Rottenberg v. United States

• Citation: 137 F.2d 850
• Decision Date: 23 August 1943
• Docket Number: 3892.,No. 3885,3885
• Parties: ROTTENBERG et al. v. UNITED STATES. YAKUS v. SAME.
• Court: U.S. Court of Appeals — First Circuit

137 F.2d 850 (1943)

ROTTENBERG et al. v. UNITED STATES.

YAKUS v. SAME.

Nos. 3885, 3892.

Circuit Court of Appeals, First Circuit.

August 23, 1943.

Leonard Poretsky, John H. Backus, and William H. Lewis, all of Boston, Mass., for Benjamin Rottenberg et al.

Leonard Poretsky, Francis P. Garland, and Joseph Kruger, all of Boston, Mass., for Albert Yakus.

Robert L. Wright, Sp. Asst. to Atty. Gen., and Edmund J. Brandon, U. S. Atty., and William T. McCarthy and Joseph J. Gottlieb, Asst. U. S. Attys., all of Boston, Mass., for the United States.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

MAGRUDER, Circuit Judge.

In these criminal prosecutions for violations of § 4(a) of the Emergency Price Control Act, 56 Stat. 28, 50 U.S.C.A.Appendix § 904(a), by making sales at prices in excess of those prescribed by an applicable price regulation, the question is squarely presented whether, or to what extent, the trial court may entertain a defense based upon the alleged invalidity of the regulation. The point was left open in Lockerty v. Phillips, 63 S.Ct. 1019, 87 L. Ed. ___, decided May 10, 1943.

No. 3885 embraces two indictments, one against Rottenberg, who was president and treasurer of B. Rottenberg Co., Inc., and one against the corporation. The two indictments were consolidated for trial and are here on a consolidated appeal. Each defendant was convicted on several counts of making sales of wholesale cuts of beef in December, 1942, and January, 1943, at prices higher than the maximum prices as determined under Revised Maximum Price Regulation No. 169,¹ in willful violation of § 4(a) of the Act. Sentence of six months in jail and a fine of $1,000 was imposed upon the individual defendant. The corporate defendant was fined $1,000.

No. 3892 embraces a similar indictment against Yakus, who was president of the Brighton Packing Company. He was convicted on three counts of making sales of wholesale beef cuts in December, 1942, and January, 1943, at prices higher than the maximum prices established by the aforesaid regulation and was sentenced to jail for six months and fined $1,000.

The cases were heard together on appeal in this court. They involve essentially the same questions, and hereafter in this opinion reference will be made only to the proceedings in Rottenberg's case.

At various appropriate stages in the proceedings Rottenberg challenged the constitutionality of the Emergency Price Control Act. The District Court upheld the Act.

The Government introduced sufficient evidence to warrant verdicts of guilty on all the counts which were submitted to the jury.

Rottenberg introduced no testimony except an offer of proof of detailed economic data designed to show that Revised Maximum Price Regulation No. 169 was arbitrary and capricious and failed to provide a fair and equitable margin of profit to slaughterers and wholesalers conducting their business in an efficient manner. The court declined to receive the offer of proof on the ground that § 204 of the Act, 50 U. S.C.A.Appendix § 924, deprived it of jurisdiction to entertain such a defense. Rottenberg duly took exception to this ruling, the correctness of which is the most serious question now before us.

There is first the inquiry whether the Act as a matter of interpretation precludes this sort of defense to the indictments now before us. If so, then we must decide whether it was competent for Congress so to provide "in a statute born of the exigencies of war." Scripps-Howard Radio, Inc. v. Federal Communications Commission, 1942, 316 U.S. 4, 17, 62 S.Ct. 875, 883, 86 L.Ed. 1229.

On July 30, 1941, many months before our country was attacked at Pearl Harbor, the President transmitted to Congress a message setting forth the necessity of legislation to control prices. H.Doc.No. 332, 77th Cong., 1st Sess. He submitted figures to show that inflationary price rises were threatening to undermine our defense effort "unless we act decisively and without delay." After extended consideration the House passed on November 28, 1941, a bill to control prices and rents. H.R. 5990, 77th Cong., 1st Sess. This bill contained quite a different scheme for review of price regulations from what was ultimately enacted. In the first instance review was to be had before a Board of Administrative Review; any person aggrieved by the decision of such board might petition for review in the appropriate circuit court of appeals. The bill contained no provision corresponding to that now found in § 204 (d) of the Act upon which the court below relied in excluding the offer of proof.

