Appeal by Barber Pure Milk Company of Montgomery, Inc., from a judgment of the circuit court of Montgomery County sustaining Orders 372 and 389 of the Alabama State Milk Control Board. The proceeding was brought to the circuit court by certiorari, on Barber's petition to that end, pursuant to Code 1940, Tit. 22, § 226. The appeal here is pursuant to Code 1940, Tit. 7, § 1074. See: White Way Pure Milk Co. v. Alabama State Milk Control Board, 265 Ala. 660, 663, 93 So.2d 509.
A group of milk producers who supply Barber, a milk distributor, have intervened as parties.
Order 372, issued December 12, 1956, as here pertinent, was the general price fixing order for milk sold by producers to distributor and producer-distributor licensees of the Board, under which the milk industry in Alabama was operating at the time of the alleged violations thereof by Barber. Order 389 was issued on February 13, 1959, after a hearing was held by the Board on a complaint made by it that Barber had failed to make certain payments to its producers in accordance with Order 372.
The Board has established five milk classifications, including "Government Contract Milk." Of these, Class I is the most important to the producer, since it calls for the highest pay by the distributor. Each producer is allotted a quota of milk for which the distributor is obligated to pay at the Class I price. Classes II and III are not material in this proceeding. Class IV consists of milk purchased by a distributor from a producer in excess of the class quotas established for each producer. Under Order 372, the highest price is paid for Class I milk and the lowest for Class IV. For "Government Contract Milk" (which is milk used to fulfill the United States government's requirements on military bases and federal installations), producers are to be paid the Class I price, except during April, May and June, when the Class IV price applies.
On October 14, 1958, the Board issued a "show cause order" and filed a four-count complaint against Barber charging
The dispute concerning the underpayments for government contract milk resulted from an alleged assignment contract between Barber and its Mississippi affiliate, White Dairy Company, a Mississippi corporation. It appears that Barber and White have the same ownership. During the period in question, Barber assigned its government contracts to White, which then contracted with Barber for the latter to supply the milk necessary to fill these contracts. Barber processed, packaged, and delivered the milk to the government installations, received payment from the government, and endorsed the government checks over to White. White then paid Barber for its services. Barber contends it was not subject to the price schedule prescribed by Order 372 because the government contracts had been assigned to White and thereafter it was acting only as White's agent. Barber also argues that the Board is without jurisdiction to enforce its price regulations in this transaction because White is a Mississippi corporation and enforcement of such regulations would constitute an undue burden on interstate commerce; also, that the Board has no jurisdiction to fix prices for products to be sold on land ceded by the state to the federal government. Barber also argues that Order 389 is illegal and unconstitutional because it impaired its contract with White.
As to count 4, Barber contends that the Board has no jurisdiction over "interplant sales"; that to hold otherwise would result in an order of the Board being promulgated without a public hearing and, therefore, illegal for lack of due process. Barber further argues that there was a lack of any evidence to support a finding of guilty under count 4.
The State Commissioner of Agriculture and Industries attended the meetings of the Board as an ex-officio member (Code 1940, Tit. 22, § 207, as amended by Act No. 785, appvd. Sept. 11, 1951, Acts 1951, Vol. II, p. 1383. See, also, Act No. 497, appvd. Aug. 21, 1961, Acts 1961, Vol. I, p. 579, further amending § 207) and voted on Orders 372 and 389. Barber contends he had no authority to participate as a voting member, the effect being to invalidate said orders.
The issues presented on this appeal may be stated, in short, as follows:
1. The validity vel non of Order 372;
2. Whether there was a denial of procedural due process in issuing Order 389;
3. The constitutional questions of impairment or abridgement of contracts and undue burden on interstate commerce;
5. The authority of the Commissioner of Agriculture and Industries to participate in Board meetings as a voting member.
Barber attacks the validity of Order 372 on two grounds, viz:
(1) That the Board, in adopting the order, considered matters within the personal knowledge of its members and not presented by evidence at the hearings on the order held pursuant to Code 1940, Tit. 22, § 223; and that this was a denial of due process.
