Polar Ice Cream & Creamery Company v. Andrews

PETITIONER:Polar Ice Cream & Creamery Company
RESPONDENT:Andrews
LOCATION:Alabama State Capitol

DOCKET NO.: 38
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 375 US 361 (1964)
ARGUED: Nov 20, 1963
DECIDED: Jan 06, 1964

Facts of the case

Question

  • Oral Argument – November 20, 1963 (Part 2)
  • Audio Transcription for Oral Argument – November 20, 1963 (Part 2) in Polar Ice Cream & Creamery Company v. Andrews

    Audio Transcription for Oral Argument – November 20, 1963 (Part 1) in Polar Ice Cream & Creamery Company v. Andrews

    Earl Warren:

    Number 38, Polar Ice Cream and Creamery Company, Appellant, versus Charles O. Andrews, et cetera.

    Mr. Harrell.

    Joe J. Harrell:

    Mr. Chief Justice, members of the Court, may it please the Court.

    This is an action and a direct appeal from a decision of a three-judge District Court which was convened in the Northern District of Florida.

    An action was brought by Polar Ice Cream and Creamery Company challenging the constitutionality of a portion of the Florida Milk Commission Act being Chapter 501 Florida Statutes.

    The complaint, an amended complaint asked for injunctive relief and also asked for declaratory relief with respect to the application of certain orders insofar as they affected the Polar Ice Cream and Creamery Company which is a milk distributor located in Pensacola, Florida which is 16 miles from the Alabama state line.

    The lower court considered three questions and one was whether or not the application of a portion of this Act and the orders which implemented it by the Florida Milk Commission burdened unduly interstate commerce, also whether or not minimum producer prices with respect to sale made to military installation could be enforced by the State of Florida.

    And the third question which the District Court considered was whether or not the distributor’s tax on milk distributed which was 15 cents per 100 gallons, milk distributed by a Florida producer, Polar Ice Cream and Creamery Company to military installations exclusive jurisdiction to which have been seeded to the United States was in fact applicable and collectible by the State of Florida.

    Those were the three questions which the District Court determined adversely to the Polar Ice Cream and Creamery Company, and from this adverse decision, a direct appeal is taken to this Court.

    In November 1961, the Pensacola area which consisted of the Western most four counties located within the State of Florida came within the jurisdiction of the Florida Milk Commission.

    These four counties, prior to that time had been without the jurisdiction of Florida — of the Florida Milk Commission.

    Immediately after they came within the jurisdiction of the Florida Milk Commission, the Florida Milk Commission began a scheme which we contend burden unduly interstate commerce.

    Potter Stewart:

    How was it which brought these four counties under the Milk Commissions jurisdiction action by the Commission or?

    Joe J. Harrell:

    It was a vote by the milk producers of those four counties.

    Potter Stewart:

    Of those four counties.

    Joe J. Harrell:

    Of those four counties, that’s correct sir.

    Potter Stewart:

    Under the state setup, that’s on (Voice Overlap) —

    Joe J. Harrell:

    Yes under state of law, they voted in on November 21, 1961, they came within the jurisdiction of the Florida Milk Commission.

    The first thing that the Florida Milk Commission did with respect to these four counties was to set a minimum producer price of 61 cents per gallon which was the highest price in the United States, the highest published price in the United States as that — as of that time.

    The second thing that the Milk Commission did to implement this particular scheme was to enter an allocation order in which it allocated all of the Class I sales to Florida Milk Commissions to Florida Milk producers and set up in a ratio which total 100% of all sales, the amount of sales which were to be allocated to each particular producer of Polar Ice Cream and Creamery Company.

    The third ground which implemented this particular scheme was the law which said that Polar Ice Cream and Creamery Company or a milk distributor could not terminate its relationship with a producer except for just cause.

    And the court has held that just cause is not — that is not just cause if he could buy his milk cheaper elsewhere.

    There was a further implementation in that if —

    Byron R. White:

    What court (Inaudible)

    Joe J. Harrell:

    The Florida Court.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes, I do have Mr. Justice White.

    It is in Odom versus the State of Florida.

    I cited in my brief.

    Byron R. White:

    The Supreme Court?

    Joe J. Harrell:

    Yes, the Supreme Court State of Florida.

    Also if the milk distributor does not take all of the milk tendered to it by the Florida producers, then of course a show-cause order can the — set against the distributor and his license can be revoked.

    So that we have here a situation in which the Florida milk producers and I’m speaking about the Pensacola area, Florida milk producers, the ones pertinent to this case.

    Although they are located — although the Pensacola plant of Polar is just 16 miles from the Alabama line, nevertheless the Florida milk producers of Polar are insulated so that they are guaranteed in effect the highest price in the United States for the sale of their milk.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes.

    Byron R. White:

    — about any (Inaudible)

    Joe J. Harrell:

    That is not exactly accurate.

    Polar must buy first from these producers and must exhaust their supply of milk insofar as its Class I needs, a concern before it can go elsewhere and purchase milk.

