Great Atlantic & Pacific Tea Co. v. Porter

• Citation: 156 F.2d 812
• Decision Date: 13 August 1946
• Docket Number: No. 282.,282.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals
• Parties: GREAT ATLANTIC & PACIFIC TEA CO. v. PORTER, Price Adm'r.

156 F.2d 812 (1946)

GREAT ATLANTIC & PACIFIC TEA CO. v. PORTER, Price Adm'r.

No. 282.

United States Emergency Court of Appeals.

Heard March 27, 1946.

Decided August 13, 1946.

Richard A. Tilden, of Washington, D. C. (Sumner S. Kittelle, of New York City, on the brief), for complainant.

John O. Honnold, Jr., Chief, Court Review Price Branch, of Washington, D. C. (Richard H. Field, General Counsel, and Jacob D. Hyman, Associate General Counsel, and Betty L. Brown, Atty., all of Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

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

Heard at New York City March 27, 1946.

MAGRUDER, Judge.

On this complaint, which challenges the validity of Amendment No. 12 to Revised Price Schedule No. 50, the only question to be decided is whether the Price Administrator has statutory authority, in order to reduce inflationary pressures on domestic price ceilings for green coffee, to forbid the importation into the United States of green coffee purchased abroad at a price above a prescribed maximum. Our answer is in the affirmative.

Price control for coffee was first imposed, under authority of Executive Order, by Price Schedule No. 50 — Green Coffee, issued on December 11, 1941 (6 F.R. 6373). The schedule became effective under the later enacted Emergency Price Control Act pursuant to § 206 thereof, 56 Stat. 35, 50 U.S.C.A.Appendix, § 926, and was republished in the Federal Register on February 21, 1942, as Revised Price Schedule No. 50 (7 F.R. 1305). The price schedule established specified dollars-and-cents maximum prices for various types of green coffee at all levels of distribution. It also prescribed what were in effect maximum buying prices for importers. Section 1(a) provided: "No person shall buy, offer to buy, attempt to buy, import or receive, in the course of trade or business, green coffee at prices higher than the maximum prices established in this schedule".¹

The reasons for this type of regulatory provision are fairly obvious. The Administrator has no power to impose legal maximum prices upon foreign producers for sales consummated abroad. But in protection of the schedule of domestic maximum prices for imported commodities, it is appropriate for the Administrator, so far as is possible within his delegated powers, to require importers to buy the commodities abroad at prices consistent with the established maximum prices for resales within this country. If American importers were free to purchase green coffee abroad at uncontrolled prices, the tendency would be for the limited supplies to be secured by importers able to absorb losses or willing to resell at black market levels. Large importer-roasters, who derive their profit from the sale of roasted coffee at wholesale or retail, would have an advantage buying in the world market in competition with importers who customarily sell green coffee to independent roasters, with possible disruption of the equitable distribution of the commodity.

We have set forth above the provision of § 1(a) in its earlier form. By Amendment No. 12, issued October 18, 1945 (10 F.R. 12992), the language of the provision was amplified to read as follows: "No person shall by direct or indirect methods, buy, offer to buy, attempt to buy, import or receive, green coffee in the course of trade or business, individually or through any agent, or through a foreign or a domestic corporation or any foreign or domestic subsidiary thereof partly or solely owned or controlled by such person, at prices higher than the maximum prices established in this schedule".

In his Statement of Considerations issued along with Amendment No. 12, the Administrator explained the purpose of the amendment as follows:

"This amendment has been necessary in order to prohibit effectively the purchase by importer-roasters of green coffee in producing countries at prices higher than those established in the Schedule. While the manifest intention has been to prohibit any person from buying, offering to buy, attempting to buy, import or receive in the course of trade or business, green coffee at prices higher than the maximum prices established in the Schedule, buyers have construed Section 1351.1(a) in such a manner as to permit the use of an agent or subsidiary corporation in foreign countries to pay excess prices and to then effectuate a resale to the importer-roaster at the ceiling prices established in the Schedule.

"This practice has been considered, by interpretation, an evasion of the Schedule. Consequently, in order that there be no doubt as to the positive prohibition of this means to evade the established ceiling prices, the amendment clarifies the applicable section so that the prohibition against buying at above the established maximum prices shall extend to any person either acting individually or through an agent or through a foreign or domestic corporation or foreign or domestic subsidiary thereof wherever located."

The device in § 1(a) of RPS 50 of imposing maximum buying prices upon importers has been utilized by the Administrator in a large number of regulations establishing maximum prices for imported commodities, and is regarded by him as a vital part of the control mechanisms for such commodities.

In the case of commodities like green coffee, where the position of American importers in the world market is a dominant one, it is not unreasonable to anticipate that the device in question would have an important restraining influence upon the selling prices of foreign producers; and, in the judgment of the Administrator, such has been the experience.

Of course, if the level of prices in the regulation were set too low, the device would not work in the face of concerted and long-continued refusal of foreign producers to sell at the specified prices, and the commodity would disappear from the American market. Such a situation, if it arose, could be alleviated by appropriate increases in the established maximum prices, or by the payment of subsidies to importers, with permission to them to pay an additional amount, corresponding to the subsidy, to foreign producers of the commodity. In fact, in the case of green coffee, resort has been had to a subsidy. By Directive No. 87 of the Office of Economic Stabilization, issued November 23, 1945 (10 F.R. 14450), the Reconstruction Finance Corporation was directed to pay to importers a subsidy of three cents per pound for green coffee purchased and shipped between November 19, 1945, and March 31, 1946, within the limits of quotas established for each importer; and the Price Administrator was directed to authorize a corresponding increase in importers' maximum buying prices established by RPS 50.² By further directive, the period of the subsidy was extended (11 F.R. 2994).

Complainant, a New Jersey corporation, is an operating subsidiary of The Great Atlantic & Pacific Tea Company of America, a Maryland corporation. It operates a chain of retail grocery stores in various states. Also, it owns a number of coffee roasting plants located in various parts of the United States. At these plants complainant roasts imported green coffee purchased by it in South America. The roasted coffee is then sold through complainant's retail outlets. For many years antedating price control, complainant has purchased its coffee from American Coffee Corporation, a New Jersey corporation, also a wholly owned subsidiary of The Great Atlantic & Pacific Tea Company of America. The business of American Coffee Corporation consists in purchasing green coffee in various South American countries and selling the same in South America to complainant and...