Nebbia v. New York

Last updated
Nebbia v. New York
Seal of the United States Supreme Court.svg
Argued December 4–5, 1933
Decided March 5, 1934
Full case nameNebbia v. People of State of New York
Citations291 U.S. 502 ( more )
54 S. Ct. 505; 78 L. Ed. 940; 1934 U.S. LEXIS 962; 89 A.L.R. 1469
Case history
PriorAppeal from the County Court of Monroe County, New York
SubsequentNone
Holding
The Constitution does not prohibit states to regulate the price of milk for dairy farmers, dealers, and retailers.
Court membership
Chief Justice
Charles E. Hughes
Associate Justices
Willis Van Devanter  · James C. McReynolds
Louis Brandeis  · George Sutherland
Pierce Butler  · Harlan F. Stone
Owen Roberts  · Benjamin N. Cardozo
Case opinions
MajorityRoberts, joined by Hughes, Brandeis, Stone, Cardozo
DissentMcReynolds, joined by Van Devanter, Sutherland, Butler
Laws applied
U.S. Const. amend. XIV

Nebbia v. New York, 291 U.S. 502 (1934), was a case in which the Supreme Court of the United States decided that New York State could regulate the price of milk for dairy farmers, dealers, and retailers. [1]

Contents

History

New York State dairy farmers were disproportionately harmed by the decline in farm prices after World War I, and the Great Depression further worsened the problems they faced. To tackle the problem, the New York legislature created a joint legislative committee, headed by State Senator Perley A. Pitcher. [2]

Following the hearings, the state of New York established a Milk Control Board in 1933 that was empowered to set maximum and minimum retail prices. The board set the price of a quart of milk at 9¢. The price reflected the market price at some point in the past and the order was designed to prevent price cutting. [2] Nevertheless, the public suspected that the board's intent was to benefit dairy dealers, instead of farmers, because the minimum prices for the two sides were not the same. Tensions ran so high that violent milk strikes took place throughout the state, with two deaths and a great amount of property damage. [3] Every public hearing of the Milk Control Board resulted in a "tumultuous, popular assemblage" and its every action was "Statewide news." [3]

A search began for a case that would challenge the constitutional basis of the statute. Leo Nebbia, the owner of a grocery store, sold two quarts of milk and a 5¢ loaf of bread for 18¢. He was found guilty of violating the price regulations and was fined $25. He challenged the conviction, arguing the statute and order violated the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment.

The county court and the Court of Appeals affirmed the conviction, and the case was appealed to the Supreme Court.

Decision

Justice Owen J. Roberts delivered the majority opinion.

He began by examining the legislative intent of the statute in question and briefly discussing on the effects of the Great Depression on milk prices and the significance of milk production to the agriculture of the United States. He then noted that although use of property and making of contracts are typically private matters and so remain free of government interference, "neither property rights nor contract rights are absolute." [4]

He added that occasional regulation by the state is requisite for the proper government function, especially if such regulation is used to promote general welfare. The Fifth and Fourteenth Amendments do not prohibit governmental regulation for the public welfare. Instead, they only direct the process by which such regulation occurs. As the Court has held before, such due process "demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained." [5]

Roberts noted also that the New York milk industry had long been the subject of public interest regulation. He claimed that because a legislative investigation had resulted in the establishment of the Milk Control Board, it was well aware of the insufficiency of regular laws of supply and demand to correct the issues with milk prices so "the order appears not to be unreasonable or arbitrary." [6]

Further addressing the due process challenge, Roberts wrote that in absence of other constitutional restrictions, a state may both adopt an economic policy that can reasonably be said to promote public welfare and enforce such policy by appropriate legislation. Courts, however, have no authority to create such policy or to strike it down when it has been properly enacted by the legislature. He added, "With the wisdom of the policy adopted, with the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal." [7]

He concluded that the majority found no basis in the Due Process Clause to strike down the challenged provisions of the Agriculture and Markets law.

Dissent

Justice James C. McReynolds dissented from the majority opinion. His dissent was joined by Justice Willis Van Devanter, Justice George Sutherland, and Justice Pierce Butler. The four became nicknamed the Four Horsemen for their rejection of New Deal regulation.

