Denver Union Stock Yard Company v. Producers Livestock Marketing Association

PETITIONER:Denver Union Stock Yard Company
RESPONDENT:Producers Livestock Marketing Association
LOCATION:Shotwell Manufacturing Co.

DOCKET NO.: 106
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 356 US 282 (1958)
ARGUED: Mar 10, 1958
DECIDED: Apr 28, 1958

Facts of the case

Question

Audio Transcription for Oral Argument – March 10, 1958 in Denver Union Stock Yard Company v. Producers Livestock Marketing Association

Earl Warren:

Number 106, Denver Union Stock Yard Company, Petitioner, versus Producers Livestock Marketing Association, and Number 118, Ezra Taft Benson, Secretary of Agriculture, Petitioner, versus Producers Livestock Marketing Association.

Mr. Brooks, you may proceed.

Neil Brooks:

If the Court please.

The centric issue in the case is whether certain regulations issued by the stockyard owner in Denver pursuant to the Packers and Stockyards Act are invalid as a matter of law or stating the question in the language used by the Court of Appeals.

The question is whether the regulations in the absence of evidence are illegal on their face.

These regulations were issued by the stockyard owner with respect to the furnishing of what the statute calls reasonable stockyard services.

The Denver Stock Yard has been posted for regulation under the Packers and Stockyards Act since 1921.

And the market agent says and the dealers at that Stock Yard are also subject to the regulatory terms of the statute.

This litigation had its origin in a complaint which was filed with the Department of Agriculture by a market agency at the Denver Stock Yard.

A market agency is by statutory definition, a person engaged in the business of buying or selling livestock on a commission basis at a posted stockyard.

A complaint in this case was filed by the Producers Livestock Marketing Association, a corporate entity which is registered with the Secretary of Agriculture as a market agency at this stockyard.

That is to say the complainant is engaged in the business of buying and selling livestock on a commission basis at the Denver Stock Yard.

It is alleged in the complaint that certain regulations issued by the stockyard owner are for various reasons invalid.

And the prayer of the complaint is that the Secretary of Agriculture, after an adjudicatory proceeding, set aside the Stock Yard Company’s regulations or as the complaint terms it, annulled those regulations.

Before explaining the regulations —

William O. Douglas:

The stockyard initiates and filed the regulations?

Neil Brooks:

Yes, Your Honor.

William O. Douglas:

Is there a hearing on those regulations?

Neil Brooks:

Not at that time.

The hearing may come later, Your Honor.

William O. Douglas:

There’s no hearing unless there’s an objection.

Neil Brooks:

That’s right, Your Honor.

William O. Douglas:

— Secretary on his own (Inaudible).

Neil Brooks:

He can indeed.

The statute expressly so provides.

William O. Douglas:

Was there any objection here by anybody?

Neil Brooks:

There was an objection here by the market agency, the complainant in the administrative proceeding.

That objection was filed properly after these regulations were filed with the Department of Agriculture.

Perhaps, it will be helpful too, Your Honor, if I explain at once two or three of the statutory provisions which are at the very center of this case, statutory provisions which are cited in the complaint and which are relied on by the complainant now as well as then.

The Packers and Stockyards Act imposed certain duties on a stockyard owner and a market agency.

Neil Brooks:

And it provides that if there’s a breach of one of those duties, a complaint maybe filed by any person, a private person or the Secretary of Agriculture and after adjudicatory proceeding, a decision maybe made by the agency with judicial review later.

Now, the first of the two statutory duties that are involved here is this.

The statute provides that it shall be the duty of a stockyard owner and a market agency to furnish upon reasonable request without discrimination, reasonable stockyard services at the stockyard.

Can I interrupt you on this —

Neil Brooks:

Yes, Your Honor.

— to Justice Douglas’ question?

Supposing the Secretary of Agriculture doesn’t think well on the regulation that’s been promulgated.

What does he do about it?

Neil Brooks:

He may issue a complaint himself, Your Honor.

You mean he has to become a litigant before his own department to get it set aside.

Neil Brooks:

He may do that, Your Honor.

He can’t just refuse to accept it.

Neil Brooks:

No, Your Honor.

The first duty then that’s specified in the statute is the duty on the part of a stockyard owner and a market agency and this is the very language of the statute.

It’s the duty on the part of a stockyard owner and a market agency to furnish upon reasonable request without discrimination, reasonable stockyard services at the Stock Yard.

Now, the pivotal term in that statutory language, the pivotal term reasonable stockyard services is not defined in the statute, neither is there any definition of the word reasonable as it’s used in that term, reasonable stockyard services.

There is, however, a statutory definition of a part of that term, namely, stockyard services as such.

The statutory definition of that term is in words of — throughout generality.

The definition is this.

The term stockyard services means facilities undefined or services undefined in connection with the receiving of livestock, the watering, the feeding and the holding of livestock and the buying and the selling and the marketing of livestock and the shipment of livestock at a posted stockyard.

So the first duty is that a stockyard owner and a market agency must furnish upon reasonable request without discrimination, reasonable stockyard services.

The second duty specified in the statute is this.

It shall be the duty of a stockyard owner and a market agency to issue, observe, and enforce just, reasonable, and nondiscriminatory regulations with respect to the furnishing of stockyard services.

Charles E. Whittaker:

As of duty?

Neil Brooks:

A duty, Your Honor.

That’s the very language of the statute.

It shall be the duty of a stockyard owner and a market agency to issue, observe and enforce just, reasonable, and nondiscriminatory regulations with respect to the furnishing of stockyard services.

The last statutory provision in the group that Justice Douglas probably referred to is this provision.

The statute says that any person, that’s the term in the statute, any person, who has agreed by what he regards as a breach of one of those statutory duties, may file a complaint with the Department of Agriculture.

Also, the statute provides that the administrative agency itself may, on its own motion, file a complaint if it regards inappropriate in the situation.

Neil Brooks:

The statute then provides that in either event whether the complaint is filed by a private person or whether the complaint is filed by the administrative agency itself in either event.

If the Secretary concludes on the basis of the hearing record and the statute refers to what it calls a full hearing, if the Secretary concludes on the basis of that record that any rate or charge or any regulation or practice in connection with the furnishing of stockyard services is unjust, unreasonable, or discriminatory, then the Secretary may set aside the rate or charge or the regulation or practice, and the Secretary may, on the basis of that record, prescribe the rate or charge or the regulation or practice which is and will be just, reasonable, and nondiscriminatory.

Those I believe are the three statutory provisions which are at the center of the case.

The complaint, as I said earlier, was filed by a market agency asserting that certain regulations issued by the stockyard owner are violative of those statutory provisions and are also in other respects that I will get to later, illegal and invalid.

It was decided by the administrative agency and that decision appears in the record that this proceeding should go forward on the basis of the complaint filed by the Producers Livestock Marketing Association as the complainant and the of course the Denver Union Stock Yard Company, the stockyard owner as the respondent.

Accordingly, the complaint was served on the respondent, an answer was filed denying the various allegations in the complaint as to whether or not these regulations are just, reasonable and nondiscriminatory.

The answer filed by the respondent admits — admits that it issued the regulations as they’re quoted in the complaint and it admits that the complainant is registered with the Secretary of Agriculture as a market agency at Denver.

But in all other respects or at least in all other material respects, the answer denies the factual allegations in the complaint and demands what it calls strict proof on the part of the complainant.

We come now to an interesting and unexpected development in the administrative proceeding.

This case was assigned to a hearing examiner and the parties were preparing for the hearing.

The respondent filed a motion with the hearing examiner for a subpoena duces tecum for certain books and records of the complaint.

It being alleged in the motion filed by the respondent that those books and records of the complainant were relevant and material to the practices in the market which gave rise to the issuance of these regulations and which would show the need for the regulations and the reasonableness of the regulations.

The complainant resisted the issuance of the subpoena duces tecum although it did not deny and the record shows it.

It did not deny the relevance of the books and records.

Felix Frankfurter:

May I — may I interrupt —

Neil Brooks:

Yes, Your Honor.

Felix Frankfurter:

I don’t quite understand.

The stockyard owner sought to get data from the Producers in order to prove that the regulations of the stockyard owner issue were reasonable and relevant.

Neil Brooks:

Has part of his proof, that’s right, Your Honor.

Felix Frankfurter:

May I — may I ask why the stockyard owner wouldn’t have those materials?

Neil Brooks:

The stockyard owner does have some of those materials, Your Honor.

Felix Frankfurter:

Is it the point of subpoenaing the complaining Producers?

Neil Brooks:

The stockyard owner has the records with respect to livestock that actually passed through the stockyard.