    Byron R. White:

    (Inaudible) outside the Florida (Inaudible)

    Joe J. Harrell:

    No, it can go outside of Florida after it satisfies the Class I requirements from the milk tended it by its Florida producers.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    No.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    No sir, it’s not geared to that.

    It’s geared to the — to the Class I sales.

    Polar must purchase insofar as Florida producers can furnish it all of its requirements of Class I sale even to the extent of 115% in excess of its requirements of Class I sales before it can go outside.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That is correct.

    Of course, it will immediately become obvious then, that the Polar producers will energetically try to bill and increase their supply —

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That’s correct.

    That is the whole theory about it.

    And of course, the record is clear that this is a deficit area and that Polar gets 70% of its milk supply from without the State of Florida and that many of its regular producers are located immediately across in the State of Alabama.

    We directly will reflect that, we have cited the gallonage including from Black Belt producers which is right across Alabama and this Alabama producers.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That is correct sir for Class I sales.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That is correct sir.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes, sir.

    Byron R. White:

    (Inaudible) outside of that area.

    Joe J. Harrell:

    Yes, sir.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Not Class I sales because they have the other classifications you see.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That’s correct but it means that —

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    The record is unclear of other than to this extent.

    The testimony was that at times, the Florida producers produced more than the Class I sales and at other times, they did not.

    The record is unclear with respect to that particular percentage.

    But this means of course that that an Alabama producer, even though he — the closer in fact geographically will never have an opportunity of selling at a Class 1 price to Polar until all of Polar’s Florida producers have been given the opportunity of getting the Class I sales.

    So that the out-of-state producers are insulated and isolated from selling to Polar by a tariff barrier and by a tariff wall which economically is just as real as can be.

    In that result, economically of course will be this. It will be that Polar will have to then either go out and pay and buy its Class II sales or Class III or IV needs from outside sources at a lower price because this Court of course is familiar with the classification of milk and that Class I received the highest price and the price paid decreases in the decreasing scale of classification.

    So that it means that the Alabama producer or the Mississippi producer even though he’ll be a regular producer could never have an opportunity literally to eat at the first table until after all of the needs of Class I sales of Polar are satisfied insofar as Florida producers are able to satisfy those needs.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes, sir.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That is absolutely correct Your Honor and —

    Byron R. White:

    Or not at all.

    Joe J. Harrell:

    And — or not at all.

    That’s right.

    It would be one of the way.

    The economic factor could be reflected in two ways.

    On Polar, it would mean that Polar would have to go out and pay a higher price in order to assure the supply of the milk.

    Looking the other way, it would mean that Alabama could never have an opportunity.

    Alabama or other outside producers could never have an opportunity of selling at the Class I price or the 61-cent price so that they would either have to accept a price which would be economically feasible for the purchase of Class II, III and IV milk or else they could say, “No,” as the court said, “We can drink the milk but sell to you we cannot unless you play the –“

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Right because —

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That’s right.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That’s correct and so then — then it would be confronted with this situation where it would be cheaper to purchase Class II from Florida because economically, they could not go out to purchase Class II from Alabama, Mississippi or some other state at a price which would be economically be.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    In a play — in order to assure the supply, yes sir.

    And that is basically —

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    I believe that it’s in the record that it was 54 and half cents with respect to the Class I.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes, yes.

    It’s now a federal marketing are you involved in this area?

    Joe J. Harrell:

    No, sir there’s — there’s no federal marketing order involved in this area.

    If we go to the next question which was considered by the lower court, we find this situation that Polar Ice Cream and Creamery Companies throughout the years and the record reflects that for the past eight years, it has supplied the milk requirements of Fort Benning Georgia among other military installations.

    The milk requirement for Fort Benning Georgia per year under the contract which was in evidence was $1,760,000.

    So it was a sizable contract.

    Also Polar supplies the Pensacola Naval Air Station, Tyndall Field Air Force Base, which is located at Panama City, Florida and also the Mine Defense Laboratory at Panama City, Florida.

    Now of each these military installations with the exception of the Mine Defense Laboratory, the military installations are located on property exclusive jurisdiction to which had been seeded to the United States of America, some of this — some of these installations having been seeded as early 1855 which is the Pensacola Naval Air Station reservation.

    But on each of the others, by deed of cession, the military installations are located on the property exclusive jurisdiction to which has been seeded to the United States.

    We are then confronted with the next question in which Court considered and that was this, “Can the State of Florida enforce its minimum producer price of 61 cents against sales which are made to military installations exclusive jurisdiction to which have been seeded to the United States?”

    And as an ancillary, the question to the U.S. Mine Defense Laboratory to which the record is unclear as to whether or not there was an exclusive deed of cession but it appears that there was none.

    Arthur J. Goldberg:

    Mr. Harrell?

    Joe J. Harrell:

    Yes sir.

    Arthur J. Goldberg:

    Why this (Inaudible)

    Joe J. Harrell:

    Yes, through the testimony of Mr. E.V. Fisher.

    Arthur J. Goldberg:

    And at any price?

    Joe J. Harrell:

    No sir, no sir.