McReynolds brought up many examples, such as New State Ice Co. v. Liebmann , where the court ruled that states may not legislate over private businesses. He further questioned the rational basis of fixing milk at a higher price than the market value. He reasoned that the extra expense would drive down sales, thus doing little to help the dairy farmer, and furthermore, deprive the poorest among milk consumers. He ultimately concluded that although "regulation to prevent recognized evils in business has long been upheld as permissible legislative action... fixation of the price at which A, engaged in an ordinary business, may sell, in order to enable B, a producer, to improve his condition, has not been regarded as within legislative power." He added, "This is not regulation, but management, control, dictation." [8]

Related Research Articles

The Dormant Commerce Clause, or Negative Commerce Clause, in American constitutional law, is a legal doctrine that courts in the United States have inferred from the Commerce Clause in Article I of the US Constitution. The primary focus of the doctrine is barring state protectionism. The Dormant Commerce Clause is used to prohibit state legislation that discriminates against, or unduly burdens, interstate or international commerce. Courts first determine whether a state regulation discriminates on its face against interstate commerce or whether it has the purpose or effect of discriminating against interstate commerce. If the statute is discriminatory, the state has the burden to justify both the local benefits flowing from the statute and to show the state has no other means of advancing the legitimate local purpose.

United States v. Butler, 297 U.S. 1 (1936), is a U.S. Supreme Court case that held that the U.S. Congress has not only the power to lay taxes to the level necessary to carry out its other powers enumerated in Article I of the U.S. Constitution, but also a broad authority to tax and spend for the "general welfare" of the United States. The decision itself concerned whether the processing taxes instituted by the 1933 Agricultural Adjustment Act were constitutional.

Lochner v. New York, 198 U.S. 45 (1905), was a landmark decision of the U.S. Supreme Court holding that a New York State statute that prescribed maximum working hours for bakers violated the bakers' right to freedom of contract under the Fourteenth Amendment to the U.S. Constitution. The decision has been effectively overturned.

United States v. Carolene Products Company, 304 U.S. 144 (1938), was a case of the United States Supreme Court that upheld the federal government's power to prohibit filled milk from being shipped in interstate commerce. In his majority opinion for the Court, Associate Justice Harlan F. Stone wrote that economic regulations were "presumptively constitutional" under a deferential standard of review known as the "rational basis test".

Article IV, Section 1 of the United States Constitution, the Full Faith and Credit Clause, addresses the duty that states within the United States have to respect the "public acts, records, and judicial proceedings of every other state." According to the Supreme Court, there is a difference between the credit owed to laws as compared to the credit owed to judgments. Judges and lawyers agree on the meaning of the clause with respect to the recognition of judgments rendered by one state in the courts of another. Barring exceptional circumstances, one state must enforce a judgment by a court in another, unless that court lacked jurisdiction, even if the enforcing court otherwise disagrees with the result. At present, it is widely agreed that this Clause of the Constitution has a minimal impact on a court's choice of law decision provided that no state’s sovereignty is infringed, although this Clause of the Constitution was once interpreted to have greater impact.

<span class="mw-page-title-main">Judicial Procedures Reform Bill of 1937</span> 1937 proposed U.S. law giving the President the power to add more justices to the U.S. Supreme Court

The Judicial Procedures Reform Bill of 1937, frequently called the "court-packing plan", was a legislative initiative proposed by U.S. President Franklin D. Roosevelt to add more justices to the U.S. Supreme Court in order to obtain favorable rulings regarding New Deal legislation that the Court had ruled unconstitutional. The central provision of the bill would have granted the president power to appoint an additional justice to the U.S. Supreme Court, up to a maximum of six, for every member of the court over the age of 70 years.

The Lochner era is a period in American legal history from 1897 to 1937 in which the Supreme Court of the United States is said to have made it a common practice "to strike down economic regulations adopted by a State based on the Court's own notions of the most appropriate means for the State to implement its considered policies". The court did this by using its interpretation of substantive due process to strike down laws held to be infringing on economic liberty or private contract rights. The era takes its name from a 1905 case, Lochner v. New York. The beginning of the era is usually marked earlier, with the Court's decision in Allgeyer v. Louisiana (1897), and its end marked forty years later in the case of West Coast Hotel Co. v. Parrish (1937), which overturned an earlier Lochner-era decision.

