Stafford v. Wallace
258 U.S. 495, 512-521, 42 S.Ct. 397, 66 L.Ed. 735 (1922)
Mr. Chief Justice
TAFT, 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 (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, 28 Sup. Ct. 441, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764.
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 Committees of 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 environment [258 U.S. 495, 513] in which Congress
passed it. It was for Congress to decide from its general information and from
such special evidence as was brought before it, the nature of the evils
actually present or threatening, and to take such steps by legislation within
its power as it deemed proper to remedy them. It is helpful for us in
interpreting the effect and scope of the act in order to determine its validity
to know the conditions under which Congress acted. Chicago Board of Trade v. United States,
246 U.S. 231, 238, 38 S. Sup. Ct. 242; Danciger v. Cooley, 248 U.S. 319, 322, 39 S.
Sup. Ct. 119.
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
constitutes 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 3 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 live 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 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
facilities in the stockyards and all practices in [258 U.S. 495, 514] connection with the live
stock passing through the yards shall be just, reasonable,
nondiscriminatory, and nondeceptive, and that a
schedule of such charges shall be kept open for public inspection, and only be
changed after 10 days' notice to the Secretary of Agriculture, who is made a
tribunal to inquire as to the justice, reasonableness, and nondiscriminatory or
nondeceptive character of every charge and practice,
and to order that it cease, if found to offend, with the same provisions for
appeal and enforcement in court as in the case of offending packers. The
Secretary is given power to make rules and regulations to carry out the
provisions, to fix rates, or a minimum or maximum thereof, and to prescribe how
every packer, stockyard owner, commission man, and dealer shall keep accounts.
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 [258 U.S. 495, 515] the shipper, who
sells, and unduly and arbitrarily to increase the price to the consumer, who
buys. Congress thought that the power to maintain this monopoly was aided by
control of the stockyards. Another evil, which it sought to provide against by
the act, was exorbitant charges, duplication of commissions, deceptive
practices in respect of prices, in the passage of the live
stock through the stockyards, all made possible by collusion between the
stockyards management and the commission men, on the one hand, and the packers
and dealers, on the other. Expenses incurred in the passage through the
stockyards necessarily reduce the price received by the shipper, and increase
the price to be paid by the consumer. If they be exorbitant or unreasonable,
they are an undue burden on the commerce which the stockyards are intended to
facilitate. Any unjust or deceptive practice or combination that unduly and
directly enhances them is an unjust obstruction to that commerce. The shipper,
whose live stock are being cared for and sold in the stockyards market, is
ordinarily not present at the sale, but is far away in the West. He is wholly
dependent on the commission men. The packers and their agents and the dealers, who
are the buyers, are at the elbow of the commission men, and their relations are
constant and close. The control that the packers have had in the stockyards by
reason of ownership and constant use, the relation of landlord and tenant
between the stockyards owner, on the one hand, and the commission men and the
dealers, on the other, the power of assignment of pens and other facilities by
that owner to commission men and dealers, all create a situation full of
opportunity and temptation, to the prejudice of the absent shipper and owner in
the neglect of the live stock, in the mala fides of
the sale, in the exorbitant prices obtained, and in the unreasonableness of the
charges for services rendered.
The stockyards are not a place of rest or final destination.
Thousands of head of live stock arrive daily by [258
U.S. 495, 516] carload and trainload
lots, and must be promptly sold and disposed of and moved out, to give place to
the constantly flowing traffic that presses behind. The stockyards are but a
throat through which the current flows, and the
transactions which occur therein are only incident to this current from the
West to the East, and from one state to another. Such transactions cannot be separated
from the movement to which they contribute and necessarily take on its
character. The commission men are essential in making the sales, without which
the flow of the current would be obstructed, and this, whether they are made to
packers or dealers. The dealers are essential to the sales to the stock farmers
and feeders. The sales are not in this aspect merely local
transactions. They create a local change of title, it is true, but they
do not stop the flow; they merely change the private interests in the subject
of the current, not interfering with, but, on the contrary, being indispensable
to, its continuity. The origin of the live stock is in the West; its ultimate
destination, known to, and intended by, all engaged in the business, is in the Middle West and East, either as meat products or
stock for feeding and fattening. This is the definite and well-understood
course of business. The stockyards and the sales are necessary factors in the
middle of this current of commerce.
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 [258 U.S. 495, 517] agency. United
States v. Union Stock Yards Co., 226 U.S. 286, 33 Sup. Ct.
