A. L. a. Schechter Poultry Corp. v. United States

8/2/2019 A. L. a. Schechter Poultry Corp. v. United States

http://slidepdf.com/reader/full/a-l-a-schechter-poultry-corp-v-united-states 1/22





administrativeprocedure.Instead,itauthorizesthemakingofcodestoprescribethem.Forthatlegislativeundertaking,itsetsupnostandards,asidefromthestatementofthegeneralaimsofrehabilitation,correctionandexpansionfoundin§1.Inviewofthebroadscopeofthatdeclaration,andofthenatureofthefewrestrictionsthatareimposed,thediscretionofthePresidentinapprovingorprescribingcodes,andthusenactinglawsforthegovernmentoftradeandindustrythroughoutthecountry,isvirtuallyunfettered.Thecode-makingauthoritythussoughttobeconferredisanunconstitutionaldelegationoflegislativepower.P.541.

6.Defendantswereengagedinthebusinessofslaughteringchickensandsellingthemtoretailers.TheyboughttheirfowlsfromcommissionmeninamarketwheremostofthesupplywasshippedinfromotherStates,transportedthemtotheirslaugterhouses,andthereheldthemforslaughterandlocalsaletoretaildealersandbutchers,whointurnsolddirectlytoconsumers.Theywereindictedfordisobeyingtherequirementsofa"CodeofFairCompetitionfortheLivePoultryIndustryoftheMetropolitanAreainandabouttheCityofNewYork,"approvedbythePresidentunder§3oftheNationalIndustrialRecoveryAct.Theallegedviolationswere:failuretoobserveintheirplaceofbusinessprovisionsfixingminimumwagesandmaximumhoursforemployees;permittingcustomerstoselectindividualchickensfromparticularcoopsandhalf-coops;saleofanunfitchicken;saleswithoutcompliancewithmunicipalinspectionregulationsandtoslaughterersanddealersnotlicensedundersuchregulations;makingfalsereports,andfailuretomakereportsrelatingtorangeofdailypricesandvolumeofsales.

Held:

(1)Whenthepoultryhadreachedthedefendants'slaughterhouses,theinterstatecommercehadended,andsubsequenttransactionsintheirbusiness,includingthematterschargedintheindictment,weretransactionsinintrastatecommerce.P.542.

(2)Decisionswhichdealwithastreamofinterstatecommerce--wheregoodscometorestwithinaStatetemporarilyandarelatertogoforwardininterstatecommerce--andwiththeregulation[p499]oftransactionsinvolvedinthatpracticalcontinuityofmovement,areinapplicableinthiscase.P.543.

(3)Thedistinctionbetweenintrastateactsthatdirectlyaffectinterstatecommerce,andthereforearesubjecttofederalregulation,andthosethataffectitonlyindirectly,andthereforeremainsubjecttothepoweroftheStatesexclusively,isclearinprinciple,thoughthepreciselinecanbedrawnonlyasindividualcasesarise.Pp.544,546.

(4)Ifthecommerceclausewereconstruedtoreachallenterprisesandtransactionswhichcouldbesaidtohaveanindirecteffectuponinterstatecommerce,thefederalauthoritywouldembracepracticallyalltheactivitiesofthepeople,andtheauthorityoftheStateoveritsdomesticconcernswouldexistonlybysufferanceoftheFederalGovernment.Indeed,onsuchatheory,eventhedevelopmentoftheState'scommercialfacilitieswouldbesubjecttofederalcontrol.P.546.

(5)ThedistinctionbetweendirectandindirecteffectshaslongbeenclearlyrecognizedintheapplicationoftheAnti-TrustAct.Itisfundamentalandessentialtothemaintenanceofourconstitutionalsystem.P.547.

(6)TheFederalGovernmentcannotregulatethewagesandhoursoflaborofpersonsemployedintheinternalcommerceofaState.Nojustificationforsuchregulationistobefoundinthefactthatwagesandhoursaffectcostsandprices,andsoindirectlyaffectinterstatecommerce,norinthefactthatfailureofsomeStatestoregulatewagesandhoursdivertscommercefromtheStatesthatdore





rslaughterhousemarketsinBrooklyn,itistheresold,usuallywithintwenty-fourhours,toretailpoultrydealersandbutcherswhoselldirectlytoconsumers.Thepoultrypurchasedfromdefendantsisimmediatelyslaughtered,priortodelivery,byschochtimindefendants'employ.Defendantsdonotsellpoultryininterstatecommerce.

The"LivePoultryCode"waspromulgatedunder§3oftheNationalIndustrialRecoveryAct.[n3]Thatsection--thepertinentprovisionsofwhicharesetforthinthemargin[n4]--authorizesthePresidenttoapprove"codesof[p522]faircompetition."Suchacodemaybeapprovedforatradeorindustry,uponapplicationbyoneormoretradeorindustrialassociationsorgroups,ifthePresidentfinds(1)thatsuchassociationsorgroups"imposenoinequitablerestrictionsonadmissiontomembershipthereinandaretrulyrepresentative,"and(2)thatsuchcodesarenotdesigned

topromotemonopoliesortoeliminateoroppresssmallenterprisesandwillnotoperatetodiscriminate[p523]againstthem,andwilltendtoeffectuatethepolicy

ofTitleIoftheAct.Suchcodes"shallnotpermitmonopoliesormonopolisticpractices."Asaconditionofhisapproval,thePresidentmay

imposesuchconditions(includingrequirementsforthemakingofreportsandthekeepingofaccounts)fortheprotectionofconsumers,competitors,employees,a

ndothers,andinfurtheranceofthepublicinterest,andmayprovidesuchexceptionstoandexemptionsfromtheprovisionsofsuchcode,asthePresidentinhisdiscretiondeemsnecessarytoeffectuatethepolicyhereindeclared.

Wheresuchacodehasnotbeenapproved,thePresidentmayprescribeone,eitheronhisownmotionoroncomplaint.Violationofanyprovisionofacode(soapprovedorprescribed)"inanytransactioninoraffectinginterstateorforeigncommerce"ismadeamisdemeanorpunishablebyafineofnotmorethan$500foreachoffense,andeachdaytheviolationcontinuesistobedeemedaseparateoffense.

The"LivePoultryCode"wasapprovedbythePresidentonApril13,1934.Itsdivisionsindicateitsnatureandscope.TheCodehaseightarticlesentitled(1)p

urposes,(2)definitions,(3)hours,(4)wages,(5)generallaborprovisions,(6)administration,(7)tradepracticeprovisions,and(8)general.

Thedeclaredpurposeis"ToeffectthepoliciesoftitleIoftheNationalIndustrialRecoveryAct."TheCodeisestablishedas"acodeoffaircompetitionforthelivepoultryindustryofthemetropolitanareainandabouttheCityofNewYork."ThatareaisdescribedasembracingthefiveboroughsofNewYorkCity,thecountiesofRockland,Westchester,NassauandSuffolkintheStateofNewYork,thecountiesofHudsonandBergenintheStateofNewJersey,andthecountyofFairfieldintheStateofConnecticut.

The"industry"isdefinedasincluding

everypersonengagedinthebusinessofselling,purchasingforresale,[p524]transporting,orhandlingand/orslaughteringlivepoultry,fromthetimesuchpoultrycomesintotheNewYorkmetropolitanareatothetimeitisfirstsoldinslaughteredform,

andsuch"relatedbranches"asmayfromtimetotimebeincludedbyamendment.Employersarestyled"membersoftheindustry,"andthetermemployeeisdefinedtoembrace"anyandallpersonsengagedintheindustry,howevercompensated,"except"members."



TheCodefixesthenumberofhoursforworkdays.Itprovidesthatnoemployee,withcertainexceptions,shallbepermittedtoworkinexcessofforty(40)hoursinanyoneweek,andthatnoemployee,saveasstated,"shallbepaidinanypayperiodlessthanattherateoffifty(50)centsperhour."Thearticlecontaining"generallaborprovisions"prohibitstheemploymentofanypersonundersixteenyearsofage,anddeclaresthatemployeesshallhavetherightof"collectivebargaining,"andfreedomofchoicewithrespecttolabororganizations,inthetermsof§7(a)oftheAct.Theminimumnumberofemployeeswhoshallbeemployedbyslaughterhouseoperatorsisfixed,thenumberbeinggraduatedaccordingtotheaveragevolumeofweeklysales.