The main thrust of the regulations or at least a main thrust of the regulations, relates to transactions in which a market agency at the stockyard circumvented the delivery of the livestock to the stockyard or as the regulation terms it interfered with the normal flow of livestock to the stockyard either by diverting direct to packer or diverting to some other market.

Although the stockyard owner has records of all shipments that actually went through the stockyard, the records of the stockyard owner were not complete with respect to these off market transactions which are largely and critically involved in the issuance of the regulation.

Well —

Neil Brooks:

In other words — in other words, the — the stockyard owner claimed that there were practices which we deem evidently elicit —

Exactly.

Felix Frankfurter:

— circumventions proper function of the stockyard owner —

Neil Brooks:

Exactly.

Felix Frankfurter:

— as a data relating to those circumventions were in the possession of the producers, is that it?

Neil Brooks:

Exactly.

Exactly, Your Honor.

Now (Voice Overlap) —

— thrust of the subpoena to find out how much business had been given to other people that should have — the owner claim should have come to it.

Is that the knob of it?

Neil Brooks:

I believe that’s little too much of an abbreviation, Your Honor.

There are two affidavits in the record which explained numerous transactions.

I hesitate at the moment to discuss that part of the case.

I’d like to defer it for a few minutes —

Go ahead.

Neil Brooks:

— if I may.

In its stout resistance to the issuance of the subpoena duces tecum, the complainant filed what he called an election, an election to state its case on the narrow circumscribed proposition that these regulations in the absence of evidence are illegal on their face.

The election filed by the complainant stated and these are the words in that election.

That the complainant will not present evidence in this case, and that the case is to be disposed of so far as the complainant is concerned.

On the one narrow proposition that these regulations are invalid on their face as a matter of law.

Accordingly, the hearing examiner was of the opinion that the complaint should be dismissed.

The matter then went to the judicial officer in the Department of Agriculture and in a rather elaborate opinion in the record of course.

The judicial officer concluded that these regulations are not as a matter of law just in the abstract in vacuo illegal.

Perhaps, I should say a word at this point as to the regulations themselves.

In the main — in the main, the regulations provide that a stock — that a market agency or a dealer at the stockyard shall not interfere.

That’s the critical word in the regulation, shall not interfere with what the regulations refer to as the normal flow of livestock to the Denver market.

That the interference shall not be by way of diversion elsewhere and that a market agency or a dealer at the stockyard shall not solicit, that’s the word used in the regulations, shall not solicit livestock business for disposition elsewhere.

Felix Frankfurter:

May I ask?

Neil Brooks:

Yes, Your Honor.

Felix Frankfurter:

At the stockyard, are provisions made for services rendered or duties that’s charged at the stockyard which bear on what I might call healthy certification practices by the stockyards from the point of view ultimately of the belief that you and I gather.

Neil Brooks:

I’m not sure I fully understood Your Honor’s question.

Felix Frankfurter:

What I want to know is whether, when you speak of the normal flow, does the normal flow bring livestock to the Denver yard or to other yards and at the yard, practices or services rendered by the yard which hereon the proper protection of the ultimate needs consumed by the consumers of United States?

What do they do?

In other words, what is there that should justify a regulation making a flow normal?

Felix Frankfurter:

Why shouldn’t the — why shouldn’t the dealer do with his cattle, his livestock what he wants to do?

Why should there be a normal flow?

Maybe that comes in later but — otherwise, I don’t understand how you can — I have this difficulty of seeing these things into blank.

Neil Brooks:

It is difficult to see them in the abstract.

In fact, that’s the main position that our department takes that the validity of these regulations in their entirety can be ascertained only on the basis of a thorough evidentiary consideration of all of the conditions and circumstances in that great market that you cannot just as a matter of law in the abstract as Justice Frankfurter just said, that you cannot in the abstract pass upon the validity of these regulations.

Felix Frankfurter:

In other words, how I can tell whether he’s entitled to a natural flow?

Neil Brooks:

Exactly, Your Honor.

Felix Frankfurter:

What does that mean?

Neil Brooks:

Exactly, Your Honor.

Exactly.

That, I should say, is our position in a nutshell.

Its — that’s the — that’s the whole thrust of the case and that was the exact decision of the judicial officer.

He refrained.

He expressly refrained from saying whether or not the regulations are valid or invalid.

He simply said that in the absence of evidence, “We cannot determine that they are invalid as a matter of law.”

Felix Frankfurter:

Can you state in the Sections what the Court did here to —

Neil Brooks:

Yes, I believe.

Felix Frankfurter:

— Sections which you’re revieiwing?

Neil Brooks:

I believe I can, Your Honor.

The Court of Appeals disposed of the case on the basis of a hypothetical situation.

It assumed.

It indulged in what we call dualistic assumptions of fact.

It said that if, and that’s the word of the Court of Appeals, if a market agency is registered at Denver and is also registered at some competitive posted stockyard and if the regulations in their application would prohibit the market agency from performing reasonable stockyard services at one stockyard or the other then in that undisclosed hypothetical situation, said the Court of Appeals, the regulation would be invalid even though it added that the condition existing on the part of a market agency in subverting the business of the stockyard where it is afforded free space to do business might bring about what the Court of Appeals called inefficient operations at that stockyard even redounding to the failure to have reasonable stockyard services there.

But nonetheless, the Court of Appeals, on the basis of that dualistic assumption of facts, said that accordingly the regulations are illegal and ordered the administrative agency to issue a cease-and-desist order.

Our brief considers this at a considerable length.

William O. Douglas:

That means that the — with that — with that hypothesis in the stockyard (Inaudible)?

Neil Brooks:

A market agency at Denver maybe registered at some other posted stockyard.

I should add, Your Honor, and I should make this clear.

William O. Douglas:

Is the case been admissible to that in the record.

Neil Brooks:

There was no evidence.

Neil Brooks:

There was no witness.

We just have the — pardon me.

Charles E. Whittaker:

As a matter of fact is it not true that Producers does have registration and membership in other stockyard companies?

Neil Brooks:

Candidly, Your Honor.

I don’t know that Producers is registered at a competing posted stockyard.

Charles E. Whittaker:

They are registered at Kansas City, are they not?

Neil Brooks:

I understand they are not registered at Kansas City.

Perhaps I should explain.

I understand that there are two or three corporate entities in this country by the name of Producers Livestock Marketing Association.

They are separate entities although as I understand all of this outside the record, if the Court please.

As I understand, there is some overwriting association or I don’t know just what the nature of that association is between those various corporate entities.

But I can still say to the Court in all candor that there are two or three, maybe more, corporate entities for the name of Producers Livestock Marketing Association which operate in various stockyards throughout the country.

I should say also in complete candor to the Court that I understand that this particular corporate entity is registered as a market agency at Los Angeles and at one or two other stockyards, Salt Lake City and Ogden.

Now, harking back for a moment to the hypothetical situation on which the Court of Appeals disposed of the case.

I don’t know Your Honor and there’s no evidence here to deal with it.

I don’t know which stockyards are competitive with the others and how much they are competitive.

I do know that there are about 600 posted stockyards throughout the country.

Some of them are great terminal stockyards like Denver and Chicago and six or eight others.

Many of them are very small auction markets, and the way of doing business, even the way of selling livestock widely various in those hundreds of stockyards throughout the country.

In the terminal stockyards, livestock is not ordinarily sold by the auction method.

The buying and the selling of it results from the livestock being consigned by the owner to a market agency or a dealer at the stockyard and then its — it’s sold by negotiation between that agent and the prospective buyer, whereas, probably 400 or 500 other stockyards throughout the country where they have auction methods of sale is disposed off by the auction method, but even that is not uniform and never has been prior to the Packers and Stockyards Act or since the passage of this Packers and Stockyards Act.

I see that my time is up.

Felix Frankfurter:

I want to ask you —

Neil Brooks:

Yes.

Felix Frankfurter:

I hope that you won’t take much time to answer it.

Neil Brooks:

I hope it won’t be a charge to my associate here.

Felix Frankfurter:

That will be.

In the first place (Inaudible) — in the first place, this regulation pertains exclusively — we are concerned merely with the regulations affecting Denver.

Neil Brooks:

That’s right, Your Honor.

That’s right.

Felix Frankfurter:

My second question is this.

Would it not have been open to the Secretary of Agriculture that the whole administrative process no matter what the producer said to — should appear into these problems and have witnesses put on the stand and explore the situation no matter what kind of summary on the base of the regulation issue, the producer has presented.

Neil Brooks:

I’m eager to explain that, Your Honor.

I just hope it won’t be a charge to my associate’s time.