In U.S. constitutional law, rational basis review is the normal standard of review that courts apply when considering constitutional questions, including due process or equal protection questions under the Fifth Amendment or Fourteenth Amendment. Courts applying rational basis review seek to determine whether a law is "rationally related" to a "legitimate" government interest, whether real or hypothetical. The higher levels of scrutiny are intermediate scrutiny and strict scrutiny. Heightened scrutiny is applied where a suspect or quasi-suspect classification is involved, or a fundamental right is implicated. In U.S. Supreme Court jurisprudence, the nature of the interest at issue determines the level of scrutiny applied by appellate courts. When courts engage in rational basis review, only the most egregious enactments, those not rationally related to a legitimate government interest, are overturned.

Plyler v. Doe, 457 U.S. 202 (1982), was a case in which the Supreme Court of the United States struck down both a state statute denying funding for education of undocumented immigrant children in the United States and an independent school district's attempt to charge an annual $1,000 tuition fee for each student to compensate for lost state funding. The Court found that any state restriction imposed on the rights afforded to children based on their immigration status must be examined under a rational basis standard to determine whether it furthers a substantial government interest.

Steward Machine Company v. Davis, 301 U.S. 548 (1937), was a case in which the U.S. Supreme Court upheld the unemployment compensation provisions of the Social Security Act of 1935, which established the federal taxing structure that was designed to induce states to adopt laws for funding and payment of unemployment compensation. The decision signaled the Court's acceptance of a broad interpretation of Congressional power to influence state laws.

Smith v. Turner; Norris v. Boston, 48 U.S. 283 (1849), were two similar cases, argued together before the United States Supreme Court, which decided 5–4 that states do not have the right to impose a tax that is determined by the number of passengers of a designated category on board a ship and/or disembarking into the State. The cases are sometimes called the Passenger Case or Passenger Cases.

Arnett v. Kennedy, 416 U.S. 134 (1974), was a United States Supreme Court case in which the Court rejected a nonprobationary federal civil service employee's claim to a full hearing prior to dismissal over charges he had brought the government into disrepute by recklessly accusing a superior of corruption. The governing federal law prescribed not only grounds for removal but also removal procedures. The employee could only be removed for "cause," but the procedures did not provide for an adversarial hearing prior to termination. The Court also rejected the respondent's claim that his First Amendment rights were violated.

West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994), was a United States Supreme Court case.

Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981), was a United States Supreme Court case which found no violation of the equal protection or commerce clauses in a Minnesota state statute banning retail sale of milk in plastic nonreturnable, nonrefillable containers, but permitting such sale in other nonreturnable, nonrefillable containers.

Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511 (1935), was a United States Supreme Court case which held that a state may not regulate intrastate prices by prohibiting the importation of less expensive goods in interstate commerce. It established the principle that one state, in its dealings with another, cannot place itself in economic isolation.

A milk quota was one of the measures used by governments in the European Union to intervene in agriculture. Their purpose was to bring rising milk production under control. Milk quotas were attached to land holdings and represented a cap on the amount of milk that a farmer could sell every year without paying a levy. Milk quotas were assets and could be bought and sold or acquired or lost by other means and so there was a market for them.

A herdshare is a contractual arrangement between a farmer and an owner of livestock - the shareholder or member - through which the shareholder is able to obtain raw milk, meat, offal and other profits of the livestock proportionate to the shareholder's interest in the herd. Herdshares include cowshares, goatshares, and sheepshares, and are sometime referred to as "farmshares" or "dairy-shares," although the term "farmshare" can also refer to an entire farm held in joint ownership.

H.P. Hood & Sons v. Du Mond, 336 U.S. 525 (1949), was a United States Supreme Court case in which the Court held a New York protectionist law which prohibits licensure to suppliers who are alleged will create “destructive competition” in the local market to violate the Commerce Clause of the U.S. Constitution.

The New Deal often encountered heavy criticism, and had many constitutional challenges.

References

  1. Nebbia v. New York, 291 U.S. 502 (1934).
  2. 1 2 Henry S. Manley, Nebbia Plus Fifteen, 13 Albany Law Review 11 (1949), at 12.
  3. 1 2 Manley, supra, at 13.
  4. 291 U.S. at 523.
  5. 291 U.S. at 525.
  6. 291 U.S. at 530.
  7. 291 U.S. at 537.
  8. 291 U.S. at 554 (McReynolds, J., dissenting).