The petitioner sold milks for an amount that exceeded the maximum price required by the New York law. The petitioner challenged the statute.
The Constitution does not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process.
The legislature of New York established a Milk Control Board with authority to fix minimum and maximum retail prices to be charged by stores to consumers for consumption off the premises where sold. The Board fixed nine cents as the price to be charged by a store for a quart of milk. Nebbia, the proprietor of a grocery store in New York, sold two quarts and a five cent loaf of bread for eighteen cents. He was convicted for violating the Board’s order. At the trial, he asserted the statute contravene the equal protection clause and the due process clause of the Fourteenth Amendment. During the period, prices received by farmers for milk were much below the cost of production. The situation of the families of dairy producers had become desperate.
Does the Constitution prohibit a state from so fixing the selling price of milk?
Yes, the milk industry in New York has been the subject of long-standing and drastic regulation in the public interest. In light of the facts the order by the New York legislature does not appear to be unreasonable or arbitrary, or without relation to the purpose to prevent ruthless competition from destroying the wholesale price structure on which the farmer depends for his livelihood, and the commnity for an assured milk.
The dairy industry is not a public utility. It is clear that there is no closed class or category of businesses affected with a public interest, and the function of courts in the application of the Constitution is to determine in each case whether circumstances vindicate the challenged regulation as a reasonable extortion of governmental authority or condemn it as arbitrary or discriminatory. So far as the requirement of due process is concerned and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adopted to its purpose. The courts are without authority either to declare such policy or to override it when it is declared by the legislature. Price control is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt.