Greenhouse Bros. & Finkelstein v. RECONSTRUCTION F. CORP.

• Decision Date: 05 February 1947
• Docket Number: No. 381.,381.
• Citation: 159 F.2d 712
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals
• Parties: GREENHOUSE BROS. & FINKELSTEIN, Inc., v. RECONSTRUCTION FINANCE CORPORATION.

159 F.2d 712 (1947)

GREENHOUSE BROS. & FINKELSTEIN, Inc., v. RECONSTRUCTION FINANCE CORPORATION.

No. 381.

United States Emergency Court of Appeals.

Heard January 14, 1947.

Decided February 5, 1947.

Writ of Certiorari Denied April 28, 1947.

James A. Murray, of Washington, D. C. (W. D. Murray, of New York City, and Bond, Schoeneck & King, of Syracuse, 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 New York January 14, 1947.

Writ of Certiorari Denied April 28, 1947. See 67 S.Ct. 1200.

MAGRUDER, Judge.

This is another case in which a non-processing slaughterer of cattle claims to be aggrieved by a ruling that, under the provisions of Amendment No. 2 (9 F.R. 1820) to Regulation No. 3 (8 F.R. 10826) issued by Defense Supplies Corporation, it was ineligible to receive a special subsidy of 80¢ per cwt.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

Complainant, Greenhouse Bros. & Finkelstein, Inc., received the special subsidy for several months following November 1, 1943. On August 1, 1944, Defense Supplies Corporation ruled that complainant was not an "unaffiliated slaughterer" within the meaning of the regulation, and therefore was disqualified from receiving the special subsidy. Complainant was directed to repay the amount of the subsidies theretofore received.³

Under date of August 22, 1946, complainant filed with Reconstruction Finance Corporation its protest both against the affiliation provisions of the subsidy regulation and against the ruling of the Defense Supplies Corporation made thereunder.

Without further proceedings, Reconstruction Finance Corporation, under date of September 17, 1946, sent a letter to complainant denying the protest. In this letter respondent set forth its determination as follows:

"I. That said Regulation is in all respects valid II. That Renee Packing Co., Inc., is a processor or purveyor of meat III. That Greenhouse Bros. & Finkelstein Inc. and Renee Packing Co., Inc., were at all times here involved affiliated IV. That Greenhouse Bros. & Finkelstein Inc. is owned and controlled by the following officers and stockholders:

                                 Officers:                     Stockholders:
                  President:    Paul Greenhouse           Total Shares Issued 614
                  Vice  "       Nathan Finkelstein   William Greenhouse     144 shares
                  Sec. & Treas. William Greenhouse   Paul Greenhouse        129½   "
                                                     Nathan Finkelstein     134½   "
                                                     Rose Greenhouse         60    "
                                                     Estabel Greenhouse      74    "
                                                     Fannie Finkelstein      70    "
                                                     Eli Gingold (atty.)      1    "
                                                     Jessie Hecker            1    "
                                                                            ___
                                                        Total               614    "
                

V. That Renee Packing Co., Inc. is owned and controlled by the following officers and stockholders:

                               Officers:                       Stockholders:
                  President:      Eli Gingold             Total Shares Issued 695
                  1st Vice Pres.  William Greenhouse   William Greenhouse     231 2/3
                  2nd Vice Pres.  Nathan Finkelstein   Paul Greenhouse        231 2/3
                  Sec. & Treas.   Paul Greenhouse      Nathan Finkelstein     231 2/3
                                                                              _______
                                                               Total          695
                

VI. That such common ownership and control constitute affiliation within the terms of said Regulation, disqualifying Greenhouse Bros. & Finkelstein, Inc., from eligibility to receive the extra compensation of eight-tenths of one cent per pound."

Upon denial of the protest, the present complaint was filed in this court.

Although both the protest and the complaint challenge the validity of the affiliation provisions of the subsidy regulation, complainant has not pressed this contention either in its brief or oral argument before us. The validity of the regulation has already been sustained by us in several cases. Earl C. Gibbs, Inc., v. Defense Supplies Corp., Em.App.1946, 155 F.2d 525, certiorari denied 67 S.Ct. 51; Atlantic Meat Co., Inc., v. Reconstruction Finance Corp., Em.App.1946, 155 F.2d 533, certiorari denied 67 S.Ct. 52; Illinois Packing Co. v. Henderson, Em.App.1946, 156 F.2d 1000, certiorari denied 67 S.Ct. 202.

The contention particularly urged is that, even under the language of the subsidy regulation, respondent and its predecessor Defense Supplies Corporation were in error in ruling that complainant was ineligible for the special subsidy. It is pointed out that the affiliation provision does not specifically include the situation of a non-processing slaughterer and a processor of meat under "common control". Various statutes are referred to in which careful draftsmen have explicitly covered the situation of two or more businesses under "common control", e. g., § 2(b) of the Communications Act of 1934, 48 Stat. 1065, 47 U.S.C.A. § 152(b), § 2(a) (3) of the Investment Company Act of 1940, 54 Stat. 791, 15 U.S.C.A. § 80a — 2(a) (3), and § 210 of the Interstate Commerce Act, as amended, 54 Stat. 923, 49 U.S.C.A. § 310. It is said that complainant, as a separate legal entity, does not hold any stock in Renee Packing Co., Inc., and that Renee Packing Co., Inc., as a separate legal entity, does not hold any stock in complainant; and, therefore, that the two companies are not affiliated within the definition of "own or control" set forth in the regulation. The further contention is made that the present case is not within any of the conventional categories in which it is justified to disregard the corporate entities and to treat the common stockholders as if they were themselves the proprietors of the two businesses.

We are not persuaded by these arguments. Of course it might have been better draftsmanship if the situation of "common control" had been explicitly covered in the regulation; but the question still remains as to the fair interpretation of the language used, in the light of the underlying purpose of the affiliation provisions, as explained in our opinion in the Gibbs case, supra. The...