1. The New York Milk Control Act, as amended effective April 1,
1934, discriminates between milk dealers without well advertised
trade names who were in the business before April 10, 1933, and
those in that class who entered it later, by granting to the former
and denying to the latter the privilege of selling milk in New York
City at a price one cent below the minimum binding on competitors
with well advertised trade names.
Held, that the
discrimination is arbitrary and unreasonable, and violates the
equal protection clause of the Fourteenth Amendment. P.
297 U. S.
271.
2. This provision, on its face, is not a regulation of a
business in the interest of, or for the protection of, the public,
but an attempt to give an economic advantage to those engaged in a
given business at an arbitrary date as against all those who
entered the business after that date. No reasons for the
discrimination are disclosed by the record, and, in the absence of
such showing, the Court has no right to conjure up possible
situations which might justify the discrimination. Pp.
297 U. S. 272,
297 U. S.
274.
3. The question whether the time limitation found
unconstitutional is severable from the provision for the price
differential is left for adjudication by the state courts upon
remand of the case. P.
297 U. S.
274.
Reversed.
Appeal from a judgment upholding an order denying the appellant
a license to sell milk. For reports of the case in the New York
courts,
see 267 N.Y. 9, 195 N.E. 532; 242 App. Div. 881,
275 N.Y.S. 669.
Compare the case next preceding in this
volume.
Page 297 U. S. 270
MR. JUSTICE ROBERTS delivered the opinion of the Court.
The appellant is a corporation formed under the laws of New
York, pursuing the business of a milk dealer in Brooklyn. It did
not enter the business until the autumn of 1933, when it applied
for, and was granted,
Page 297 U. S. 271
a license under the Milk Control Act of March 31, 1933. The
statute having been reenacted for the year commencing April 1,
1934, the company, on April 16, 1934, sought a license under the
new act. After a hearing, the application was denied. The Supreme
Court granted a certiorari order, and, upon that order and the
return the Appellate Division, confirmed the order of the
Department of Agriculture and Markets refusing a license, and this
action was affirmed by the Court of Appeals.
The Milk Control Act of 1933 [
Footnote 1] authorized a board to fix minimum prices for
sales of fluid milk in bottles by dealers to stores in cities of
more than one million inhabitants, with a differential of one cent
per quart in favor of dealers "not having a well advertised trade
name." [
Footnote 2] The term of
the act was one year. An amended act, effective April 1, 1934,
[
Footnote 3] which placed milk
control under the jurisdiction of a division of the Department of
Agriculture and Markets, contained a similar provision with respect
to the differential. The pertinent section, as it stood at the time
of the appellant's application for a license, follows, the words in
brackets having been in the original act, but eliminated when the
statute was revised in 1934, those in italics having been added by
the later act:
"It shall not be unlawful for any milk dealer who [at the time
this act shall take effect, is]
since April tenth, nineteen
hundred thirty-three has been engaged continuously in the
business of purchasing and handling milk not having a well
advertised trade name in a city of more than one million
inhabitants to sell fluid milk in bottles to stores in such city at
a price not more than one cent per quart below the price of such
milk sold to stores under
Page 297 U. S. 272
a well advertised tradename,
and such lower price shall also
apply on sales from stores to consumers, provided that in no
event shall the price of such milk not having a well advertised
tradename, be more than one cent per quart below the minimum price
fixed [by the board] for such sales to stores in such a city.
[
Footnote 4]"
The appellant had not a well advertised tradename. The reason
for refusing it a license was that, though it had not been
continuously in the business of dealing in milk since April 10,
1933, it had sold, and was selling to stores milk at a price a cent
below the established minimum price. The question is whether the
provision denying the benefit of the differential to all who embark
in the business after April 10, 1933, works a discrimination which
has no foundation in the circumstances of those engaging in the
milk business in New York City, and is therefore so unreasonable as
to deny appellant the equal protection of the laws in violation of
the Fourteenth Amendment.
The record discloses no reason for the discrimination. The
report of the committee, pursuant to which the Milk Control Act was
adopted, is silent on the subject. While the legislative history
indicates that the differential provision was intended to preserve
competitive conditions affecting the store trade in milk, it
affords no clue to the genesis of the clause denying the benefit of
the differential to those entering the business after April 10,
1933.
The Court of Appeals thought a possible reason for the time
limitation might be that, without it, the companies having well
advertised names could, through subsidiaries, sell milk not bearing
their names in competition with unadvertised dealers, and thus
drive some of the latter
Page 297 U. S. 273
out of the field, with consequent injury to the farmers who sell
them milk. This view ignores the fact that the purchase price to
the farmer is fixed, and that the introduction of new unadvertised
brands of bottled milk would not reduce the total demand for fluid
milk in the metropolitan area. The appellees do not attempt now to
support the provision on this ground.
