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U.S. Supreme Court

United States v. Rock Royal Cooperative, Inc., 307 U.S. 533 (1939)

United States v. Rock Royal Cooperative, Inc.

No. 771

Argued April 24, 25, 1939

Decided June 5, 1939*

307 U.S. 533


Under the Agricultural Marketing Agreement Act of 1937, the Secretary of Agriculture, after notice and hearings, made an order for fixing and equalizing minimum prices to be paid producers for milk sold to dealers ("handlers") and disposed of by the latter either in liquid form or as milk products within a "marketing area" comprising the City of New York and adjacent counties. chanroblesvirtualawlibrary

Page 307 U. S. 534

Efforts to secure the consent of dealers to a marketing agreement having failed, the order, before its promulgation, was submitted by referendum to producers, the vote resulting, as determined by the Secretary with the approval of the President, in acceptance of the order by at least two-thirds of those producers who, during a representative period, had been engaged in production of milk for the marketing area. The Secretary had found that two-thirds of the milk comes to this area from other States where it is produced, or from the New York through other States, and that the other one-third, produced in New York, becomes "physically and inextricably intermingled" with this "interstate" milk, and that all is handled either in the current of interstate commerce or so as to affect, burden, and obstruct interstate commerce in milk and its products. The Secretary had determined also that prices calculated to give milk a purchasing power for producers equivalent to that enjoyed in the base periods selected by §§ 2 and 8e of the Act would not be reasonable, in view of prices for feed and "other economic conditions," and resorted to the authority granted by § 8c(18), to fix prices so as to "reflect" those factors and "insure a sufficient quantity of pure and wholesome milk and be in the public interest." The order provides a method for computing "minimum prices" or values for the milk received by "handlers' during the computation period, varying according to the class of use to which the milk is put, the butter-fat content, distance of transportation, etc. It then provides for fixing the "uniform price" which producers are actually paid by the proprietary (non-cooperative) "handlers," and which, in substance, is determined by multiplying the amount of milk of each class received by all "handlers' during the period, less certain deductions, by the respective "minimum price," making certain deductions, and dividing the total of the remainders by the total amount of the milk received. For the purpose of equalization, the order requires "handlers' to pay into a "Producer Settlement Fund" the amount by which their purchases at the "minimum prices" exceeds the amount of their purchased milk multiplied by the "uniform price." When the value of a "handler's" purchased milk at the "minimum prices" is less than if bought at the "uniform price," the Fund pays him the difference for distribution to his producers. By the terms of the order, cooperative associations of producers which are also "handlers' need not pay the "uniform price," but may settle with their patrons according to their contracts. The order, by these and other means, sought to bring chanroblesvirtualawlibrary

Page 307 U. S. 535

about a fair division among producers of the fluid milk market and utilization of the rest of the supply in other dairy staples, and thus to correct evils arising from overproduction of the fluid milk, price-cutting, etc. Cf. Nebbia v. N.Y., 291 U. S. 502. In a suit by the Government to enforce the order against a proprietary producer of milk and cooperative associations of producers, in which other cooperative associations intervened on the side of the plaintiff, the District Court adjudged the order invalid and dismissed the bill.


1. Suspension of the order by the Secretary under §8c(16)(A) of the Act because of the effect of the decree on its administration and enforcement did not render the proceedings moot, since rights accrued under the order were preserved, and reports, accountings and payments under it were sought from the defendants. P. 307 U. S. 555.

2. Contentions that the adoption of the order was influenced by false representations and coercive tactics practiced by certain cooperative associations which intervened in this case are immaterial, as there is no authority in the courts to go behind the conclusion of the Secretary to inquire into the influences which caused the producers to favor the resolution. P. 307 U. S. 556.

3. The provision of the Act, § 8(12), authorizing cooperatives to express their approval or disapproval of such orders for all their members or patrons is not unreasonable. P. 307 U. S. 559.

4. If the order and Act are otherwise valid, the fact that their effect would be to give cooperatives a monopoly of the market, would not violate the Sherman Act or justify a refusal of an injunction enforcing the order. P. 307 U. S. 560.

5. The objection that the Act does not authorize the provision of the order exempting cooperatives from payment of "uniform prices" required to be paid by proprietary "handlers" cannot be taken by defendants who are themselves cooperatives, but can be taken by a defendant proprietary. P. 307 U. S. 560.

6. This exemption for cooperatives is authorized by § 8c(F) of the Act, which provides that

"Nothing . . . shall . . . prevent a cooperative . . . from . . . making distribution [of net proceeds] . . . in accordance with the contract between the association and its producers."

P. 307 U. S. 561.

7. The objection that, in authorizing payments to cooperatives and certain other "handlers" from the Producer Settlement Fund, the order is without statutory basis cannot be raised by "handlers," chanroblesvirtualawlibrary

Page 307 U. S. 536

whether proprietary or cooperative, since "handlers " have no financial interest in that fund. P.

whether proprietary or cooperative, since "handlers " have no financial interest in that fund. P.