Schechter+Poultry+Corp+v+United+States+_1935_

Schechter+Poultry+Corp+v+United+States+_1935_ - Schechter...

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Unformatted text preview: Schechter Poultry Corp. v. United States Early in 1935, the Court began its all-out assault against the New Deal. First, in Panama Refining Co. v. Ryan, it invalidated the petroleum code established under the National Industrial Recovery Act (293 U.S. 388). By an 8-1 margin, the Court held that the act unduly delegated legislative power to the executive. But in the Schechter case a few months later, the Court unanimously con— demned the constitutional underpinnings of the NIRA. The “Sick Chicken” case, as it came to be known, hardly reflected the govern- ment’s concern with basic industries and was, altogether, a poor case for justifying the broad powers encompassed in the NIRA. It involved the live-poultry code which regulated wages, hours, production, and marketing for the poultry industry within the metropolitan New York area. Although this included parts of New Jersey and Connecticut, the regulations mostly covered local trans- actions. The plaintifls were charged with selling an “unfit chicken” when they violated the “straight killing” code provision, prohibiting discriminatory selection of fowl. They challenged the act as a regu— lation of intrastate commerce and also as an excessive delegation of legislative power to the executive branch of government. Chief Justice Hughes delivered the opinion of the Court. First. Two preliminary points are stressed by the Government with respect to the appropriate approach to the important questions presented. We are told that the provision of the statute authorizing the adoption of codes must be viewed in the light of the grave national crisis With which Congress was confronted. Undoubtedly, the condi— tions to which power is addressed are always to be considered when the exercise of power is challenged. Extraordinary conditions may call for extraordinary remedies. But the argument necessarily stops short of an attempt to justify action which lies outside the sphere of constitutional authority. Extraordinary conditions do not create or enlarge constitu— tional power. The Constitution established a national government with powers deemed to be adequate, as they have proved to be both in war and peace, but these powers of the national government are limited by the constitutional grants. Those who act under these grants are not at liberty to transcend the imposed limits because they believe that more 295 U.S. 495 (1935) 373 374 Depression and Constitutional Crisis: 1933—4936 or different power is necessary. Such assertions of extra-constitutional authority were anticipated and precluded by the explicit terms of' the Tenth Amendment,-———“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” .. . . Second. The question of the delegation of legislative power. . Accordingly we turn to the Recovery Act to ascertain what limits have been set to the exercise of the President’s discretion. First, the President, as a condition of approval, is required to find that the trade or industrial associations or groups which propose a code, “impose no inequitable restrictions on admission to membership” and are “truly representative.” That condition, however, relates only to the status of the initiators of the new laws and not to the permissible scope of such laws. Second, the President is required to find that the code is not “designed to promote mondpolies or to eliminate or oppress small enterprises and will not operate to discriminate against them.” And, to this is added a proviso that the code “shall not permit monopolies or monopolistic practices.” But these restrictions leave virtually untouched the field of policy en- visaged by section one, and, in that wide field of legislative possibilities, the proponents of a code, refraining from monopolistic designs, may roam at will and the President may approve or disapprove their proposals as he may see fit. . . . Nor is the breadth of the President’s discretion left to the necessary implications of this limited requirement as to his findings. As already noted, the President in approving a code may impose his own conditions, adding to or taking from what is proposed, as “in his discretion” he thinks necessary “to effectuate the policy” declared by the Act. Of course, he has no less liberty when he prescribes a code on his own motion or on complaint, and he is free to prescribe one if a code has not been approved. The Act provides for the creation by the President of admin- istrative agencies to assist him, but the action or reports of such agencies, or of his other assistants, -——their recommendations and findings in rela— tion to the making of codes—have no sanction beyond the will of the President, who may accept, modify or reject them as he pleases. Such recommendations or findings in no way limit the authority which § 3 un— dertakes to vest in the President with no other conditions than those there specified. And this authority relates to a host of different trades and industries, thus extending the President’s discretion to all the varieties of laws which he may deem to be beneficial in dealing with the vast array of commercial and industrial activities throughout the country. ' Such a sweeping delegation of legislative power finds no support in the decisions upon which the Government especially relies. . . To summarize and conclude upon this point: Section 3 of the Recovery Act is without precedent. It supplies no standards for any trade, industry Sohechter Poultry Corp. v. United States 375 or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate ad— ministrative procedure. Instead of prescribing rules of conduct, it an- thorizes the making of codes to prescribe them. For that legislative undertaking, § 3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction and expansion described in section one. In view of the scope of that broad declaration, and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually ' unfettered. We think that the code-making authority thus conferred is _ an unconstitutional delegation of legislative power. Third. The question of the application of the provisions of the Live Poultry Code to intrastate transactions. . . . This aspect of the case presents the question whether the particular provisions of the Live Poultry Code, which the defendants were con— victed for violating and for having conspired to violate, were within the regulating power of Congress. These provisions relate to the hours and wages of those employed by defendants in their slaughterhouses in Brooklyn and to the sales there made to retail dealers and butchers. . . . The undisputed facts . . . afiord no warrant for the argument that the poultry handled by defendants at their slaughterhouse markets