Provisionismadeforadministrationthroughan"industryadvisorycommittee,"tobeselectedbytradeassociationsandmembersoftheindustry,anda"codesupervisor,"tobeappointed,withtheapprovalofthecommittee,byagreementbetweentheSecretaryofAgricultureandtheAdministratorforIndustrialRecovery.Theexpensesofadministrationaretobebornebythemembersoftheindustryproportionatelyuponthebasisofvolumeofbusiness,orsuchotherfactorsastheadvisorycommitteemaydeemequitable,"subjecttothedisapprovaloftheSecretaryand/orAdministrator."

Theseventharticle,containing"tradepracticeprovisions,"prohibitsvariouspracticeswhicharesaidtoconstitute[p525]"unfairmethodsofcompetition."Thefinalarticleprovidesforverifiedreports,suchastheSecretaryorAdministratormayrequire,

(1)fortheprotectionofconsumers,competitors,employees,andothers,andinfurtheranceofthepublicinterest,and(2)forthedeterminationbytheSecretaryorAdministratoroftheextenttowhichthedeclaredpolicyoftheactisbeingeffectuatedbythiscode.

Themembersoftheindustryarealsorequiredtokeepbooksandrecordswhich"willclearlyreflectallfinancialtransactionsoftheirrespectivebusinessandthefinancialconditionthereof,"andtosubmitweeklyreportsshowingtherangeofdailypricesandvolumeofsalesforeachkindofproduce.

ThePresidentapprovedtheCodebyanexecutiveorderinwhichhefoundthattheapplicationforhisapprovalhadbeendulymadeinaccordancewiththeprovisio

nsofTitleIoftheNationalIndustrialRecoveryAct,thattherehadbeenduenoticeandhearings,thattheCodeconstituted"acodeoffaircompetition"ascontemplatedbytheAct,andcompliedwithitspertinentprovisions,includingclauses(1)and(2)ofsubsection(a)of§3ofTitleI,andthattheCodewouldtend"toeffectuatethepolicyofCongressasdeclaredinsection1ofTitleI."[n5][p526]TheexecutiveorderalsorecitedthatSecretaryofAgricultureandtheAdministratoroftheNationalIndustrialRecoveryActhadrenderedseparatereportsastotheprovisionswithintheirrespectivejurisdictions.TheSecretaryofAgriculturereportedthattheprovisionsoftheCode

establishingstandardsoffaircompetition(a)areregulationsoftransactionsinoraffectingthecurrentofinterstateand/orforeigncommerceand(b)arereasonable,[p527]

andalsothattheCodewouldtendtoeffectuatethepolicydeclaredinTitleIoftheAct,assetforthin§1.ThereportoftheAdministratorforIndustrialRecoverydealtwithwages,oursoflaborandotherlaborprovisions.[n6]

Oftheeighteencountsoftheindictmentuponwhichthedefendantswereindicted,asidefromthecountforconspiracy,twocountschargedviolationoftheminimumwageandmaximumhourprovisionsoftheCode,andtencountswereforviolationoftherequirement(foundinthe"tradepracticeprovisions")of"straightkilling."Thisrequirementwasreallyoneof"straight"selling.Theterm"straigh





aryandproperforcarryingintoexecution"itsgeneralpowers.Art.I,8,par.18.TheCongressisnotpermittedtoabdicateortotransfertootherstheessentiallegislativefunctionswithwhichitisthusvested.Wehaverepeatedlyrecognizedthenecessityofadapting[p530]legislationtocomplexconditionsinvolvingahostofdetailswithwhichthenationallegislaturecannotdealdirectly.WepointedoutinthePanamaCompanycasethattheConstitutionhasneverbeenregardedasdenyingtoCongressthenecessaryresourcesofflexibilityandpracticalitywhichwillenableittoperformitsfunctioninlayingdownpoliciesandestablishingstandardswhileleavingtoselectedinstrumentalitiesthemakingofsubordinateruleswithinprescribedlimits,andthedeterminationoffactstowhichthepolicy,asdeclaredbythelegislature,istoapply.Butwesaidthattheconstantrecognitionofthenecessityandvalidityofsuchprovisions,andthewiderangeofadministrativeauthoritywhichhasbeendevelopedbymeansofthem,cannotbeallowedtoobscurethelimitationsoftheauthoritytodelegate,ifourconstitutionalsystemistobemaintained.Id.,p.421.

Accordingly,welooktothestatutetoseewhetherCongresshasoversteppedtheselimitations--whetherCongress,inauthorizing"codesoffaircompetition,"hasitselfestablishedthestandardsoflegalobligation,thusperformingitsessentiallegislativefunction,or,bythefailuretoenactsuchstandards,hasattemptedtotransferthatfunctiontoothers.

TheaspectinwhichthequestionisnowpresentedisdistinctfromthatwhichwasbeforeusinthecaseofthePanamaCompany.There,thesubjectofthestatuto

ryprohibitionwasdefined.NationalIndustrialRecoveryAct,§9(c).ThatsubjectwasthetransportationininterstateandforeigncommerceofpetroleumandpetroleumproductswhichareproducedorwithdrawnfromstorageinexcessoftheamountpermittedbyStateauthority.ThequestionwaswithrespecttotherangeofdiscretiongiventothePresidentinprohibitingthattransportation.Id.pp.414,415,430.Astothe"codesoffaircompetition,"under§3oftheAct,thequestionismorefundamental.[p531]Itiswhetherthereisanyadequatedefinitionofthesubjecttowhichthecodesaretobeaddressed.

Whatismeantby"faircompetition"asthetermisusedintheAct?Doesitrefertoacategoryestablishedinthelaw,andistheauthoritytomakecodeslimitedaccordingly?Orisitusedasaconvenientdesignationforwhateversetoflawstheformulatorsofacodeforaparticulartradeorindustrymayproposeand

thePresidentmayapprove(subjecttocertainrestrictions),orthePresidentmayhimselfprescribe,asbeingwiseandbeneficentprovisionsforthegovernmentofthetradeorindustryinordertoaccomplishthebroadpurposesofrehabilitation,correctionandexpansionwhicharestatedinthefirstsectionofTitleI?[n9]

TheActdoesnotdefine"faircompetition.""Unfaircompetition,"asknowntothecommonlaw,isalimitedconcept.Primarily,andstrictly,itrelatestothepalmingoffofone'sgoodsasthoseofarivaltrader.GoodyearManufacturingCo.v.GoodyearRubberCo.,128U.S.598,[p532]604;HoweScaleCo.v.Wyckoff,Seaman&Benedict,198U.S.118,140;HanoverMillingCo.v.Metcalf,240U.S.403,413.Inrecentyears,itsscopehasbeenextended.Ithasbeenheldtoapplytomisappropriationaswellasmisrepresentation,tothesellingofanother'sgo

odsasone'sown--tomisappropriationofwhatequitablybelongstoacompetitor.InternationalNewsServicev.AssociatedPress,248U.S.215,241,242.Unfairnessincompetitionhasbeenpredicatedofactswhichlieoutsidetheordinarycourseofbusinessandaretaintedbyfraud,orcoercion,orconductotherwiseprohibitedbylaw.[n10]Id.,p.258.Butitisevidentthat,initswidestrange,"unfaircompetition,"asithasbeenunderstoodinthelaw,doesnotreachtheobjectivesofthecodeswhichareauthorizedbytheNationalIndustrialRecoveryAct.Thecodesmay,indeed,coverconductwhichexistinglawcondemns,buttheyarenotlimitedtoconductofthatsort.TheGovernmentdoesnotcontendthattheActcontemplatessuchalimitation.Itwouldbeopposedbothtothedeclared



purposesoftheActandtoitsadministrativeconstruction.

