A.L.A. SCHECHTER POULTRY CORPORATION v. UNITED STATES

No. 854

295 U.S. 495, 519-528 (Facts), 529-542, 55 S.Ct. 837, 79 L.Ed. 1570 (1935).

Mr. Chief Justice HUGHES delivered the opinion of the Court.

Petitioners in No. 854 were convicted in the District Court of the United States for the Eastern District of New York on eighteen counts of an indictment charging violations of what is known as the 'Live Poultry Code,'¹ and on an additional count for conspiracy to commit such violations.² By demurrer to the indictment and appropriate motions on the trial, the defendants contended (1) that the code had been adopted pursuant to an unconstitutional delegation by Congress of legislative power; (2) that it attempted to regulate intrastate transactions which lay outside the authority of Congress; and (3) that in certain provisions it was repugnant to the due process clause of the Fifth Amendment. [295 U.S. 495, 520] 'The Circuit Court of Appeals sustained the conviction on the conspiracy count and on sixteen counts for violation of the code, but reversed the conviction on two counts which charged violation of requirements as to minimum wages and maximum hours of labor, as these were not deemed to be within the congressional power of regulation. 76 F.(2d) 617. On the respective applications of the defendants (No. 854) and of the government (No. 864), this Court granted writs of certiorari April 15, 1935. 295 U.S. 723 , 55 S.Ct. 651, 79 L.Ed. --.

New York City is the largest live poultry market in the United States. Ninety-six per cent. of the live poultry there marketed comes from other states. Three-fourths of this amount arrives by rail and is consigned to commission men or receivers. Most of these freight shipments (about 75 per cent.) come in at the Manhattan Terminal of the New York Central Railroad, and the remainder at one of the four terminals in New Jersey serving New York City. The commission men transact by far the greater part of the business on a commission basis, representing the shippers as agents, and remitting to them the proceeds of sale, less commissions, freight, and handling charges. Otherwise, they buy for their own account. They sell to slaughterhouse operators who are also called marketmen.

The defendants are slaughterhouse operators of the latter class. A.L. A. Schechter Poultry Corporation and Schechter Live Poultry Market are corporations conducting wholesale poultry slaughterhouse markets in Brooklyn, New York City. Joseph Schechter operated the latter corporation and also guaranteed the credits of the former corporation, which was operated by Martin, Alex, and Aaron Schechter. Defendants ordinarily purchase their live poultry from commission men at the West Washington Market in New York City or at the railroad terminals serving the city, but occasionally they purchase from commission men in Philadelphia. They buy the [295 U.S. 495, 521] poultry for slaughter and resale. After the poultry is trucked to their slaughterhouse markets in Brooklyn, it is there sold, usually within twenty-four hours, to retail poultry dealers and butchers who sell directly to consumers. The poultry purchased from defendants is immediately slaughtered, prior to delivery, by shochtim in defendants' employ. Defendants do not sell poultry in interstate commerce.

The "Live Poultry Code" was promulgated under § 3 of the National Industrial Recovery Act.³ That section -- the pertinent provisions of which are set forth in the margin⁴ authorizes the President to approve "codes of [295 U. S., 522] fair competition." Such a code may be approved for a trade or industry, upon application by one or more trade or industrial associations or groups, if the President finds (1) that such associations or groups "impose no inequitable restrictions on admission to membership therein and are truly representative," and (2) that such codes are not designed "to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate [295 U. S., 523] against them, and will tend to effectuate the policy" of Title I of the Act. Such codes "shall not permit monopolies or monopolistic practices." As a condition of his approval, the President may "impose such conditions (including requirements for the making of reports and the keeping of accounts) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code, as the President in his discretion deems necessary to effectuate the policy herein declared."

Where such a code has not been approved, the President may prescribe one, either on his own motion or on complaint. Violation of any provision of a code (so approved or prescribed) "in any transaction in or affecting interstate or foreign commerce" is made a misdemeanor punishable by a fine of not more than $500 for each offense, and each day the violation continues is to be deemed a separate offense.

