206 F.2d 377 (1st Cir. 1953), 4752, Mora v. Mejias

Docket Nº:4752.
Citation:206 F.2d 377
Party Name:MORA v. MEJIAS.
Case Date:July 24, 1953
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 377

206 F.2d 377 (1st Cir. 1953)




No. 4752.

United States Court of Appeals, First Circuit.

July 24, 1953

Page 378

[Copyrighted Material Omitted]

Page 379

James R. Beverley and Francisco Castro Amy, San Juan, Puerto Rico (R. Castro-Fernandez, San Juan, Puerto Rico, on the brief), for appellants.

Jose Trias Monge, Atty. Gen., San Juan, Puerto Rico (Abe Fortas, Sp. Asst. Atty. Gen., and Arnold, Fortas & Porter, Washington, D.C., on the brief), for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit judges.

MAGRUDER, Chief Judge.

This is an appeal under 28 U.S.C. § 1292(1) from an interlocutory judgment in the United States District Court for the District of Puerto Rico, entered June 19, 1953, denying an application for a temporary injunction against the Secretary of Agriculture and Commerce of Puerto Rico enjoining him from enforcing or instituting any proceedings to compel compliance with his Administrative Order No. 228 of March 12, 1953, fixing the maximum prices for the sale of rice in Puerto Rico, and from interfering in any manner with the sale of rice by any one of the plaintiffs, pending final judgment in the case.

The complaint below was filed June 4, 1953, by plaintiff Enrique Mora, Jr., an importer of rice in Puerto Rico, and was stated to be brought 'on behalf of himself and all other importers of rice in Puerto Rico similarly situated.' Jurisdiction of the complaint in the court below was founded upon 28 U.S.C.§ 1331.

Administrative Order No. 228 was a local price regulation of general applicability in Puerto Rico issued under authority of Law No. 228 enacted by the legislature of Puerto Rico on May 12, 1942 (Laws P.R. 1942, p. 1268). That act was modeled closely upon the Emergency Price Control Act of 1942, 56 Stat. 23, 50 U.S.C.A.Appendix, § 901 et seq. It authorized the designated administrator, whenever in his judgment the price or prices of staple commodities had risen or threatened to rise in a manner inconsistent with the purposes of the act, to establish by regulation or order 'such maximum prices or maximum profits as in his judgment are generally fair and equitable and will effectuate the purposes of this Act.' As foundation for obtaining judicial review, it was provided in § 11 that within ten days following the promulgation of any price regulation or order, any person directly subject to the provisions thereof might, in accordance with regulations prescribed by the administrator, file an application for reconsideration, setting forth his objections to any such provisions. Section 12 provided that any person aggrieved by the dismissal, in whole or in part, of his application for reconsideration, might, within ten days thereafter, file a petition with 'the Supplies Appeal Court hereinafter created', setting for his objections and praying that the regulation or order be revoked in whole or in part. That court was given exclusive jurisdiction, upon the filing of such petition, to revoke such regulation or order, in whole or in part, or to dismiss the petition, or to remand the proceedings. 1 Section 12(b) provided that no regulation or order shall be revoked in whole or in part unless the petitioner shows and establishes to the satisfaction of the court, that the regulation or order 'is contrary

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to law, or is arbitrary or capricious. It was provided in § 12(c) that the Supplies Appeal Court 'shall not have power to issue temporary injunction or an interlocutory order suspending or restricting in whole or in part the effectiveness' of any such price regulation or order. Within ten days after the entry of judgment by the Supplies Appeal Court, a petition for a writ of certiorari might be filed in the Supreme Court of Puerto Rico, as prescribed in § 12(d) of the act. That subsection further provided that the Supplies Appeal Court, and the Supreme Court of Puerto Rico, when reviewing judgments and orders of the General Supplies Administrator, shall have exclusive jurisdiction to determine the validity of any price regulation or order; and that except as provided in § 12, no court shall have jurisdiction or power to consider the validity of any such regulation or order or to suspend, restrain, or prevent by injunction, or revoke or annul, in whole or in part, any provision of the act authorizing the promulgation of such regulations or orders, or to prevent the effectiveness of any provision of any such regulations or orders, or to issue a writ of injunction to restrain the effectiveness and application of any such provision. Section 13 contained provisions for enforcement, both by way of criminal prosecution and by way of injunction at the suit of the administrator.

