Maloney Packing Co. v. Reconstruction Finance Corp.

• Decision Date: 05 February 1947
• Docket Number: No. 334.,334.
• Citation: 159 F.2d 717
• Parties: MALONEY PACKING CO. v. RECONSTRUCTION FINANCE CORPORATION.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

159 F.2d 717 (1947)

MALONEY PACKING CO. v. RECONSTRUCTION FINANCE CORPORATION.

No. 334.

United States Emergency Court of Appeals.

Heard January 13, 1947.

Decided February 5, 1947.

As Amended March 10, 1947.

Joseph Kruger, of Boston, Mass. (Martin Ritvo, of Cambridge, Mass., and Widett & Kruger, of Boston, Mass., on the brief), for complainant.

John C. Erickson, of Washington, D. C., (John D. Goodloe, George B. Stoner, and James L. Dougherty, all of Washington, D. C., on the brief), for respondent.

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

Heard at Boston January 13, 1947.

MAGRUDER, Judge.

Maloney Packing Company, complainant, challenges the validity of a provision of Amendment No. 2 (9 F.R. 1820) to Regulation No. 3 (8 F.R. 10826) issued by the Defense Supplies Corporation, under which provision respondent has ruled that complainant was ineligible, during the period November 1, 1943, to March 4, 1944, to receive the special subsidy of 80¢ per cwt. payable to non-processing slaughterers of cattle.¹

Amendment No. 2 established a special subsidy to non-processing slaughterers pursuant to a Directive of the Economic Stabilization Director issued October 25, 1943 (8 F.R. 14641), and attached certain conditions to the payment of such subsidy. To be eligible for the special subsidy, a non-processing slaughterer, as defined, must be an "unaffiliated slaughterer," that is, it must not "own or control," or be "owned or controlled by," a "processor or purveyor of meat." The phrase "own or control" is defined as meaning "to own or control directly or indirectly a partnership equity or in excess of ten percent of any class of outstanding stock or to have made loans or advances in excess of five percent of the other person's monthly sales."²

Maloney Packing Company is a Massachusetts corporation which was organized in 1936. Its business is the slaughter of livestock. Since April, 1943, all its outstanding corporate stock has been held by John E. Maloney. During the latter part of August, 1943, Mary L. Maloney, wife of John E. Maloney, in her own right acquired all the outstanding capital stock of Benson Bros. Corp., also incorporated in Massachusetts. Benson Bros. Corp. is a hotel supply house, engaged in the business of fabricating primal cuts of beef for sale to purveyors of meat; it is, therefore, a "processor of meat" within the meaning of the subsidy regulation. Atlantic Meat Co., Inc., v. Reconstruction Finance Corp., Em. App.1946, 155 F.2d 533, certiorari denied 67 S.Ct. 52.

On March 4, 1944, Defense Supplies Corporation ruled that Maloney Packing Company was not eligible to receive the special subsidy during the period in question because Maloney Packing Company, otherwise qualifying as a non-processing slaughterer, was, within the meaning of the regulation, affiliated with Benson Bros. Corp., a processor of meat.³

On December 5, 1945, Maloney Packing Company filed its protest with the Reconstruction Finance Corporation. The protest attacked the validity of the affiliation provisions of the subsidy regulation, and alleged that the determination by Defense Supplies Corporation of complainant's ineligibility was erroneous for the reason that Maloney Packing Company, during the period in question, was an independent slaughterer of beef, in fact and in law unaffiliated with and not owning or controlling, or owned or controlled by, any processor or purveyor of meat. Accompanying the protest was an affidavit by John E. Maloney attesting to the truth of the facts alleged in the protest. The protest concluded with a request for oral argument and an oral hearing. This request was denied by respondent on January 3, 1946, but at the same time respondent offered complainant an opportunity to submit further documentary evidence or briefs in support of the protest. Thereafter complainant moved to amend its protest in certain particulars which need not be recited, which motion was granted; but no further documentary evidence was offered by complainant.

On April 12, 1946, respondent wrote a letter to complainant informing it in effect that the protest was denied. After stating that "the subsidy regulation complained of is in all respects valid," the letter concluded with the following:

"That during the period November 1, 1943 to and including March 4, 1944, John E. Maloney was president of and owned all of the corporate stock of Maloney Packing Company; that during said period Mary L. Maloney, wife of John E. Maloney owned all of the capital stock of Benson Bros. Corp., a hotel supply house; and that such stock ownership by John E. and Mary L. Maloney constitutes, under said subsidy regulation, an affiliation between the subsidy applicant, Maloney Packing Company, and Benson Bros. Corp., a processor or purveyor of meat, disqualifying Maloney Packing Company from eligibility to receive extra compensation during said period."

Being aggrieved by the denial of its protest, Maloney Packing Company duly filed its complaint in this court. In respondent's answer thereto, it is admitted "that, except for the ownership by John E. Maloney and Mary L. Maloney, respectively, of the stock of Complainant and Benson Bros. Corp., Complainant is a wholly independent business entity not otherwise affiliated or integrated with or deriving financial benefit from Benson Bros. Corp."

The validity of the affiliation provisions of the subsidy regulation, here under attack, has been settled by our decisions in Earl C. Gibbs, Inc., v. Defense Supplies Corp., Em.Ap...