The "Live Poultry Code" was approved by the President on April 13, 1934. Its divisions indicate its nature and scope. The Code has eight articles entitled (1) purposes, (2) definitions, (3) hours, (4) wages, (5) general labor provisions, (6) administration, (7) trade practice provisions, and (8) general.

The declared purpose is "To effect the policies of title I of the National Industrial Recovery Act." The Code is established as "a code of fair competition for the live poultry industry of the metropolitan area in and about the City of New York." That area is described as embracing the five boroughs of New York City, the counties of Rockland, Westchester, Nassau and Suffolk in the State of New York, the counties of Hudson and Bergen in the State of New Jersey, and the county of Fairfield in the State of Connecticut.

The 'industry' is defined as including 'every person engaged in the business of selling, purchasing of re- [295 U.S. 495, 524] sale, transporting, or handling and/or slaughtering live poultry, from the time such poultry comes into the New York metropolitan area to the time it is first sold in slaughtered form,' and such 'related branches' as may from time to time be included by amendment. Employers are styled 'members of the industry,' and the term 'employee' is defined to embrace 'any and all persons engaged in the industry, however compensated,' except 'members.'

The code fixes the number of hours for workdays. It provides that no employee, with certain exceptions, shall be permitted to work in excess of forty hours in any one week, and that no employees, save as stated, 'shall be paid in any pay period less than at the rate of fifty (50) cents per hour.' The article containing 'general labor provisions' prohibits the employment of any person under 16 years of age, and declares that employees shall have the right of 'collective bargaining' and freedom of choice with respect to labor organizations, in the terms of section 7(a) of the act (15 USCA 707(a). The minimum number of employees, who shall be employed by slaughterhouse operators, is fixed; the number being graduated according to the average volume of weekly sales.

Provision is made for administration through an 'industry advisory committee,' to be selected by trade associations and members of the industry, and a 'code supervisor,' to be appointed, with the approval of the committee, by agreement between the Secretary of Agriculture and the Administrator for Industrial Recovery. The expenses of administration are to be borne by the members of the industry proportionately upon the basis of volume of business, or such other factors as the advisory committee may deem equitable, 'subject to the disapproval of the Secretary and/or Administrator.'

The seventh article, containing 'trade practice provisions,' prohibits various practices which are said to consti- [295 U.S. 495, 525] tute 'unfair methods of competition.' The final article provides for verified reports, such as the Secretary or Administrator may require, '(1) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and (2) for the determination by the Secretary or Administrator of the extent to which the declared policy of the act is being effectuated by this code.' The members of the industry are also required to keep books and records which 'will clearly reflect all financial transactions of their respective businesses and the financial condition thereof,' and to submit weekly reports showing the range of daily prices and volume of sales' for each kind of produce.

The President approved the code by an executive order (No. 6675-A) in which he found that the application for his approval had been duly made in accordance with the provisions of title 1 of the National Industrial Recover Act; that there had been due notice and hearings; that the code constituted 'a code of fair competition' as contemplated by the act and complied with its pertinent provisions, including clauses (1) and (2) of subsection (a) of section 3 of title 1 (15 USCA 703(a)(1, 2); and that the code would tend 'to effectuate the policy of Congress as declared in section 1 of Title I.'⁵ [295 U.S. 495, 526] The executive order also recited that the Secretary of Agriculture and the Administrator of the National Industrial Recovery Act had rendered separate reports as to the provisions within their respective jurisdictions. The Secretary of Agriculture reported that the provisions of the code 'establishing standards of fair competition (a) are regulations of transactions in or affecting the current of interstate and/or foreign commerce and (b) are reason- [295 U.S. 495, 527] able,' and also that the code would tend to effectuate the policy declared in title 1 of the act, as set forth in section 1 (15 USCA 701). The report of the Administrator for Industrial Recovery dealt with wages, hours of labor, and other labor provisions.⁶

Of the eighteen counts of the indictment upon which the defendants were convicted, aside from the count for conspiracy, two counts charged violation of the minimum wage and maximum hour provisions of the code, and ten counts were for violation of the requirement (found in the 'trade practice provisions') of 'straight killing.' This requirement was really one of 'straight' selling. The term 'straight killing' was defined in the code as 'the practice of requiring persons purchasing poultry for resale to accept the run of any half coop, coop, or coops, as purchased by slaughterhouse operators, except for culls.'⁷ The charges in the ten counts, respectively, were [295 U.S. 495, 528] that the defendants in selling to retail dealers and butchers had permitted 'selections of individual chickens taken from particular coops and half coops.'

