Swift & Co. v. Reconstruction Finance Corp.

• Decision Date: 21 June 1950
• Docket Number: No. 9832.,9832.
• Parties: SWIFT & CO. v. RECONSTRUCTION FINANCE CORP.
• Court: U.S. Court of Appeals — Seventh Circuit

183 F.2d 456 (1950)

SWIFT & CO. v. RECONSTRUCTION FINANCE CORP.

No. 9832.

United States Court of Appeals, Seventh Circuit.

June 21, 1950.

Joseph M. Friedman, Sp. Asst. to Atty. Gen., H. G. Morison, Assistant Attorney General, Maurice C. Handelman, Assistant United States Attorney, Otto Kerner, Jr., U. S. Attorney, John P. Lulinski, Asst. U. S. Atty., Chicago, Ill., and Anthony L. Mondello and George Arthur Fruit, Attys., Department of Justice, Washington, D. C., for appellant.

Edward R. Johnston, Albert E. Jenner, Jr., Edward H. Hatton, all of Chicago, Ill., Edgar Byron Kixmiller, William N. Strack, Poppenhusen, Johnston, Thompson & Raymond, all of Chicago, Ill., of counsel, for appellee.

Before MAJOR, Chief Judge, and LINDLEY and SWAIM, Circuit Judges.

LINDLEY, Circuit Judge.

On June 30, 1947, plaintiff filed its complaint for declaratory judgment and other appropriate relief authorized by Section 2 (m) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix, § 902(m), averring that, prior to price control termination, it had continuously purchased and slaughtered livestock and processed and sold meats and meat products therefrom; that thereby it became entitled to subsidies for which from time to time it had filed its claims and received payment except that there remained due and unpaid on valid claims the sum of $221,861.51; that defendant, on or about March 31, 1947, subsequent to termination of price control, had issued its "Announcement No. 1," wherein it stated that the Office of Temporary Price Controls had determined that, in view of Section 6(a) (4) of the Price Control Extension Act of 1946, 15 U.S.C.A. § 713 note, in order to avoid unjust enrichment of packers, subsidies allocable to the volume of processed meat held in inventory on October 14, 1946, the date of termination of price control on meat, should not be paid or, if paid, recaptured. Plaintiff prayed a declaratory judgment determining that Announcement No. 1 and defendant's action in pursuance thereof were not in conformity with the terms and provisions of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix, § 901 et seq., and were "otherwise unlawful, capricious, arbitrary, void and of no effect," and that the court enjoin defendant from carrying out or enforcing the announcement and enter judgment requiring defendant to pay plaintiff the sum of $221,861.51.

In its answer defendant admitted plaintiff's averments as to the existence of the subsidy program and the previous payments to plaintiff and that plaintiff was insisting that the claim mentioned in the complaint which had been denied should be paid, representing, as defendant said, subsidies on processed goods held by plaintiff at the time of termination of control. However, defendant denied the District Court's jurisdiction on the ground that as to all complaints attacking the validity of regulations, rules, orders, and price lists issued in pursuance of Section 2 of the Price Control Act, by Section 204(d) jurisdiction was vested exclusively in the United States Emergency Court of Appeals and denied to the District Court, and that Section 2(m) of the Act did not apply to the suit.

The trial court made specific findings of fact and conclusions of law, expressly finding that it had jurisdiction to entertain the cause of action and, in effect, held Announcement No. 1 invalid and entered judgment as prayed. From this defendant appeals.

At the outset we are confronted by the question as to the jurisdiction of the District Court to entertain the suit. Announcement No. 1 was issued under R. F. C.'s Regulation No. 10, issued in turn under Section 2(e) of the Emergency Price Control Act of 1942, as amended, 50 U.S. C.A.Appendix, § 902(e). Reg. 10, incorporated by reference Rev.Reg. No. 3 as amended. These regulations prescribed terms and conditions governing meat subsidies for the period from September 1 through October 14, 1946. Plaintiff's basis for its claim of jurisdiction in the trial court is Section 2(m) of the Price Control Act, 50 U.S.C.A.Appendix, § 902(m), appearing in the footnote.¹

It will be observed that Section 2(m), which grants, under named conditions, certain jurisdiction to the District Court, is confined to "the payment of sums * * * relating to the production or sale of agricultural commodities." Admittedly, before the District Court has jurisdiction to proceed under this Section, it is essential that it appear that the subject matter of the suit relates to the "production or sale of agricultural commodities." If the term "agricultural commodities" be considered in its strict literal sense, it will embrace, of course, livestock and other raw farm products but not the products manufactured or processed from such raw commodities. However, plaintiff insists that under the circumstances existing here, the term includes meat processed by slaughtering cattle. Upon this primary question the parties are in sharp controversy.