TheFederalTradeCommissionAct(§5)[n11]introducedtheexpression"unfairmethodsofcompetition,"whichweredeclaredtobeunlawful.Thatwasanexpressionnewinthelaw.Debateapparentlyconvincedthesponsorsofthelegislationthatthewords"unfaircompetition,"inthelightoftheirmeaningatcommonlaw,weretoonarrow.Wehavesadthatthesubstitutedphrasehasabroadermeaning,thatitdoesnotadmitofprecisedefinition,itsscopebeinglefttojudicialdeterminationascontroversiesarise.FederalTradeComm'nv.RaladamCo.,283U.S.643,648,649;FederalTradeComm'nv.Keppel&Bro.,291U.S.304,310-312.Whatare[p533]"unfairmethodsofcompetition"arethustobedeterminedinparticularinstances,uponevidence,inthelightofparticularcompetitiveconditionsandofwhatisfoundtobeaspecificandsubstantialpublicinterest.FederalTradeComm'nv.Beech-NutPackingCo.,257U.S.441,453;FederalTradeComm'nv.Klesner,280U.S.19,27,28;FederalTradeComm'nv.RaladamCo.,supra;FederalTradeComm'nv.Keppel&Bro.,supra;FederalTradeComm'nv.AlgomaLumberCo.,291U.S.67,73.Tomakethispossible,Congresssetupaspecialprocedure.ACommission,aquasi-judicialbody,wascreated.Provisionwasmadeformalcomplaint,fornoticeandhearing,forappropriatefindingsoffactsupportedbyadequateevidence,andforjudicialreviewtogiveassurancethattheactionoftheCommissionistakenwithinitsstatutoryauthority.FederalTradeComm'nv.RaladamCo.,supra;FederalTradeComm'nv.Klesner,supra.[n12]

Inprovidingforcodes,theNationalIndustrialRecoveryActdispenseswiththis

administrativeprocedureandwithanyadministrativeprocedureofananalogouscharacter.ButthedifferencebeenthecodeplanoftheRecoveryActandtheschemeoftheFederalTradeCommissionActliesnotonlyinprocedure,butinsubject[p534]matter.Wecannotregardthe"faircompetition"ofthecodesasantitheticaltothe"unfairmethodsofcompetition"oftheFederalTradeCommissionAct.The"faircompetition"ofthecodeshasamuchbroaderrange,andanewsignificance.TheRecoveryActprovidesthatitshallnotbeconstruedtoimpairthepowersoftheFederalTradeCommission,but,whenacodeisapproved,itsprovisionsaretobethe"standardsoffaircompetition"forthetradeorindustryconcerned,andanyviolationofsuchstandardsinanytransactioninoraffectinginterstateorforeigncommerceistobedeemed"anunfairmethodofcompetition"withinthemeaningoftheFederalTradeCommissionAct.§3(b).

Forastatementoftheauthorizedobjectivesandcontentofthe"codesoffaircompetition,"wearereferredrepeatedlytothe"DeclarationofPolicy"insectiononeofTitleIoftheRecoveryAct.Thus,theapprovalofacodebythePresidentisconditionedonhisfindingthatit"willtendtoeffectuatethepolicyofthistitle."§3(a).ThePresidentisauthorizedtoimposesuchconditions

fortheprotectionofconsumers,competitors,employees,andothers,andinfurtheranceofthepublicinterest,andmayprovidesuchexceptionstoandexemptionsfromtheprovisionsofsuchcodeasthePresidentinhisdiscretiondeemsnecessarytoeffectuatethepolicyhereindeclared.

Id.The"policyhereindeclared"ismanifestlythatsetforthinsectionone.Thatdeclarationembracesabroadrangeofobjectives.Amongthemwefindtheelim

inationof"unfaircompetitivepractices."Butevenifthisclauseweretobetakentorelatetopracticeswhichfallunderthebanofexistinglaw,eithercommonlaworstatute,itisstillonlyoneoftheauthorizedaimsdescribedinsectionone.Itistheredeclaredtobe"thepolicyofCongress"--

toremoveobstructionstothefreeflowofinterstateandforeigncommercewhichtendtodiminishtheamount[p535]thereof,andtoprovideforthegeneralwelfarebypromotingtheorganizationofindustryforthepurposeofcooperativeactionamongtradegroups,toinduceandmaintainunitedactionoflaborandmanagementunderadequategovernmentalsanctionsandsupervision,toeliminateunfair



competitivepractices,topromotethefullestpossibleutilizationofthepresentproductivecapacityofindustries,toavoidunduerestrictionofproduction(exceptasmaybetemporarilyrequired),toincreasetheconsumptionofindustrialandagriculturalproductsbyincreasingpurchasingpower,toreduceandrelieveunemployment,toimprovestandardsoflabor,andotherwisetorehabilitateindustryandtoconservenaturalresources.[n13]

Under§3,whatever"maytendtoeffectuate"thesegeneralpurposesmaybeincludedinthe"codesoffaircompetition."Wethinktheconclusionisinescapablethattheauthoritysoughttobeconferredby§3wasnotmerelytodealwith"unfaircompetitivepractices"whichoffendagainstexistinglaw,andcouldbethesubjectofjudicialcondemnationwithoutfurtherlegislation,ortocreateadministrativemachineryfortheapplicationofestablishedprinciplesoflawtoparticularinstancesofviolation.Rather,thepurposeisclearlydisclosedtoauthorizenewandcontrollingprohibitionsthroughcodesoflawswhichwouldembracewhattheformulatorswouldpropose,andwhatthePresidentwouldapprove,orprescribe,aswiseandbeneficientmeasuresforthegovernmentoftradesandindustriesinordertobringabouttheirrehabilitation,correctionanddevelopment,accordingtothegeneraldeclarationofpolicyinsectionone.Codesoflawsofthissortarestyled"codesoffaircompetition."

Wefindnorealcontroversyuponthispoint,andwemustdeterminethevalidityoftheCodeinquestioninthisaspect.AstheGovernmentcandidlysaysinits[p536]brief:

Thewords"policyofthistitle"clearlyrefertothe"policy"whichCongressdeclaredinthesectionentitled"DeclarationofPolicy"--§1.Allofthepoliciestheresetforthpointtowardasinglegoal--therehabilitationofindustryandtheindustrialrecoverywhichunquestionablywasthemajorpolicyofCongressinadoptingtheNationalIndustrialRecoveryAct.

AndthatthisisthecontrollingpurposeoftheCodenowbeforeusappearsbothfromitsrepeateddeclarationstothateffectandfromthescopeofitsrequirements.Itwillbeobservedthatitsprovisionsastothehoursandwagesofemployeesandits"generallaborprovisions"wereplacedinseparatearticles,andthesewerenotincludedinthearticleon"tradepracticeprovisions"declaringwhatshouldbedeemedtoconstitute"unfairmethodsofcompetition."TheSecretary

ofAgriculturethusstatedtheobjectivesoftheLivePoultryCodeinhisreporttothePresident,whichwasrecitedintheexecutiveorderofapproval:

ThatsaidcodewilltendtoeffectuatethedeclaredpolicyoftitleIoftheNationalIndustrialRecoveryActassetforthinsection1ofsaidactinthatthetermsandprovisionsofsuchcodetendto:(a)removeobstructionstothefreeflowofinterstateandforeigncommercewhichtendtodiminishtheamountthereof;(b)toprovideforthegeneralwelfarebypromotingtheorganizationofindustryforthepurposeofcooperativeactionamongtradegroups;(c)toeliminateunfaircompetitivepractices;(d)topromotethefullestpossibleutilizationofthepresentproductivecapacityofindustries;(e)toavoidunduerestrictionofproduction(exceptamaybetemporarilyrequired);(f)toincreasetheconsumptionofindustrialandagriculturalproductsbyincreasingpurchasingpower,and(

g)otherwisetorehabilitateindustry,andtoconservenaturalresources.[p537]

TheGovernmenturgesthatthecodeswill

consistofrulesofcompetitiondeemedfairforeachindustrybyrepresentativemembersofthatindustry--bythepersonsmostvitallyconcernedandmostfamiliarwithitsproblems.