Of the other six counts, one charged the sale to a butcher of an unfit chicken; two counts charged the making of sales without having the poultry inspected or approved in accordance with regulations or ordinances of the city of New York; two counts charged the making of false reports or the failure to make reports relating to the range of daily prices and volume of sales for certain periods; and the remaining count was for sales to slaughterers or dealers who were without licenses required by the ordinances and regulations of the city of New York.

* * * *

Second. The Question of the Delegation of Legislative Power.-We recently had occasion to review the pertinent decisions and the general principles which govern the determination of this question. Panama Refining Company v. Ryan, 293 U.S. 388 , 55 S.Ct. 241, 79 L.Ed . 446. The Constitution provides that 'All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.' Article 1, 1. And the Congress is authorized 'To make all Laws which shall be necessary and proper for carrying into Execution' its general powers. Article 1, 8, par. 18. The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. We have repeatedly recognized the necessity of adapting [295 U.S. 495, 530] legislation to complex conditions involving a host of details with which the national Legislature cannot deal directly. We pointed out in the Panama Refining Company Case that the Constitution has never been regarded as denying to Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. But we said that the constant recognition of the necessity and validity of such provisions, and the wide range of administrative authority which has been developed by means of them, cannot be allowed to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained. Id., 293 U.S. 388 , page 421, 55 S.Ct. 241.

Accordingly, we look to the statute to see whether Congress has overstepped these limitations-whether Congress in authorizing 'codes of fair competition' has itself established the standards of legal obligation, thus performing its essential legislative function, or, by the failure to enact such standards, has attempted to transfer that function to others.

The aspect in which the question is now presented is distinct from that which was before us in the case of the Panama Refining Company. There the subject of the statutory prohibition was defined. National Industrial Recovery Act, 9(c), 15 USCA 709(c). That subject was the transportation in interstate and foreign commerce of petroleum and petroleum products which are produced or withdrawn from storage in excess of the amount permitted by state authority. The question was with respect to the range of discretion given to the President in prohibiting that transportation. Id., 293 U.S. 388 , pages 414, 415, 430, 55 S.Ct. 241. As to the 'codes of fair competition,' under section 3 of the act, the question is more funda- [295 U.S. 495, 531] mental. It is whether there is any adequate definition of the subject to which the codes are to be addressed.

What is meant by 'fair competition' as the term is used in the act? Does it refer to a category established in the law, and is the authority to make codes limited accordingly? Or is it used as a convenient designation for whatever set of laws the formulators of a code for a particular trade or industry may propose and the President may approve ( subject to certain restrictions), or the President may himself prescribe, as being wise and beneficent provisions for the government of the trade or industry in order to accomplish the broad purposes of rehabilitation, correction, and expansion which are stated in the first section of title 1? 9

