Mora v. Torres

• Citation: 113 F. Supp. 309
• Decision Date: 19 June 1953
• Docket Number: No. 8426.,8426.
• Parties: MORA et al. v. TORRES, Secretary of Agriculture and Commerce of Puerto Rico.
• Court: U.S. District Court — District of Puerto Rico

113 F. Supp. 309

MORA et al. v. TORRES, Secretary of Agriculture and Commerce of Puerto Rico.

No. 8426.

United States District Court, D. Puerto Rico, San Juan Division.

June 19, 1953.

Rafael Castro-Fernandez and Francisco Castro Amy, San Juan, Puerto Rico, for plaintiffs.

Aurelio Torres Braschi, Edgar S. Belaval and J. Trias Monge, San Juan, Puerto Rico, for defendant.

ORTIZ, Acting District Judge.

In this complaint for injunction it is prayed that an injunction be issued against the defendant, Ramon Colon Torres, as Secretary of Agriculture of Puerto Rico, enjoining him from enforcing or instituting any proceedings to compel compliance with Administrative Order No. 228 of May 12, 1953, fixing the maximum price for the sale of rice by anyone of the plaintiffs. A hearing was held on June 11, 1953, as to the issuance of a temporary injunction. This Court now formulates the following conclusions:

Jurisdiction

This Court has jurisdiction over this action, for

(a) this is a case arising under the Fifth Amendment of the United States, applicable herein, and

(b) The matter in controversy exceeds the sum or value of $3,000, exclusive of interest and costs.

Findings of Fact

(1) Plaintiff, a citizen of the United States, is an importer and wholesaler of rice, in Puerto Rico and the larger part of his business is devoted to the importation and wholesale of rice. The defendant is the Secretary of Agriculture and Commerce of the Commonwealth of Puerto Rico.

(2) On August 14, September 8, September 13 and October 1, 1952, plaintiff, as purchaser, made and executed several contracts for the sale and purchase of a total of 6400 bags of rice, of 100 pounds each, with several rice growers domiciled in the Continental United States, to wit, the Rice Growers Association of California, the Farmers Rice Growers Cooperative, of California, and Rosenberg Bros. and Co., of California. Under those contracts deliveries were and are to be made through shipments to Puerto Rico during each of the two halves of each month, beginning in the first half of January, 1953, and ending in the second half of August, 1953, said dates of deliveries fluctuating in accordance with the terms of each of the respective six contracts in evidence. No fixed purchase price was set in any of those contracts. The purchase price was, and is, an "open price", that is, it was and is to be measured by the market price prevailing in the Continental United States at time of shipment, plus any increase in freight or insurance, C. I. F. San Juan.

(3) On March 12, 1953, defendant, pursuant to Act No. 228 of May 2, 1942, of Puerto Rico, as amended, issued an Order entitled: "Administrative Order No. 228, of the General Supplies Administration," fixing the maximum price for the sale of rice in Puerto Rico, said order to be effective on March 16, 1953, establishing in part, and as said order affects plaintiff herein, the following schedule of maximum prices, as to wholesale price per 100 pounds:

(a) For rices of superior quality, short and long grain, classified as "extra choice", "fancy" or "extra fancy", which is 15% or less broken, a maximum wholesale price per 100 pounds of $12.90.

(b) For rices of good quality, short or long grain, classified as "choice" or "medium", which is more than 15% or less than 40%, a maximum wholesale price per 100 pounds of $12.25.

(4) Said order was based, expressly, on the following determinations of facts and policy.

"The progressive decontrol of prices in Continental United States could bring about a disruption of the market and of the economy of Puerto Rico and, for that reason, its effects are observed daily by the Secretary of Agriculture and Commerce of the Commonwealth of Puerto Rico.

"Rice is the main basic product in the diet of the Puerto Rican consumers strongly affected by the federal decontrol of prices.

"Rice is the most important staple in the diet of the Puerto Rican consumer and especially of those of lowest income, and this commodity began to show a price increase as soon as it was decontrolled in Continental United States. The initial change has been such that an unjustifiable and disproportionate price increase is imminent. * * *"

(5) At the time said order became effective, that is, on March 16, 1953, plaintiff had already actually received 1400 bags of rice under the contracts referred to, of which 1400 bags he had received 1000 bags of superior quality, 15% or less broken, at a purchase price of $13.25 (market price at time of shipment plus any increase in freight or insurance), and 400 bags of 39% rice at a purchase price (market price, etc.) of $12.45. On the effective date of the order plaintiff had in stock all of said rice. After the effective date of the order plaintiff was and is to receive 5000 more bags of rice, under the contracts referred to, last shipment to be made on the second half of August.