InstancesarecitedinwhichCongresshasavaileditselfofsuchassistance;as,e.g.,intheexerciseofitsauthorityoverthepublicdomainwithrespecttot



herecognitionoflocalcustomsorrulesofminersastominingclaims,[n14]or,inmattersofamoreorlesstechnicalnature,asindesignatingthestandardheightofdrawbar.[n15]ButwoulditbeseriouslycontendedthatCongresscoulddelegateitslegislativeauthoritytotradeorindustrialassociationsorgroupssoastoempowerthemtoenactthelawstheydeemtobewiseandbeneficentfortherehabilitationandexpansionoftheirtradeorindustries?Couldtradeorindustrialassociationsorgroupsbeconstitutedlegislativebodiesforthatpurposebecausesuchassociationsorgroupsarefamiliarwiththeproblemsoftheirenterprises?And,couldaneffortofthatsortbemadevalidbysuchaprefaceofgeneralitiesastopermissibleaimsaswefindinsection1oftitleI?Theanswerisobvious.Suchadelegationoflegislativepowerisunknowntoourlaw,andisutterlyconsistentwiththeconstitutionalprerogativesanddutiesofCongress.

Thequestion,then,turnsupontheauthoritywhich§3oftheRecoveryActvestsinthePresidenttoapproveorprescribe.Ifthecodeshavestandingaspenalstatutes,thismustbeduetotheeffectoftheexecutiveaction.ButCongresscannotdelegatelegislativepowertothePresidenttoexerciseanunfettereddiscretiontomake[p538]whateverlawshethinksmaybeneededoradvisablefortherehabilitationandexpansionoftradeorindustry.SeePanamaRefiningCo.v.Ryan,supra,andcasestherereviewed.

Accordingly,weturntotheRecoveryActtoascertainwhatlimitshavebeensettotheexerciseofthePresident'sdiscretion.First,thePresident,asacondit

ionofapproval,isrequiredtofindthatthetradeorindustrialassociationsorgroupswhichproposeacode,"imposenoinequitablerestrictionsonadmissiontomembership,"andare"trulyrepresentative."Thatcondition,however,relatesonlytothestatusoftheinitiatorsofthenewlaws,andnottothepermissiblescopeofsuchlaws.Second,thePresidentisrequiredtofindthatthecodeisnot"designedtopromotemonopoliesortoeliminateoroppresssmallenterprises,andwillnotoperatetodiscriminateagainstthem."Andtothisisaddedaprovisothatthecode"shallnotpermitmonopoliesormonopolisticpractices."Buttheserestrictionsleavevirtuallyuntouchedthefieldofpolicyenvisagedbysectionone,and,inthatwidefieldoflegislativepossibilities,theproponentsofacode,refrainingfrommonopolisticdesigns,mayroamatwill,andthePresidentmayapproveordisapprovetheirproposalsashemayseefit.ThatisthepreciseeffectofthefurtherfindingthatthePresidentistomake--thatthec

ode"willtendtoeffectuatethepolicyofthistitle."Whilethisiscalledafinding,itisreallybutastatementofanopinionastothegeneraleffectuponthepromotionoftradeorindustryofaschemeoflaws.ThesearetheonlyfindingswhichCongresshasmadeessentialinordertoputintooperationalegislativecodehavingtheaimsdescribedinthe"DeclarationofPolicy."

NoristhebreadthofthePresident'sdiscretionlefttothenecessaryimplicationofthislimitedrequirementastohisfindings.Asalreadynoted,thePresident,inapprovingacode,mayimposehisownconditions,addingto[p539]ortakingfromwhatisproposedas,"inhisdiscretion,"hethinksnecessary"toeffectuatethepolicy"declaredbytheAct.Ofcourse,hehasnolesslibertywhenheprescribesacodeonhisownmotionoroncomplaint,andheisfreetoprescribeoneifacodehasnotbeenapproved.TheActprovidesforthecreationbytheP

residentofadministrativeagenciestoassisthim,buttheactionorreportsofsuchagencies,orofhisotherassistants--theirrecommendationsandfindingsinrelationtothemakingofcodes--havenosanctionbeyondthewillofthePresident,whomayaccept,modify,orrejectthemashepleases.Suchrecommendationsorfindingsinnowaylimittheauthoritywhich§3undertakestovestinthePresidentwithnootherconditionsthanthosetherespecified.Andthisauthorityrelatestoahostofdifferenttradesandindustries,thusextendingthePresident'sdiscretiontoallthevarietiesoflawswhichhemydeemtobebeneficialindealingwiththevastarrayofcommercialandindustrialactivitiesthroughoutthecountry.



SuchasweepingdelegationoflegislativepowerfindsnosupportinthedecisionsuponwhichtheGovernmentespeciallyrelies.BytheInterstateCommerceAct,CongresshasitselfprovidedacodeaflawsregulatingtheactivitiesofthecommoncarrierssubjecttotheActinordertoassuretheperformanceoftheirservicesuponjustandreasonableterms,withadequatefacilitiesandwithoutunjustdiscrimination.Congress,fromtimetotime,haselaborateditsrequirementsasneedshavebeendisclosed.TofacilitatetheapplicationofthestandardsprescribedbytheAct,Congresshasprovidedanexpertbody.Thatadministrativeagency,indealingwithparticularcases,isrequiredtoactuponnoticeandhearing,anditsordersmustbesupportedbyfindingsoffactwhich,inturn,aresustainedbyevidence.InterstateCommerceComm'nv.Louisville&NashvilleR.Co.,227U.S.88;Floridav.UnitedStates,282U.S.194;UnitedStates[p540]v.Baltimore&OhioR.Co.,293U.S.454.WhentheCommissionisauthorizedtoissue,fortheconstruction,extensionorabandonmentoflines,acertificateof"publicconvenienceandnecessity,"ortopermittheacquisitionbyonecarrierofthecontrolofanother,ifthatisfoundtobe"inthepublicinterest,"wehavepointedoutthattheseprovisionsarenotleftwithoutstandardstoguidedetermination.Theauthorityconferredhasdirectrelationtothestandardsprescribedfortheserviceofcommoncarriers,andcanbeexercisedonlyuponfindings,baseduponevidence,withrespecttoparticularconditionsoftransportation.NewYorkCentralSecuritiesCo.v.UnitedStates,287U.S.12,24,25;Texas&PacificRailwayCo.v.Gulf,Colorado&SantaFeRy.Co.,270U.S.266,273;Chesapeake&OhioRy.Co.v.UnitedStates,283U.S.35,42.

Similarly,wehaveheldthattheRadioActof1927[n16]establishedstandardstogovernradiocommunications,and,inviewofthelimitednumberofavailablebroadcastingfrequencies,Congressauthorizedallocationandlicenses.TheFederalRadioCommissionwascreatedasthelicensingauthorityinordertosecureareasonableequalityofopportunityinradiotransmissionandreception.TheauthorityoftheCommissiontograntlicenses"aspublicconvenience,interestornecessityrequires"waslimitedbythenatureofradiocommunicationsandbythescope,character,andqualityoftheservicestoberenderedandtherelativeadvantagestobederivedthroughdistributionoffacilities.ThesestandardsestablishedbyCongressweretobeenforceduponhearing,andevidence,byanadministrativebodyactingunderstatutoryrestrictionsadaptedtotheparticularactivity.FederalRadioComm'nv.NelsonBrothersCo.,289U.S.266.[p541]

InHampton&Co.v.UnitedStates,276U.S.394,thequestionrelatedtothe"flexibletariffprovision"oftheTariffActof1922.[n17]WeheldthatCongresshaddescribeditsplan

tosecurebylawtheimpositionofcustomsdutiesonarticlesofimportedmerchandisewhichshouldequalthedifferencebetweenthecostofproducinginaforeigncountrythearticlesinquestionandlayingthemdownforsaleintheUnitedStates,andthecostofproducingandsellinglikeorsimilararticlesintheUnitedStates.

Asthedifferencescostmightvaryfromtimetotime,provisionwasfortheinvestigationanddeterminationofthesedifferencesbytheexecutivebranch,soas

tomake"theadjustmentsnecessarytoconformthedutiestothestandardunderlyingthatpolicyandplan."Id.pp.404,405.TheCourtfoundthesameprincipletobeapplicableinfixingcustomsdutiesasthatwhichpermittedCongresstoexerciseitsratemakingpowerininterstatecommerce,"bydeclaringtherulewhichshallprevailinthelegislativefixingofrates"andthenremitting"thefixingofsuchrates"inaccordancewithitsprovisions"toaratemakingbody."Id.,p.409.TheCourtfullyrecognizedthelimitationsuponthedelegationoflegislativepower.Id.pp.408-411.