The act does not define 'fair competition.' 'Unfair competition,' as known to the common law, is a limited concept. Primarily, and strictly, it relates to the palming off of one's goods as those of a rival trader. Goodyear's Rubber Manufacturing Co. v. Good-year Rubber Co., 128 U.S. 598 , [295 U.S. 495, 532] 604, 9 S.Ct. 166; Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U.S. 118, 140 , 25 S.Ct. 609; Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413 , 36 S.Ct. 357. In recent years, its scope has been extended. It has been held to apply to misappropriation as well as misrepresentation, to the selling of another's goods as one's own-to misappropriation of what equitably belongs to a competitor. International News Service v. Associated Press, 248 U.S. 215, 241 , 242 S., 39 S.Ct. 68, 2 A.L.R. 293. Unfairness in competition has been predicated of acts which lie outside the ordinary course of business and are tainted by fraud or coercion or conduct otherwise prohibited by law. 10 Id., 248 U.S. 315 , page 258, 39 S.Ct. 68, 2 A.L.R. 293. But it is evident that in its widest range, 'unfair competition,' as it has been understood in the law, does not reach the objectives of the codes which are authorized by the National Industrial Recovery Act. The codes may, indeed, cover conduct which existing law condemns, but they are not limited to conduct of that sort. The government does not contend that the act contemplates such a limitation. It would be opposed both to the declared purposes of the act and to its administrative construction.

The Federal Trade Commission Act [section 5 (15 USCA 45 11 introduced the expression 'unfair methods of competition,' which were declared to be unlawful. That was an expression new in the law. Debate apparently convinced the sponsors of the legislation that the words 'unfair competition,' in the light of their meaning at common law, were too narrow. We have said that the substituted phrase has a broader meaning, that it does not admit of precise definition; its scope being left to judicial determination as controversies arise. Federal Trade Commission v. Raladam Co., 283 U.S. 643, 648 , 649 S., 51 S.Ct. 587, 79 A.L.R. 1191; Federal Trade Commission v. R. F. Keppel, 291 U.S. 304 , 310-312, 54 S.Ct. 423. What are [295 U.S. 495, 533] 'UNFAIR METHODS OF COMPETITION' ARE THUS to be determined in particular instances, upon evidence, in the light of particular competitive conditions and of what is found to be a specific and substantial public interest. Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 453 , 42 S.Ct. 150, 19 A.L.R. 882; Federal Trade Commission v. Klesner, 280 U.S. 19, 27 , 28 S., 50 S.Ct. 1, 68 A.L.R. 838; Federal Trade Commission v. Raladam Co., supra; Federal Trade Commission v. R. F. Keppel, supra; Federal Trade Commission v. Algoma Lumber Co., 291 U.S. 67, 73 , 54 S.Ct. 315. To make this possible, Congress set up a special procedure. A commission, a quasi-judicial body, was created. Provision was made for formal complaint, for notice and hearing, for appropriate findings of fact supported by adequate evidence, and for judicial review to give assurance that the action of the commission is taken within its statutory authority. Federal Trade Commission v. Raladam Co., supra; Federal Trade Commission v. Klesner, supra. 12

In providing for codes, the National Industrial Recovery Act dispenses with this administrative procedure and with any administrative procedure of an analogous character. But the difference between the code plan of the Recovery Act and the scheme of the Federal Trade Commission Act lies not only in procedure but in subject- [295 U.S. 495, 534] matter. We cannot regard the 'fair competition' of the codes as antithetical to the 'unfair methods of competition' of the Federal Trade Commission Act. The 'fair competition' of the codes has a much broader range and a new significance. The Recovery Act provides that it shall not be construed to impair the powers of the Federal Trade Commission, but, when a code is approved, its provisions are to be the 'standards of fair competition' for the trade or industry concerned, and any violation of such standards in any transaction in or affecting interstate or foreign commerce is to be deemed 'an unfair method of competition' within the meaning of the Federal Trade Commission Act. Section 3(b) of the act, 15 USCA 703(b).

For a statement of the authorized objectives and content of the 'codes of fair competition,' we are referred repeatedly to the 'Declaration of Policy' in section 1 of title 1 of the Recovery Act (15 USCA 701). Thus the approval of a code by the President is conditioned on his finding that it 'will tend to effectuate the policy of this title.' Section 3(a) of the act, 15 USCA 703(a). The President is authorized to impose such conditions 'for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code, as the President in his discretion deems necessary to effectuate the policy herein declared.' Id. The 'policy herein declared' is manifestly that set forth in section 1. That declaration embraces a broad range of objectives. Among them we find the elimination of 'unfair competitive practices.' But, even if this clause were to be taken to relate to practices which fall under the ban of existing law, either common law or statute, it is still only one of the authorized aims described in section 1. It is there declared to be 'the policy of Congress'- 'to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount [295 U.S. 495, 535] thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.' 13