Another suggested reason for the discrimination is that the
Legislature believed an equal price basis for all dealers would
cause most of the business of selling milk through stores to pass
into the hands of the large and well known dealers; the
differential provision was designed to prevent this result, and
save existing businesses of the independent dealers, but was
limited in its scope by the reason for it; the Legislature did not
wish to increase the lower price competition against well
advertised dealers by permitting new independent dealers to go into
the business, and so required persons or corporations desiring to
make investments in the milk business after April 10, 1933, to
attach themselves to the higher price group. This is but another
way of saying the Legislature determined that, during the life of
the law, no person or corporation might enter the business of a
milk dealer in New York City. The very reason for the differential
was the belief that no one could successfully market an
unadvertised brand on an even price basis with the seller of a well
advertised brand. One coming fresh into the field would not possess
such a brand, and clearly could not meet the competition of those
having an established tradename and good will unless he were
allowed the same differential as others in his class. By denying
him this advantage, the law effectually barred him from the
business.
We are referred to a host of decisions to the effect that a
regulatory law may be prospective in operation and may except from
its sweep those presently engaged in the calling or activity to
which it is directed. Examples are statutes
Page 297 U. S. 274
licensing physicians and dentists which apply only to those
entering the profession subsequent to the passage of the act and
exempt those then in practice, or zoning laws which exempt existing
buildings, or laws forbidding slaughterhouses within certain areas
but excepting existing establishments. The challenged provision is
unlike such laws, since, on its face, it is not a regulation of a
business or an activity in the interest of, or for the protection
of, the public, but an attempt to give an economic advantage to
those engaged in a given business at an arbitrary date as against
all those who enter the industry after that date. The appellees do
not intimate that the classification bears any relation to the
public health or welfare generally, that the provision will
discourage monopoly, or that it was aimed at any abuse, cognizable
by law, in the milk business. In the absence of any such showing,
we have no right to conjure up possible situations which might
justify the discrimination. The classification is arbitrary and
unreasonable, and denies the appellant the equal protection of the
law.
At the argument, we were asked to hold that, if the time
limitation be bad, it is severable, and the provision for the
differential, shorn of it, remains in force, and we were referred
to a section of the act claimed to show the Legislature so
intended. While we have jurisdiction to decide the question, it is
one which may appropriately be left for adjudication by the courts
of New York,
Dorchy v. Kansas, 264 U.
S. 286,
264 U. S.
290-291;
Fox Film Corp. v. Muller, 296 U.
S. 207,
296 U. S.
209-210.
The judgment is reversed, and the cause remanded for further
proceedings not inconsistent with this opinion.
Reversed.
[
Footnote 1]
Laws 1933 (N.Y.) c. 158.
See Nebbia v. New York,
291 U. S. 502.
[
Footnote 2]
Ibid., § 317(c).
[
Footnote 3]
Laws 1934, c. 126.
[
Footnote 4]
Laws N.Y.1933, chap. 158, § 317(c); Article 21-A, § 258(q) of
the Agriculture and Markets Law of the State of New York; Laws 1934
(N.Y.) 580.
MR. JUSTICE CARDOZO, dissenting.
The judgment just announced is irreconcilable in principle with
the judgment in
Borden's case,
297 U.
S. 251, announced a minute or so earlier.
Page 297 U. S. 275
A minimum price for fluid milk was fixed by law in April, 1933.
At that time, "independents" were underselling their competitors,
the dealers in well advertised brands, by approximately a cent a
quart. There was reason to believe that, unless that differential
was preserved, they would be driven out of business. To give them
an opportunity to survive, the lawmakers maintained the
differential in the City of New York, the field of keenest
competition. We have learned from the opinion in
Borden's
case that this might lawfully be done.
The problem was then forced upon the lawmakers, what were to be
the privileges of independents who came upon the scene thereafter?
Were they to have the benefit of a differential though they had not
invested a dollar in the milk business at the passage of the act,
or were they to take the chances of defeat by rivals stronger than
themselves, as they would have to do in other callings? "The
Fourteenth Amendment does not protect a business against the
hazards of competition."
Hegeman Farms Corp. v. Baldwin,
293 U. S. 163,
293 U. S. 170;
Public Service Comm'n v. Great Northern Utilities Co.,
289 U. S. 130,
289 U. S. 135.
To concede the differential to newcomers might mean an indefinite
extension of an artificial preference, thereby aggravating the
handicap, the factitious barrier to expansion, for owners of
established brands. There was danger that the preference would
become so general as to occupy an unfair proportion of the field,
the statutory norm being thus disrupted altogether. On the other
hand, to refuse the differential might mean that newcomers would be
deterred from putting capital and labor at the risk of such a
business, and, even if they chose to do so, would wage a losing
fight.
Hardships, great or little, were inevitable, whether the field
of the differential was narrowed or enlarged. The legislature, and
not the court, has been charged with the duty of determining their
comparative extent. To some minds, an expansion of the field might
seem the course of
Page 297 U. S. 276
wisdom, and even that of duty; to others, wisdom and duty might
seem to point the other way. The judicial function is discharged
when it appears from a survey of the scene that the lawmakers did
not pay the part of arbitrary despots in choosing as they did.
