Bowles v. Munsingwear, Civil Action No. 1147.

• Decision Date: 22 October 1945
• Docket Number: Civil Action No. 1147.
• Citation: 63 F. Supp. 933
• Parties: BOWLES, Price Administrator, v. MUNSINGWEAR, Inc.
• Court: U.S. District Court — District of Minnesota

63 F. Supp. 933

BOWLES, Price Administrator, v. MUNSINGWEAR, Inc.

Civil Action No. 1147.

District Court, D. Minnesota, Fourth Division.

October 22, 1945.

Harry E. Witherell, of Chicago, Ill., and Hymen L. Greenberg, Office of Price Administration, of St. Paul, Minn., for plaintiff.

F. H. Stinchfield, John M. Palmer, and Stinchfield, Mackall, Crounse & Moore, all of Minneapolis, Minn., for defendant.

JOYCE, District Judge.

This is a suit by the Price Administrator against an underwear manufacturer for the sale of fall and winter underwear claiming violation of Revised Price Regulation No. 221, particularly sections 1389.302 and 1389.303. An injunction and treble damages are asked, but by agreement the question of damages is to be held in abeyance pending the determination of the injunction issue. There is little or no dispute as to the facts. The price at which defendant sold the underwear in question is conceded. Nor is there any question raised as to defendant's good faith. The only issue is whether defendant used the correct pricing formula in determining its ceiling prices.

To obtain the proper perspective I believe it advisable to consider the pertinent events in a somewhat chronological order. After the outbreak of World War II in December, 1941, it was obvious that our national economy would be subjected to severe strains and marked changes. The needs and demands of the military would have to take precedence and civilian economy would suffer. Material shortages, increased labor costs, and higher prices were predicted in all civilian consumer goods including the textile industry. The court can practically take judicial notice of this situation although the defendant offered proof thereof in the way of excerpts from trade and other contemporaneous publications.

The defendant is a large manufacturer of all types of underwear garments and enjoys a nation-wide trade. It is a "retailer" mill; that is, its customers sell directly to the consumer as distinguished from a "jobber" mill which sells to wholesalers. Starting in January, 1942, defendant began to receive orders for fall and winter underwear in larger quantities than in any comparable period. Retail stores were ordering many times the number of dozens of fall and winter underwear they had ordered in any previous January. The situation was such that defendant's own inventory was imperiled. These developments were matters of concern to defendant's management and it was decided that in view of this volume of business prices must be increased to reflect the then current costs. It is to be kept in mind that at the time there were no price regulations of any kind and that the war had commenced less than two months before. The Emergency Price Control Act became effective January 30, 1942, 50 U.S.C.A. Appendix, § 901 et seq. On February 2, 1942, defendant's new prices became effective. The method by which this change became effective becomes significant in view of the subsequent regulations issued pursuant to the Emergency Price Control Act. Defendant stopped filling new orders as of February 2nd and until February 6th was engaged in preparing the new prices on its entire line. These price changes were made effective as of February 2nd and so all accumulated orders and orders subsequent to February 6th were booked at the new prices. This policy was communicated to some customers by letter, to others by word of mouth. The complete new price list was sent to the printers on February 9th where it was printed and mailed to all of defendant's customers. This job was completed on February 19th but there was no way of ascertaining how many lists were printed and mailed on any given date.

On April 28, 1942, the general maximum price regulation became effective. This was the general "freeze" regulation which fixed ceiling prices on all commodities at the March 1, 1942, levels. This was the first regulation to affect the defendant and of course defendant's ceiling prices became the prices that were fixed in February as they were still in effect on March 1st. It was therefore unnecessary for defendant to make any price adjustment to conform to the regulation.

On September 15, 1942, Maximum Price Regulation No. 221 establishing ceiling prices for fall and winter underwear was issued to become effective September 21st. In brief, this regulation established four pricing rules or formulae. The first provided that the maximum price would be the highest price at which the manufacturer sold the garment by written order or contract after November 30, 1941, and before February 10, 1942. If the manufacturer could not price under this formula, he could use the price at which the garment was first offered for sale in a written or printed price list which was distributed generally to customers on or before February 10, 1942. If the manufacturer could not use either of these formulae he could add five per cent to his 1941 prices; and if none of these methods was available to him he could apply to the Administrator for an "in line" price. These last two methods are of little concern here as it is conceded that defendant made no attempt to apply them.

Under this original regulation it seems clear that defendant was not required to adjust its prices on any items on which it booked orders at the new prices on or before February 10, 1942, as such prices would be the ceilings as fixed by formula (1) of Section 1389.302(a) referred to above. There is no serious dispute on this question. However, on November 18, 1942, this part of Maximum Price Regulation No. 221 was amended to read:

"The manufacturer's maximum price shall be the highest price at which the manufacturer sold by written order or contract for the fall and winter season of 1942, the same garment of fall and winter knitted underwear after November 30, 1941 and before February 10, 1942;"

The italicized phrase constituted the amendment. It is the meaning of this regulation as amended that is the major issue in this case. The Office of Price Administration takes the position that the addition of the words "for the fall and winter season of 1942" disqualifies defendant from using its February, 1942 prices. In support of this contention it is argued that the statement of considerations accompanying the original MPR 221 shows an administrative intent to have jobber mills price under paragraphs 1 and 2 and retailer mills under paragraph 3; that the omission of the words "for the fall and winter season of 1942" was an oversight as testified to on the trial by an OPA attorney who helped draft the regulation; that the only factor to consider in determining whether a sale was for the fall and winter season is the manufacturer's intent, and it is claimed that defendant intended the February, 1942 prices to be for "fillin" orders only and was not an "opening of the fall line." I do not consider any of these contentions to be sound.

Regardless of what was said in the statement of considerations which accompanied the original regulations, the regulation itself is so clear as to need no construction. Any manufacturer who sold any garment during the base period could fix his ceiling price thereby. There were no qualifications in the regulation about jobber or retailer mills or for what season the sale was made. The regulation itself defines the term "manufacturer" without reference to jobber or retailer mills. However, even the official press release which accompanied the issuance of the original MPR 221 uses such qualifying language that no one could conclude from it that hard and fast rules were being laid down by which the jobber mills were to use one pricing formula and retailer mills another. This press release reads in part:

"For the most part, the first and second methods of determining maximum prices are expected to be used by so-called `jobber' mills, who customarily offer fall seasonal underwear during December and January for delivery during the following July through December. These mills usually supply wholesalers or jobbers as well as bulk buyers, such as mail order houses and the chain store trade.

"The third method will generally apply to `retailer' mills which sell directly to retail, department and specialty stores. These manufacturers customarily do not circulate price lists as early in the season as January." (Italics supplied.)

The...