(6) As to each and everyone of the bags of rice actually received, or shipped or paid for at the time the order became effective and at the time the complaint in this case was filed, there is a difference of fifty cents per bag between the purchase price paid by plaintiff and the prices fixed by the defendant, which latter is 50 cents less than the purchase price already paid. If plaintiff were to sell said rice at the prices fixed by the defendant, he would lose 50 cents on each bag and he would also lose the opportunity of making a profit of 84 cents per bag on 15% superior quality rice and 73 cents per bag on 40% rice.

(7) On March 21, 1953, plaintiff and other importers of rice moved the defendant for reconsideration of its Order, attacking the order as confiscatory and violative of the commerce clause of the constitution of the United States. On April 27 a hearing was granted by the defendant and the plaintiff and other rice importers appeared personally, made objections to the Order and presented in evidence proofs of the stocks they had on hand, the purchase price paid for the same, and the above mentioned contracts then and still in force. At said hearing, motion was made to the defendant for an issuance of an order of supersedeas or suspension of the Order until final determination of the validity of the Order. On May 29, 1953, defendant denied the motion of reconsideration of Order 228, and refused to grant the supersedeas requested. On that same date an appeal was taken from the Order and the determinations of the defendant to the Superior Tribunal of Puerto Rico pursuant to the Act above mentioned and defendant was notified of said appeal. Said appeal is still pending and the complete record of the proceedings before the defendant as to said order has not as yet been filed in the Superior Tribunal.

(8) On or about April 23, 1953, the California Rice Growers Association made an offer to plaintiff, of cancellation of the pending contracts with that firm, as to future deliveries in May, June, July and August, 1953, but not as to rice already delivered, shipped or paid for prior to May, 1953. Plaintiff refused to accept that offer of cancellation, on the basis of his allegation that he would have to go out of business, inasmuch as the sale of rice constituted the greater part of his business. At the time the offer of cancellation was made, plaintiff had in stock 1200 bags plus 800 he was to receive before May, and thus, he would have 2000 bags not subject to the offer of cancellation. Farmers Rice Growers Cooperative, and Rosenberg Bros. & Co. did not make any offers of cancellation to plaintiffs, as to the contracts pending with them.

(9) Rice is a perishable commodity and, in Puerto Rico, there is a maximum limit of three months within which rice may be conserved without deterioration. Plaintiff has had to fumigate his rice in stock, to change it among different bags and to kill the weevils in the rice. Continued handling of rice affects its quality and value.

(10) Three million bags of rice, of 100 pounds, are imported annually in Puerto Rico, 250,000 bags being consumed monthly in this Island. There has been no shortage of rice in Puerto Rico throughout this year.

(11) No marketing quotas nor acreage allotments as to rice have been instituted by the United States Government as to the crops of rice for the years 1952, 1953, inasmuch as the supply of rice is not excessive. Federal Register, Vol. 16, No. 234, P. 12211, paragraph 730, point 302, Vol. 17, number 243, P. 11303, paragraph 730, point 402.

(12) Rice is a basic and most important product and staple in the diet of Puerto Rican consumers, especially in the lower income groups, which comprise the great majority of Puerto Ricans.

Conclusions of Law

(1) Order No. 228 of March 12, 1953 is not clearly confiscatory nor arbitrary nor does it clearly deprive plaintiff of his property without due process of law.

(2) The facts in this case do not justify the issuance of an injunction.

(3) The lack of injunctive relief in this case does not deprive plaintiff of his property without due process of law.

(4) The 14th Amendment and the Interstate Commerce clause of the Constitution of the United States are not applicable to this case.

Opinion

It is the obligation of this Court to decide, in the first instance, whether it has jurisdiction to issue an injunction on the basis of the alleged applicability of the Fifth and Fourteenth Amendment, and the Interstate Commerce Clause of the Constitution of the United States. This Court has jurisdiction of all actions wherein the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and arises under the Constitution, laws or treaties of the United States. 28 U.S.C.A. § 1331. Before the enactment by the 81st Congress of the United States of Public Law 600, approved July 3, 1950, 48 U.S.C.A. § 731b et seq., and the approval and adoption by the people of Puerto Rico of the Constitution of the Commonwealth of Puerto Rico, the Fifth Amendment of the...