Tosummarizeandconcludeuponthispoint:Section3oftheRecoveryActiswith



outprecedent.Itsuppliesnostandardsforanytrade,industryoractivity.Itdoesnotundertaketoprescriberulesofconducttobeappliedtoparticularstatesoffactdeterminedbyappropriateadministrativeprocedure.Insteadofprescribingrulesofconduct,itauthorizesthemakingofcodestoprescribethem.Forthatlegislativeundertaking,§3setsupnostandards,asidefromthestatementofthegeneralaimsofrehabilitation,correctionandexpansiondescribedinsectionone.Inviewofthescopeofthatbroaddeclaration,andofthe[p542]natureofthefewrestrictionsthatareimposed,thediscretionofthePresidentinapprovingorprescribingcodes,andthusenactinglawsforthegovernmentoftradeandindustrythroughoutthecountry,isvirtuallyunfettered.Wethinkthatthecode-makingauthoritythisconferredisanunconstitutionaldelegationoflegislativepower.

Third.ThequestionoftheapplicationoftheprovisionsoftheLivePoultryCodetointrastatetransactions.Althoughthevalidityofthecodes(apartfromthequestionofdelegation)restsuponthecommerceclauseoftheConstitution,§3(a)isnot,interms,limitedtointerstateandforeigncommerce.Fromthegeneralityofitsterms,andfromtheargumentoftheGovernmentatthebar,itwouldappearthat§3(a)wasdesignedtoauthorizecodeswithoutthatlimitation.But,under§3(f),penaltiesareconfinedtoviolationsofacodeprovision"inanytransactioninoraffectinginterstateorforeigncommerce."ThisaspectofthecasepresentsthequestionwhethertheparticularprovisionsoftheLivePoultryCode,whichthedefendantswereconvictedforviolatingandforhavingconspiredtoviolate,werewithintheregulatingpowerofCongress.

TheseprovisionsrelatetothehoursandwagesofthoseemployedbydefendantsintheirslaughterhousesinBrooklyn,andtothesalestheremadetoretaildealersandbutchers.

(1)Werethesetransactions"in"interstatecommerce?MuchismadeofthefactthatalmostallthepoultrycomingtoNewYorkissenttherefromotherStates.Butthecodeprovisions,ashereapplied,donotconcernthetransportationofthepoultryfromotherStatestoNewYork,orthetransactionsofthecommissionmenorotherstowhomitisconsigned,orthesalesmadebysuchconsigneestodefendants.Whendefendantshadmadetheirpurchases,whetherattheWestWashingtonMarketinNewYorkCityorattherailroad[p543]terminalsservingtheCity,orelsewhere,thepoultrywastruckedtotheirslaugterhousesinBrooklynforl

ocaldisposition.Theinterstatetransactionsinrelationtothatpoultrythenended.Defendantsheldthepoultryattheirslaughterhousemarketsforslaughterandlocalsaletoretaildealersandbutcherswho,inturn,solddirectlytoconsumers.Neithertheslaughteringnorthesalesbydefendantsweretransactionsininterstatecommerce.Brownv.Houston,114U.S.622,632,633;PublicUtilitiesComm'nv.Landon,249U.S.236,245;IndustrialAssociationv.States,268U.S.64,78,79;AtlanticCoastLinev.StandardOilCo.,275U.S.257,267.

Theundisputedfactsthusaffordnowarrantfortheargumentthatthepoultryhandledbydefendantsattheirslaughterhousemarketswasina"current"or"flow"ofinterstatecommerce,andwasthussubjecttocongressionalregulation.ThemerefactthattheremaybeaconstantflowofcommoditiesintoaStatedoesnotmeanthattheflowcontinuesafterthepropertyhasarrived,andhasbecomecomm

ingledwiththemassofpropertywithintheState,andisthereheldsolelyforlocaldispositionanduse.Sofarasthepoultryhereinquestionisconcerned,theflowininterstatecommercehadceased.ThepoultryhadcometoapermanentrestwithintheState.Itwasnotheld,used,orsoldbydefendantsinrelationtoanyfurthertransactionsininterstatecommerce,andwasnotdestinedfortransportationtootherStates.Hence,decisionswhichdealwithastreamofinterstatecommerce--wheregoodscometorestwithinaStatetemporarilyandarelatertogoforwardininterstatecommerce--andwiththeregulationsoftransactionsinvolvedinthatpracticalcontinuityofmovement,arenotapplicablehere.SeeSwift&Co.v.UnitedStates,196U.S.375,387,388;Lemkev.FarmersGrain



Co.,258U.S.50,55;Staffordv.Wallace,258U.S.495,519;Chicago[p544]BoardofTradev.Olsen,262U.S.l,35;TaggBros.&Moorheadv.UnitedStates,280U.S.420,439.

(2)Didthedefendants'transactionsdirectly"affect"interstatecommerce,soastobesubjecttofederalregulation?ThepowerofCongressextendsnotonlytotheregulationoftransactionswhicharepartofinterstatecommerce,buttotheprotectionofthatcommercefrominjury.Itmattersnotthattheinjurymaybeduetotheconductofthoseengagedinintrastateoperations.Thus,Congressmayprotectthesafetyofthoseemployedininterstatetransportation"nomatterwhatmaybethesourceofthedangerswhichthreatenit."SouthernRy.Co.v.UnitedStates,222U.S.20,27.WesaidinSecondEmployers'LiabilityCases,223U.S.1,51,thatitisthe"effectuponinterstatecommerce,"not"thesourceoftheinjury,"whichis"thecriterionofcongressionalpower."Wehaveheldthat,indealingwithcommoncarriersengagedinbothinterstateandintrastatecommerce,thedominantauthorityofCongressnecessarilyembracestherighttocontroltheirintrastateoperationsinallmattershavingsuchacloseandsubstantialrelationtointerstatetrafficthatthecontrolisessentialorappropriatetosecurethefreedomofthattrafficfrominterferenceorunjustdiscriminationandtopromotetheefficiencyoftheinterstateservice.TheShreveportCase,234U.S.342,351,352;WisconsinRailroadComm'nv.Chicago,B.&Q.R.Co.,257U.S.563,588.Andcombinationsandconspiraciestorestraininterstatecommerce,ortomonopolizeanypartofit,arenonethelesswithinthereachoftheAnti-TrustActbecausetheconspiratorsseektoattaintheirendbymeansofintrastat

eactivities.CoronadoCoalCo.v.UnitedMineWorkers,268U.S.295,310;BedfordCutStoneCo.v.StoneCuttersAssn.,274U.S.37,46.

Werecentlyhadoccasion,inLocal677v.UnitedStates,291U.S.293,toapplythisprincipleinconnectionwith[p545]thelivepoultryindustry.ThatwasasuittoenjoinaconspiracytorestrainandmonopolizeinterstatecommerceinviolationoftheAnti-TrustAct.Itwasshownthatmarketmen,teamstersandslaughterers(shochtim)hadconspiredtoburdenthefreemovementoflivepoultryintothemetropolitanareainandaboutNewYorkCity.Marketmenhadorganizedanassociation,hadallocatedretailersamongthemselves,andhadagreedtoincreaseprices.Toaccomplishtheirobjects,largeamountsofmoneywereraisedbyleviesuponpoultrysold,menwerehiredtoobstructthebusinessdealerswhoresisted,wholesalersandretailerswerespiedupon,and,byviolenceandotherformsof

intimidation,werepreventedfromfreelypurchasinglivepoultry.Teamstersrefusedtohandlepoultryforrecalcitrantmarketmen,andmembersoftheshochtimunionrefusedtoslaughter.Inviewoftheproofofthatconspiracy,wesaidthatitwasunnecessarytodecidewheninterstatecommerceendedandwhenintrastatecommercebegan.Wefoundthattheprovedinterferencebytheconspirators"withtheunloading,thetransportation,thesalesbymarketmentoretailers,thepricescharged,andtheamountofprofitsexacted"operated"substantiallyanddirectlytorestrainandburdentheuntrammeledshipmentandmovementofthepoultry"whileunquestionablyitwasininterstatecommerce.Theintrastateactsoftheconspiratorswereincludedintheinjunctionbecausethatwasfoundtobenecessaryfortheprotectionofinterstatecommerceagainsttheattemptedandillegalrestraint.Id.pp.297,299,300.