Under section 3, whatever 'may tend to effectuate' these general purposes may be included in the 'codes of fair competition.' We think the conclusion is inescapable that the authority sought to be conferred by section 3 was not merely to deal with 'unfair competitive practices' which offend against existing law, and could be the subject of judicial condemnation without further legislation, or to create administrative machinery for the application of established principles of law to particular instances of violation. Rather, the purpose is clearly disclosed to authorize new and controlling prohibitions through codes of laws which would embrace what the formulators would propose, and what the President would approve or prescribe, as wise and beneficient measures for the government of trades and industries in order to bring about their rehabilitation, correction, and development, according to the general declaration of policy in section 1. Codes of laws of this sort are styled 'codes of fair competition.'

We find no real controversy upon this point and we must determine the validity of the code in question in this aspect. As the government candidly says in its [295 U.S. 495, 536] brief: 'The words 'policy of this title' clearly refer to the 'policy' which Congress declared in the section entitled 'Declaration of Policy'- Section 1. All of the policies there set forth point toward a single goal- the rehabilitation of industry and the industrial recovery which unquestionably was the major policy of Congress in adopting the National Industrial Recovery Act.' And that this is the controlling purpose of the code now before us appears both from its repeated declarations to that effect and from the scope of its requirements. It will be observed that its provisions as to the hours and wages of employees and its 'general labor provisions' were placed in separate articles, and these were not included in the article on 'trade practice provisions' declaring what should be deemed to constitute 'unfair methods of competition.' The Secretary of Agriculture thus stated the objectives of the Live Poultry Code in his report to the President, which was recited in the executive order of approval:

'That said code will tend to effectuate the declared policy of title I of the National Industrial Recovery Act as set forth in section 1 of said act in that the terms and provisions of such code tend to: (a) Remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof: (b) to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups; (c) to eliminate unfair competitive practices; (d) to promote the fullest possible utilization of the present productive capacity of industries; (e) to avoid undue restriction of production (except as may be temporarily required); (f) to increase the consumption of industrial and agricultural products by increasing purchasing power; and (g) otherwise to rehabilitate industry and to conserve natural resources.' [295 U.S. 495, 537] The government urges that the codes will 'consist of rules of competition deemed fair for each industry by representative members of that industry-by the persons most vitally concerned and most familiar with its problems.' Instances are cited in which Congress has availed itself of such assistance; as, e.g., in the exercise of its authority over the public domain, with respect to the recognition of local customs or rules of miners as to mining claims, 14 or, in matters of a more or less technical nature, as in designating the standard height of drawbars. 15 But would it be seriously contended that Congress could delegate its legislative authority to trade or industrial associations or groups so as to empower them to enact the laws they deem to be wise and beneficent for the rehabilitation and expansion of their trade or industries? Could trade or industrial associations or groups be constituted legislative bodies for that purpose because such associations or groups are familiar with the problems of their enterprises? And could an effort of that sort be made valid by such a preface of generalities as to permissible aims as we find in section 1 of title 1? The answer is obvious. Such a delegation of legislative power is unknown to our law, and is utterly inconsistent with the constitutional prerogatives and duties of Congress.

The question, then, turns upon the authority which section 3 of the Recovery Act vests in the President to approve or prescribe. If the codes have standing as penal statutes, this must be due to the effect of the executive action. But Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make [295 U.S. 495, 538] whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade or industry. See Panama Refining Company v. Ryan, supra, and cases there reviewed.

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 monopolies 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 envisaged by section 1, 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. That is the precise effect of the further finding that the President is to make-that the code 'will tend to effectuate the policy of this title.' While this is called a finding, it is really but a statement of an opinion as to the general effect upon the promotion of trade or industry of a scheme of laws. These are the only findings which Congress has made essential in order to put into operation a legislative code having the aims described in the 'Declaration of Policy.'

