Woods v. Oak Park Chateau Corporation

• Decision Date: 31 January 1950
• Docket Number: No. 9821.,9821.
• Citation: 179 F.2d 611
• Parties: WOODS v. OAK PARK CHATEAU CORPORATION et al.
• Court: U.S. Court of Appeals — Seventh Circuit

179 F.2d 611 (1950)

WOODS v. OAK PARK CHATEAU CORPORATION et al.

No. 9821.

United States Court of Appeals Seventh Circuit.

January 4, 1950.

Rehearing Denied January 31, 1950.

John F. McCarthy, Robert E. Levin, Chicago, Illinois, for appellants.

Ed Dupree, General Counsel, Hugo V. Prucha, Assistant General Counsel, Benjamin I. Shulman, Attorney, Benjamin Freidson, Attorney, Office of the Housing Expediter, Washington, D. C., Wm. S. Kaplan, Office of the Housing Expediter, Chicago, Ill., for appellee.

Before KERNER, LINDLEY, and SWAIM, Circuit Judges.

KERNER, Circuit Judge.

This is another action in which plaintiff, pursuant to § 206(b) of the Housing and Rent Act of 1947 as amended, 50 U.S.C.A. Appendix, § 1881 et seq., sued defendants to enjoin them from charging and collecting over-ceiling rents, and for a refund of all amounts collected in excess of the maximum rents established by the Housing Expediter pursuant to the Act. The premises involved are within the Chicago Defense-Rental area, and consist of a 14-story fireproof building containing 130 dwelling units. The defense pleaded was that the Act violated the Fifth Amendment to the Constitution of the United States, and that the accommodations in question were hotel housing accommodations exempt from federal rent control.

The case was tried by the court without a jury. The trial judge sustained the Act as constitutional, made special findings of fact favorable to plaintiff upon which he rendered his conclusions of law, and entered a judgment enjoining defendants as prayed for in the complaint. To reverse the judgment, defendants appeal.

Two questions are presented. First. Does the Housing and Rent Act of 1947 as amended violate the Fifth Amendment? Second. Did the court err in holding that the particular units in question were not exempt from federal rent control?

First. Defendants admit that the Constitution does not forbid "different treatment of the members of different classes," and that it "does not forbid classification of persons affected by Congressional Acts," yet they insist that § 204(b) of the Act as amended, 50 U.S.C.A.Appendix, § 1894(b), violates the Fifth Amendment in that it sets up an unreasonable classification, effects an arbitrary discrimination among owners based on their tenants' willingness to execute such leases, and fails to show a reasonable relationship between the discrimination and the purposes of the statute. True it is, that § 204(b) does provide certain benefits by way of exemptions and increased rents for owners whose tenants are willing to execute 15% increase leases, but it is clear that this section of the statute extends an equal opportunity to all landlords and all tenants to enter into such leases. In this situation, it seems to us that it is enough to say, "This alone is adequate answer to the objection." Woods v. Miller Co., 333 U.S. 138, 145, 68 S.Ct. 421, 425, 92 L.Ed. 596. We must sustain the Act as valid.

Second. The exemption from rent control for accommodations in establishments providing customary hotel services which were commonly known as hotels was first enacted into law in the Housing and Rent Act of 1947. Section 202(c) of that Act, 50 U.S.C.A.Appendix, § 1892(c), defines controlled housing accommodations and the exceptions to such control as follows: "The term `controlled housing accommodations' means housing accommodations in any defense-rental area, except that it does not include — (1) those housing accommodations, in any establishment which is commonly known as a hotel in the community in which it is located, which are occupied by persons who are provided customary hotel services such as maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy service; * * *" By § 204(d) of the Act, the Housing Expediter is authorized to issue such regulations and orders, consistent with the provisions of the Act, as he may deem necessary to carry out the provisions of § 204 and § 202(c). Pursuant thereto, the Expediter promulgated a regulation (12 F.R. 4331) framed in the same language as that of the Act, except that it contains the date "June 30, 1947," the effective date of the 1947 Act.

Before proceeding to discuss whether the court erred in holding that the units in question were not exempt, we must consider defendants' claim that the insertion by the Expediter of the June 30, 1947 cut-off date, in his regulations is "an attempt to defeat an exemption conferred by the Act." The argument is that the exemption arose from the factual situation at the time of the overcharges rather than from the factual situation on June 30, 1947.

We must bear in mind that the effective date of the Act was June 30, 1947, and that the Expediter's interpretation of § 202(c) is entitled to great weight, Skidmore v. Swift & Co., 323 U.S. 134, 139, 65 S.Ct. 161, 89 L.Ed. 124, particularly "when it involves a contemporaneous construction of a statute by the men charged with the responsibility of setting its machinery in motion," Norwegian Nitrogen Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 358, 77 L.Ed. 796. And when Congress reenacted the 1947 Act, after many of the provisions of the Act had been interpreted by the courts and made the subject of administrative regulation, it constituted ratification by Congress of the earlier administration of the Act and regulations. Pinkus v. Porter, 7 Cir., 155 F.2d 90, and United Labor Committee v. Woods, Em.App., 175 F. 2d 967. And since we entertain no doubt that Congress intended to confer an exemption upon those accommodations which satisfied the statutory requirements on June 30, 1947, it follows that the court did not err in concluding that the test date for determining decontrol of housing accommodations under the Act was June 30, 1947.

We now consider defendants' principal contention. They say that plaintiff introduced no testimony and the court made no finding "on the problem of what are customary apartment or hotel services." They contend that this 14-story building was occupied by persons who were provided customary apartment or residential hotel services, hence the apartments were exempt. They cite Woods v. Western Holding Corp., 8 Cir., 173 F.2d 655, and Woods v. Benson Hotel Corp., 8 Cir., 177 F.2d 543, 544.

Claiming that the trial judge ignored the evidence, they assert that the evidence shows that on the first floor of the premises is a lobby with a desk switchboard and extensions to each apartment, manned by four clerks who gave 24-hour service each day; that morning calls were made to the tenants who wished to be awakened and messages were taken for the tenants who were...