262 F.

2d 600

CROSSE & BLACKWELL COMPANY, a corporation,

Petitioner,
v.
FEDERAL TRADE COMMISSION, Respondent.
No. 7719.

United States Court of Appeals Fourth Circuit.

Argued November 10, 1958.
Decided January 5, 1959.

James W. Cassedy, Washington, D. C., (A. Adgate Duer and Niles,

Barton, Yost & Dankmeyer, Baltimore, Md., on brief), for petitioner.
Carleton A. Harkrader, Atty., Federal Trade Commission, Washington, D.
C. (Earl W. Kintner, Gen. Counsel, and James E. Corkey, Asst. Gen.
Counsel, Federal Trade Commission, Washington, D. C., on brief), for
respondent.
Before SOBELOFF, Chief Judge, HAYNSWORTH, Circuit Judge, and
THOMSEN, District Judge.
HAYNSWORTH, Circuit Judge.

We are not persuaded to adopt the literal view that a canner of soups, relishes,
preserves and similar products, including a small number containing meat
ingredients, is a packer within the meaning of the Packers and Stockyards Act
of 1921, 7 U.S.C.A. 181-195, 221-229, and as such is immune from an order
of the Federal Trade Commission when, in connection with its general business,
it violates 2 of the Clayton Act, 15 U.S.C.A. 13.

Crosse & Blackwell is a well-known canner of soups, marmalades, tomato

products, pickles, relishes and other food products. It puts up and markets
approximately 150 different products under the brand name "Crosse &
Blackwell" and another 35 under the brand name "Keiler," its annual sales
amounting to approximately $14,000,000. Among its products there are 14
which contain meat or meat stock as one of the ingredients,1 and which

collectively account for something less than three per cent of the annual sales
of all of the products of Crosse & Blackwell. The meat content of these
products is derived from cuts which Crosse & Blackwell purchases from
slaughter houses and which it then trims, bones, cuts, mixes and cooks for
subsequent mixing with other ingredients in the cans. Because it processes
meats, Crosse & Blackwell obtained registration from the Department of
Agriculture under the Meat Inspection Act, 21 U.S.C.A. 71-95, as it was
required to do, and officials of that Department supervise and inspect Crosse &
Blackwell's plant and operations, insofar as they relate to meat products, on an
almost daily basis.
3

Crosse & Blackwell sells its products through jobbers and wholesalers, or
directly, to grocery stores and other retailers of food products. It was charged
with having violated 2 of the Clayton Act by giving credit to certain retailers
for advertising Crosse & Blackwell products when such credits were not given
or offered to competitors of the favored retailers. For the purpose of this
proceeding, Crosse & Blackwell conceded that there would be substantial
evidence that it had followed the questioned practice, chose not to stand upon
its denial of the charges on the merits and elected to defend solely upon the
ground that, because of its processing of meat, it is a packer within the meaning
of the Packers and Stockyards Act of 1921. This contention leads Crosse &
Blackwell to the conclusion that exclusive jurisdiction to question its trade
practices, with respect to all of its products, is lodged in the Secretary of
Agriculture, and that such jurisdiction has been wholly withdrawn from the
Federal Trade Commission. The argument is that what Crosse & Blackwell
does with meats to be used as an ingredient in some of its products subjects it to
the Packers and Stockyards Act of 1921, 7 U.S.C.A. 191, which, by definition
of a "packer," regulates activities of "any person engaged in the business * * *
(b) of manufacturing or preparing * * * meat food products for sale or shipment
in commerce * * *." It contends that its products containing meat are "meat
food products," which the Act defines as the edible products of the slaughtering
and meat packing industry, and that it is engaged in the business of preparing
them for sale and shipment in commerce. Since 202 of the Packers and
Stockyards Act of 1921 (7 U.S.C.A. 192) prohibits any packer from engaging
in certain unfair trade practices and 203 (7 U.S.C.A. 193) authorizes the
Secretary of Agriculture, after appropriate proceedings, to prevent the
continuance of such unlawful practices, Crosse & Blackwell, concludes that, as
a packer, it is subject to the restraints of the Packers and Stockyards Act, and
by 406 of that Act (7 U.S.C.A. 226-227) as well as by 5(a) (6) of the
Federal Trade Commission Act (15 U.S. C.A. 45(a) (6)) the jurisdiction of the
Secretary of Agriculture is exclusive and the Federal Trade Commission
powerless to proceed against it.2 The Trial Examiner agreed with Crosse &

Blackwell, but the Commission reversed, and Crosse & Blackwell has brought
its legal contention here for decision.
4

We may start with the assumption that if the only business of Crosse &
Blackwell was the preparation and sale of corned beef hash, and its other
products containing meat, we would agree that its products were "meat foot
products," its business that of a "packer," and its trade practices subject to
regulation under the Packers and Stockyards Act and beyond the reach of the
prohibitive powers of the Federal Trade Commission. United Corporation v.
Federal Trade Commission, 4 Cir., 110 F.2d 473; Trunz Pork Stores, Inc. v.
Wallace, 2 Cir., 70 F.2d 688. Its total activity is not to be finally characterized
upon a look at a small portion of the whole, however, and we must inquire
whether its general business is the sort which Congress intended to, and did,
withdraw from the jurisdiction of the Federal Trade Commission.