Well, when this complaint was filed, it had factual allegations in it.

Those allegations were denied by the Stock Yard Company.

Our department, as a matter of administration, had every reason to believe at that time that these two litigants would develop the facts forthrightly and fully.

These two litigants, if Your Honor please, are very substantial corporate entities.

The Producers Livestock Marketing Association in its own brief here today describes itself as a public utility and it characterizes the Stock Yard Company also as a public utility.

Both of these litigants have had experience an important and nature litigation under the Packers and Stockyards Act.

They have been operating at that stockyard for years and years, both the stockyard owner and the Producers Livestock Marketing Association.

When our department received this complaint by this market agency with various factual allegations as to conditions and circumstances in the market there and when those factual circumstances were denied by the Stock Yard Company, our department at least in reason and we had no reason to believe otherwise, thought that these two litigants if they proceeded with the case would develop the evidence forthrightly and fully.

Now, this practice is not a novelty either under the statute or under the Interstate Commerce Commission Act.

Title III of the Packers and Stockyards Act is patterned expressly so this Court said in the Tarrant case in 280 U.S. and the legislative history shows it.

Title III of the Packers and Stockyards Act, the very title involved here today is adopted almost exclusively on the basis of the Interstate Commerce Act with respect to their jurisdiction overrates and regulations.

The practice there and the practice before our own agency since 1921, since the adoption of the Packers and Stockyards Act, has been that in some situations, we would allow a private litigant to go forward with his own complaint either with respect to a rate that’s challenged or with respect to a regulation that’s challenged.

May I say again, when this litigation had its origin, our department had every reason to believe that these facts would be developed.

And as I said earlier in my remarks, we were surprised when the case took the turn that it did.

Now, if you suggest — now I don’t know that Justice Frankfurter suggested it but let’s assume it for a moment.

If you suggest that at the time, the complainant refused to — refused to go forward with the presentation of evidence, if at that time the department on its own motion had issued a complaint, no doubt these books and records would again have been sought by means of a subpoena.

Felix Frankfurter:

But you have to — I didn’t mean to —

Neil Brooks:

Yes, I know.

I know.

I know, Your Honor.

Felix Frankfurter:

Won’t you go on in this very proceeding?

Would you have to start a new proceeding?

Neil Brooks:

Well —

Felix Frankfurter:

You’re in a position — isn’t the scope of your process that make you to say, we have to pass on the legality of a challenged regulation and the party can circumscribe the litigation so as to exclude what the department —

Neil Brooks:

Yes.

Felix Frankfurter:

— means relevant issues.

Neil Brooks:

We have a main section of our brief on that exact point, Your Honor.

On reversal, and I believe this is the heading of that section in our brief, on reversal of the decision by the Court of Appeals in this case, the department will then be free to take whatever action is appropriate with respect to these regulations, and in further answer, and I must not run over my time further, the department at times is the complainant.

In fact, I believe the brief filed of the Producers Livestock Marketing Association here refers to a situation in Indianapolis not related to this but refers to a situation there in which the stockyard owner issued some regulations and the department itself filed the complaint and it’s going forward with that proceeding.

Within the limits of our personnel and they are limited of course in this broad appeal of regulation, our department proceeds forthrightly in these cases as best we can.

And here, at the time the administrative decision was made, there was ever reason to believe that all of these facts would be developed.

Earl Warren:

Mr. Sellers.

Hugo L. Black:

Mr. Sellers, before we begin, I would like to ask you a question.

Ashley Sellers:

May it please the Court.

Hugo L. Black:

I evidently see this (Inaudible) appears to me, not that I’m saying the court below was right but it seems to me is very simple on what it is.

I don’t think it’s in the abstract to (Inaudible)

What they found was the statute that has one special provision which said it shall be (Inaudible) of every stockyard owners and market agents that have furnished a reasonable repair without discrimination, reasonable stockyard services that’s been stopped.

I understand what the Court then said was that it found that the Denver yard have refused to render to every stockyard (Inaudible) services of unreasonable repairs.

That it said that the stockyard had imposed condition which attempted to control the other business activity of those who dealt with them.

The Court may have been wrong but it held, as I understand it, that there was nothing could take evidence on in that field that if the Denver — the Denver agency absolutely barred the — any regulation which would prohibit people from doing business with them, anyone of them, on equal terms with others and there’s nothing for the Secretary of Agriculture to determine.

I would like you before you get through the discussion on that basis.

I don’t quite — it seems — I may not understand it but it seems to me like that’s the issue.

Ashley Sellers:

Justice please.

I’m going to start out with that point.

It is true the court below looked at the regulation and the court below continued to look at the regulation and screwing its eyes solely upon the words of the regulation.

It said this regulation was bad and therefore, it cannot stand.

The court below said evidence was immaterial.

That the Secretary of Agriculture should have, without holding a hearing, without looking into the background of the rule, what it meant, what its application was, found on its face the regulation was unreasonable.

Hugo L. Black:

You construe that regulation of the Board as telling people to do business with Denver that you can’t do business with others unless you agree not to solicit for any other agencies.

Ashley Sellers:

Not at all.

Hugo L. Black:

Not to have any transactions with them.

Ashley Sellers:

Not at all.

Hugo L. Black:

That’s your dispute with the matter.

Ashley Sellers:

Well, that’s right.

With the regulation, if the Court please, there’s upon market agencies and dealers operating at the Denver Stock Yard.

William O. Douglas:

Denver Stock Yard (Inaudible)

Ashley Sellers:

No.

William O. Douglas:

Most of it.

Ashley Sellers:

That is territory from which livestock normally comes in to the Denver market.

William O. Douglas:

It includes the (Inaudible)

Ashley Sellers:

The marketing territory includes of course —

William O. Douglas:

Yes, both (Inaudible)

Ashley Sellers:

That’s right.

William O. Douglas:

But not the agent.

Ashley Sellers:

No.

He said the Denver Stock Yard, if the Court please, as I understood him to say.

William O. Douglas:

That’s right.

Ashley Sellers:

Now, the market —

William O. Douglas:

Does it include any state like Utah or whatever?

Ashley Sellers:

No.

It only includes in the area, in Colorado which —

William O. Douglas:

So the man is down in Colorado Springs.

(Inaudible) you can’t get the services of the stockyard in Denver.

Ashley Sellers:

May I elaborate?

William O. Douglas:

That’s a question.

I mean not a (Inaudible)

Ashley Sellers:

The regulation bears upon market agencies.

It does not bear upon farmers or shippers to the market.

The regulation has to do only with those few people.

By saying few, I don’t mean to suggest that that means its going to bear.

But in order to get an understanding of the compass of the rule only upon those people firms who do business at the Denver market as agents, as people operating on the market as instrumentalities or if you please, facilities of the market.

A stockyard within the contemplation of the Act and as it has gone up, consists of the Stock Yard Company of course which owns the facilities and which performs the services and which under the statute as construed by the courts is a business affected where the public interest — public interest has the duty to provide reasonable stockyard services and facilities upon reasonable request.

Itself could have started out by providing the buying and selling of services itself.

In some stockyards, that is the situation.

In other stockyards, there are agents there who come on the market, who have to register with the department, and who have to obtain the approval of the Stock Yard Company in order to do business at that yard.

Now, the market agencies and that’s the case here is involved only market agencies, market agencies has facilities or instrumentalities on the yard are themselves public utilities within the language of these cases.

Ashley Sellers:

They too have the obligation to render reasonable services upon reasonable requests without discrimination.

The marketing agencies at Denver or at any other stockyard have as their initial responsibility so provided by the regulations of the department itself to render it — the — render their primary duties to the consignors to the market.

That is their whole reason for being on the market is that they serve that market.

Otherwise, you could have, well have situations where people come on the market.

They come registered with the department which is in very large part of ministerial act, the registration.

Obtain the consent of the Stock Yard Company to operate on the yard, they made assignments of tents, free of rental, get an established place on the market, there’s a room only for so many, 10, 12, 15 at Denver and advertise themselves throughout that great area as being Denver market agencies but set themselves to taking business elsewhere than in Denver.

And the result would be that this — the market would be — would inevitably decline without any ability to help itself in the interest of the patrons both the buyers and sellers of the market.

Now, the Stockyard Act, the whole background of it is definitely grounded in the theory that it’s in the interest of the farmers and the producers of the area to have a market, a central market such as this great stockyard at Denver is which would provide free competition in the bidding and the sale of livestock which would provide an ample supply or different kinds of livestock at all times to suit different buying demands and which would be the price fixing setting mechanism through that whole marketing area.