Theinstantcaseisnotofthatsort.ThisisnotaprosecutionforaconspiracytorestrainormonopolizeinterstatecommerceinviolationoftheAnti-TrustAct.Defendantshavebeenconvictednotupondirectchargesofinjurytointerstatecommerceorofinterferencewithpersonsengagedinthatcommerce,butofviolationsofcertainprovisionsoftheLivePoultryCodeandofconspiracy[p546]tocommittheseviolations.Interstatecommerceisbroughtinonlyuponthechargethatviolationsoftheseprovisions--astohoursandwagesofemployeesandlocalsales-"affected"interstatecommerce.

Indetermininghowfarthefederalgovernmentmaygoincontrollingintrastatet



ransactionsuponthegroundthatthey"affect"interstatecommerce,thereisanecessaryandwellestablisheddistinctionbetweendirectandindirecteffects.Thepreciselinecanbedrawnonlyasindividualcasesarise,butthedistinctionisclearinprinciple.Directeffectsareillustratedbytherailroadcaseswehavecited,as,e.g.,theeffectoffailuretouseprescribedsafetyappliancesonrailroadswhicharethehighwaysofbothinterstateandintrastatecommerce,injurytoanemployeeengagedininterstatetransportationbythenegligenceofanemployeeengagedinanintrastatemovement,thefixingofratesforintrastatetransportationwhichunjustlydiscriminateagainstinterstatecommerce.Butwheretheeffectofintrastatetransactionsuponinterstatecommerceismerelyindirect,suchtransactionsremainwithinthedomainofstatepower.Ifthecommerceclausewereconstruedtoreachallenterpriseandtransactionswhichcouldbesaidtohaveanindirecteffectuponinterstatecommerce,thefederalauthoritywouldembracepracticallyalltheactivitiesofthepeople,andtheauthorityoftheStateoveritsdomesticconcernswouldexistonlybysufferanceofthefederalgovernment.Indeed,onsuchatheory,eventhedevelopmentoftheState'scommercialfacilitieswouldbesubjecttofederalcontrol.AswesaidintheMinnesotaRateCases,230U.S.352,410:

Intheintimacyofcommercialrelations,muchthatisdoneinthesuperintendenceoflocalmattersmayhaveanindirectbearinguponinterstatecommerce.Thedevelopmentoflocalresourcesandtheextensionoflocalfacilitiesmayhaveaveryimportanteffectuponcommunitieslessfavored,and,toanappreciabledegree,[p547]alterthecourseoftrade.Thefreedomoflocaltrademaystimulateint

erstatecommerce,whilerestrictivemeasureswithinthepolicepoweroftheStateenactedexclusivelywithrespecttointernalbusiness,asdistinguishedfrominterstatetraffic,may,intheirreflexorindirectinfluence,diminishthelatterandreducethevolumeofarticlestransportedintooroutoftheState.

SeealsoKiddv.Pearson,128U.S.1,21;Heislerv.ThomasCollierCo.,260U.S.245,259,260.

ThedistinctionbetweendirectandindirecteffectshasbeenclearlyrecognizedintheapplicationoftheAnti-TrustAct.Whereacombinationorconspiracyisformed,withtheintenttorestraininterstatecommerceortomonopolizeanypartofit,theviolationofthestatuteisclear.CoronadoCoalCo.v.UnitedMineWorkers,268U.S.295,310.Butwherethatintentisabsent,andtheobjectives

arelimitedtointrastateactivities,thefactthattheremaybeanindirecteffectuponinterstatecommercedoesnotsubjectthepartiestothefederalstatute,notwithstandingitsbroadprovisions.Thisprinciplehasfrequentlybeenappliedinlitigationgrowingoutoflabordisputes.UnitedMineWorkersv.CoronadoCoalCo.,259U.S.344,410,411;UnitedLeatherWorkersv.Herkert&MeiselTrunkCo.,265U.S.457,464-467;IndustrialAssociationv.UnitedStates,268U.S.64,82;Levering&GarriguesCo.v.Morrin,289U.S.103,107,108.Inthecaselastcited,wequotedwithapprovaltherulethathadbeenstatedandappliedinIndustrialAssociationv.UnitedStates,supra,afterreviewofthedecisions,asfollows:

Theallegedconspiracyandtheactsherecomplainedofspenttheirintendedanddirectforceuponalocalsituation--forbuildingisasessentiallylocalasm

ining,manufacturingorgrowingcrops--andif,byaresultingdiminutionofthecommercialdemand,interstatetradewascurtailedeithergenerallyorinspecificinstances,thatwasafortuitousconsequencesoremoteandindirect[p548]asplainlytocauseittofalloutsidethereachoftheShermanAct.

Whilethesedecisionsrelatedtotheapplicationofthefederalstatute,andnottoitsconstitutionalvalidity,thedistinctionbetweendirectandindirecteffectsofintrastatetransactionsuponinterstatecommercemustberecognizedasafundamentalone,essentialtothemaintenanceofourconstitutionalsystem.Otherwise,aswehavesaid,therewouldbevirtuallynolimittothefederalpower,



and,forallpracticalpurposes,weshouldhaveacompletelycentralizedgovernment.Wemustconsidertheprovisionshereinquestioninthelightofthisdistinction.

ThequestionofchiefimportancerelatestotheprovisionsoftheCodeastothehoursandwagesofthoseemployedindefendants'slaughterhousemarkets.Itisplainthattheserequirementsareimposedinordertogovernthedetailsofdefendants'managementoftheirlocalbusiness.Thepersonsemployedinslaughteringandsellinginlocaltradearenotemployedininterstatecommerce.Theirhoursandwageshavenodirectrelationtointerstatecommerce.ThequestionofhowmanyhourstheseemployeesshouldworkandwhattheyshouldbepaiddiffersinnoessentialrespectfromsimilarquestionsinotherlocalbusinesseswhichhandlecommoditiesbroughtintoaStateandtheredealtinasapartofitsinternalcommerce.ThisappearsfromanexaminationoftheconsiderationsurgedbytheGovernmentwithrespecttoconditionsinthepoultrytrade.Thus,theGovernmentarguesthathoursandwagesaffectprices;thatslaughterhousemensellatasmallmarginaboveoperatingcosts;thatlaborrepresents50to60percentofthesecosts;thataslaughterhouseoperatorpayinglowerwagesorreducinghiscostbyexactinglonghoursofworktranslateshissavingintolowerprices;thatthisresultsindemandsforacheapergradeofgoods,andthatthecutting[p549]ofpricesbringsaboutademoralizationofthepricestructure.Similarconditionsmaybeadducedinrelationtootherbusinesses.TheargumentoftheGovernmentprovestoomuch.IfthefederalgovernmentmaydeterminethewagesandhoursofemployeesintheinternalcommerceofaState,becauseoftheirrelationtocosta

ndpricesandtheirindirecteffectuponinterstatecommerce,itwouldseemthatasimilarcontrolmightbeexertedoverotherelementsofcostalsoaffectingprices,suchasthenumberofemployees,rents,advertising,methodsofdoingbusiness,etc.Alltheprocessesofproductionanddistributionthatenterintocostcouldlikewisebecontrolled.Ifthecostofdoinganintrastatebusinessis,initself,thepermittedobjectoffederalcontrol,theextentoftheregulationofcostwouldbeaquestionofdiscretion,andnotofpower.

TheGovernmentalsomakesthepointthateffortstoenactstatelegislationestablishinghighlaborstandardshavebeenimpededbythebeliefthat,unlesssimilaractionistakengenerally,commercewillbedivertedfromtheStatesadoptingsuchstandards,andthatthisfearofdiversionhasledtodemandsforfederallegislationonthesubjectofwagesandhours.Theapparentimplicationisthat

thefederalauthorityunderthecommerceclauseshouldbedeemedtoextendtotheestablishmentofrulestogovernwagesandhoursinintrastatetradeandindustrygenerallythroughoutthecountry,thusoverridingtheauthorityoftheStatestodealwithdomesticproblemsarisingfromlaborconditionsintheirinternalcommerce.