As Mr. Justice Frankfurter has said, 3 this "* * * statute, like other living
organisms, derives significance and sustenance from its environment, from
which it cannot be severed without being mutilated. Especially is this true
where the statute, like the one before us, is part of a legislative process having a
history and a purpose. The meaning of such a statute cannot be gained by
confining inquiry within its four corners. Only the historic process of which
such legislation is an incomplete fragment that to which it gave rise as well
as that which gave rise to it can yield its true meaning. * * *" It behooves us,
therefore, to refer briefly to the problem which the Congress sought to resolve
and the purpose to be served when the Packers and Stockyards Act of 1921 was
enacted.

The Packers and Stockyards Act of 1921 has a long legislative history which
began with realization of the tremendous potential power of the five great
packing companies of that day to control both the prices of livestock and the
price to the consumers of meat products. The stockyards and slaughtering
centers, controlled by a handful of interests, were a bottleneck through which
the livestock had to move on the way to the ultimate consumer, and those in
control at the bottleneck were in position to misuse power to the detriment both
of the producer and of the consumer. It was thus thought a proper and essential
governmental purpose to provide controls of the prices and practices of the
stockyards and packers, so that the interests of the producers, who sold their
livestock through the established channels, and the purchasing public, who
were dependent upon the packers for their supplies of meat, would be protected
from the monopolistic power of those in control of the marketing facilities. The
problem and the purpose were summarized by Mr. Chief Justice Taft in
Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 401, 66 L.Ed. 735, when he

said:
7

"* * * The object to be secured by the act is the free and unburdened flow of
live stock from the ranges and farms of the West and the Southwest through the
great stockyards and slaughtering centers on the borders of that region, and
thence, in the form of meat products, to the consuming cities of the country in
the Middle West and East, or, still as live stock, to the feeding places and
fattening farms in the Middle West or East, for further preparation for the
market.

"The chief evil feared is the monopoly of the packers, enabling them unduly
and arbitrarily to lower prices to the shipper who sells, and unduly and
arbitrarily to increase the price to the consumer who buys. Congress thought
that the power to maintain this monopoly was aided by control of the
stockyards. Another evil which it sought to provide against by the act was
exorbitant charges, duplication of commissions, deceptive practices in respect
to prices, in the passage of the live stock through the stockyards, all made
possible by collusion between the stockyards management and the commission
men, on the one hand, and the packers and dealers on the other. * * *

9* * * * * *
10

"The act * * * treats the various stockyards of the country as great national
public utilities to promote the flow of commerce from the ranges and farms of
the West to the consumers in the East."

11

The Packers and Stockyards Act would never have been adopted by the
Congress if the marketing of livestock and the distribution of meat products did
not present problems which, in the view of the Congress, were insufficiently
met by the antitrust laws of general application. The problems were peculiar to
agriculture, and it was appropriate that the regulatory responsibility be placed
upon the Secretary of Agriculture and removed from the Federal Trade
Commission. That one enterprise should not be subject to conflicting regulation
in the same field, the Congress was careful to provide that the Federal Trade
Commission should have no jurisdiction to proceed against any business
subject to regulation by the Secretary of Agriculture under the Packers and
Stockyards Act, but it is clear that the substance of what was intended to be
withdrawn from the controls of the Federal Trade Commission and subjected to
regulation by the Secretary of Agriculture were the businesses of the stockyards
and of the packers as those industries were known and understood at the time.
Doubtless the Congress did not anticipate that a great steel company might
attempt to escape the restraints of the antitrust laws by operating a small

packing plant, taking the position that it was engaged in the business of a
packer and was thus subject, in its steel business, to regulation only by the
Secretary of Agriculture under the Packers and Stockyards Act, or that a canner
of miscellaneous food items might avoid compliance with the general antitrust
laws solely by reason of the fact that it used a relatively small quantity of meat
as an ingredient in some of its products, for it did not expressly provide in 1921
that one engaged in parallel businesses, or in peripheral activity, would be
subject to regulation as a packer under the Packers and Stockyards Act to the
extent that he was engaged in that business and subject to regulation under the
general antitrust laws to the extent he was engaged in other businesses.
Whatever doubt there may have been on that score has been removed by the
adoption of Public Law 909, 85th Congress, approved September 2, 1958, 72
Stat. 1749. But if we look to the language of the Act prior to the 1958
amendment, in the light of the purposes the Congress in 1921 clearly intended
to serve, there seems no doubt that it was never intended that relatively
inconsequential activity which might be classified as meat packing should
insulate all of the other activities of a corporation from the reach of the Federal
Trade Commission.
12