    At a price — or excuse me I misunderstood —

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    Yes, I misunderstood your question.

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    That is Fisher and also —

    Arthur J. Goldberg:

    What is your complaint about that?

    Joe J. Harrell:

    Our complaint is this that it means that no military personnel in Florida can drink Florida milk.

    It means that if one gallon of Florida milk although it’s located, the Pensacola Naval Air Station is located within three or four miles of this plant, it’s right in Pensacola.

    If a gallon of Florida milk is delivered to that Pensacola Naval Air Station, the producer must be paid 61 cents per gallon for each and every gallon of Florida milk.

    Arthur J. Goldberg:

    But the first question in your argument was that (Inaudible), is that correct?

    Joe J. Harrell:

    That is correct.

    Arthur J. Goldberg:

    (Voice Overlap)

    Joe J. Harrell:

    That is correct.

    Arthur J. Goldberg:

    Now the second question in your argument is that (Inaudible)

    Joe J. Harrell:

    That is correct because of the peculiarity under the procurement policy and the peculiarity of the fact that exclusive jurisdiction of this military installation was seeded to the United States and that the State of Florida is without jurisdiction to say that this Florida produced milk must be delivered at 61 cents per gallon paid to Florida producers.

    Now, insofar as other milk for example — insofar other Florida milk that is not the crux of the question but it turns basically on that issue.

    And so I hoped I made myself clear with respect to that time.

    Mr. Harrell —

    Joe J. Harrell:

    Yes sir.

    (Inaudible)

    Joe J. Harrell:

    Yes, sir.

    (Inaudible)

    Joe J. Harrell:

    Well, I can — I can only cite and it will take only a moment if the Court will permit to read exactly what the Lower Court, Judge Caldwell in his opinion stated the issues to be.

    And the very first issue and I quote from 182 of the record, “Whether Chapter 5 or 1, Florida Statutes and the regulations and orders of defendants has applied to milk delivered by plaintiff to military reservations are constitutional.”

    And that’s at Page 181 and that was the first issue that the Judge himself considered. And he squarely considers that and he squarely considers and in fact discusses the Polar case at the time in his opinions stating that the Polar case had not been decided at the time that he wrote his opinion.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Package been delivered and processed.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That is very true.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Because if Florida Milk is used, because Florida is the cheapest source of supplies because the milk does not involve transportation cost, it of course would be the most readily available with a guaranteed source of supply and if it were used to fill the military contracts then of course each gallon would had — would have to be paid for as the rate of 61.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Yes sir and I direct the Court’s attention to Mr. Fisher’s testimony in which he states that yes if it is to the military, it would be at the rate of 61 cents per gallon.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    That there is absolutely squarely, their position.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    Well, that’s right.

    And I quoted page — at page 148 of the record Your Honor and you can put your hand right on it.

    Byron R. White:

    (Inaudible)

    Joe J. Harrell:

    So that is — that is the exact position and that is the position and as I understood issues and as the Judge Caldwell understood him when he wrote the opinion.

    That was the issue which he considered with respect to the use of military milk insofar as the fulfilling of the military contracts, the use of Florida milk, excuse me.

    Then we come to the third —

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    Yes sir?

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    No sir, no.

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    The logic behind the argument is that it is certainly and in appearance with the procurement policy of the United States leaving aside the exclusive jurisdiction of the location of the situs of this that certainly is an interference if they say all (Inaudible) who want to use Florida Milk, you can bid on this contract although Polar has had this contract for eight years but if he uses Florida Milk, he must begin by paying a producer price of 61 cents a gallon.

    The evidence reflects that he was delivering packaged and delivered milk to Fort Benning Georgia I believe for 58 cents package homogenized, pasteurized and delivered for a price of 58 cents per gallon sold at as a practical economic situation, it would eliminate any bidder using Florida Milk from bidding on a military contract.

    Just the sheer economics will be immediately apparent.

    In other words, when he has to pay for producer milk 3 cents more than the actual processed and delivered price, it puts an end to the use of Florida milk for the servicing of military contract.

    Did the United States (Inaudible)

    Joe J. Harrell:

    The United States has not sir, to my knowledge.

    (Inaudible)

    William J. Brennan, Jr.:

    Well, I thought (Inaudible)

    Joe J. Harrell:

    Your Honor insofar as sale to the United States Government on — on military installations exclusive jurisdiction which has been seeded.

    It’s the exact same situation as the Pacific Coast.

    William J. Brennan, Jr.:

    (Inaudible)

    Joe J. Harrell:

    Oh yes, sir, yes.

    William J. Brennan, Jr.:

    (Inaudible) those regulations, is to believe (Inaudible) the Federal Government negotiation (Inaudible).

    Joe J. Harrell:

    I do not intend to evade your question but let me preface the answer phrase by saying this.

    That as I understand the cornerstone of the procurement regulations is competitive bidding that is the — as I read the Polar case that is the absolute cornerstone although secondarily procurement can be head by negotiations.