ItisnottheprovinceoftheCourttoconsidertheeconomicadvantagesordisadvantageofsuchacentralizedsystem.ItissufficienttosaythattheFederalConstitutiondoesnotprovideforit.Ourgrowthanddevelopmenthavecalledforwideuseofthecommercepowerofthefederalgovernmentinitscontrolovertheexpandedactivitiesofinterstatecommerce,andinprotectingthat[p550]commercefromburdens,interferences,andconspiraciestorestrainandmonopolizeit.Buttheauthorityofthefederalgovernmentmaynotbepushedtosuchanextrem

eastodestroythedistinction,whichthecommerceclauseitselfestablishes,betweencommerce"amongtheseveralStates"andtheinternalconcernsofaState.ThesameanswermustbemadetothecontentionthatisbasedupontheseriouseconomicsituationwhichledtothepassageoftheRecoveryAct--thefallinprices,thedeclineinwagesandemployment,andthecurtailmentofthemarketforcommodities.Stressislaiduponthegreatimportanceofmaintainingwagedistributionswhichwouldprovidethenecessarystimulusinstarting"thecumulativeforcesmakingforexpandingcommercialactivity."Withoutinanywaydisparagingthismotive,itisenoughtosaythattherecuperativeeffortsofthefederalgovernmentmustbemadeinamannerconsistentwiththeauthoritygrantedbythe



Constitution.

Weareoftheopinionthattheattempt,throughtheprovisionsoftheCode,tofixthehoursandwagesofemployeesofdefendantsintheirintrastatebusinesswasnotavalidexerciseoffederalpower.

Theotherviolationsforwhichdefendantswereconvictedrelatedtothemakingoflocalsales.Tencounts,forviolationoftheprovisionasto"straightkilling"wereforpermittingcustomerstomake"selectionsofindividualchickenstakenfromparticularcoopsandhalfcoops."Whetherornotthispracticeisgoodorbadforthelocaltrade,itseffect,ifany,uponinterstatecommercewasonlyindirect.ThesamemaybesaidofviolationsoftheCodebyintrastatetransactionsconsistingofthesale"ofanunfitchicken"andofsaleswhichwerenotinaccordwiththeordinancesoftheCityofNewYork.Therequirementofreportastopricesandvolumesofdefendants'saleswasincidenttotheefforttocontroltheirintrastatebusiness.[p551]

Inviewoftheseconclusions,wefinditunnecessarytodiscussotherquestionswhichhavebeenraisedastothevalidityofcertainprovisionsoftheCodeunderthedueprocessclauseoftheFifthAmendment.

Onboththegroundswehavediscussed,theattempteddelegationoflegislativepower,andtheattemptedregulationofintrastatetransactionwhichaffectinterstatecommerceonlyindirectly,weholdhecodeprovisionshereinquestiontobe

invalidandthatthejudgmentofconvictionmustbereversed.

No.864--reversed.No.86--affirmed.

*TogetherwithNo.864,UnitedStatesv.A.L.A.SchechterPoultryCorp.etal.CertioraritotheCircuitCourtofAppealsfortheSecondCircuit.

1.ThefulltitleoftheCodeis"CodeofFairCompetitionfortheLivePoultryIndustryoftheMetropolitanAreainandabouttheCityofNewYork."

2.Theindictmentcontained60counts,ofwhich27countsweredismissedbythetrialcourt,andon14counts,thedefendantswereacquitted.

3.ActofJune16,1933,c.90,48Stat.195,196;15U.S.C.703.

4.

CODESOFFAIRCOMPETITION.

Sec.3.(a)UpontheapplicationtothePresidentbyoneormoretradeorindustrialassociationsorgroups,thePresidentmayapproveacodeorcodesoffaircompetitionforthetradeorindustryorsubdivisionthereof,representedbytheapplicantorapplicants,ifthePresidentfinds(1)thatsuchassociationsorgroupsimposenoinequitablerestrictionsonadmissiontomembershipthereinandaretrulyrepresentativeofsuchtradesorindustriesorsubdivisionsthereof,and(2)thatsuchcodeorcodesarenotdesignedtopromotemonopoliesortoelimi

nateoroppresssmallenterprisesandwillnotoperatetodiscriminateagainstthem,andwilltendtoeffectuatethepolicyofthistitle:Provided,Thatsuchcodeorcodesshallnotpermitmonopoliesormonopolisticpractices:Providedfurther,Thatwheresuchcodeorcodesaffecttheservicesandwelfareofpersonsengagedinotherstepsoftheeconomicprocess,nothinginthissectionshalldeprivesuchpersonsoftherighttobeheardpriortoapprovalbythePresidentofsuchcodeorcodes.ThePresidentmay,asaconditionofhisapprovalofanysuchcode,imposesuchconditions(includingrequirementsforthemakingofreportsandthekeepingofaccounts)fortheprotectionofconsumers,competitors,employees,andothers,andinfurtheranceofthepublicinterest,andmayprovides



uchexceptionstoandexemptionsfromtheprovisionsofsuchcodeasthePresidentinhisdiscretiondeemsnecessarytoeffectuatethepolicyhereindeclared.

(b)AfterthePresidentshallhaveapprovedanysuchcode,theprovisionsofsuchcodeshallbethestandardsoffaircompetitionforsuchtradeorindustryorsubdivisionthereof.AnyviolationofsuchstandardsinanytransactioninoraffectinginterstateorforeigncommerceshallbedeemedanunfairmethodofcompetitionincommercewithinthemeaningoftheFederalTradeCommissionAct,asamended;butnothinginthistitleshallbeconstruedtoimpairthepowersoftheFederalTradeCommissionundersuchAct,asamended.

(c)TheseveraldistrictcourtsoftheUnitedStatesareherebyinvestedwithjurisdictiontopresentandrestrainviolationsofanycodeoffaircompetitionapprovedunderthistitle,anditshallbethedutyoftheseveraldistrictattorneysoftheUnitedStates,intheirrespectivedistricts,underthedirectionoftheAttorneyGeneral,toinstituteproceedingsinequitytopreventandrestrainsuchviolations.

(d)Uponhisownmotion,orifcomplaintismadetothePresidentthatabusesinimicaltothepublicinterestandcontrarytothepolicyhereindeclaredareprevalentinanytradeorindustryorsubdivisionthereof,andifnocodeoffaircompetitionthereforhastheretoforebeenapprovedbythePresident,thePresident,aftersuchpublicnoticeandhearingasheshallspecify,mayprescribeandapproveacodeoffaircompetitionforsuchtradeorindustryorsubdivisionther

eof,whichshallhavethesameeffectasacodeoffaircompetitionapprovedbythePresidentundersubsection(a)ofthissection.

****

(f)WhenacodeoffaircompetitionhasbeenapprovedorprescribedbythePresidentunderthistitle,anyviolationofanyprovisionthereofinanytransactioninoraffectinginterstateorforeigncommerceshallbeamisdemeanoranduponconvictionthereofanoffendershallbefinednotmorethan$500foreachoffense,andeachdaysuchviolationcontinuesshallbedeemedaseparateoffense.

5.TheExecutiveOrderisasfollows:

EXECUTIVEORDER

ApprovalofCodeofFairCompetitionfortheLivePoultryIndustryoftheMetropolitanAreainandabouttheCityofNewYork.

Whereas,theSecretaryofAgricultureandtheAdministratoroftheNationalIndustrialRecoveryActhavingrenderedtheirseparatereportsandrecommendationsandfindingsontheprovisionsofsaidcode,comingwithintheirrespectivejurisdictions,assetforthintheExecutiveOrderNo.6182ofJune26,1933,assupplementedbyExecutiveOrderNo.6207ofJuly21,1933,andExecutiveOrderNo.6345ofOctober20,1933,asamendedbyExecutiveOrderNo.6551ofJanuary8,1934;

Now,therefore,I,FranklinD.Roosevelt,PresidentoftheUnitedStates,pursuanttotheauthorityvestedinmebytitleIoftheNationalIndustrialRecoveryAct,approvedJune16,1933,andotherwise,doherebyfindthat:

1.Anapplicationhasbeendulymade,pursuanttoandinfullcompliancewiththeprovisionsoftitleIoftheNationalIndustrialRecoveryAct,approvedJune16,1933,formyapprovalofacodeoffaircompetitionforthelivepoultryindustryinthemetropolitanareainandabouttheCityofNewYork;and

2.Duenoticeandopportunityforhearingstointerestedpartieshavebeengiven







rant,ifImayborrowmyownwordsinanearlieropinion.PanamaRefiningCo.v.Ryan,293U.S.388,440.