Standard Oil Co. v. Marysville, 279 U.
S. 582,
279 U. S.
586-587. When a line or point has to be fixed, and
"there is no mathematical or logical way of fixing it precisely,
the decision of the Legislature must be accepted unless we can say
that it is very wide of any reasonable mark."
Holmes, J., in
Louisville Gas & Electric Co. v.
Coleman, 277 U. S. 32,
277 U. S. 41.
Cf. Dominion Hotel v. Arizona, 249 U.
S. 265,
249 U. S.
268-269. The judgment of the court commits us to a
larger role. In declaring the equities of newcomers to be not
inferior to those of others, the judgment makes a choice between
competing considerations of policy and fairness, however emphatic
its professions that it applies a rule of law.
For the situation was one to tax the wisdom of the wisest. At
the very least, it was a situation where thoughtful and honest men
might see their duty differently. The statute upheld by this Court
in
Nebbia v. New York, 291 U. S. 502, was
an experiment, and a novel one, in that form of business
enterprise. Relations between groups had grown up and crystalized
under cover of the regime of unrestricted competition. They were
threatened with disruption by a system of regulated prices which
might crowd the little dealers out and leave the strong and the
rich in possession of the field. If there was to be dislocation of
the price structure by the action of the state, there was a duty,
or so the lawmakers might believe, to spread the consequences among
the groups with a minimum of change, and hence a minimum of
hardship. But the position of men in business at the beginning of
the change was very different from those who might go into the
business afterwards. Those already there would lose something more
than an opportunity for a choice between one business and another.
They would lose capital
Page 297 U. S. 277
already ventured; they would lose experience already bought;
they would suffer the pains incidental to the sudden and enforced
abandonment of an accustomed way of life. A newcomer could not
pretend that he was exposed to those afflictions. Then too, the
ephemeral character of the project counted heavily in favor of the
older dealers, and little in favor of a newcomer -- or rather,
indeed, against him. The system of regulation had been set up as a
temporary one, to tide producers over the rigors of the great
depression. If independents already in the field could have their
business saved from ruin, it might come back to them intact when
the statute was no longer needed. Those who went into the system
later would have to count the cost.
Considerations akin to these have seemed sufficient to other
Legislatures for drawing a distinction between an old business and
a new one. They have seemed sufficient to this Court in determining
the validity of other acts of legislation not different in
principle.
Stanley v. Utilities Comm'n, 295 U. S.
76,
295 U. S. 78;
Continental Baking Co. v. Woodring, 286 U.
S. 352,
286 U. S.
370-371;
Sperry & Hutchinson Co. v. Rhodes,
220 U. S. 502,
220 U. S. 505;
Watson v. Maryland, 218 U. S. 173,
218 U. S.
177-178;
cf. Spector v. Building Inspector, 250
Mass. 63, 70, 71, 145 N.E. 265. Independents who were in business
when the statute was adopted would not have suffered a denial of a
constitutional right or privilege if they had been refused a
differential, though the refusal might have condemned them to a
foreordained and hopeless struggle with advertised competitors
stronger than themselves. For the same reason, independents
starting afterwards must submit to the same chances unless their
equities are as commanding as those of dealers on the scene before.
It is juggling with words to say that all the independents make up
a single "class," and, by reason of that fact, must be subjected to
a single rule. Whether the class is divisible into subclasses is
the very question to be answered. There may
Page 297 U. S. 278
be division and subdivision unless separation can be found to be
so void of rationality as to be the expression of a whim, rather
than an exercise of judgment. "We have no right," it is now said,
"to conjure up possible situations which might justify the
discrimination." The court has taught a different doctrine in its
earlier decisions.
"A statutory discrimination will not be set aside as the denial
of equal protection of the laws if any state of facts reasonably
may be conceived to justify it."
Metropolitan Casualty Insurance Co. v. Brownell,
294 U. S. 580,
294 U. S. 584;
Rast v. Van Deman & Lewis Co., 240 U.
S. 342,
240 U. S. 357;
O'Gorman & Young v. Hartford Fire Insurance Co.,
282 U. S. 251,
282 U. S. 257;
Williams v. Mayor, 289 U. S. 36,
289 U. S. 42. On
this occasion, happily, the facts are not obscure. Big dealers and
little ones, newcomers in the trade and veterans, were clamorously
asserting to the Legislature their title to its favor. I have not
seen the judicial scales so delicately poised and so accurately
graduated as to balance and record the subtleties of all these
rival equities, and make them ponderable and legible beyond a
reasonable doubt.
To say that the statute is not void beyond a reasonable doubt is
to say that it is valid.
MR. JUSTICE BRANDEIS and MR. JUSTICE STONE join in this
opinion.