As everyone knows in the industry, prices that are established at great markets like Chicago and Omaha and Denver and the large markets have a tremendous influence over the transactions of livestock made locally and out into the country.

Now, with that in mind, the regulation bore only upon market agencies.

The regulation does not say to any farmer or any producer in a shipper to the market that you have to ship to Denver.

The regulation does not say to any farmer, you have to ship all of your livestock or none to do.

The regulation only bears upon market agencies.

It in effect is telling to market agencies, “It is your primary job made so not by us but by the statute and by that regulation to the department.

It is your primary job to serve this market and — and if you devote your energies elsewhere than at this market then other market agencies who could — who could better serve this market in the interest of the market as a whole should take your place”.

Felix Frankfurter:

Mr. Sellers, may I ask you this question for me to understand this more clearly.

I suppose nobody on this Court is more eager to deny it but cattle countries or livestock industry for a better understanding.

Do I understand it the Denver market has x number, 12 or 15 to indicate a relatively small number of people who get a license — out of license from the department or an authorization from the Department of Agriculture to do business within the Denver market and that means to have certain store or whatever you call them in order there to do bidding with other people, other market agencies.

Presumably, if they ask me to do business in the Denver market, they wanted to do business in the Denver market.

Now, do I understand that this regulation circumscribed their freedom to do business elsewhere?

Ashley Sellers:

No.

Felix Frankfurter:

You address it.

Ashley Sellers:

This —

Felix Frankfurter:

Is this for certain limitation or in some way it curtails their freedom to do what they please in relation to the Denver market, is that correct?

Ashley Sellers:

That’s right.

If regulation does limit, their activities are to roam around and buy and sell and trade any livestock.

Felix Frankfurter:

Now, what I want to know is this.

What is there in the Packers and Stockyards Act which define, if not in terms by the implications of the duties and services to be rendered, the obligation to carry on business for the Denver market for which their license — license and (Inaudible) their unlimited freedom to do business in any other markets to which they also may have a license.

Ashley Sellers:

If the Court please, the regulation or the — the statute doesn’t say that you may only do business at one market neither does this stockyard regulation say that you may only do business at one market.

It says that as far as Denver is concerned and that’s all that the Denver Stock Yards could do that you should in operating as a market agency at this yard, give certain of your functions, certain of your activities to the service of this market.

Ashley Sellers:

Otherwise, there’s no reason for you being here.

Now it could well be, although, again if the Court please, there is not one ounce of evidence in this record as to what the regulation means, as to what its impact is, as to how many other markets there are, as to how many agencies there are, as to what sort of organization that producers marketing association is, we don’t know what they are of this record.

Felix Frankfurter:

But it does to some extent curtail their freedom.

Ashley Sellers:

It does.

Felix Frankfurter:

And — and you say that —

Ashley Sellers:

To the extent —

Felix Frankfurter:

— validity under faith must either mean that to make any regulation curtailing their freedom although they own a license for the Denver market and there is this statutory construction scheme that’s been summarized or that on the basis, the kind of limitation of freedom that it sees the Denver agency, it’s obviously a discriminatory or exemplary jurisdiction.

Ashley Sellers:

May I say that this is only one regulation.

There is a great body of stockyard regulations, not merely at Denver but Stock Yard Companies all over the country have regulations.

Many of those regulations impose limitations upon the freedom of action of market agencies.

It’s — as this Court said in the Board of Trade case, every regulation restrains to a certain extent that is true of practically of a regulation I can conceive of not only of the Stock Yard Company but of — almost in the other utilities.

Felix Frankfurter:

You say doesn’t — the regulation doesn’t fit your Denver agency, you can take business to ship cattle to Los Angeles, it doesn’t do that, does it or does it?

Ashley Sellers:

The — the regulation says that you can undertake to solicit sitting on the Denver market and setting yourself out as a market agency to serve this market.

You can’t reach out to solicit to take business away from this market.

You can’t — you can’t expect yourself to diverting the flow of livestock that normally would not.

It is your —

Felix Frankfurter:

Why would — why would they say that he’d be registered for Denver unless it wanted to do also Denver business.

It wouldn’t, would it?

Ashley Sellers:

It should not.

But If the Court please —

Charles E. Whittaker:

Mr. Sellers —

Hugo L. Black:

That doesn’t settle the question, does it?

May I ask you if this is it as you will get to the part of the statute which made all I know be wholly inadequate to support the Court’s judgment?

What you have is a regulation of the Denver Stock Yard, and if it can make it every other every other one, you’d make it, which tells all these market agencies to do business, that you can’t do any business if you solicit for any other agents or any other — other place, if you — in manner divert or attempt to divert livestock in this market even yours which would otherwise normally come to the stockyard.

Now, therefore, you have a regulation which cuts off that freedom to get stockyard service it rendered, does it?

Ashley Sellers:

No.

Hugo L. Black:

It produces it, doesn’t it?

Ashley Sellers:

If the Court please.

The stockyard service is not rendered to the market agency.

Hugo L. Black:

Well —

Ashley Sellers:

The market agencies are merely agencies not — not marketing agencies generally.

They’re not simply businessmen operating buying and selling and trading in livestock.

They are — they are definite —

Hugo L. Black:

I understand (Voice Overlap) market.

I agree with you over that.

But what you have is — is a statute which has given broad power to regulate in certain a expense are the markets themselves and with the Secretary in the counsel’s brief, but it has this section may or may not control and may or may not justify what the Court said.

It should be the duty of every stockyard owner.

This is a stockyard owned business in Denver.

Ashley Sellers:

Oh, yes.

Hugo L. Black:

And market agents, is that right?

Ashley Sellers:

Yes, sir.

Hugo L. Black:

To furnish upon reasonable request without discrimination, reasonable stockyard service at such time.

Now suppose the stockyard service they want and for purpose of reason for the amount of cattle they want, pleaded and process there and willing to pay the price but the man comes in and says, “The company comes in with a regulation decision.”

You can’t do business with us because you’ve been soliciting business on those markets.

We don’t — you — you can’t do business with us if you do that.

For selling outside these stores, you’ve attempted to divert business from this agency to go to Utah or to Los Angeles.

Why does this — why does that not deny them that full service which the provision of the statute on which the Court relies said they must have free at each market?

Is it in the language —

Ashley Sellers:

The —

Hugo L. Black:

— that I’ve read (Voice Overlap) —

Ashley Sellers:

The respondent here, the Producers Livestock Marketing Association is a market agency.

If under the statute just like the Stock Yard Company by that very language we just read has a duty to render reasonable stockyard services if you please and that’s a strange terminology that a market agency would have the responsibility to have to render stockyard services but that’s the language of the statute.

So that the two, both the Stock Yard Company and the market agencies are under the same statutory duty to render stockyard services to patrons of that market.

Now, again, if I can say so without the fear of repetition, the market agencies are not the patrons of the yard.

They are not the farmers who shipped the livestock to the market.

Hugo L. Black:

I understand that.

Ashley Sellers:

They are simply people operating on the market.

Hugo L. Black:

What is this Utah (Inaudible)

Ashley Sellers:

They are the market agency operating on this market.

Hugo L. Black:

Why are they opposing to this?

Ashley Sellers:

They are opposed to it because they want — if the Court please, I — I can’t talk without getting off the record.

There’s no record here at all.

Hugo L. Black:

Well —

Ashley Sellers:

All that we have here is a —

Hugo L. Black:

They cannot.

People that want to do business with them and with the Denver Stock Yard and want to solicit customers for them can’t do it, if this regulation does.

Ashley Sellers:

If — if it is true that under this regulation that they have — they are soliciting business, the people operating — the personnel operating — representing this agency at Denver is soliciting business in that area for other stockyards or for other markets then the wording of the regulation would certainly seem to say that that’s what they could not do.

Hugo L. Black:

Now, the problem I have is this.

It maybe the act for instance in certain way, the Secretary can with evidence being introduced, permit the local places like Denver and Utah to say that we’re not going to have anybody.

We won’t have the business with Denver agencies.

We’re not going to let you have anything to do, maybe it does.

But what I’m interested in is why does this section on which the Court relied not permitted?

Ashley Sellers:

Well, the case came before the Court as I said without any evidence whatsoever.

All we have —

Earl Warren:

Was it possible for that within a case without any evidence?

Ashley Sellers:

The responsibility is upon the respondent here.

They filed a complaint in the administrative proceeding alleging that the regulation was invalid.

Hugo L. Black:

On its face?

Ashley Sellers:

No.

There (Voice Overlap) no, not in their complaint.

Hugo L. Black:

Well, that’s what the Court decided on.

Ashley Sellers:

Well, that’s right.