(2) That the Board, by said order, seeks to control the price paid to producers for "government contract milk," that is, milk sold to military and government agencies for consumption on government installations.
The attack on this order presupposes that its unlawfulness can be questioned by Barber in this proceeding. Section 226, Tit. 22, Code 1940, provides that "[a]ny person affected by any order or action of the board, who deems himself aggrieved by any such order or act may within ten days after receiving notice of any such action or order, have such order, or action reviewed by a writ of certiorari". Barber contends that it was not "aggrieved," within the meaning of this section, by the adoption of Order 372 until the Board adopted Order 389, which applied Order 372 to Barber's pattern of conduct. We are unable to agree with this contention.
There is no dispute that Barber operated under Order 372, and had notice of its provisions here under attack, for considerably more than ten days after its adoption. In White Way Pure Milk Company v. Alabama State Milk Control Board, 265 Ala. 660, 665-666, 93 So.2d 509, supra, it was held that an attack on the lawfulness and reasonableness of an order of the Board must be made in the manner prescribed by the legislature, that is, by certiorari within ten days after receiving notice of the order, and that such attack cannot be made collaterally. In that case, there was certiorari within the prescribed ten days to review the Board's Order 348, which was based, in part, on alleged violations of Order 322. By way of defense to the proceeding, White Way made an attack on Order 322. It was held that such collateral attack could not be made. A similar situation exists in the proceeding before us.
We find no merit in Barber's insistence that it was denied due process in not being given an additional hearing prior to the Board's February meeting, when Order 389 was adopted.
It is argued by Barber that the action of the Board is resuming deliberations in February was, in effect, a reopening of the case, and, therefore, in order to satisfy the requirements of due process of law, it should have been granted a new hearing after notice. This argument overlooks the fact that the original deliberations, begun in December, had never been concluded. The deliberations were not brought to an end until Order 389 was adopted at the February meeting. As we view it, the February meeting was simply a continuance of the December deliberations. No official order on the charges against Barber was adopted at the December meeting so as to bring the hearing and deliberations on such charges to an end at that time; and there is no indication that any additional evidence was taken after the December meeting. Consideration of the voluminous evidence contained in the 490-page record discloses a full and fair hearing of the charges against Barber in December, with ample opportunity being given Barber to offer evidence in defense of the charges against it. In fact, there is no contention that the hearing was anything
The Board and producers contend there was no valid contract between Barber and White which could be impaired because the alleged "contract" was nothing more than a subterfuge designed to circumvent the regulations of the Board. However, we find it unnecessary to deal with this contention. Assuming the contract to be valid, it is our view that there was no unconstitutional impairment of it by the adoption of Order 389.
It is elemental that "the law enters into and defines the obligation of every contract" and that "[a]ll men are charged as matter of public policy with a knowledge of the law pertaining to their transactions." Birmingham Bar Ass'n v. Phillips & Marsh, 239 Ala. 650, 656, 196 So. 725. And "every contract is made with reference to existing law and every law affecting the contract is read into and becomes a part of the contract when made." Bush v. Greer, 235 Ala. 56, 58, 177 So. 341. These principles are directly applicable here.
As already noted, Order 389 resulted from violations of Order 372, which was adopted some eighteen months prior to execution of the alleged "contract" between Barber and White. Order 372 had "the force and effect of law." Section 211, Tit. 22, Code 1940. Accordingly, said order was read into and became a part of the "contract" when made. And Barber thus was charged with knowledge, when contracting with White, that it was required to pay a specified price to its producers. This was an obligation separate and apart from its obligation to White under the "contract" and was in no way affected by Barber's agreement with White.
Order 389 does not interfere with the free flow of milk in interstate commerce. If there is any burden placed on interstate commerce by said order, it is incidental to the paramount objective of the Board in exercising the powers given to it by State law. In our view, said order does not place an unconstitutional burden on interstate commerce.