    William J. Brennan, Jr.:

    (Inaudible)

    Joe J. Harrell:

    The producer price was not considered by in the Polar Case only at the wholesale price but it–

    William J. Brennan, Jr.:

    (Inaudible)

    Joe J. Harrell:

    No sir, that’s correct.

    In the lower court both producer and the wholesale price were considered when the case reach this Court only the wholesale price was considered and the producer price was not considered.

    William J. Brennan, Jr.:

    (Inaudible)

    Joe J. Harrell:

    No sir, I’m not saying that.

    But I am saying — I am saying this, that — that if the — that if the producer — I am saying this that if there is a fixed produce — producer price which has the effect of eliminating the use of Florida milk from the fulfillment of a contract in bidding then certainly that would be an interference with a procurement policy and in that event, the State of Florida could not so interfere.

    It’s the identical thing as the wholesale only these steps down to the producer price which is the next level and —

    (Inaudible)

    Joe J. Harrell:

    Only this suggestion and on–

    (Inaudible)

    Joe J. Harrell:

    Well, I think economically certainly Pensacola — the Pensacola Naval Air Station being right within four miles, there would be an economic distance advantage to Polar Ice Cream and Creamery Company bidding on that contract as opposed to some other Alabama.

    (Inaudible)

    Joe J. Harrell:

    Perhaps they would not.

    Perhaps they could supply for a lesser amount as the record reflects and as we have stated for the past eight years, Polar Ice Cream and Creamery Company has been able to compete — competitively with the low bid.

    But this was — you will recall, this was before these four counties came under the — the Florida Milk Commission and of course it was on and altogether the different basis because at that time, there were no regulations or requirements of paying a minimum producer price of 61 cents.

    (Inaudible)

    Joe J. Harrell:

    Well, there are some other —

    (Inaudible)

    Joe J. Harrell:

    No.

    (Inaudible)

    Joe J. Harrell:

    There was — there is one in Montgomery Alabama.

    (Inaudible)

    Joe J. Harrell:

    And to be utterly candid with the Court, there are a few people — there are few companies in position to handle this quantity of milk.

    But the record reflects that Polar Ice Cream and Creamery is the largest — one of the largest independent milk dealers certainly in the South.

    And as a practical problem, there are very few companies that are able to bid on a contract of this magnitude that I think is —

    (Inaudible)

    Joe J. Harrell:

    And then the last of portion of our brief is consider the question of whether or not Florida can impose a distributor’s tax of 15 cents per 100 gallons on all of the milk which is delivered to the military.

    Our position is squarely this that certainly on these military installations, exclusive jurisdiction to which it has been seeded to the United States, Florida is without jurisdiction to impose that tax on the distributor because the tax is leveled upon sales made by the distributor and the impact would have necessity fall on the Government.

    It would increase the price of milk and also —

    (Inaudible)

    Joe J. Harrell:

    That is correct.

    (Inaudible)

    Joe J. Harrell:

    That is correct Your Honor.

    And so Polar contends that Florida is without jurisdiction because the same situation found here is the situation which was found in Pacific Coast Dairy of course at market field and also with respect to the installations in all cases.

    Hugo L. Black:

    In which question presented is that come under?

    Joe J. Harrell:

    That comes under the —

    Hugo L. Black:

    This argument.

    Joe J. Harrell:

    That comes under the —

    Hugo L. Black:

    You have two?

    Joe J. Harrell:

    Three — the third, the third question.

    Hugo L. Black:

    Where is it?

    Joe J. Harrell:

    On Page 41.

    Hugo L. Black:

    In your brief (Voice Overlap) —

    Joe J. Harrell:

    Of our main brief.

    I beg your pardon.

    Hugo L. Black:

    I find that the two questions only presented on your brief on Page 4.

    Joe J. Harrell:

    On page 41.

    But excuse me that —

    (Inaudible)

    Joe J. Harrell:

    Yes sir that’s the one, page 41.

    (Inaudible)

    Joe J. Harrell:

    No sir because the third.

    (Inaudible)

    Joe J. Harrell:

    Yes, it’s related to both points but the third — the third point, it seems that we would be on extremely solid ground and that I’ve been unable to find any cases which would call this Court — which would indicate that this Court has departed from the position which has always taken down through the years and that is — the cession of exclusive jurisdiction of course means just that unless there was a saving clause and therefore, the State was without jurisdiction to levy the tax.

    (Inaudible)

    Joe J. Harrell:

    Yes sir, yes sir.

    So that the — I hope I made myself clear with respect to the three issues as we understand them.

    (Inaudible) where does tax (Inaudible)?

    Joe J. Harrell:

    The tax goes to the support of the Milk Commission, yes sir.

    And before I sit down, I would like before the Court to understand that this is a little different, however, from a tax which is an inspection tax with respect to purity or wholesomeness of that or anything of that sort, Chapter 501 does not touched on the purity or the wholesomeness of milk and that is with — that is on the jurisdiction of the Department of Agriculture in the State of Florida.

    Joe J. Harrell:

    And of course 501 is only interested in the economic aspects insofar as the regulation of milk is concern.

    Arthur J. Goldberg:

    (Inaudible)

    Joe J. Harrell:

    Yes, he was.