But before you get to that if the Court please, the complaint alleged that the regulation was invalid.

We filed an answer in which we denied the allegations of their complaint, all factual allegations except the mere fact that the — that there were — there were two people involved and that there was a regulation.

Felix Frankfurter:

Can you justify the regulation in your answer?

Ashley Sellers:

We — we denied that the regulation had the meaning that they attributed to it, and we put the matter into issue for a hearing as to what the regulation would mean.

In preparation for the hearing, we filed an application for a subpoena to get certain records and books that they have which would demonstrate the unreasonableness of their conduct and their failure themselves to render reasonable stockyard services and which in turn made it necessary for us to have such a regulation.

At that point, they did not as we — as we’ve said before challenge the subpoena in terms of its propriety.

They simply answered by saying the subpoena should not issue because the regulation is invalid on its face.

That would have not been their reply to the complaint.

Ashley Sellers:

It was only in response to the subpoena.

At that point, after oral argument on that feature as to whether the — the subpoena should — should issue with that type of response, the examiner held that a hearing was necessary in order to determine the reasonableness of the regulation that he deemed that a subpoena should — should issue but that he would await until the complainants have made out a prima facie case.

He expected them to put on evidence.

He set it down for hearing.

Thereupon, they filed a document entitled an election to rest in which they said, “We will not put on evidence.

We will not attend the hearing in January the 24th that they set or at any other time and we stand on the proposition that the regulation is invalid on its face.”

The Stock Yard Company at that point moved to dismiss the proceeding because of the failure of the complainant to prosecute its case.

These were the only two parties involved.

I was — it was their task.

They had the burden of proof.

Admittedly, under the law and under the rules of the department and they had failed to go forward with the evidence to even put on any evidence whatsoever, so we moved to dismiss.

And that gave rise to the decision of the judicial officer who residing those facts said that the issue before me is whether the regulation is invalid on its face, is evidence needed in order to determine the issue.

He also then said my conclusion about dismissing the case because he found that the regulation was not invalid on its face that it needed evidence.

He — he greatly explored the different areas in which — of their attack.

They attacked it on the basis of the public utilities obligation and of our obligation under the antitrust laws.

He explored all of those features holding that in any event that evidence was necessary in order to determine whether the evidence — whether the regulation was involved — invalid on its face.

And he said, “My conclusion is strengthened by the fact that the specs upon which I may act gives to the respondent in a proceeding, the right to a full hearing and upon the basis of that procedural right which this Court as he adverted to time and again has upheld the famous Morgan cases, the comparable cases under the Interstate Commerce Act which is a counterpart to this statute.

He held that I — that the regulation should — should go to hearing and since they had refused to go to hearing, he said I have no choice but to dismiss the complaint.

Felix Frankfurter:

Now this — is this your case, Mr. Sellers?

That Packers and Stockyards back of 1921 took over packers and stockyards business in interstate commerce.

That extent is elaborated or rather detailed scheme subjecting the stockyard public utility regulations and creating things called market agency as business for the conduct of the stockyard.

While it maintained a competitive system in order to make the scheme functional, in order to enable the stockyards to carry out their belief, they had to be effective functioning market agency.

And in order to have effective market agencies, there have to be a certain (Inaudible), a certain circumscription of freedom of action by the market agency.

And whether or not, a restriction from the conduct of the market agencies in carrying out not only their duty but to enable the stockyard to live and function, you have to know what the facts are in a particular market.

Is that your case?

Ashley Sellers:

Precisely.

Hugo L. Black:

Now would you mind telling us, if you don’t mind, why does anything there for anybody to decide if this means what the Court said that they must not restrain the freedom of the people to come in to that market agent and do business, when it’s conceivable and has to be conceded that the regulation does in the statute.

Ashley Sellers:

Let’s assume, if the Court please, that evidence would show that the impact of this regulation is actually to foster competition at the Denver market.

Let’s assume that that’s the case.

Hugo L. Black:

But that doesn’t (Voice Overlap) it says —

Ashley Sellers:

It could well do that.

Hugo L. Black:

— that to deny them service, it’s their duty to furnish upon reasonable request without discrimination, reasonable stockyard services.

Now, if that doesn’t mean that there’s nothing left for the agency there, what does it mean?

It can — can every marketing agent in the United States issue regulations controlling the amount in which those who do business with them — will do business with other people.

Ashley Sellers:

Well, we are not a marketing remarkable agency.

We’re a stockyard —

Hugo L. Black:

But what are you going to argue on the stockyard?

Ashley Sellers:

Well but they are subject to the statutes just as we are in the same obligation.

Hugo L. Black:

Certainly if (Voice Overlap) but they haven’t passed any regulation yet.

Charles E. Whittaker:

Mr. Sellers.

Hugo L. Black:

They tried to deny to certain people the right to get stockyard services from them.

Felix Frankfurter:

Why don’t you admit what Mr. Justice Black said and say you can’t tell and do all the facts to shed on the situation.

Ashley Sellers:

You said it much more precisely than I’ve tried to say it for 15 to 20 minutes.

Charles E. Whittaker:

Mr. Sellers —

Hugo L. Black:

— to you or someone else before (Inaudible)

Charles E. Whittaker:

May I ask you a question if you please, sir?

Ashley Sellers:

Yes.

Charles E. Whittaker:

Now, I want to find out if you operated differently in Denver than elsewhere.

A market agency, this respondent, has a license from the Secretary of Agriculture, does it not?

Ashley Sellers:

No.

Charles E. Whittaker:

None at all?

Ashley Sellers:

Not a license.

It’s a mere registration.

Charles E. Whittaker:

A registration.

Ashley Sellers:

Yes, sir.

Charles E. Whittaker:

To operate under the Packers and Stockyards Act as a market agency on the Denver market, right?

Ashley Sellers:

That’s right.

Charles E. Whittaker:

Now, he’s assigned — well, what this consists of is an office in the livestock exchange, and half a dozen so tends in the public stockyard, isn’t that right?

And he has —

Ashley Sellers:

Well, it’s more than that.

Charles E. Whittaker:

Well, he had more (Inaudible) on that depending on the size.

Now, he is required to render stockyard service at that market under that license to all commerce without discrimination, does he not?

Ashley Sellers:

Yes.

Charles E. Whittaker:

Yes.

But he may even buy and sell on that market to other market agencies or to packers or even to persons to ship elsewhere, right?

Ashley Sellers:

He may act — he acts as a commission basis.

Charles E. Whittaker:

Certainly.

And thousands of head of livestock of all types are bought by foreign shippers through those market agencies daily, are they not?

Ashley Sellers:

They are.

Charles E. Whittaker:

And shipped throughout the country.

Ashley Sellers:

Yes, sir.

Charles E. Whittaker:

Now, the regulation here simply says that the market agency shall not solicit business in competition with his own — with this market for which he’s been given a registration at Denver, am I right?

Ashley Sellers:

That’s right, sir, precisely.

Charles E. Whittaker:

He may not divert business elsewhere —

Ashley Sellers:

Precisely.

Charles E. Whittaker:

— so long as it comes from in the area which normally would flow to Denver.

Ashley Sellers:

Yes, sir.

Charles E. Whittaker:

Isn’t that right?

Ashley Sellers:

Yes, sir.

Earl Warren:

Mr. Sellers, to your — to your knowledge, was there any other stockyard in the country that have regulation like this one?

Ashley Sellers:

Yes.

Earl Warren:

Where?

Ashley Sellers:

That’s cited in — in the — I believe it’s in — set forth in the Government’s brief.

There’s one like this at Los Angeles.

There’s one like this at Baltimore.

There’s one like this at San Antonio, I believe.

There are many regulations of —

Earl Warren:

Well, may I ask you if you know —

Ashley Sellers:

— of stockyard companies somewhat along this line.

Earl Warren:

Are those (Voice Overlap) —

Ashley Sellers:

Many.

Earl Warren:

— of your standing or are they —

Ashley Sellers:

Oh, yes.

The brief cites —

Earl Warren:

I’ll — I’ll follow the brief.

Ashley Sellers:

Beginning on page 43 of the Government’s brief as replete and —

Charles E. Whittaker:

Do you know of any substantial market agency that doesn’t have a regulation like this?

May I ask you that one?

Ashley Sellers:

Of any — of stockyard company?

Charles E. Whittaker:

Stockyard Company.

Ashley Sellers:

I know of a number of them.

I don’t have it precisely like this but they all have regulations of this general tariff.

Charles E. Whittaker:

I’m speaking of the substantial (Inaudible) like Omaha, Chicago, Saint Louis, Kansas City.

Ashley Sellers:

It — it varies.

