entire
business in New York, present and proposed, is interstate commerce. This Smith
& Smith has conducted for some time by means of three receiving depots,
where it takes raw milk from farmers The milk is not processed in New York but
is weighed, tested and, if necessary, cooled and on the same day shipped as fluid
milk to Boston. These existing plants have been operated under license from the
State and are not in question here as the State has licensed Smith & Smith
to continue them. The controversy concerns a proposed additional plant for the
same kind of operation at Greenwich, New York. Article 21 of the Agriculture
and Markets Law of New York, Consol. Laws, c. 69, forbids a dealer to buy milk from producers
unless licensed to do so by the Commissioner of Agriculture and Markets. For
the license he must pay a substantial fee and furnish a bond to assure prompt
payment to producers for milk. Under 258, the Commissioner may not grant a
license unless satisfied 'that the applicant is qualified by character,
experience, financial responsibility and equipment to properly conduct the
proposed business.' The Smith & Smith Company concededly has met all the
foregoing tests and license for an additional plant was not denied for any
failure to comply with these requirements. The Commissioner's denial was based
on further provisions of this section which require him to be satisfied 'that
the issuance of the license will not tend to a destructive competition in a
market already adequately served, and that the issuance of the license will be
in the public interest.'
Upon
the hearing pursuant to the statute, milk dealers competing with Smith &
Smith as buyers in the area opposed licensing the proposed Greenwich plant.
They complained that Smith & Smith, by reason of conditions under which it
sold in Boston, had competitive advantages under applicable federal milk
orders, Boston health regulations, and OPA ceiling prices. There was also
evidence of a temporary shortage of supply in the Troy, New York market during
the fall and winter of 1945-46. The Commissioner was urged not to allow Smith
& Smith to compete for additional supplies to milk or to take on producers
then delivering to their dealers.
The
Commissioner found that Smith & Smith, if licensed at Greenwich, would
permit its present suppliers, at their option, to deliver at the new plant
rather than the old ones and for a substantial number this would mean shorter
hauls and savings in delivery costs. The new plant also would attract twenty to
thirty producers, some of whose milk Smith & Smith
anticipates will or may be diverted from other buyers. Other large milk
distributors have plants within the general area and dealers serving Troy
obtain milk in the locality. He found that Troy was inadequately supplied
during the preceding short season.
In
denying the application for expanded facilities, the Commissioner states his
grounds as follows:
'If applicant is permitted to equip and
operate another milk plant in this territory, and to take on producers now
delivering to plants other than those which it operates, it will tend to reduce
the volume of milk received at the plants which lose those producers, and will
tend to increase the cost of handling milk in those plants.
'If applicant takes producers now
delivering milk to local markets such as Troy, it will have a tendency to
deprive such markets of a supply needed during the short season.
'There is no evidence that any producer is
without a market for his milk. There is no evidence that any producer not now
delivering milk to applicant would receive any higher price, were it to deliver
their milk to applicant's proposed plant.
'The issuance of a license to applicant
which would permit it to operate an additional plant, would tend to a
destructive competition in a market already adequately served, and would not be
in the public interest.'
Denial
of the license was sustained by the Court of Appeals over constitutional
objections duly urged under the Commerce Clause. Smith and Smith petitioned for
a writ of certiorari, because of the importance of the questions involved, we
granted the writ.
1. Legal issue:
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2. Relevant case(s):
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3. Petitioner’s first
argument: _RULE:_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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4. Respondent’s first
response: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
5. Petitioner’s second
argument (if any): _RULE:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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6. Respondent’s second
response: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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