Denver Union Stock Yard Company v. Producers Livestock Marketing Association/Opinion of the Court

This litigation started with a complaint filed by respondent, a market agency at the Denver Union stockyard, with the Secretary of Agriculture, alleging that certain Regulations issued by Denver Union Stock Yard Company are invalid under the Packers and Stockyards Act, 42 Stat. 159, as amended, 7 U.S.C. s 181 et seq., 7 U.S.C.A. § 181 et seq. The Regulations complained of provide:

'No market agency or dealer engaging in business at this     Stockyard shall, upon Stock Yard Company property, or elsewhere, nor shall any other person upon      Stock Yard Company property-

'(1) Solicit any business for other markets, for sale at     outside feed yards or at country points, or endeavor to      secure customers to sell or purchase livestock elsewhere; or

'(2) In any manner divert or attempt to divert livestock from     this market which would otherwise normally come to this Stock      Yard; or

'(3) Engage in any practice or device which would impair or     interfere with the normal flow of livestock to the public      market at this Stockyard.'

The complaint was entertained; and the Stock Yard Company admitted that it issued the Regulations and alleged that they were necessary to enable it 'to furnish, upon reasonable request, without discrimination, reasonable stockyard services * *  * and to enable the patrons of the Denver Union Stockyards to secure, upon reasonable request, without discrimination, reasonable stockyard services *  *  * .' The prayer in the answer was that the Stock Yard Company be granted an oral hearing and that the complaint be dismissed. Thereafter the Stock Yard Company filed a motion to require respondent to produce for examination certain books and records. Respondent opposed the motion, electing to stand upon the illegality of the Regulations as a matter of law. The Examiner certified the question to the Judicial Officer for decision, recommending that the proceeding be dismissed. The Judicial Officer dismissed the complaint, holding that he could not find the Regulations invalid on their face. 15 Agr.Dec. 638. The Court of Appeals reversed, holding that the Regulations are an unlawful restriction on the statutory rights and duties of stockyards and market agencies under the Act. 10 Cir., 241 F.2d 192. It remanded the case to the Secretary of Agriculture with directions to issue a cease and desist order against the issuance or enforcement of the Regulations. The case is here by certiorari which we granted in view of the public importance of the issue raised. 353 U.S. 982, 77 S.Ct. 1283, 1285, 1 L.Ed.2d 1141.

The Act defines 'market agency' as 'any person engaged in the business of (1) buying or selling in commerce live stock at a stockyard on a commission basis or (2) furnishing stockyard services.' § 301(c). The Act also provides that 'no person shall carry on the business of a market agency * *  * at such stockyard unless he has registered with the Secretary *  *  * .' § 303. Respondent is registered not only with the Denver Union Stock Yard Co. but with other stockyards as well. One impact of the Regulations on respondent is therefore clear: having registered with this Stock Yard Company it may not, in the 'normal marketing area' of the Denver yard (which is defined in the Regulations to embrace a vast area in Colorado ), solicit business for, or divert it to, other markets. The market agency registered with the Denver Stock Yard Co. must, while working in the, 'normal marketing area' of that yard, solicit or do business exclusively for it and for none of the other stockyards with which it is registered.

Yet § 304 of the Act makes it 'the duty' of every market agency 'to furnish upon reasonable request, without discrimination, reasonable stockyard services at such stockyard.' Section 301(b) defines stockyard services to mean 'services or facilities furnished at a stockyard in connection with the receiving, buying, or selling on a commission basis or otherwise, marketing, feeding, watering, holding, delivery, shipment, weighing, or handling in commerce, of livestock.' And § 307 prohibits and declares unlawful 'every unjust, unreasonable, or discriminatory regulation or practice.'

The words 'at such stockyard' as used in § 304 obviously mean, as applied to a 'market agency,' every stockyard where that 'market agency' is registered. From the Act it seems plain, therefore, that the duty of respondent would be to furnish a producer in the Denver area stockyard service at Kansas City, if the producer so desired. Stockyards and market agencies are made public utilities by the Act. Stafford v. Wallace, 258 U.S. 495, 516, 42 S.Ct. 397, 402, 66 L.Ed. 735; Swift & Co. v. United States, 316 U.S. 216, 232, 62 S.Ct. 948, 956, 86 L.Ed. 1391. Their duty is to serve all, impartially and without discrimination. The Regulations bar both the market agency and the stockyard from performing their statutory duty. A market agency registered with Denver could not by force of the challenged Regulations furnish producers in the Denver area stockyard services at Kansas City or at any other stockyard where the agency is also registered. The conflict seems clear and obvious; and no evidence could make it clearer. The case is as simple to us as that of a utility that refuses to sell any power to a customer if the customer buys any power from a competitor; as clear as an attempt by a carrier by rail to deny service to one who ships by truck. Cf. Northern Pacific R. Co. v. United States, 356 U.S. 1, 78 S.Ct. 514; International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20.