There are — they vary all over the lot and that’s one problem we have of the differences between stockyards.

Earl Warren:

Mr. Thomas.

Hadlond P. Thomas:

May it please the Court.

We stood before the Secretary of Agriculture.

We stood before this Circuit Court of Appeals.

We stand here and we will continue to stand upon one proposition.

That proposition is this.

This regulation is illegal and invalid upon its face as a matter of law.

Evidence without ambit cannot be given vitality.

Now, something being invalid upon its face isn’t — shouldn’t be so strange.

This Court has recently, that’s January 13 in the Staub against City Baxley case from Georgia held that that city ordinance down there was invalid upon its face as a matter of law which required one who had solicit membership in a labor union to secure a permit from the mayor of the city.

Mr. Justice Whittaker ought that decision and he said that it deprived the — the defendant in that case of his right of free speech without getting a permit from the mayor and for that reason, the ordinance was invalid on its face.

Now, this ordinance here is nonetheless invalid on its face.

And it is an ordinance.

It was ordained by the Denver Union Stock Yard.

I say that it stands out on the face of this ordinance like Mr. Justice Black said in his opinion issued this morning in the Northern Pacific Railroad case that it was adopted to fence out competitors.

Hadlond P. Thomas:

That’s the language, His Honor used, and that’s the purpose of this unwholesome regulation I submit.

Now, the only question anymore in this case to begin with was and still is, is this regulation here on trial illegal on its face as a matter of law?

How did it come up?

The Packers and Stockyards Act says two things.

First, that every stockyard company must furnish reasonable stockyard services on reasonable request without discrimination.

I would emphasize those words without discrimination.

Then it says also that every stockyard company must adopt regulations and practices that are — that are just, reasonable, and nondiscriminatory and that every regulation which is unjust, unreasonable, or discriminatory — discriminatory is invalid.

Now, there is where we start out.

This stockyard company —

Earl Warren:

Mr. Thomas may I — may I ask if you have any observation to what counsel just said to any part of the business customary —

Hadlond P. Thomas:

Well I certainly do, Your Honor.

Earl Warren:

Have you any —

Hadlond P. Thomas:

I do.

I say there are three stockyards.

You have the regulations identical with this and they were all adopted after this one.

They got their cue from Denver.

They were inspired and one of them is Los Angeles, one is Baltimore, and one is Houston.

Earl Warren:

When was — when was this?

Hadlond P. Thomas:

This was adopted May 11, 1955 and those others were adopted a month, two months, and three months of Los Angeles 10 days later.

And we challenge that and it’s still before the — before the department.

Earl Warren:

After that time as far as we know they were —

Hadlond P. Thomas:

Up to that time every stockyard company had regulations but I affirmed none like this.

They had regulations which — from which the — their amicus, the American Stockyard Association in their brief have taken selective excerpts in which — which prohibit going on the yards or in the streets so that entering the yards and interfering with the movement of livestock like the Fort Worth case where they climbed on — where they stopped the trucks in the — in — in the yards and dealt with the drivers and bought the livestock, unloaded them and put them on their own trucks and went of.

Then they cause traffic jams.

Now those are the regulations they have with other yards.

They say that — that they can’t on the ways — on the highways, and the streets adjacent and adjoining.

This — the fact that no one has ever had one of these regulations in the Court before that test, in my opinion, the fact that there are none such.

Could I ask you a question?

Hadlond P. Thomas:

Yes.

You say this is a — I want to make sure I understand it.

You say this regulation violates the statute on its face.

Hadlond P. Thomas:

Yes.

304 that is?

Hadlond P. Thomas:

Well —

Section 304?

Hadlond P. Thomas:

It violates the Section —

It should be the duty of every stockyard owner and market agency to furnish upon reasonable request without discrimination.

Is that the section?

Hadlond P. Thomas:

No.

The next Section is 208 in the U.S. Code entity, which says it shall be the duty of every stockyard owner and market agency to establish, observe and enforce just, reasonable, and nondiscriminatory regulations and practices and so on respecting the furnishing of stockyard services and — you’ll find that on page 19 of the respondents brief Your Honor.

William O. Douglas:

Is there any — any discrimination here against the producer?

Hadlond P. Thomas:

Yes.

Now let me show you what this — what this regulation.

William O. Douglas:

The regulation purports to be a discrimination against the marketing agent.

Hadlond P. Thomas:

Absolutely.

Now, let me tell you.

What the —

William O. Douglas:

How does it work against the producer?

Hadlond P. Thomas:

I — I’ll explain.

The Act recognizes three agencies.

There is the stockyard, there is the market agency, that’s us, commission firms who buy and sell on commission and the dealers.

The dealer buys and sells on his own account.

He speculated it.

Denver Union Stock Yard here is the stockyard where the commission firm.

Now, this regulation says that no market agency or dealer engaging in business at this stockyard, what, shall upon the stockyard company property or elsewhere, or elsewhere even anywhere else nor show any other person on the Stock Yard Company solicit business for other markets and so on or in any manner to further attempt to divert livestock from this market or engage in any practice or device which you would be impair or interfere with the normal flow of livestock to the public market at this stockyard and then it sets up its own definition, say the normal marketing area from which livestock would normally come to this market is so and so.

Well what section —

Hadlond P. Thomas:

U.S. 56 of Colorado.

What Section of the Act do you claim that violates?

Hadlond P. Thomas:

I claimed it violates both Section 205 and Section 208, particularly 208 which commands the Stock Yard Companies to enact nondiscriminatory regulations in which denounces as unlawful every discriminatory regulation or practice.

Felix Frankfurter:

How do you know it’s nondiscriminatory?

Hadlond P. Thomas:

All right.

How do we know it is discriminatory?

Felix Frankfurter:

(Inaudible)

Hadlond P. Thomas:

All right, it means this.

It means that since we are registered at the Denver yard like many others and incidentally, as you have been told, we are also registered at Los Angeles, Salt Lake, and Ogden, in as much as registered to Denver yard, we can’t go out in the country and buy and sell between two growers.

We can’t go to Colorado Springs for example.

Felix Frankfurter:

How do I know that?

Hadlond P. Thomas:

Well because it says so.

It says we can’t do this on the Stock Yard Company property or elsewhere.

Felix Frankfurter:

Flow naturally?

Hadlond P. Thomas:

No.

Solicit any business for other markets, or for sale at outside feed yards, or at country points.

I can’t go and sell for one grower to another.

Felix Frankfurter:

What about the normal flow?

Hadlond P. Thomas:

Well, the normal (Voice Overlap) the normal —

Felix Frankfurter:

Do you think that’s sort of the qualification of the regulation?

Hadlond P. Thomas:

No, I think the normal flow, if the Court please, relates to this diversion practice they’ve mentioned in here that — where it says, we may not in any manner divert or attempt to divert livestock from this market which would otherwise normally tend to the stockyard and then comes the normal marketing area.

Felix Frankfurter:

But I should think that the Court (Inaudible) away from substance otherwise in the normal court (Inaudible) Denver that — that’s divertible to Denver.

Hadlond P. Thomas:

Surely it’s divertible.

Felix Frankfurter:

How do I know what the effect of this is or what the Secretary would construe the regulation fee?

Hadlond P. Thomas:

Well, we —

Felix Frankfurter:

The Court spends endless time on matters of legislative history because of these contentions have favorably endless time.

I didn’t mean to shut off the law in this regulation.

Why can’t you being — what is the relationship — a company of the stockyard is to the (Inaudible) of the market agency?

Why this Court be shut off of knowing those (Inaudible)

I’m asking in the inadvertence of light instead of speculation.

Hadlond P. Thomas:

Well —

Felix Frankfurter:

You know about these things but I don’t know (Voice Overlap) think about —

Hadlond P. Thomas:

I — I contend we don’t have to know anymore than we look at the regulation if Your Honor please.

Felix Frankfurter:

Well, that’s what you told (Voice Overlap) —

Hadlond P. Thomas:

And that’s —

Felix Frankfurter:

— very often it looks different.

Hadlond P. Thomas:

And let me (Voice Overlap) —

Felix Frankfurter:

— to find out its history.

Hadlond P. Thomas:

Let me explain how the case came up.

Let me explain the posture of this case.

We filed this complaint and we said in our complaint before the Secretary this regulation is wholly invalid.

Why?

Because it’s discriminatory.

And then they answered.

And we said, “We’re going to stand does we say here we do now upon the illegality of this regulation upon its face as a matter of law.

Now, so on December the 23rd, 1955 after the case had come an issue, we filed complainants “election to rest” and we say, “It comes now the complainant and the above entitled cause and states that the challenged regulation of respondents is illegal and invalid upon its face.