was in a “current” or “flow” of interstate commerce and was thus subject to congressional regulation. The mere fact that there may be a constant flow of commodities into a State does not mean that the flow continues after the property has arrived and has become commingled with the mass of property within the State and is there held solely for local disposition and use. So far as'the poultry here in question is concerned, the flow in interstate commerce had ceased. The poultry had come to a perma— nent rest within the State. It was not held, used, or sold by defendants in relation to any further transactions in interstate commerce and was not destined for transportation to other States. Hence, decisions which deal with a stream of interstate commerce—where goods come to rest a State temporarily and are later to go forward in interstate com- merce—and with the regulations of transactions involved in that prac- tical continuity of movement, are not applicable here. . . . Did the defendants’ transactions directly “afieot” interstate commerce so as to be subject to federal regulation? The power of Congress extends not only to the regulation of transactions which are part of interstate commerce, but to the protection of that commerce from injury. . . . In determining how far the federal government may go in controlling intrastate transactions upon the ground that they “afiect” interstate com- meme, there is a necessary and well~established distinction between 376 Depression and Constitutional Crisis: 1933—1936 direct and indirect effects. The precise line can be drawn only as in— dividual cases arise, but the distinction is clear in principle. Direct effects are illustrated by the railroad cases we have cited, as e.g., the effect of failure to use prescribed safety appliances on railroads which are the highways of both interstate and intrastate commerce, injury to an em— ployee engaged in interstate transportation by the negligence of an employee engaged in an intrastate movement, the fixing of rates for in— trastate transportation which unjustly discriminate against interstate com— merce. But where the effect of intrastate transactions upon interstate commerce is merely indirect, such transactions remain within the domain of state power. If the commerce clause were construed to reach all enter— prises and transactions which could be said to have an indirect effect upon interstate commerce, the federal authority would embrace prac- tically all the activities of the people and the authority of the State over its domestic concerns would exist only by sufferance of the federal government. Indeed, on such a theory, even the development of the State’s commercial facilities would be subject to federal control. . . . The question of chief importance relates to the provisions of the Code as to the hours and wages of those employed in defendants’ slaughter— house'markets. It is plain that these requirements are imposed in order to govern the details of defendants’ management of their local business. The persons employed in slaughtering and selling in local trade are not employed in interstate commerce. Their hours and wages have no direct relation to interstate commerce. The question of how many hours these employees should work and what they should be paid diifers in no essential respect from similar questions in other local businesses which handle commodities brought into a State and there dealt in as a part of its internal commerce. This appears from an examination of the con- siderations urged by the Government with respect to conditions in the poultry trade. Thus, the Government argues that hours and wages affect prices; that slaughterhouse men sell at a small margin above operating costs; that labor represents 50 to 60 per cent. of these costs; that a slaugh- terhouse operator paying lower wages or reducing his cost by exacting long hours of work, translates his saving into lower prices; that this results in demands for a cheaper grade of goods; and that the cutting of prices brings about a demoralization of the price structure. Similar conditions may be adduced in relation to other businesses. The argument of the Government proves too much. If the federal government may determine the wages and hours of employees in the internal commerce of a State, because of their relation to cost and prices and their indirect effect upon interstate commerce, it would seem that a similar control might be exerted over other elements of cost, also affecting prices, such as the number of employees, rents, advertising, methods of doing business, etc. All the processes of production and distribution that enter into cost could Sohechter Poultry Corp. v. United States 377 I likewise be controlled. 'If the cost of doing an intrastate business is in itself the permitted object of federal control, the extent of the regulation of cost would be a question of discretion and not of power. . . . It is not the province of the Court to consider the economic advan~ tages or disadvantages of such a centralized system. It is sufficient to say that the Federal Constitution does not provide for. it. Our growth and development have called for Wide use of the commerce power of the federal government in its control over the expanded activities of interstate commerce, and in protecting that commerce from burdens, interferences, and conspiracies to restrain and monopolize it. But the authority of the federal government may not be pushed to such an ex- treme as to destroy the distinction, which the commerce clause itself establishes, between commerce “among the several States; and the in- ternal concerns of a State. The same answer must be "made to the contention that is based upon the serious economic situation which led to the passage of the Recovery Act,--the fall in prices, the decline in wages and employment, and the curtailment of the market for commodi- ties. Stress is laid upon the great importance of maintaining wage dis- tributions which would provide the necessary stimulus in starting “the cumulative forces making for expanding commercial activity.” Without in any way disparaging this motive, it is enough to say that the recupera- tive efforts of the federal government must be made in a manner con~ sistent with the authority granted by the Constitution. We are of the opinion that the attempt through the provisions of the Code to fix the hours and wages of employees of defendants in their intrastate business was not a valid exercise of federal power. . . . ...
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This note was uploaded on 02/21/2012 for the course 512 404 taught by Professor Clemens during the Spring '12 term at Rutgers.

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Schechter+Poultry+Corp+v+United+States+_1935_ - Schechter...

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