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 [295 U.S. 495, 539] 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 administrative agencies to assist him, but the action or reports of such agencies, or of his other assistants-their recommendations and findings in relation 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 section 3 undertakes 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. By the Interstate Commerce Act (49 USCA 1 et seq.), Congress has itself provided a code of laws regulating the activities of the common carriers subject to the act, in order to assure the performance of their services upon just and reasonable terms, with adequate facilities and without unjust discrimination. Congress from time to time has elaborated its requirements, as needs have been disclosed. To facilitate the application of the standards prescribed by the act, Congress has provided an expert body. That administrative agency, in dealing with particular cases, is required to act upon notice and hearing, and its orders must be supported by findings of fact which in turn are sustained by evidence. Interstate Commerce Commission v. Louisville & Nashville Railroad Company, 227 U.S. 88 , 33 S.Ct. 185; State of Florida v. United States, 282 U.S. 194 , 51 S.Ct. 119; United States [295 U.S. 495, 540] v. Baltimore & Ohio Railroad Company, 293 U.S. 454 , 55 S.Ct. 268. When the Commission is authorized to issue, for the construction, extension, or abandonment of lines, a certificate of 'public convenience and necessity,' or to permit the acquisition by one carrier of the control of another, if that is found to be 'in the public interest,' we have pointed out that these provisions are not left without standards to guide determination. The authority conferred has direct relation to the standards prescribed for the service of common carriers, and can be exercised only upon findings, based upon evidence, with respect to particular conditions of transportation. New York Central Securities Corporation v. United States, 287 U.S. 12, 24 , 25 S., 53 S.Ct. 45; Texas & Pacific Railway Co. v. Gulf, Colorado & Santa Fe Railway Co., 270 U.S. 266, 273 , 46 S.Ct. 263; Chesapeake & Ohio Railway Co. v. United States, 283 U.S. 35, 42 , 51 S.Ct. 337.

Similarly, we have held that the Radio Act of 192716 established standards to govern radio communications, and, in view of the limited number of available broadcasting frequencies, Congress authorized allocation and licenses. The Federal Radio Commission was created as the licensing authority, in order to secure a reasonable equality of opportunity in radio transmission and reception. The authority of the Commission to grant licenses 'as public convenience, interest or necessity requires' was limited by the nature of radio communications, and by the scope, character, and quality of the services to be rendered and the relative advantages to be derived through distribution of facilities. These standards established by Congress were to be enforced upon hearing and evidence by an administrative body acting under statutory restrictions adapted to the particular activity. Federal Radio Commission v. Nelson Brothers Bond & Mtg. Co., 289 U.S. 266 , 53 S.Ct. 627

[295 U.S. 495, 541] In Hampton, Jr. & Company v. United States, 276 U.S. 394 , 48 S.Ct. 348, 350 the question related to the 'flexible tariff provision' of the Tariff Act of 1922.17 We held that Congress had described its plan 'to secure by law the imposition of customs duties on articles of imported merchandise which should equal the difference between the cost of producing in a foreign country the articles in question and laying them down for sale in the United States, and the cost of producing and selling like or similar articles in the United States.' As the differences in cost might vary from time to time, provision was made for the investigation and determination of these differences by the executive branch so as to make 'the adjustments necessary to conform the duties to the standard underlying that policy and plan.' Id. 276 U.S. 394 , pages 404, 405, 48 S.Ct. 348, 350. The Court found the same principle to be applicable in fixing customs duties as that which permitted Congress to exercise its rate-making power in interstate commerce, 'by declaring the rule which shall prevail in the legislative fixing of rates,' and then remitting 'the fixing of such rates' in accordance with its provisions 'to a rate-making body.' Id. 276 U.S. 394 , page 409, 48 S.Ct. 348, 352. The Court fully recognized the limitations upon the delegation of legislative power. Id. 276 U.S. 394 , pages 408-411, 48 S.Ct. 348.