That as a matter of law and that the complainant elects to stay and upon the illegality of said regulation as a matter of law and states that it will not present evidence in this cause as the taking of evidence is unnecessary to determine the illegality of said regulation as a matter of law wherefore the complainant hereby rests and submits its case for final decision by the Secretary —

Felix Frankfurter:

May I —

Hadlond P. Thomas:

Then what did they do?

They filed — they took up the challenge.

They — they met and head on.

They filed respondent’s motion to dismiss and that reads thus, comes down the respondent by its attorneys and moves that the complaint in this proceeding be dismissed with prejudice.

They state their case upon it too, because of the complainant’s failure on the record to sustain the burden of making a prima facie case in support of the complaint as evidence by its election not to offer proof of its allegation and not to proceed in accordance with the hearing examiners rule respectfully submitted.

There the issue was sharply drawn.

What did the — what did the hearing officer say at that point?

Here is what he said.

He said the complainant was freed away herein and to state the outcome of the proceeding solely upon the question as to whether the disputed regulation is invalid on its face as a matter of law.

Now, he elects this.

He said you’re wrong.

It’s not illegal on its face.

You have the right to state your case on it.

Sure.

And they state theirs too because they’d rather head on with the motion to dismiss when we filed “election to rest”.

Felix Frankfurter:

Mr. Thomas, may I suggest (Voice Overlap) —

Hadlond P. Thomas:

I beg you pardon.

Felix Frankfurter:

May I suggest that my experience on this Court has been that sometimes of the statute is conflicting.

Charles E. Whittaker:

Mr. Thomas, what — what could they do when you took that position other than to challenge the sufficiency of your petition — of your position.

What could be the part to do in that circumstance?

Hadlond P. Thomas:

Well, it was the Stock Yard Company, if Your Honor please.

Charles E. Whittaker:

Yes, all right.

Hadlond P. Thomas:

What could they do?

Charles E. Whittaker:

Yes, after you had taken the —

Hadlond P. Thomas:

To do what they did, exactly.

Charles E. Whittaker:

That was all they could do.

Hadlond P. Thomas:

Yes, and that brought the matter sharply into focus for decision, what, upon the validity or invalidity of this regulation as a matter of law upon its face.

Charles E. Whittaker:

Now, may I ask you —

Hugo L. Black:

— certainty about what they mean by normal (Voice Overlap) —

Hadlond P. Thomas:

We say not.

Hugo L. Black:

Does it describe it by (Inaudible)

Hadlond P. Thomas:

It does.

Hugo L. Black:

So that you can get it?

Hadlond P. Thomas:

The last five to six —

Hugo L. Black:

— without a surveyor?

Hadlond P. Thomas:

No.

It — it follows county lines and highways if the Court please, and it comprises the entire West 56 of the State of Colorado.

What will happen —

Hugo L. Black:

Is there anything ambiguous about —

Hadlond P. Thomas:

Not a bit.

Hugo L. Black:

— definition.

Hadlond P. Thomas:

Not a bit and if they make this one stick they’ll nudge the boundaries all over the United States.

Felix Frankfurter:

Mr. Thomas, do we know whether the metes and bounds or the metes and bound is the trickiest flow of business.

Do we not know — do we know — does anybody that we’re entitled to make judicial office — judicial notice?

Hadlond P. Thomas:

I don’t think you do, very frankly, no.

Felix Frankfurter:

Therefore, we don’t know whether the metes and bounds did represent what (Inaudible)

Hadlond P. Thomas:

I don’t —

Felix Frankfurter:

— for X number of years.

Hadlond P. Thomas:

I don’t think that matters, Your Honor.

Felix Frankfurter:

Well — well all I’m saying is that those metes and bounds won’t tell us anything except the metes and bounds.

It doesn’t tell us the significance of the metes and bounds.

Hadlond P. Thomas:

It — it tells you what they claim the normal flow is that they charge us with the diverting?

To tell you what they want is —

Hadlond P. Thomas:

Sure.

— if you do business with them.

You shall not do business with anybody else.

Hadlond P. Thomas:

Right.

What it says is that on all livestock which originates in the West 56 of Colorado, our market agency and all others as well who deal out there must see that every head of livestock we handle is routed in the Denver Stockyard.

Now what does that do?

That makes us — prevents us from routing any to Kansas City and it prevents to see what is also from this.

It prevents us from selling from one grower to another grower right out there in Colorado Springs as Mr. Justice Douglas referred to.

Now, it means that under this regulation that if we propose to sell from one grower in Colorado Springs to another grower in Colorado Springs, we can only do it by routing that livestock to the Denver yard and shipping it back to that bar, a little decrease process or else pay in tribute to the Denver yard.

William O. Douglas:

As I read the opinion of the judicial officer, he didn’t attack that part of the — or he don’t discuss particularly that part of the regulation.

He assumed that this was a regulation that forbid as it does in part from the solicitation of business in the stockyard, away from that stockyard to another.

Would you think that that would be a valid regulation?

Hadlond P. Thomas:

I wonder if I understand, Your Honor.

William O. Douglas:

Well at the top — at the bottom of page 27 and at the top of page — for example, he said, the regulation in part prohibits conduct of on the Stock Yard Company’s property that diverts livestock in the designated area from the respondent’s stockyard.

Suppose the regulation had not gone any further than that, would it be valid?

Hadlond P. Thomas:

You mean, if it had forbidden us to pick up the phone on the Denver yard and calls Kansas City yard and say, “We’ll ship you some cattle within the fence of Denver.”

William O. Douglas:

Yes it is.

Hadlond P. Thomas:

Is that what you mean?

William O. Douglas:

Yes.

Hadlond P. Thomas:

And they had said that we could not do that.

William O. Douglas:

Yes.

Hadlond P. Thomas:

I think that would be invalid upon its face, Your Honor.

William O. Douglas:

The same as —

Hadlond P. Thomas:

The same as the others.

William O. Douglas:

Soliciting in the country.

Hadlond P. Thomas:

Absolutely.

William O. Douglas:

Now, why do you say that?

Hadlond P. Thomas:

Because of the Packers and Stockyards Act that requires them to render as stockyard services and to adopt regulations that are just, reasonable, and nondiscriminatory.

And I say that regulation would be discriminatory.

William O. Douglas:

It — rights as if the marketing agent in that circumstance would be a sort of a fiduciary.

Hadlond P. Thomas:

We are a fiduciary.

William O. Douglas:

An agent with — duties to the — to the principal which would be the stockyard.

Hadlond P. Thomas:

No.

I beg your pardon, Your Honor.

We are a fiduciary.

Our principal is our shipper for whom we are acting.

Felix Frankfurter:

But the functioning of the stockyard is highly dependent on what the marketing agent could do, is it not?

Hadlond P. Thomas:

I — I suppose it’s depending upon there — being there and operating where assigned pens.

Our livestock that we handle come in.

If they’re kept there, they’re put into pens and held there by us and then out they go, we send them out.

Felix Frankfurter:

For instance, you stop doing business with them for fishing areas, would that not affect the stockyard?

Hadlond P. Thomas:

Well, I suppose if we stop doing business with them —

Felix Frankfurter:

(Inaudible) on a stockyard, wouldn’t that affect them and wouldn’t have to — have a right to do something about that?

Hadlond P. Thomas:

I was going to say if we stop from the dealers stock, I’d guess they’d be left to the growers themselves to deal with.

(Inaudible)

Hadlond P. Thomas:

Absolutely.

Charles E. Whittaker:

Mr. Thomas, will you state (Inaudible)

Hadlond P. Thomas:

Yes, sir.

Charles E. Whittaker:

Do you have a separate permit to each station where you operate?

Hadlond P. Thomas:

We don’t get a permit, if Your Honor please, we are registered with the Secretary of Agriculture at each yard and repost the bond.

Charles E. Whittaker:

And is there separate step on each place —

Hadlond P. Thomas:

That’s my understanding.

Now of course —

Hugo L. Black:

Where — where are these judges on that decided this case?

Hadlond P. Thomas:

These judges, I’m glad Your Honor asked that, they’re from all over the country.

Judge Louis who wrote the opinion is from Salt Lake and Judge Huxman is from New Mexico.

Hugo L. Black:

(Inaudible) Ex-governor of Kansas.

Hadlond P. Thomas:

All right.

I’m wrong.

I’ve got Judge Bratton — Judge —

Hugo L. Black:

Judge Pickett.

Hadlond P. Thomas:

Judge Pickett of Wyoming.

Felix Frankfurter:

Now, would you disqualify those of us who don’t know anything about that problem?