    He did not feel that it would be the best interest of the milk industry or the dairy.

    Earl Warren:

    Mr. Horne?

    Mallory E. Horne:

    Mr. Chief Justice, may it please the Court.

    On behalf of the Milk Commission, I will address myself primarily to the two points.

    One the involvement of the military milk, the other with the regulatory fee imposed by State and reserve to Mr. Savary, may it please the Court, the question of the involvement of commerce.

    I think first of all the brief explanation of the Florida’s approach to the military milk question and particularly with the reference to this area might be helpful.

    First of all, as this case begin its development even prior to the complaint and in responding to your question, the record does reflect the vociferous opposition of this plaintiff to the jurisdiction of the Commission.

    The record reflects that as a result of — and by the way Your Honor that he does not load himself because he’s a distributor, producers and producer-distributors do load.

    After series of letters to his producers against after they succeeded in loading in this jurisdiction, this record reflects a series of unilateral price slash-in to the producers directed to this plant unparallel in our history of milk in the State.

    So the answer is very definitely, he was opposed and from that time on this case begin.

    Now, what its involvement in military milk?

    I think one significant thing.

    The complaint which brought forth to jurisdiction of this three-judge tribunal, one alleged primarily that the military milk order, effective in the Pensacola market precluded his utilization of other state milk.

    And jurisdiction in that point brought forth, the three-judge tribunal going up.

    Now, before we can even get the pre-trial conference, the producers brought it out as they can in our statutory structure, the military milk order.

    So that at the time of the pre-trial conference, may it please the Court, there was no statutory or regulation or attempted enforcement in the field of military milk at all, none.

    So that Judge Caldwell in his pre-trial order says that we are in effect true with the military milk question, it has become moot.

    And there was an order into that effect in the reference and it is noted in my brief.

    William J. Brennan, Jr.:

    What was that?

    Mallory E. Horne:

    Sir?

    William J. Brennan, Jr.:

    What was that (Inaudible)

    Mallory E. Horne:

    Yes sir.

    William J. Brennan, Jr.:

    Military milk orders will not (Inaudible)

    Mallory E. Horne:

    Yes sir, yes sir but the point —

    William J. Brennan, Jr.:

    (Inaudible)

    Mallory E. Horne:

    Yes sir.

    But the point is that he cannot — let me — this brings over to this field of classification of milk Judge and here’s the point.

    Mallory E. Horne:

    And that is that we have classifications of milk.

    Class I is generally that which is utilized in a drinking form by customers.

    Now, military milk itself would fit that classification.

    But because of the necessity of bidding, if they want use it, there is a classification, a separate classification called military milk and a separate price.

    In most areas when they do have a military price, if someone that they go to 41 to 45 cents.

    Now, the military classification was removed in Florida prior to this trial.

    So what he’s doing here is saying at the time of this trial, they get it back in the backdoor and saying, “But what if we wanted to use Florida milk in this area since there is no classification of it?”

    And the — he’s involved here is because of this.

    He can do two things if he wants to use Florida milk but be mindful that it came into court because it was keeping him from using other state milk that he can acquire.

    And this gentleman testified in court that if he never saw of another Florida producer, the milk man would not miss one delivery.

    That’s how significant this matter is to him.

    He didn’t need a Florida producer and in fact over 70% of his businesses, milk is obtained elsewhere.

    But he can obtain Florida milk on a bilateral arrangement with producers to obtain that milk.

    He cannot unilaterally say it.

    But he get it from other surplus areas of the state, if he can persuades his own producers or other producers to produce more than their commitment and allocate it to military relationships bilaterally —

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Actually, no.

    I’m not saying exactly Judge.

    I don’t want to mislead you about this.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    The milk that he’s obtaining from his base earned producers.

    If it used in Class I channel and military actually without a separate definition of military, it would be Class I.

    However — so if he did but now what he’s telling you is that I want to use this milk, Florida milk.

    But at the same time in his testimony, he tells you that when Wisconsin is in surplus, he can go through brokers and bring milk back in Florida for 30 cents.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Unless he can obtain a bilateral agreement elsewhere in Florida or even in his own area for the production of separate milk.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    No.

    Byron R. White:

    — priority.

    Mallory E. Horne:

    No I’m saying that if he wants to go another producer or at a dairy farm and asked them to produce milk for him for dairy, 41 cents.

    Mallory E. Horne:

    He can do that and we —

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Yes, sir.

    That’s right.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Yes.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Yes but we do not try the make him use it, is the point.

    How can we encroach and how can we be construed to be interfering with the government contract when we do nothing in the area?

    It’s difficult for me to understand what the Court would strike down if you struck down our involvement because we simply do nothing, if he selects this milk.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Yes, sir.

    I am — I am suggesting that he paid 61 before the Milk Commission even came in.

    I’m suggesting to you that and record reflects that he paid his producers the same ones you’re using now, 61 cents per gallon on a blend based prices.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    Yes sir.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    That’s my understanding of it.