Prior to the promulgation of Administrative Order No. 228 pursuant to the aforesaid insular statute, the prices of rice at all levels of distribution, including the prices of millers or suppliers in continental United States, and wholesale and retail prices in Puerto Rico, were controlled by regulations of the Director of Price Stabilization under the Defense Production Act of 1950, 64 Stat. 798, as amended, 50 U.S.C.A.Appendix, § 2061 et seq. The last prices established by the OPS for sales of rice by millers in continental United States were $12 per cwt. for rices of superior quality, which is 15% or less broken, and $11.60 per cwt, for rices of good quality, classified as choice or medium, which is more than 15% and less than 40% broken. The regulation of the OPS establishing wholesale prices in Puerto Rico was predicated upon the established maximum prices for milled rice in continental United States, plus freight and insurance and a percentage mark-up to allow a reasonable profit to the importer. Under this formula, the last authorized OPS prices at wholesale in Puerto Rico amounted to $12.90 per cwt. for rices of superior quality, as defined, and $12.25 for choice or medium rices, less than 40% broken. These prices, we are told, were at the highest levels in history.

Shortly before Administrative Order No. 228 went into effect, all federal price controls on rice were lifted by the Office of Price Stabilization. That posed a serious threat to the economy of Puerto Rico.

The production of rice in Puerto Rico is negligible, and over 3, 000, 000 cwt. bags of rice are imported into the island annually. Over 90% of the rice imported into Puerto Rico is produced in continental United States. The greater part of these importations from continental United States comes from California, but heavy importations are also derived from Arkansas, Texas, Louisiana, and Mississippi. Such volume of importation into Puerto Rico from continental United States represents a very substantial percentage of the total quantity of milled rice sold by domestic millers for consumption outside the United States. See Statement of Considerations to Amendment 2 to Ceiling Price Regulation 12 (17 F.R. 6084). Rice is the most important item in the diet of the Puerto Rican people. Per-capita consumption of rice in Puerto Rico amounted to 146 lbs. during 1952-1953, as compared to 6 lbs. in continental United States. Even an increase of one cent per pound in the retail price would inflict serious hardship, especially upon the low-income groups, who comprise the greater part of the population.

To fill the price control void left by the removal of federal controls, the local administrator issued Administrative Order No. 228, in question, on March 12, 1953, to be effective March 16, 1953, setting maximum prices for the sale of rice of all grades in Puerto Rico. Such maximum prices were fixed in dollars and cents, rather than in terms of an established percentage mark-

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up over cost. Thus, the wholesale price per cwt. for rices of superior quality was fixed at $12.90, and the wholesale price for rices of choice or medium grade, less than 40% broken, was fixed at $12.25. These wholesale prices were the same, or substantially the same, as the wholesale prices which importers had been permitted to charge under the superseded OPS federal regulation. Plaintiff says that these prices were all right while the importers' costs were held down by federal regulation of millers' prices in continental United States, but that such prices have become oppressive and confiscatory now that the importers have to buy in an unregulated market, where the prices are beyond the control either of the importers or of the local price administrator in Puerto Rico.

It appears that the plaintiff, and other importers of rice, duly filed an application with the administrator for reconsideration of Administrative Order No. 228; that the administrator gave the importers a hearing on the application on April 27, 1953, at which hearing a motion was made for the issuance of an order of supersedeas or suspension of the price regulation until final determination of its validity; that on May 29 the administrator denied said motion for reconsideration and declined to grant the supersedeas requested; that on the same date a petition for review of the administrative action was filed in the Superior Court of Puerto Rico pursuant to § 12 of the Act, 2 and that said proceeding was pending in the Superior Court at the time of the hearing below on the application for a temporary injunction. We were informed at the oral argument of the present appeal that the Superior Court has meanwhile heard the petition for review and is awaiting the submission of briefs therein.

In the case now before us, the court below (Hon. Benjamin Ortiz, Acting U.S. District Judge) found as a fact, upon evidence submitted on behalf of the plaintiff, that in August, September and October, 1952, while federal price controls were still in effect, plaintiff executed several contracts for the purchase of a total of 6400...

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