The language of the Act is susceptible to the construction that one engaged in
the business of processing meats for sale is subject to regulation in that business
as a packer under the Packers and Stockyards Act, while any other business in
which he may be engaged is subject to the general restraints of the antitrust
laws, and that jurisdiction to enforce the antitrust laws was left in the Federal
Trade Commission, except insofar as the businesses of the stockyard and
packing industry, as such, were removed from the jurisdiction of the Federal
Trade Commission. It is the business of a packer which is subjected to
regulation under the Act and 406(b) withdraws from the jurisdiction of the
Federal Trade Commission only such businesses. That section provides that the
Commission "shall have no power or jurisdiction so far as relating to any matter
which by this Act is made subject to the jurisdiction of the Secretary * * *,"
which is an exclusion not of persons nor of corporate entities, nor of affiliated
enterprises, but of integrated activities which were intended by the Act to be
subjected to the regulatory controls of the Secretary of Agriculture.

13

The difficulty comes from the Federal Trade Commission Act, which prior to
the 1958 amendment exempted "persons, partnerships or corporations subject
to" the Packers and Stockyards Act, but it is not reasonable to suppose that the
Congress intended the limitations upon the jurisdiction of the Federal Trade
Commission to be more extensive than the regulatory powers conferred upon
the Secretary of Agriculture and intended by the Congress to be exercised
effectively by him. Harmonious reconciliation of the several statutory

provisions can be achieved in the light of the apparent statutory scheme to

subject the business of the packer and the stockyard operator to the regulatory
control of the Secretary of Agriculture, whose department was particularly
concerned with the problem and who had the means of effectively discharging
the responsibility, while enforcement of the general antitrust laws, as they
applied to other businesses than that of packers and stockyard operators, was
left to the Federal Trade Commission, each exercising its particular functions in
its own special field where a single corporation was engaged in activities, some
of which were and some of which were not subject to regulation under the
Packers and Stockyards Act.
14

We construe the Act, as we must, to effectuate the apparent purpose and

intention of the Congress. United States v. Champlin Refining Co., 341 U.S.
290, 71 S.Ct. 715, 95 L.Ed. 949; United States v. American Trucking
Associations, 310 U.S. 534, 60 S.Ct. 1059, 84 L. Ed. 1345; McKee v. United
States, 164 U.S. 287, 17 S.Ct. 92, 41 L.Ed. 437; Lessee of Brewer v. Blougher,
14 Peters, 39 U.S. 178, 10 L.Ed. 408; Minor v. Mechanics' Bank, 1 Peters, 26
U.S. 46, 7 L.Ed. 47. A literal interpretation of the exemption of 5(a) (6) of the
Federal Trade Commission Act must be laid aside for it is "plainly at variance
with the policy of the legislation as a whole," Ozawa v. United States, 260 U.S.
178, 43 S.Ct. 65, 67, 67 L.Ed. 199; United States v. N. E. Rosenblum Truck
Lines, 315 U.S. 50, 62 S.Ct. 445, 86 L.Ed. 671; United States v. American
Trucking Associations, 310 U.S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345, and if held
to grant a more extensive exemption than the Secretary's regulatory power
would produce an absurd result. United States v. American Trucking
Associations, 310 U. S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345; Sorrells v. United
States, 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413; United States v. Ryan, 284
U.S. 167, 52 S.Ct. 65, 76 L.Ed. 224; Rector, Etc., of Holy Trinity Church v.
United States, 143 U.S. 457, 12 S.Ct. 511, 36 L.Ed. 226.

15

We do not overlook the fact that a retailer or manufacturer of non-edible

livestock products was made subject to the Packers and Stockyards Act if he
should own more than a twenty per cent interest in a packer or a stockyard. The
integration of the operations of stockyards and packers with those of retailers of
meat products or of the manufacturers of other livestock products requires
extension of the control of the primary regulatory agency. There is much reason
for the belief that a vertically integrated business which handles meat through
all of the steps from the hoof to the hand of the ultimate consumer may be
effectively regulated only if the regulatory responsibility is lodged in one
agency. Such beliefs and considerations, however, find no basis in the bare fact
that different businesses in parallel may be lodged under the same corporate
roof. The business of Crosse & Blackwell may be said to be unitary, but that of

a canner of miscellaneous products is so far removed from that of the packing

industry, upon which the attention of Congress was focused, that it may be said
to have been reached by the Act, if at all, only to the extent it is actually
concerned with the processing of meats.
16

The proceeding here arose out of the general conduct of the business of Crosse
& Blackwell. It concerns credits for advertising its products in general, not just
that small proportion of its products which contain meat ingredients. The
problem is not one of those associated with the problem sought to be met by the
Packers and Stockyards Act, nor is it one with which the Secretary of
Agriculture is primarily concerned. It is a problem commonplace to the Federal
Trade Commission, one which it has the general responsibility of meeting and
which it may handle without prejudice to the effective performance of the
functions of the Secretary of Agriculture under the Packers and Stockyards Act.