    It never has and never will because in every area of this country and this is one the things that’s causing the milk industry to be in a metamorphosis from actually this concept of locally supplied milk to the big brokerage surplus-storage type situation.

    And that’s why you beginning to see more and more of this type of case.

    But in anyway, Florida Commission is doing absolutely nothing.

    They tried to say that the Polar case says, “As I understand what you said.

    There is ridiculous because there, you have the State of California saying that X number of cents per gallon, you must charge.”

    This involved the direct relationship between the distributor and the military installation.

    Byron R. White:

    What is the (Inaudible)

    Mallory E. Horne:

    I don’t think it is.

    I don’t think it ever will be difficult for him to buy out-of-state milk.

    It never has been a problem.

    It isn’t one now.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    No sir it won’t be.

    Byron R. White:

    (Inaudible)

    Mallory E. Horne:

    No I think he is absolutely and unequivocally convinced that he wants to destroy the Florida Milk Commission.

    I think it’s his one ambition in life and I think he says so.

    But the military question is ridiculous.

    We did not set a price at either level and the Polar case attacked that one point.

    And to say that you said in the Polar case that you’re prohibiting any involvement or any expenditure that affects a military price is ridiculous too and yet that’s what they said in their reply brief to you.

    William O. Douglas:

    On Page 75 of the record that the court says that this issue would become moot.

    Mallory E. Horne:

    Yes sir.

    William O. Douglas:

    Could you explain that again?

    Mallory E. Horne:

    I cannot explain it Judge.

    I can’t understand why we are arguing it here.

    The court there said, “It’s moot because we abolished our order and yet the biggest part of the transcript in this case involved a military installation.”

    And we argued it again in this brief.

    I cannot understand it because it in fact Judge had become moot.

    William O. Douglas:

    By reason of?

    Mallory E. Horne:

    By reason of the destruction of the military milk order.

    So that there was no compulsion that he buy milk from Florida producers at any specific price or that he sells to the military installations at any particular price in fact we took a hands-off policy.

    William O. Douglas:

    Is that the status of the present time?

    Mallory E. Horne:

    Yes, sir.

    That’s the status of the present time.

    Now with respect to the regulatory fee involved here and I — I can’t see that it violates a single standard that you ever set forth with respect to a state rights, states right to have a regulatory body hence sufficient financially to accomplish that aspect to this jurisdiction.

    This statute simply says this, that the producers and the distributors play identically the same fractional percentage of each gallon of milk produced on the one hand or distributed on the other for the financing of this Commission.

    That fee never touches the general revenue fund of the State of Florida.

    It is never expended in any function of our Government, save this Florida Milk Commission.

    It is held by the state controller in trust and separate from all other general revenue funds and it ever exceeds 125% of the budgeted needs of Florida Milk Commission in a base for the rest of that year.

    There was no testimony in this record whatsoever that this fee was one excessive.

    It was applied to this distributor differently than any other distributor, nor that it ever touched in any way the general revenue fund of the State of Florida.

    It’s difficult for me to see how any regulatory fee could one be fairer or two, fail to meet the standards set down by this Court to compare to the Standard Oil case is absorbed, the gasoline taxes of this Country either go directly to the general revenue funds at several states or they are earmarked constitutionally or statutorily for roads and this is not the specific case here.

    So I think that the question of the involvement of the military in either of its aspects is not justified and that the position of the State of Florida in both regards is fair and meet standard set fort by this Court.

    Mallory E. Horne:

    Thank you very much.

    Earl Warren:

    Mr. Savary.

    Johnson S. Savary:

    Mr. Chief Justice, may it please the Court.

    I will address my remarks mainly to the commerce question that has been brought up by the appellant in this case.

    But before doing so, I believe that it will be of assistant to this Court and analyzing the facts in this case, and this case to understand a little bit more about the milk biddings in the State of Florida.

    Now very briefly, there are five milk marketing areas in the State of Florida under the jurisdiction of the Florida Milk Commission.

    We are concerned in this case only with the Pensacola area.

    But very briefly, we have the Tallahassee area, the Northeast area which is Jacksonville, the Central Florida and the Tampa area.

    Now, this so-called scheme that the appellant accuses the Commission of adopting is the same scheme used in every other area in the State of Florida.

    In other words, we have a uniform system of milk regulation in each of the five milk marketing areas.

    Now, I should point out to the Court to this 61 cent price has — since the trial on this case been dropped to 59 cents in the Pensacola area.

    It is also 59 cents in the Tallahassee area but it is 61 cents in the other three areas.

    So in effect the Tallahassee and Pensacola area has a lower Class I price in the other areas in Florida.

    Now, the base order or base scheme as referred to by appellant is as I said a uniform order but designating each milk marketing area but the same intent, the same construction, the same meaning as in this order, as an area order in the State of Florida.

    Now, the Pensacola area was under the control of the Florida Milk Commission until in April of 1958 which timely produces loaded the Commission now or a period of approximately four years, the Commission was out of this area.

    The producers ordered them back in once again in November 21, 1961.

    Following this point, the Polar Ice Cream Company, the appellant in this case arbitrarily cut prices to his producers.

