Today in Supreme Court History: December 4, 1933

12/4/1933: Nebbia v. New York argued.

 

Comments

[JoeFromtheBronx]

The opinion upheld price fixing of milk, indicating that there was some broad acceptance of the power of the states (at least) to regulate the economy at a relatively early date.

The fact that this was a state regulation means it is not a matter of drawing congressional power lines. The opinion was 5-4, written by Roberts and joined by Chief Justice Hughes.

Justice McReynolds (who, to foreshadow next week's oral argument, dissented in Myers v. U.S. regarding executive removal power) wrote the dissent for the four horsemen.

[F.D. Wolf]

The New York Milk Control Board had set a minimum price for milk of nine cents per quart. Leo Nebbia's crime was throwing in a free five-cent loaf of bread with the purchase of two quarts of milk at eighteen cents, a transgression for which he was fined $25. He argued that the free bread was merely a "premium" and that it was his to give away if he chose, but the state courts did not buy it. The implications of the 5-4 decision were not lost on contemporary observers:

The loaf of bread and two bottles of milk that Leo Nebbia sold to his Rochester (N. Y.) customer last April at the bargain price of 18 cents. in defiance of a new State law off a legal barrage that went on until last week. Almost 11 months after he had sold his bread and milk, the Supreme Court of the United States handed down a 5 to 4 decision that turned out to be a milestone in the history of constitutional law, one of the biggest decisions of all time. It was last April 10 that New York's law gave a control board power to regulate the entire milk industry. It was just nine days later that Leo Nebbia devised his neat plan of getting around the rule that milk must not sell for less than 9 cents a quart. After all, he figured, the loaf of bread that went with the two quarts of milk for 18 cents, was merely a gift, a premium.

In effect the Supreme Court held that much of the New Deal program can be reconciled with protective clauses of the Constitution, so long as the laws passed have a reasonable relation to proper legislative purpose and are neither arbitrary nor discriminatory. Although the decision is limited to the validity of a state statute, yet it eliminated any question as to the validity of recent Federal laws, so far as they involve due process, interference with liberty of contract, and deprivation of private property.

Historic Decision on State Price-Fixing: Supreme Court's Ruling in Support of 'New Deal' Powers, U.S. News 12 (March 12, 1934).

The days of a "liberty interest" to be free of economic regulation were rapidly coming to an end.