Spaeth v. Brown

• Citation: 137 F.2d 669
• Decision Date: 04 August 1943
• Docket Number: No. 20.,20.
• Court: U.S. Temporary Emergency Court of Appeals
• Parties: SPAETH v. BROWN, Price Adm'r.

137 F.2d 669 (1943)

SPAETH v. BROWN, Price Adm'r.

No. 20.

United States Emergency Court of Appeals.

Heard June 9, 1943.

Decided August 4, 1943.

Einar G. Carlson, of Cleveland, Ohio (Miller B. Pennell, of Cleveland, Ohio, on the brief), for complainant.

Sol. M. Linowitz, Atty., of Rochester, N. Y. (George J. Burke, Gen. Counsel, Thomas I. Emerson, Associate Gen. Counsel, Nathaniel L. Nathanson, Asst. Gen. Counsel, and Harry H. Schneider and Mavis M. Clark, Attys., all of the Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and MAGRUDER and LAWS, Judges.

MARIS, Chief Judge.

The Complainant, an owner of housing accommodations in Cleveland, Ohio, attacks the maximum rent date — July 1, 1941 — fixed by the Price Administrator for the Cleveland Defense-Rental Area in Maximum Rent Regulation No. 16 issued May 27, 1942, to take effect June 1, 1942.¹ His complaint is not against the imposition of rent regulation in the area nor against the rent date method of such regulation. He concedes that some form of rent control in the area became advisable in the year 1942 but in his protest which the Administrator denied and in his present complaint he strongly urges that the action of the Administrator in fixing as early a maximum rent date as July 1, 1941, was arbitrary and capricious. In addition he urges that the Administrator failed to give proper consideration to the directives contained in the act.

We shall first consider whether the transcript of the protest proceedings before the Administrator furnishes support for his selection of July 1, 1941, as the maximum rent date. If it does, his selection of that date cannot be held to be either arbitrary or capricious. In his opinion denying the Complainant's protest the Administrator described at length the Cleveland Defense-Rental Area and the economic conditions existing there prior to the inception of the war manufacturing program. We need not repeat what was there said except to point out that Cleveland is a great manufacturing center, with iron and steel and their products, including machinery, accounting for one-half of its production. The evidence in the transcript shows that the outbreak of the war in 1939 had an immediate effect in Cleveland. Primary war supply and facility contracts awarded from June 1940 to June 1941 in the Cleveland area totaled more than $300,000,000. Subcontracts and British contracts were estimated to exceed that amount. More than $1,000,000,000 in primary war supply and facility contracts and a vast number of subcontracts were awarded in the area between July 1, 1941 and July 1, 1942.

This enormous volume of war production had its effect upon employment. In the year preceding July 1, 1941, the index of employment in the area rose 27% while pay-rolls increased 65%. The result was an unprecedented demand for housing accommodations by those who had previously been forced to double up as well as by an increasingly large group of newly married couples. Housing vacancy rates dropped from 2.9% in April 1940 to 1.9% a year later. The habitable vacancy rate then was only 1.1%. By January 1942 these rates had dropped to 1% and 0.5% respectively. From July 1935 to June 1939 the index of rents for homes in the area had risen over 17%. Between September 1939 and September 1940 this index remained practically stable and thereafter it rose only about 2% to June 1941. Even during the period from September 1939 to June 1941, however, 29 out of every 100 rental dwellings for white tenants had an increase in rent, of which 6 represented increases of from 10% to 15%, 3 increases of from 15% to 25% and 2 increases of 25% or more. Likewise during the same period 37 out of every 100 rented dwellings for non-white tenants had rent increases, of which 11 represented increases of from 10% to 15%, 8 increases of from 15% to 25% and 5 increases of 25% or more. It thus appears that while the rent level was continuing on the average to remain stable prior to July 1, 1941, significant individual increases were even then taking place.

The record after July 1, 1941, is even more significant. In eleven months following that date the rent index rose from 101.9 to 108.9, an increase of 6.9%.² During that period 54 out of every 100 dwelling units rented to white tenants had rent increases. Fifteen of these were increases of from 10% to 15%, 12 increases of from 15% to 25%, and 2 increases of 25% or more. Likewise 47 out of every 100 nonwhite tenants had rent increases during this period, 17 of them having increases of from 10% to 15%, 10 of them increases of from 15% to 25%, and 11 of them increases of 25% or more.

The foregoing facts all appear in the transcript which also contains much additional relevant evidence which we need not detail here. All of it furnishes sufficient support for the judgment of the Administrator that after July 1, 1941, rent increases were taking place in the Cleveland Defense-Rental Area which were inconsistent with the purpose of the Emergency Price Control Act to prevent speculative, unwarranted and abnormal increases in rents. It follows that the action of the Administrator in freezing rents in that area at their July 1, 1941 level was neither arbitrary nor capricious.

The Complainant urges that the increase in rents which took place during the year following July 1, 1941, was too slight to be called speculative, unwarranted or abnormal. But without stopping to point out the fallacy of relying wholly upon average figures and without conceding that rent increases of 10%, 15% and 25% may be regarded as slight, we point out that even slight increases in rents must be controlled if the inflationary tendencies resulting from defense activities are to be checked as the act contemplates. See Lincoln Sav. Bank v. Brown, Em.App., May 7, 1943, 137 F.2d 228. But, says the Complainant, these increased rentals are still relatively lower than those which prevailed in Cleveland between 1919 and 1931 and which now prevail in some other communities. This may be conceded, but the answer is that it is wholly immaterial. Congress clearly authorized the Administrator to stabilize rents at the level at which they stood in the particular area in question on the most recent date which did not reflect increases resulting from...