83. The only questior here is whether the
business done in the stockyards, between the receipt of the live
stock in the yards and the shipment of them therefrom, is a part of
interstate commerce, or is so associated with it as to bring it within the
power of national regulation. A similar question has been before this court and
had great consideration in Swift v. United States, 196 U.S. 375, 25 Sup. Ct. 276. The judgment in that case gives a clear and
comprehensive exposition, which leaves to us in this case little but the
obvious application of the principles there declared.
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 ( 196 U.S. 396, 25 Sup. Ct. 279):
'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 [258 U.S. 495, 518] as the parts of a single plan. The
plan may make the parts unlawful. Aikens v. Wisconsin, 195
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 ( 196 U.S. 396, 397, 25 S.
Sup. Ct. 279):
'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 subjectmatter is sales, and the very point of the
combination is to restrain and monopolize commerce among the states in respect
of such sales.'
Again ( 196 U.S. 398, 399, 25 S.
Sup. Ct. 280), 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 stockyards,
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 [258 U.S. 495, 519]
central fact that such streams of commerce from one part of the
country to another, which are ever flowing, are in their very essence the
commerce among the states and with foreign nations, which historically it was
one of the chief purposes of the Constitution to bring under national
protection and control. This court declined to defeat this purpose in respect
of such a stream and take it out of complete national regulation by a nice and
technical inquiry into the noninterstate character of
some of its necessary incidents and facilities, when considered alone and
without reference to their association with the movement of which they were an
essential but subordinate part.
The principles of the Swift Case have become a fixed rule of
this court in the construction and application of the commerce clause. It
latest expression on the subject is found in Lemke v. Farmers' Grain Co., 258
U.S. 50, 42 Sup. Ct. 244, 66 L. Ed. --, decided at this term,
February 27, 1922. 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 clause. Similar
confirmation of the principle of the Swift Case is to be found in Dahnke v. Bondurant, 257 U.S. 282, 42 Sup. Ct. 106, in
Eureka Pipe Line v. Hallanan, 257 U.S. 265, 42 Sup.
Ct. 101, and in United Fuel Co. v. Hallanan, 257 U.S.
277, 42 Sup. Ct. 105, all decided December 12, 1921; in Western Union Co. v.
Foster, 247 U.S. 105, 113, 38 S. Sup. Ct. 438, 1 A. L. R. 1278; United States
v. [258 U.S. 495, 520]
Reading, 226 U.S. 324, 367, 368 S., 33 Sup. Ct.
90; Ohio R. R. Co. v. Worthington, 225 U.S. 101, 108, 32 S. Sup. Ct. 653, and Loewe v. Lawlor, 208 U.S. 274, 301, 28 S. Sup.
Ct. 301, 13 Ann. Cas. 815.
It is manifest that Congress framed the Packers and
Stockyards Act in keeping with the principles announced and applied in the
opinion in the Swift Case. The recital in section 2, par. b, of title 1 of the
act, quoted in the margin, leaves no doubt of this.1 The act deals
with the same current of business, and the same practical conception of
interstate commerce.
Of course, what we are considering here is not a bill in equity or an indictment charging conspiracy to obstruct interstate commerce, but a law. The language of the law shows that what Congress had in mind primarily was to prevent such conspiracies by supervision of the agencies which would be likely to be employed in it. If Congress could provide for punishment or restraint of such conspiracies after their formation through the Anti- Trust Law as in the Swift Case, certainly it may provide regulation to prevent their formation. The reasonable fear by Congress that such acts, usually lawful and affecting only intrastate commerce when considered alone, will probably [258 U.S. 495, 521] and more or less constantly be used in conspiracies against interstate commerce or constitute a direct and undue burden on it, expressed in this remedial legislation, serves the same purpose as the intent charged in the Swift indictment to bring acts of a similar character into the current of interstate commerce for federal restraint. Whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commerce is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent.
* * * *
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.
Footnotes
1The first title (section 2, paragraph
b) provides that: 'For the purpose of this act a transaction in respect to any
article shall be considered to be in commerce if such article is part of that
current of commerce usual in the live stock and meat
packing industries whereby live stock and its
products are sent from one state with the expectation that they will end their
transit after purchase in another, including, in addition to cases within the
general description, all cases whose purchase or sale is either for shipment to
another state, or for slaughter of the live stock
within the state and the shipment outside of the state of the products
resulting from such slaughter. Articles normally in such current of commerce
shall not be considered out of such current through resort being had to any
means or device intended to remove transactions in respect thereto from the
provisions of the act.'