To summarize and conclude upon this point: Section 3 of the Recovery Act (15 USCA 703 is without precedent. It supplies no standards for any trade, industry, or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that legislative undertaking, section 3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction, and expansion described in section 1. In view of the scope of that broad declaration and of the [295 U.S. 495, 542] 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.

* * * *

On both the grounds we have discussed, the attempted delegation of legislative power and the attempted regulation of intrastate transactions which affect interstate commerce only indirectly, we hold the code provisions here in question to be invalid and that the judgment of conviction must be reversed. No. 854-reversed. No. 864-affirmed.

Footnotes

¹The full title of the Code is "Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York."

²The indictment contained 60 counts, of which 27 counts were dismissed by the trial court, and on 14 counts, the defendants were acquitted.

³Act of June 16, 1933, c. 90, 48 Stat. 195, 196; 15 U.S.C. 703.

⁴"CODES OF FAIR COMPETITION."

"Sec. 3. (a) Upon the application to the President by one or more trade or industrial associations or groups, the President may approve a code or codes of fair competition for the trade or industry or subdivision thereof, represented by the applicant or applicants, if the President finds (1) that such associations or groups impose no inequitable restrictions on admission to membership therein and are truly representative of such trades or industries or subdivisions thereof, and (2) that such code or codes are not designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them, and will tend to effectuate the policy of this title: Provided, That such code or codes shall not permit monopolies or monopolistic practices: Provided further, That where such code or codes affect the services and welfare of persons engaged in other steps of the economic process, nothing in this section shall deprive such persons of the right to be heard prior to approval by the President of such code or codes. The President may, as a condition of his approval of any such code, impose such conditions (including requirements for the making of reports and the keeping of accounts) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code as the President in his discretion deems necessary to effectuate the policy herein declared."

"(b) After the President shall have approved any such code, the provisions of such code shall be the standards of fair competition for such trade or industry or subdivision thereof. Any violation of such standards in any transaction in or affecting interstate or foreign commerce shall be deemed an unfair method of competition in commerce within the meaning of the Federal Trade Commission Act, as amended; but nothing in this title shall be construed to impair the powers of the Federal Trade Commission under such Act, as amended."

"(c) The several district courts of the United States are hereby invested with jurisdiction to present and restrain violations of any code of fair competition approved under this title, and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations."

"(d) Upon his own motion, or if complaint is made to the President that abuses inimical to the public interest and contrary to the policy herein declared are prevalent in any trade or industry or subdivision thereof, and if no code of fair competition therefor has theretofore been approved by the President, the President, after such public notice and hearing as he shall specify, may prescribe and approve a code of fair competition for such trade or industry or subdivision thereof, which shall have the same effect as a code of fair competition approved by the President under subsection (a) of this section."

"* * * *"

"(f) When a code of fair competition has been approved or prescribed by the President under this title, any violation of any provision thereof in any transaction in or affecting interstate or foreign commerce shall be a misdemeanor and upon conviction thereof an offender shall be fined not more than $500 for each offense, and each day such violation continues shall be deemed a separate offense."

⁵The Executive Order is as follows:

"EXECUTIVE ORDER"

"Approval of Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York."

"Whereas, the Secretary of Agriculture and the Administrator of the National Industrial Recovery Act having rendered their separate reports and recommendations and findings on the provisions of said code, coming within their respective jurisdictions, as set forth in the Executive Order No. 6182 of June 26, 1933, as supplemented by Executive Order No. 6207 of July 21, 1933, and Executive Order No. 6345 of October 20, 1933, as amended by Executive Order No. 6551 of January 8, 1934;"

"1. An application has been duly made, pursuant to and in full compliance with the provisions of title I of the National Industrial Recovery Act, approved June 16, 1933, for my approval of a code of fair competition for the live poultry industry in the metropolitan area in and about the City of New York; and"

"2. Due notice and opportunity for hearings to interested parties have been given pursuant to the provisions of the act and regulations thereunder; and,"

"3. Hearings have been held upon said code, pursuant to such notice and pursuant to the pertinent provisions of the act and regulations thereunder; and"

"4. Said code of fair competition constitutes a code of fair competition, as contemplated by the act, and complies in all respects with the pertinent provisions of the act, including clauses (1) and (2) of subsection (a) of section 3 of title I of the act; and"

"5. It appears, after due consideration, that said code of fair competition will tend to effectuate the policy of Congress as declared in section 1 of title I of the act."