    He cut it from — from 61 cents that he was paying prior to the time this Commission came back in to 56 cents retroactive prior to the date the Commission came back in.

    It further cut in month later down to 47 cents, I believe in on that to 43 cents per gallon.

    Following this unilateral price cutting on the part of appellant, the Commission in due course exercise its authority on the statute and issued a letter to appellant stating that the producers that when your plant prior to the time the Milk Commission came back in are the producers that are assigned basis in your plant based on the previous course of needs.

    Now, we are dealing merely with a local problem that Pensacola, the same problem we have in every other milk marketing area in Florida.

    When the Commission goes in, the Commission must assign basis to a plant for a price order is nothing without a base order.

    You can say that price order is 50 cents a gallon for Class I milk or 60 or 59, but unless you have a base order, and unless the producer and the distributor know what milk goes in or what category, you’ve got nothing to apply you prices to.

    Now in the Pensacola area, it is actually a deficit area.

    I think on theories in the United States, it is a milk deficit area.

    The record shows and the Commission does not contested that there has been a surplus milk situation in United States for over 10 years and that there still is and I think they’re all with will be surplus milk situation.

    The Polar Company states that 70% of its total usage of milk or in other words 70% of milk, they process through that plant, comes from out-of-state.

    The 30% of what they could do are processed and package comes from the milk marketing area in Pensacola area.

    Now, out of the 70%, it comes in the Polar, Polar has no contractual arrangement, they have no base arrangement, they have no other arrangement with any other state, any other producers.

    I challenge the appellant to show in his record where there’s any testimony as to regular Alabama producers.

    Johnson S. Savary:

    Now, he is trying to infer to this Court that because Pensacola is only 16 miles from the Alabama state line that they carry on a regular course of business with Alabama producers.

    That is not the case.

    They buy from a milk brokerage firm and the Demopolis, Alabama come and know as the Black Belt theory cooperative incorporated.

    We call it cooperative but in effects it’s actually a corporation.

    They buy surplus milk.

    The Alabama Milk Control Board regulates prices in Alabama.

    They regulate the milk business in Alabama.

    They’re telling Alabama is distributed it for every gallon of Class I milk that you sell, you must pay your Alabama producers 56 and a half cents per gallon.

    Mr. Zirkleback, the President of the Polar Company in the trial of the case and it appears in the record states that they — he can go in Alabama and buy milk for 30 cents per gallon.

    May it please the Court, the only milk he buy for 30 cents of gallon is surplus milk and we are not prohibits him from doing that.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Not to the extent that Florida Commission does Mr. Justice Goldberg.

    Alabama, I understand, wants follow what Florida us doing.

    But at the present time, they are faced with an influx of milk from Mississippi and Tennessee and Arkansas into Northern Alabama.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Yes, sir.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    That is correct Your Honor, yes, sir.

    Arthur J. Goldberg:

    — and that is a basic step.

    Johnson S. Savary:

    Yes, sir.

    Arthur J. Goldberg:

    (Inaudible) purposes.

    Johnson S. Savary:

    Yes, sir.

    Arthur J. Goldberg:

    Exactly.

    Johnson S. Savary:

    Now, perhaps, the base order might go a half step further, a state that you must accept that because of the base order — now the base order guarantees to Polar that it’s going to get pretty much so many gallons per day and per week, per month out of the Pensacola area.

    A producer of Polar may not go to border to sell his milk, may not go with the formal, they may not go to seal test.

    His milk must be transported from his barn to Polar.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Yes.

    Arthur J. Goldberg:

    (Inaudible) to sell it.

    Johnson S. Savary:

    That is correct Your Honor.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Yes but sir except.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Yes except —

    Yes, let me not mislead.

    You owned this — the order does not specify the 30%.

    Arthur J. Goldberg:

    I understand it — (Inaudible)

    Johnson S. Savary:

    But based on the present application of approximately the proportion of milk that had being produced by the Florida producers and sold to the Polar plant.

    Now, the order further states that there’s 110% and 115% provision which is really, really — you might call it a nice hair we called the distributor must accept up to 110% of the producer’s milk that he must only pay for that percentage that actually gets into Class I sale.

    The surplus is only a surplus price, your Class II, III, and IV prices.

    Now, the Florida Commission follows the pricing schedule of the federal milk marketing area which is in existence in Southeast Florida, some eight counties and Southeast Florida has a federal order.

    Now, we follow their price allocation and definitions on Class II, III, and IV milk.

    Whatever their price is, we allow the same price to the Florida producers in our area and that is in effect based upon the Chicago commodity exchange.

    So we say that — that to whatever extent, Polar has Class I sales in Florida, Florida only that they must first use the milk that is assigned to them by these producers that is guaranteed to them to you.

    They use that milk, and the record is very incomplete on it’s phase and I’m sure that you will observe it and reading the record that the Judge Jones, Judge Caldwell and Judge DeVane, the three judges who herd the case referred to the fact that the Polar Company had no records on actual sales and utilizations.