When an Act condemns a practice that is 'unfair' or 'unreasonable,' evidence is normally necessary to determine whether a practice, rule, or regulation transcends the bounds. See Associated Press v. National Labor Relations Board, 301 U.S. 103, 57 S.Ct. 650, 81 L.Ed. 953; Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683; Sugar Institute v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859. But where an Act defines a duty in explicit terms, a hearing on the question of statutory construction is often all that is needed. See Securities and Exchange Commission v. Ralston Purina Co., 346 U.S. 119, 73 S.Ct. 981, 97 L.Ed. 1494 (public offering); Addison v. Holly Hill Fruit Products, 322 U.S. 607, 64 S.Ct. 1215, 88 L.Ed. 1488 (area of production). It is, of course, true that § 310 of the Act provides for a 'full hearing' on a complaint against a 'regulation' of a stockyard. That was also true of the Act involved in United States v. Storer Broadcasting Co., 351 U.S. 192, 76 S.Ct. 763, 100 L.Ed. 1081. But we observed in that case that we never presume that Congress intended an agency 'to waste time on applications that do not state a valid basis for a hearing.' Id., 351 U.S. at page 205, 76 S.Ct. at page 772.

The critical statutory words in the present case are from § 304 providing, 'It shall be the duty of every stockyard owner and market agency to furnish upon reasonable request, without discrimination, reasonable stockyard services at such stockyard.' The Secretary's emphasis in the argument was on the words 'reasonable stockyard services.' By analogy to the antitrust cases, a case is built for fact findings essential to a determination of what is 'reasonable.' See Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619; Chicago Board of Trade v. United States, supra. Certainly an evidentiary hearing would be necessary if, for example, a method of handling livestock at a particular stockyard was challenged as unreasonable. See Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288; Morgan v. United States, 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129; United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211. But that argument is misapplied here. It misconceives the thrust of the present Regulations, which are aimed at keeping market agencies registered at Denver from doing business for producers, who are in the 'normal marketing area' of the Denver yard, at any other market. These Regulations bar them from rendering, not some stockyard services at the other yards, but any and all other stockyard services for those producers, except at Denver. 'No' stockyard services cannot possibly be equated with 'reasonable' stockyard services under this Act.

The argument contra is premised on the theory that stockyard owners, like feudal barons of old, can divide up the country, set the bounds of their domain, establish 'no trespassing' signs, and make market agencies registering with them their exclusive agents. The institution of the exclusive agency is, of course, well known in the law; and the legal problem here would be quite different if the Act envisaged stockyards as strictly private enterprise. But, as noted, Congress planned differently. The Senate Report proclaimed that these 'great public markets' are 'public utilities.' S.Rep. No. 39, 67th Cong., 1st Sess. 7. The House Report, in the same vein, placed this regulation of the stockyards on a par with the regulation of the railroads. H.R.Rep. No. 77, 67th Cong., 1st Sess. 10. It was against this background that Chief Justice Taft wrote in Stafford v. Wallace, supra, 258 U.S. at page 514, 42 S.Ct. at page 401:

'The object to be secured by the act is the free and     unburdened flow of five 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.'

He went on to say that the Act treats the stockyards 'as great national public utilities,' id., 258 U.S. at page 516, 42 S.Ct. at page 402. His opinion echoes and re-echoes with the fear of monopoly in this field.

We are told, however, that the economics of the business has changed, that while at the passage of the Act most livestock purchases were at these stockyards, now a substantial portion about 40 percent, it is said-takes place at private livestock markets such as feed yards and country points. From this it is argued that the present Regulation is needed to keep the business in the public markets, where there is regulation and competition, and out of the private markets where there is no competitive bidding and regulation. If the Act does not fit the present economics of the business, a problem is presented for the Congress. Though our preference were for monopoly and against competition, we should 'guard against the danger of sliding unconsciously from the narrow confines of law into the more spacious domain of policy.' Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 194, 61 S.Ct. 845, 852, 85 L.Ed. 1271.

We take the Act as written. As written, it is aimed at all monopoly practices, of which discrimination is one. When Chief Justice Taft wrote of the aim of the Act in terms of the ends of a monopoly, he wrote faithfully to the legislative history. The Senate Report, supra, at 7, stated 'It has been demonstrated beyond question that the history of the development of this industry has been the history of one effort after another to set up monopoly.' The present Regulations, it seems, have had a long ancestry.

Affirmed.