Hadlond P. Thomas:

No, I’m very happy to have you, Your Honor.

[Laughs]

Now of course our approach to this is simply this.

That under the Packers and Stockyards Act and the famous decision of Stafford against Wallace of this Court immediately following the enactment of the Act, the Stock Yard Company is a public utility and being such is bound to furnish — as in all other market agencies with stockyard services without discrimination.

Charles E. Whittaker:

Now Mr. Thomas, may I ask you on that sir?

Where are you to render the reasonable stockyard services at a particular registration authorized?

Hadlond P. Thomas:

No, are we to render or whereas the stockyard to render, it makes a difference.

Charles E. Whittaker:

Well, to you.

Were you —

Hadlond P. Thomas:

All right.

As a (Voice Overlap) —

Charles E. Whittaker:

— registration to operate itself or not and the session stopped, you must furnish reasonable stockyard service without registration (Inaudible)

Hadlond P. Thomas:

We’d render them there in that instance of course.

Charles E. Whittaker:

Now then under your permit (Inaudible)

Hadlond P. Thomas:

Right.

Charles E. Whittaker:

Now then, do you have rights you think to divert business which normally would flow to Denver over the mountains to Salt Lake?

Hadlond P. Thomas:

I think so.

We say so.

Charles E. Whittaker:

And — and does a regulation opposing that you think here valid.

Hadlond P. Thomas:

We do.

Charles E. Whittaker:

In the vacuum and without any fact.

Hadlond P. Thomas:

We do, as violative of the fact that the stockyard cites which commands the Stock Yard Company to furnish us with stockyard services and to enact and observe nondiscriminatory regulations.

We get back to the non — to the discriminatory again.

We say that’s discriminatory.

Their Court of Appeals said so too from up the cowboy country, if Your Honor please.

Charles E. Whittaker:

Whom I —

William J. Brennan, Jr.:

(Inaudible)

Hadlond P. Thomas:

Now, of course every public utility is bound to serve and we have cited the cases, many of them, which hold that a public utility may not demand exclusive patronage or exclusive allegiance for example an electric company cannot say if you — if you burn gas also, you can have our electricity.

And a railroad company can’t say if you ride the airplanes, you can’t ride our — our trains and so on and so forth.

Nor public utilities deny service because of something which is a collateral matter — something which is collateral to the service they furnish.

For example, I can’t say to you that if you can have water and electricity but only if you install a septic tank.

Now we say here that this regulation demands our exclusive patronage our exclusive allegiance and also it denies us service because of a collateral matter namely doing business out in the country.

The country business is big if the Court please.

That’s one reason we’re objecting and we say we’ve got a right to go out in the country and sell from one grower to another and that the Denver Stock Yard Company can’t stop us by regulation.

Hugo L. Black:

Would you mind — would you mind explaining the technique of how you do your business.

Hadlond P. Thomas:

Well, we do two kinds of business, if the Court please.

We do a business, a grower will give us — send us livestock to sell on consignment for example at the stockyard and we will ship it there and it will be sold there, on the other hand — some grower will say to us find a buyer for our livestock and we do —

Hugo L. Black:

Do you travel around over the country?

Hadlond P. Thomas:

We have people out in the country.

We do have tremendous country business, if the Court please.

That’s what it states here.

Hugo L. Black:

Does — does everything that you buy go to the stockyard?

Hadlond P. Thomas:

Oh, no, not near.

No.

I should say not.

I would say most of it sold in the country.

Hugo L. Black:

Are there some places where they’re reasonably close to one — more than one stockyard?

Hadlond P. Thomas:

It might be in the Midwest.

I don’t think there is in the west where Denver, where Los Angeles, Salt Lake, Ogden and then there are yards that are not posted for example, Phoenix and Brawley.

They’re not imposed to stockyard subject to jurisdiction of the — of the (Voice Overlap) —

Hugo L. Black:

But if it’s not any along close to the dividing line, what is the quarrel about?

Hadlond P. Thomas:

Well, the quarrel is about whether we can sell — buy and sell in the country part of Colorado or whether we’ve got to ship all that stuff to the Denver yard.

William O. Douglas:

But the judicial officer didn’t so construe it.

He construed the controversy before him as one where Denver Stock Yard was compelled to furnish its facilities to the benefit of its competitors in Kansas City.

Hadlond P. Thomas:

Well —

William O. Douglas:

As he addressed himself to that solicitation in the Stock Yard that I asked you about (Voice Overlap) —

Hadlond P. Thomas:

Well, we’ve — there’s no question about it or what.

We will get livestock in the country and ship it to Kansas City if somebody wants us to.

And right then, we’d be violating and we would report this regulation.

Hugo L. Black:

When that’s ordinarily done, is there a dispute over to crime?

Hadlond P. Thomas:

Well, I don’t know why it’s (Voice Overlap).

It maybe — it maybe that the grower will say we — I think you can get me a better price at Kansas City or we may think of the case.

Charles E. Whittaker:

Which should be violating this regulation if you bought cattle in the east or in the west — Eastern 16 of Colorado and ship them on or encourage others to ship them on to Kansas City?

Hadlond P. Thomas:

No.

Charles E. Whittaker:

You would not, would you?

Hadlond P. Thomas:

We would not.

Charles E. Whittaker:

And why is that?

Hadlond P. Thomas:

Because they say that — they take the position at least that this thing implies today only to that West 56.

Charles E. Whittaker:

Yes.

Hadlond P. Thomas:

Now, if they were in this lawsuit, they’re going to push those boundaries all over the United States like Los Angeles has done or has attempted to do.

The Secretary of Agriculture might have to say about that, wouldn’t he?

Hadlond P. Thomas:

Well, he hasn’t said anything yet and Los Angeles’ regulation is passed the time of complaint.

Charles E. Whittaker:

Now, you wouldn’t have to be a market agency on the Denver Stock Yard in order to make your country transactions (Inaudible)?

Hadlond P. Thomas:

Oh, no.

That would result if we have to.

Charles E. Whittaker:

And — and would this not be the means if all other market agencies on the Denver yards, transact their business outside the yards of destroying the public market Denver?

Hadlond P. Thomas:

Which they do, if the Court please.

They do just like we do.

Charles E. Whittaker:

Wouldn’t this as a matter of fact if you all did what you’re doing, (Inaudible) to destroy the public market in Denver?

Hadlond P. Thomas:

I — I supposed that if you — you ask me if we and all the other market agencies, buy and sell in the country, it reduces the livestock that moves for the Denver Stock Yard of course and that’s why of the regulation.

Hadlond P. Thomas:

Now, let me say this too, that the American Stockyard Association in their brief amicus curiae has pointed out that very thing that when the Packers and Stockyards Act was passed in 1921, 90% of all livestock moved through these posted stockyards.

Whereas today, only about 60% moves through and it’s going down all the time, you can see the reason for the regulation, trying to force this economic effect.

Charles E. Whittaker:

You do not think in that circumstance, Mr. Thomas that would it be essential to have a factual showing in order to determine whether or not there were evils needed to be corrected by this resolution or by these regulations that whether they were responsive?

Hadlond P. Thomas:

No, I do not.

Charles E. Whittaker:

You do not.

Hadlond P. Thomas:

I think it would be — they are trying to get the law changed if they can.

Well I say this — I beg your pardon.

Earl Warren:

Under — under this law, is the Secretary of Agriculture be permitted to sort of walk the lines with the cattle country — states to and say that one stockyard (Inaudible) necessary other than — other than another one?

Hadlond P. Thomas:

I don t think he has any such power, Mr. Chief Justice.

Earl Warren:

(Inaudible) power.

Hadlond P. Thomas:

I never heard of that.

Now, I don’t think that I have anymore to say Your Honors.

I think you have the case very well in mind.

It — it went off entirely on the question of the illegality of this thing upon its face as a matter of law and we say that is exactly where we stood and where we continue to stand.

If we are right and the Court of Appeals is right, the judgment must be affirmed.

Thank you.

If I have ten more minutes — moment —

Earl Warren:

I beg your pardon.

Hadlond P. Thomas:

I understood I have time for rebuttal.

Earl Warren:

Well, I thought the red light was on for sometime before you sat down.

Hadlond P. Thomas:

Well, I am answering Mr. Justice Black’s question as I understood.

Earl Warren:

No, I think your time is up.

I think your time is up and it’s up for sometime before you sat down.

The red light — I beg your pardon.

Yes.

Hugo L. Black:

I asked him a question after the time (Voice Overlap) —

Hadlond P. Thomas:

I’m sorry.

I —

Earl Warren:

I think it’s just in our side.

That’s all we have in this case.