The State has deemed it vital to the welfare of its people that the milk industry be regulated, so as to prevent harmful practices which would disrupt the production of this essential commodity. Code 1940, Tit. 22, § 205. Cf. Franklin v. State ex rel. Alabama State Milk Control Board, 232 Ala. 637, 169 So. 295. This authority extends to the practice of regulating prices to be paid to producers by distributors. Code 1940, Tit. 22, § 210. The authority stems from the fact that the milk industry is affected with a public interest, because the welfare of the people depends upon an ample supply of milk in wholesome condition. Furthermore, the conditions surrounding the production of milk are such that the producer is in a distinctly disadvantageous position with respect to marketing practices and economic fluctuations. These factors necessitate supervision and regulation of the industry by the State. Code 1940, Tit. 22, § 205, supra.
As we view the situation presented by this record, the effect of Order 389 on interstate commerce is only incidental or indirect and is, therefore, not unconstitutional (there being no overriding action by Congress on the subject). See: Milk Control Board of Pennsylvania v. Eisenberg Farm Products, 306 U.S. 346 at p. 351, 59 S.Ct. 528, 83 L.Ed. 752, where it is said:
The record before us discloses a similar situation.
Barber contends there was no price-fixing order governing "interplant sales"; hence, a finding of "guilty" under count 4 had the effect of an order being issued by the Board without a public hearing, in violation of the Milk Control Board Act (§ 223, Tit. 22, Code 1940), thereby resulting in a denial of due process. In this connection, emphasis is placed on the fact that personnel employed by the Board knew of no such order. Barber also contends there was no evidence to support a finding of "guilty" under count 4.
"Interplant sales" refer to sales by one distributor to another distributor. In no other way are these sales different from
The orders of the Board pertaining to sales of this kind are clear enough to include "interplant sales," although not specifically referred to in the orders by that name.
The statute nowhere provides that employees of the Board have the power to interpret the Board's orders. The mere fact that employees knew of no order affecting "interplant sales" is of no real significance in determining whether the Board's orders cover such sales. It seems clear that Cloverleaf sold the milk as Class I milk and, therefore, under the orders of the Board, the producers should have been paid Class I prices by Barber. If a distributor were allowed to circumvent the Board's price regulations as in this instance, one of the prime purposes of the Milk Control Board Act would be effectively destroyed. Distributors could shuttle milk back and forth among themselves so that practically all milk could be considered "surplus milk" and thus subject to the lower prices for that category.
There is testimony in the record that the raw milk purchased by Cloverleaf from Barber was used as bottled milk, and also in filling government contracts. The monthly reports by Cloverleaf to the Board revealed that the milk purchased from Barber was used in Class I sales. In view of these facts, considered in connection with the definition of Class I milk as including "raw milk," it cannot be said that the finding of the Board under count 4 was unsupported by evidence.
Barber questions the authority of the Commissioner of Agriculture and Industries to vote as a member of the Board. Code 1940, Tit. 22, § 207, provides that the Commissioner "shall be an ex officio member of the board." In our opinion, this statutory provision makes the Commissioner a member of the Board for all purposes.
Although the proper method of determining the Commissioner's authority to serve on the Board is by quo warranto (Alabama State Milk Control Board v. Graham, 250 Ala. 49, 53, 33 So.2d 11; Hodges v. Board of Education of Geneva County, 245 Ala. 64, 67, 16 So.2d 97), we think it appropriate to discuss the question of his authority on this appeal.
We perceive no persuasive reason why the Commissioner, as an ex officio member of the Board, should not have the same authority as the appointed members have. "Ex officio" means by virtue or because of an office. Webster's International Dictionary, 2d Ed., p. 894; Ashmore v. Greater Greenville Sewer Dist., 211 S.C. 77, 44 S.E.2d 88, 95, 173 A.L.R. 397; King v. Physicians' Casualty Ass'n of America, 97 Neb. 637, 150 N.W. 1010, 1011. It has been held that an "ex officio member" of a board is one who is a member by virtue of his title to a certain office, and without further warrant or appointment. State ex rel. Hennepin County v. Brandt, 225 Minn. 345, 31 N.W.2d 5, 9. It has also been held that "ex officio members of a public body are members for all purposes and must be counted in determining the presence of a quorum."
Error to reverse not appearing, the judgment appealed from is due to be affirmed.
LIVINGSTON, C. J., and SIMPSON and COLEMAN, JJ., concur.