On January 2, 1942, the Senate Committee on Banking and Currency reported out the House bill, with substantial amendments, including the review provisions which eventually became law, and which we shall examine in detail later.

The Senate committee report (Sen.Rep. No. 931, 77th Cong., 2d Sess.) pointed out that the House bill had been passed before we entered the war and that the bill needed to be strengthened now that we were embarked upon an "unlimited national mobilization in a war for survival." While the country was concerned with the danger of inflation even before December 7, 1941, "the pressures on the price structure, already enormous, will be multiplied" now that we are engaged in a world war. The committee pictured in vivid terms what would be the disastrous consequences of inflation by way of sapping our national strength and effort and morale. "Effective price control, under these circumstances, must no longer be delayed." The report added: "Price control which cannot be made effective is at least as bad as no price control at all. It will not stop inflation, and enables those who defy regulation to proceed at the expense of the buyers and sellers who unselfishly cooperate in the interests of the emergency."

The Emergency Price Control Act of 1942 became law on January 30, 1942, 50 U.S.C.A.Appendix § 901 et seq.

Section 1(a) of the Act sets forth its purposes and declares that price and rent control are "necessary to the effective prosecution of the present war."

The temporary, emergency character of the legislation was emphasized by the provision in § 1(b) that the Act "shall terminate on June 30, 1943", or upon such earlier date as the President by proclamation, or the Congress by concurrent resolution, may prescribe.²

Section 2(a) provides that whenever in the judgment of the Price Administrator the price or prices of a commodity or commodities have risen or threatened to rise to an extent or in a manner inconsistent with the purposes of the Act, "he may by regulation or order establish such maximum price or maximum prices as in his judgment will be generally fair and equitable and will effectuate the purposes of this Act." In establishing any maximum price, he is directed, so far as practicable, to ascertain and give due consideration to the prices prevailing between October 1 and October 15, 1941, and to make adjustments for such relevant factors as he may determine to be of general applicability. The Administrator is also directed, so far as practicable, before issuing any price regulation, to consult with representative members of the industry affected. Further to assure that no price regulation would be issued without due consideration by the Administrator of the factors involved, it is required that every price regulation issued by him "shall be accompanied by a statement of the considerations involved in the issuance of such regulation". After a regulation is issued the Administrator is required, if requested by any substantial portion of the industry affected, to appoint an advisory committee truly representative of the industry with whom he shall advise and consult from time to time with respect to the regulation, the form thereof, and classifications, differentiations and adjustments therein. Under § 2(c) any price regulation "may contain such classifications and differentiations, and may provide for such adjustments and reasonable exceptions, as in the judgment of the Administrator are necessary or proper in order to effectuate the purposes of this Act."

Section 4(a) provides that it shall be unlawful "for any person to sell or deliver any commodity * * * in violation of any regulation or order under section 2, * * *" This subsection is implemented by § 205(b) which provides that any person "who willfully violates any provision of section 4 of this Act" shall, upon conviction thereof, be subject to a fine or imprisonment or both. In § 205(c) it is provided that "the district courts shall have jurisdiction of criminal proceedings for violations of section 4 of this Act."

Sections 203 and 204 provide in detail the procedure for administrative review, and ultimate court review, of price and rent regulations, first in a special court of the United States known as the Emergency Court of Appeals, and then in the Supreme Court, upon certiorari. This special court, created by § 204(c), consists of three or more judges to be designated by the Chief Justice of the United States from judges of the United States district courts and circuit courts of appeals. It is given the powers of a district court with respect to the jurisdiction conferred upon it, except that it "shall not have power to issue any temporary restraining order or interlocutory decree staying or restraining, in whole or in part, the effectiveness of any regulation or order issued under section 2."

Under § 203(a), within a period of sixty days after the issuance of any regulation under § 2, "any person subject to any provision of such regulation" may "file a protest specifically setting forth objections to any such provision and affidavits or other written evidence in support of such objections." Within thirty days after the filing of such protest "the Administrator shall either grant or deny such protest in whole or in part, notice such protest for hearing, or provide an opportunity to present further...