"Now, therefore, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise, do hereby approve said Code of Fair Competition for the Live Poultry Industry in the Metropolitan Area in and about the City of New York."

"FRANKLIN D. ROOSEVELT,"

"President of the United States"

"The White House, "

April 13, 1934.

⁶The Administrator for Industrial Recovery stated in his report that the Code had been sponsored by trade associations representing about 350 wholesale firms, 150 retail shops, and 21 commission agencies; that these associations represented about 90 percent of the live poultry industry by numbers and volume of business, and that the industry, as defined in the Code, supplied the consuming public with practically all the live poultry coming into the metropolitan area from forty-one States, and transacted an aggregate annual business of approximately ninety million dollars. He further said that about 1610 employees were engaged in the industry; that it had suffered severely on account of the prevailing economic conditions and because of unfair methods of competition and the abuses that had developed as a result of the "uncontrolled methods of doing business," and that these conditions had reduced the number of employees by approximately 40 percent. He added that the report of the Research and Planning Division indicated that the Code would bring about an increase in wages of about 20 percent in this industry, and an increase in employment of 19.2 percent.

⁷The prohibition in the Code (Art. VII, § 14) was as follows:

"Straight Killing. -- The use, in the wholesale slaughtering of poultry, of any method of slaughtering other that 'straight killing,' or killing on the basis of official grade. Purchasers may, however, make selection of a half-coop, coop, or coops, but shall not have the right to make any selection of particular birds."

[Footnote 8]

See Ex parte Milligan, 4 Wall. 2, 71 U. S. 120, 71 U. S. 121; Home Building & Loan Assn v. Blaisdell, 290 U. S. 398, 290 U. S. 426.

[Footnote 9]

That section, under the heading "Declaration of Policy," is as follows:

"Section 1. A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof, and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resource."

[Footnote 10]

See case collected in Nims on Unfair Competition and Trade-Marks, Chap. I, § 4, p. 19, and Chap. XIX.

[Footnote 11]

Act of September 26, 1914, c. 11, 38 Stat. 717, 719, 720.

[Footnote 12]

The Tariff Act of 1930 (§ 337, 46 Stat. 703), like the Tariff Act of 1922 (§ 316, 42 Stat. 943), employs the expressions "unfair methods of competition" and "unfair acts" in the importation of articles into the United States, and in their sale,

"the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated in the United States, or to prevent the establishment of such industry, or to restrain or monopolize trade and commerce in the United States."

Provision is made for investigation and findings by the Tariff Commission, for appeals upon questions of law to the United States Court of Customs and Patent Appeals, and for ultimate action by the President when the existence of any " such unfair method or act" is established to his satisfaction.

[Footnote 13]

See Note 9

[Footnote 14]

Act of July 26, 1866, c. 262, 14 Stat. 251; Jackson v. Roby, 109 U. S. 440, 109 U. S. 441; Erhardt v. Boaro, 113 U. S. 527, 113 U. S. 535; Butte City Water Co. v. Baker, 196 U. S. 119, 196 U. S. 126.

[Footnote 15]

Act of March 2, 1893, c.196, 27 Stat. 531; St. Louis, I. M. & So. Ry. Co. v. Taylor, 210 U. S. 281, 210 U. S. 286.

[Footnote 16]

Act of February 23, 1927, c. 169, 44 Stat. 1162, as amended by the Act of March 28, 1928, c. 263, 45 Stat. 373.

[Footnote 17]

Act of September 21, 1922, c. 356, Title III, § 315, 42 Stat. 858, 941.

- See more at: http://caselaw.findlaw.com/us-supreme-court/295/495.html#sthash.xgsKCxfq.dpuf