State Department of Agriculture v. Tillamook Cheese & Dairy Ass'n

SLOAN, J.

This is an action by the Department of Agriculture, pursuant to ORS 583.106 to obtain injunctive enforcement of its order requiring defendant to pay certain milk producers. The dispute that has existed in the Tillamook County Dairy industry for the past several years is collaterally involved in this proceeding.

Defendant is a milk producer’s cooperative organized by its member milk producing patrons to receive the patrons’ milk, market it and divide the net proceeds among the member patrons. The collateral party, not a party to this proceeding, but whose actions are directly involved, is the Tillamook County Creamery Association. We will refer to it as the Association. The Association is a cooperative Association whose members are producer’s co-ops, like defendant.

For some years prior to the summer of 1963, defendant marketed all of its Grade A milk through the Association. In the summer of 1963, the relationship between defendant and the Association erupted in the quarrel that has been in the state and federal courts ever since. The nature of the dispute and the persons involved does not appear in the record. It does appear that some of defendant’s producers were participants or active sympathizers with one side or the other. As a result of this quarrel, defendant failed or refused to pay all of its member milk producers for milk delivered to defendant by its producers during July, August and September, 1963. Defendant did pay some of the producers. Defendant has declined to pay because, as it claims, payment was made to the producers by the Association and that the Association obtained from each producer an assignment of its claim and as a result defendant should not be forced to pay the producers. Whether or not defendant refuses to pay because it fears it may later be obliged to pay the Association for the same milk, is not clear from the issues and record presented by this appeal. It does appear that an action for accounting is now pending between defendant and the Association in which that question may be solved. The question here is: Does this situation excuse defendant from its statutory duty as a handler to pay all of its producers and is the situation a defense to the statutory duty of the department to order compliance and to the court’s duty to enforce the department’s order?

Defendant, as mentioned, is a handler. The duty of a handler, as spelled out by OES Chapter 583 is, among other things, to keep adequate books and records and to promptly pay all producers from whom it buys milk.

The duty of the department and the function of the court is found in OES Chapter 583 beginning with 583.076. That section requires the department to audit the records of all milk handlers at least once a year. If the audit reveals that the handler has not paid his producers during the audit period, ORS 583.086 requires the department to order the handler to make payment or to show cause in an administrative proceeding within the department why such payment should not be made. If the department does not change the result of the audit as permitted by ORS 583.086, the handler may then file an appeal to the appropriate circuit court and have expeditious review of the department’s findings and order. ORS 583.096.

If the handler refuses to conform to the department’s order or to appeal to the court, as was the situation in' this case, then ORS 583.106 provides that the department shall file “an injunctive action” in the proper circuit court to compel obedience to the department order. ORS 583.106(2) provides that in such a judicial review that the findings of the department, “if supported by substantial evidence, in the absence of fraud, are conclusive and the jurisdiction of the court shall be confined to the questions of law.” ORS 583.106(3) provides that if the findings of the department include the requirement that the handlers make payment to a producer for milk, the “court shall order” the handler to make payment.

Here, the department made the statutory audit. The indisputable facts disclosed by the audit were that defendant had not paid the producers or anybody else the admitted amounts of money involved in marketing the milk involved. Accordingly, the department was obliged by the statute to enter its order of compliance and, upon failure of defendant to invoke the statutory review procedure available to it, to seek the injunctive decree of the circuit court.

Defendant is in obvious violation of the unambiguous requirements of the statute and by the equally clear mandate of the statute the court has no discretion to do other than order compliance. Dept. of Agriculture v. Watkins, 1966, 244 Or 484, 419 P2d 26; United States v. Ruzicka, 1946, 329 US 287, 67 S Ct 207, 91 L ed 290; Jaffe, Enforcement of Administrative Orders, 1963, 76 Harv L Rev 865.

Defendant devotes much of its argument to the theory that a cooperative should be excused from full compliance with the statute. It argues that by the nature of a cooperative organization it cannot pay its producers any amount in excess of net profits and that since no net profits were shown that it could not be required to pay. ORS 583.006(5) in defining a handler specifically includes a “cooperative organization engaged in handling milk * * It would be necessary to delete this language from the statute and ignore the clear intent of the entire chapter if we would sustain defendant’s theory.

The decree is, therefore, affirmed.