17

We conclude that Crosse & Blackwell was subject to the jurisdiction of the
Federal Trade Commission when charged in the complaint with having given
discriminatory advertising credits for its general products, though a small
proportion of them contained meat ingredients. Such a construction is required
by the apparent purpose and intention of Congress. It avoids having the
Secretary of Agriculture saddled with responsibility in areas far beyond the
bounds of his concern. It permits the orderly enforcement of the antitrust laws
by the particular agency established for that purpose, with only such necessary
exceptions as arise from the effective regulatory activity of other agencies.

18

The petition to review will be denied and the order of the Federal Trade
Commission will be affirmed.

Notes:
1

These 14 products, with their meat or meat stock content both before and after
cooking are as follows:
Name
Liver and Beef Paste
Corned Beef Hash
Ham and Tongue Paste
Beef Stew
Lamb Stew
Chili Con Carne
Scotch Chicken Soup

Raw
Percentage

Cooked
Percentage

50%
50
36
25
25
25.5
14

39%
35
24
18
18
17.5
.4

Beef Noodle Soup

Vegetable Beef Soup
Chicken Noodle Soup
French Onion Soup
Vegetable Soup with Beef Stock
Chicken Rice Soup
Cream of Chicken Soup

20
19
13.8
12.5
10
9.3
8.7

---------------

The relevant sections of the several statutes, prior to the 1958 Amendments,
are:
2(a) (3). "The term `meat food products' means all products and byproducts of
the slaughtering and meat-packing industry if edible."
2(a) (5). "The term `livestock products' means all products and by-products
other than meats and meat food products) of the slaughtering and meat-packing
industry derived in whole or in part from livestock * * *."
201. "* * * The term `packer' means any person engaged in the business (a)
of buying livestock in commerce for purposes of slaughter, or (b) of
manufacturing or preparing meats or meat food products for sale or shipment in
commerce, or (c) of manufacturing or preparing livestock products for sale or
shipment in commerce, or (d) of marketing meats, meat food products,
livestock products, dairy products, poultry, poultry products, or eggs, in
commerce; but no person engaged in such business of manufacturing or
preparing livestock products or in such marketing business shall be considered a
packer unless
"(1) Such person is also engaged in any business referred to in clause (a) or (b)
of this section, or unless
"(2) Such person owns or controls, directly or indirectly, through stock
ownership or control or otherwise, by himself or through his agents, servants, or
employees, any interest in any business referred to in clause (a) or (b) of this
section, or unless
"(3) Any interest in such business of manufacturing or preparing livestock
products, or in such marketing business is owned or controlled, directly or
indirectly, through stock ownership or control or otherwise, by himself or
through his agents, servants, or employees, by any person engaged in any
business referred to in clause (a) or (b) of this section, or unless

"(4) Any person or persons jointly or severally, directly or indirectly, through

stock ownership or control or otherwise, by themselves or through their agents,
servants, or employees, own or control in the aggregate 20 per centum or more
of the voting power or control in such business of manufacturing or preparing
livestock products, or in such marketing business and also 20 per centum or
more of such power or control in any business referred to in clause (a) or (b) of
this section."
202. "It shall be unlawful for any packer or any live poultry dealer or handler
to:
"(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice
or device in commerce; or * *."
406(b). "So long as this chapter remains in effect, the Federal Trade
Commission shall have no power or jurisdiction so far as relating to any matter
which by this chapter is made subject to the jurisdiction of the Secretary except
when the Secretary of Agriculture, in the exercise of his duties hereunder, shall
request of the said Federal Trade Commission that it make investigations and
report in any case."
Federal Trade Commission Act, 5(a) (6). "The Commission is empowered
and directed to prevent persons, partnerships, or corporations, except banks,
common carriers subject to the Acts to regulate commerce, air carriers and
foreign air carriers subject to the Civil Aeronautics Act of 1938, and persons,
partnerships, or corporations subject to the Packers and Stockyards Act, 1921,
except as provided in section 227(b) of Title 7, from using unfair methods of
competition in commerce and unfair or deceptive acts or practices in
commerce."
3

United States v. Monia, 317 U.S. 424, 432, 63 S.Ct. 409, 413, 87 L.Ed. 376,
382