    They could not prove and did not prove at the trial of this case as to what extent of their sales where in Florida, as to what percentage of the Florida produced milk went in the Florida sale.

    Mr. Zirkleback stated that as far as he was concerened, he did not keep records that he’s treated milk as he would have can of sardines, it was only altogether.

    And I don’t see how that they can come in to this Court with all of these issues as to the Commerce Clause when there’s nothing into record on the any violation of the Commerce Clause, whatsoever.

    We did strictly with a local situation.

    Now, I might make one further observation, that when Polar first came in the Court, they came into the military question with Mr. Horne has discussed and there are many complaints.

    They finally got into to a face of commerce by saying in paragraph 43 of their amended complaint.

    Polar says that “Because Florida Milk Commission forces us, requires us to take all of the Florida produced milk and any surplus produce milk and use it in our sales.

    First, it violates a Commerce Clause.

    We do not do that.

    We only say that you have to take the Florida milk insofar as the Class I sale was utilized.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Yes except the from what the argument–

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Yes, but we say that any sales he wants to put in the military, he is free to contract Fort on out-of-state milk or on any other produced milk in Florida.

    But we say that a Class I sale and we will further do insofar as pricing is concerned, is this milk sold on the street, in the store or delivered to the houses.

    Johnson S. Savary:

    We don’t want do that any way regulate military milk.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Mr. Justice White, he may go to his Florida producers and say that after I use your milk to the extent of my Class I sale.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Military milk is specifically defined, although it might be fresh wholesome fluid milk.

    We have a separate category for military sales so that we won’t in any way try to regulate.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    No, sir.

    We still have the definition.

    We just do not have a military order in the Pensacola area.

    Alright so I’ll try to explain it if I might.

    Mr. Horne actually had the military phrased this question.

    But in any milk order, in the milk areas excuse me, there is in effect what we call a military order which states that the producers have agreed to produce milk to be sold to the military at a free arranged price between the producer and the distributor.

    They have agreed.

    They have contractually made and argued and set a price and then producer say that, “We will produce surplus milk and you can put it in the military.”

    The — initially when this case was filed, there was a military order in effect in the Pensacola area.

    That order was voted out by the producers.

    In other words, the producers are saying that we cannot produce milk, keeping it for you to bid on the military that we are like any other businessmen that we don’t want to sell our goods at a loss just to give you the privilege of bidding on a military contract with any other contract.

    That we know what it cost us to produce milk and we can’t sell that cheap.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Sir?

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    There is in the general allocation order which I’m not sure if it’s in the record or not.

    That classifies a separate and distinct classification of military milk so that if producers want to produce for surplus milk for that, they might.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    We disagree with that contingent Mr. Justice White because of the reason that this one —

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    The contention of the Commission is this very brief with that.

    So long as he has Class I sale, in other words apart from military, taking military out separate.

    If he has Class I sale, separate from his military, he must take a Florida produce milk first and put it into the Class I sale.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    After the Class I sales are used up, this milk becomes surplus milk.

    He make contract with those producers for diverting in —

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Insofar as pricing his concern is not Your Honor.

    Byron R. White:

    (Inaudible)

    Johnson S. Savary:

    Sir?

    Byron R. White:

    Think about the contract.

    Johnson S. Savary:

    Yes, sir.

    Now, a word if I might about —

    Arthur J. Goldberg:

    Would it be correct to say (Inaudible)

    Johnson S. Savary:

    If the producers wish —

    Arthur J. Goldberg:

    If they want to change (Inaudible)

    Johnson S. Savary:

    Yes, sir.

    Arthur J. Goldberg:

    In that respect?

    Johnson S. Savary:

    Well, we’re not holding them at all in that one point.

    Let me say one point I meant about the way the price is determined for Class I sales in Florida.

    The statute it’s very clear in the elements, the Florida Milk Commission must consider in arriving at a Class I price.

    As I mentioned, it was 61 cents and they reduced it to 59 cents.

    They had a detail price study that what it cost to raise a gallon of milk or produce a gallon of milk in Florida, whether it be for sales to a supermarket, to a house or any other purpose of which it was intended to be used, it cost the same.

    They took into consideration the cost of the cows, the land, the taxes, the real state taxes of course, the property taxes, the labor, the bid, and they inserted a minimum amount for overhead and profit.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Yes, sir.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    No sir, we had no Jurisdiction whatsoever in Alabama.

    And I would — they have speculated and not even attempted to say what it cost to raise a gallon of milk in Alabama, I have no idea.

    I know that if Mr. Zirkleback can buy the 30 cents of gallon, surplus milk over there, that’s indicative to me that it can be produce to that.

    However, the Commission, control board, all had said he produced price 56 and a half cent for a gallon.

    Arthur J. Goldberg:

    (Inaudible)

    Johnson S. Savary:

    Mr. Justice Goldberg, I have run across one federal case and it involved a milk marketing — federal milk marketing area which is in St. Louis.

    Johnson S. Savary:

    But I think that the requirement as to infringement upon the importation of outside milk would be substantial saying on the Federal Act as on the state regulation.

    And I was going to discuss that case after lunch very briefly.