Law School Case Brief
Nebbia v. New York - 291 U.S. 502, 54 S. Ct. 505 (1934)
The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. The guaranty of due process demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business may be invalid for another sort because the reasonableness of each regulation depends upon the relevant facts.
The New York Legislature passed a Milk Control Law that established a Milk Control Board with the power to fix minimum and maximum retail prices charged by stores to consumers for milk. Defendant was a storekeeper who was found to have sold milk for less than the price fixed by the Board's order. Defendant asserted that the statute and order violated the equal protection clause and the due process clause of the Fourteenth Amendment. The Court held that the contention that discrimination deprived defendant of equal protection was not well founded because there was no showing that the order placed him at a disadvantage or affected him adversely.
Does the Federal Constitution prohibit a state from fixing the selling price of milk?
The law-making bodies have in the past endeavored to promote free competition by laws aimed at trusts and monopolies. The consequent interference with private property and freedom of contract has not availed with the courts to set these enactments aside as denying due process. Where the public interest was deemed to require the fixing of minimum prices, that expedient has been sustained. If the law-making body within its sphere of government concludes that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer's interests, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulation adopted fixes prices reasonably deemed by the legislature to be fair to those engaged in the industry and to the consuming public. And this is especially so where, as here, the economic maladjustment is one of price, which threatens harm to the producer at one end of the series and the consumer at the other. The Constitution does not secure to anyone liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of the people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.
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