Thiscourthasheldthatdelegationmaybeunlawful,thoughtheacttobeperformedisdefiniteandsingle,ifthenecessity,timeandoccasionofperformancehavebeenleftintheendtothediscretionofthedelegate.PanamaRefiningCo.v.Ryan,supra.Ithoughtthatrulingwenttoofar.Ipointedoutinanopinionthattherehadbeen"nogranttotheExecutiveofanyrovingcommissiontoinquireintoevilsandthen,upondiscoveringthem,doanythinghepleases."293U.S.atp.435.Choice,thoughwithinlimits,hadbeengivenhim"astotheoccasion,butnonewhateverastothemeans."Ibid.Here,inthecasebeforeus,isanattempteddelegationnotconfinedtoanysingleactnortoanyclassorgroupofactsidentifiedordescribedbyreferencetoastandard.Here,ineffect,isarovingcommissiontoinquireintoevilsand,upondiscovery,correctthem.[p552]

Ihavesaidthatthereisnostandard,definiteorevenapproximate,towhichlegislationmustconform.Letmemakemymeaningmoreprecise.Ifcodesoffaircompetitionarecodeseliminating"unfair"methodsofcompetitionascertaineduponinquirytoprevailinoneindustryoranother,thereisnounlawfuldelegationoflegislativefunctionswhenthePresidentisdirectedtoinquireintosuchpracticesanddenouncethemwhendiscovered.Formanyyears,alikepowerhasbeencommittedtotheFederalTradeCommissionwiththeapprovalofthiscourtinalongseriesofdecisions.Cf.FederalTradeComm'nv.Keppel&Bro.,291U.S.304,312;FederalTradeComm'nv.RaladamCo.,283U.S.643,648;FederalTradeCom

m'nv.Gratz,253U.S.421.Delegationinsuchcircumstancesisbornofthenecessitiesoftheoccasion.TheindustriesofthecountryaretoomanyanddiversetomakeitpossibleforCongress,inrespectofmatterssuchasthese,tolegislatedirectlywithadequateappreciationofvaryingconditions.NoristhesubstanceofthepowerchangedbecausethePresidentmayactattheinstanceoftradeorindustrialassociationshavingspecialknowledgeofthefacts.Theirfunctionisstrictlyadvisory;itistheimprimaturofthePresidentthatbegetsthequalityoflaw.Dotyv.Love,antep.64.Whenthetaskthatissetbeforeoneisthatofcleaninghouse,itisprudent,aswellasusual,totakecounselofthedwellers.Butthereisanotherconceptionofcodesoffaircompetition,theirsignificanceandfunction,whichleadstoverydifferentconsequences,thoughitisonethatisstrugglingnowforrecognitionandacceptance.Bythisotherconception,acodeisnottoberestrictedtotheeliminationofbusinesspracticesth

atwouldbecharacterizedbygeneralacceptationasoppressiveorunfair.Itistoincludewhateverordinancesmaybedesirableorhelpfulforthewellbeingorprosperityoftheindustry[p553]affected.Inthatview,thefunctionofitsadoptionisnotmerelynegative,butpositive--theplanningofimprovementsaswellastheextirpationofabuses.Whatisfair,asthusconceived,isnotsomethingtobecontrastedwithwhatisunfairorfraudulentortricky.Theextensionbecomesaswideasthefieldofindustrialregulation.Ifthatconceptionshallprevail,anythingthatCongressmaydowithinthelimitsofthecommerceclauseforthebettermentofbusinessmaybedonebythePresidentupontherecommendationofatradeassociationbycallingitacode.Thisisdelegationrunningriot.Nosuchplenitudeofpowerissusceptibleoftransfer.Thestatute,however,aimsatnothingless,asonecanlearnbothfromitstermsandfromtheadministrativepracticeunderit.Nothinglessisaimedatbythecodenowsubmittedtoo

urscrutiny.

Thecodedoesnotconfineitselftothesuppressionofmethodsofcompetitionthatwouldbeclassifiedasunfairaccordingtoacceptedbusinessstandardsoracceptednormofethics.Itsetsupacomprehensivebodyofrulestopromotethewelfareoftheindustry,ifnotthewelfareofthenation,withoutreferencetostandards,ethicalorcommercial,thatcouldbeknownorpredictedinadvanceofitsadoption.Oneofthenewrules,thesourceoftencountsintheindictment,isaimedatanestablishedpractice,notunethicaloroppressive,thepracticeofselectivebuying.Manyotherscouldbeinstancedasopentothesameobjection



ifthesectionsofthecodeweretobeexaminedonebyone.Theprocessofdissectionwillnotbetracedinallitsdetails.Enoughatthistimetostatewhatitreveals.Evenifthestatuteitselfhadfixedthemeaningoffaircompetitionbywayofcontrastwithpracticesthatareoppressiveorunfair,thecodeoutrunstheboundsoftheauthorityconferred.Whatisexcessiveisnotsporadicorsuperficial.Itisdeep-seatedandpervasive.[p554]Thelicitandillicitsectionsaresocombinedandweldedastobeincapableofseverancewithoutdestructivemutilation.

Butthereisanotherobjection,far-reachingandincurable,asidefromanydefectofunlawfuldelegation.

IfthiscodehadbeenadoptedbyCongressitself,andnotbythePresident,ontheadviceofanindustrialassociation,itwouldeventhenbevoidunlessauthoritytoadoptitisincludedinthegrantofpower"toregulatecommercewithforeignnationsaamongtheseveralstates."UnitedStatesConstitution,Art.I,§8,Clause3.

Ifindnoauthorityinthatgrantfortheregulationofwagesandhoursoflaborintheintrastatetransactionsthatmakeupthedefendants'business.Astothisfeatureofthecase,littlecanbeaddedtotheopinionofthecourt.Thereisaviewofcausationthatwouldobliteratethedistinctionbetweenwhatisnationalandwhatislocalintheactivitiesofcommerce.Motionattheouterrimiscommunicatedperceptibly,thoughminutely,torecordinginstrumentsatthecente

r.Asocietysuchasours"isanelasticmediumwhichtransmitsalltremorsthroughoutitsterritory;theonlyquestionisoftheirsize."PerLearnedHand,J.,inthecourtbelow.Thelawisnotindifferenttoconsiderationsofdegree.Activitieslocalintheirimmediacydonotbecomeinterstateandnationalbecauseofdistantrepercussions.Whatisnearandwhatisdistantmayattimesbeuncertain.Cf.ChicagoBoardofTradev.Olsen,262U.S.1.Thereisnopenumbraofuncertaintyobscuringjudgmenthere.Tofindimmediacyordirectnesshereistofinditalmosteverywhere.Ifcentripetalforcesaretobeisolatedtotheexclusionoftheforcesthatopposeandcounteractthem,therewillbeanendtoourfederalsystem.

Totakefromthiscodetheprovisionsastowagesandthehoursoflaboristodestroyitaltogether.Ifatradeoranindustryissopredominantlylocalasto

beexempt[p555]fromregulationbytheCongressinrespectofmatterssuchasthese,therecanbeno"code"foritatall.Thisisclearfromtheprovisionof§7aoftheAct,withitsexplicitdisclosureofthestatutoryscheme.Wagesandthehoursoflaborareessentialfeaturesoftheplan,itsveryboneandsinew.Thereisnoopportunityinsuchcircumstancesfortheseveranceoftheinfectedpartsinthehopeofsavingtheremainder.Acodecollapsesutterlywithboneandsinewgone.

IamauthorizedtoStatethatMR.JUSTICESTONEjoinsinthisopinion.

Documents

A. L. a. Schechter Poultry Corp. v. United States