STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

August 22, 1966

Ernest L. Johnson
Secretary of Agriculture
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 67-68 pg. 24

Statutes. Interpretation of Section 14 of Chapter 9 of the 1966 Session Laws regarding exemptions from the Dairy Industry Marketing Act.

You have requested an official opinion interpreting Section 14 of Chapter 9 of the 1966 Session Laws which reads as follows:

"Exemptions: The provisions of this Act shall not be construed or interpreted to apply to any private or public non-profit, charitable, religious or educational institutions, organization, association or corporation."

You have asked the following specific questions:

"1. Does the exemption apply to sales by a processor or distributor to the organizations listed therein?

"2. Does the exemption apply to sales of dairy products made by these organizations?

"3. Would the answers to the above questions also apply to Federal Military installations?"

Our answer to these questions is in the affirmative. Section 2 of the Act reads in part as follows:

“…It is the purpose of this Act, under the police powers of the state of South Dakota, to promote the public interest so declared by outlawing the continuance of such trade practices."

 "The protection of a large industry constituting one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of a great portion of the population of the state is affected to such an extent by 'public interest' that it is within the 'police power' of the sovereign." Miller v. Michigan State Apple Commission 296 NW 245, 247.

The prime issue in interpreting the exemption section of the Act is determine the intent of the Legislature when the Act was passed. It would seem evident from the context of the Act that this purpose was the protection and control of the dairy industry in South Dakota from unfair trade practices.

"As respect validity of Milk Control Act, the milk industry of the state is affected with a 'public interest' and hence subject regulation under police power of State." State v. Auclair, 4 A 2d 107, 112, 110 Vt. 147.

"One of the cardinal rules of construction of exemption laws is that the intention of the lawmakers must be ascertained and carried out. . . and the spirit and intention of the statute must prevail over its strict letter; that where a statute is ambiguous the court will in construing it, have regard to its object and spirit and follow that construction which carries out the purpose for which it was passed. . . Although it has been held that exemption laws are to be strictly construed, the rule adopted by practically all of the courts is that they are to be construed liberally, in favor of persons within their purview, so as to effectuate their beneficent purposes." 35 CJS 13.

The grant of exemptions of this nature rests upon the theory that such an exemption will benefit the body of the people and not upon any idea of lessening the burdens of the individuals benefiting from the exemption. The granting of exemptions of this nature is justified on the ground that such institutions perform a work which would otherwise have to be carried on by the public at the taxpayers' expense. To this extent then, the institutions deriving the benefit of the exemption decrease the taxpayers' burden. This theory is readily apparent when considering the purchase of milk by the public school systems on a competitive bid basis. To require that commercial enterprises be bound by a minimum price when dealing with these organizations would increase the price of milk to the governments thereby creating a greater drain on tax moneys.