This specific question was before the Court of Appeals of the First Circuit in Atlantic Meat Co., Inc. v. Reconstruction Finance Corp., 166 F.2d 51, where the court considered at length the contention that Section 2(m), was intended to apply to products resulting from processing agricultural commodities, and declined to give it support.

It is clear, we think, that the Congress, itself, in its legislation providing for price control, stabilization, subsidies and other matters relating to control, made clear distinction between agricultural commodities and goods processed therefrom. Thus in Section 3 of the Act, subsection (a) dealt with agricultural commodities and subsection (c) with "commodities processed or manufactured in whole or in substantial part from any agricultural commodities." Equally clear distinction between agricultural commodities and food products processed or manufactured in whole or in substantial part from agricultural commodities appears in other portions of the Act, as in Section 3(e) and Section 2(e). We think it obvious that whenever Congress intended to include within the general term "agricultural commodity," goods processed from such commodities, it made express statement to that effect, as in the 1945 amendment of Section 302 and in the 1946 amendment, known as Section 1a (e) (4) B, 50 U.S.C.A.Appendix, § 901a (e) (4) (B), and that the Act reflects a clear intention upon the part of Congress to exclude from agricultural commodities goods processed or manufactured therefrom except where it expressly provided to the contrary.

In Tambasco v. Reconstruction Finance Corporation, 2 Cir., 178 F.2d 283, 285, the court said: "It is settled by statute that livestock is an `agricultural commodity' within the meaning of the act, 50 U.S.C.A. Appendix, § 942(1); but it has been authoritatively determined that meat and meat products are not. Superior Packing Co. v. Clark, Em.App., 164 F.2d 343. And while the subsidy regulation here was couched in terms of livestock slaughter as a matter of industry convenience, the subsidy was really on meat. Wm. Schluderberg-T. J. Kurdle Co. v. R. F. C., Em.App., 169 F.2d 419, certiorari denied 335 U.S. 846, 69 S.Ct. 68 93 L.Ed. 396. To stretch the meaning of `agricultural commodity' so as to include plaintiff's activities here would do violence to the legislative intent in writing the section. Atlantic Meat Co. v. R. F. C., 1 Cir., 166 F.2d 51."

Equally persuasive is the language of Superior Packing Co. v. Clark, Em.App., 164 F.2d 343 at page 349, as follows: "A live steer is an `agricultural commodity', produced on a farm and sold by a farmer in its raw, natural or unprocessed state. A beef carcass, a wholesale cut, retail cuts such as steaks or roasts, beef brains, kidneys, hearts, livers, or other edible by-products, as well as meat products resulting from still further processing, such as sausages — these are all distinct commodities not produced on the farm and sold by farmers. They are not `agricultural commodities', but commodities `processed or manufactured in whole or substantial part' from an agricultural commodity, the live steer."

We conclude that Section 2(m) vested the District Court with no jurisdiction to entertain the action, for this suit is not one relating to sale of agricultural commodities. Consequently, any basis for jurisdiction in the District Court must be found elsewhere in the Acts of Congress.

There is no question, of course, but that by Section 204(e) of the Price Control Act, the United States Emergency Court of Appeals is given exclusive jurisdiction to review the validity of orders, regulations and price schedules established or entered by the proper administrative body under Section 2 of the Act. The same section expressly denies jurisdiction to any other court whether federal, state or territorial, to pass upon these questions. Consequently, if Announcement No. 1 comes within the category of subject matter, exclusive jurisdiction of which is vested in the United States Emergency Court of Appeals and the suit involves validity, it is clear that the District Court had no jurisdiction.

However, plaintiff asserts that Announcement No. 1, though it contends that the same is not justified by the law and is arbitrary, is not such an order, ruling or other action as comes within the category of matters reviewable only in the Emergency Court of Appeals. That court has held that Announcement No. 1 and the implementing action were orders or regulations issued under Section 2, specifically Section 2(e), of the Price Control Act, in Schluderberg-T. J. Kurdle Co. v. Reconstruction Finance Corp., Em.App., 169 F.2d 419, 420. The Reconstruction Finance Corporation had ruled there as here, that, in computing the subsidy payments to plaintiff, an appropriate deduction must be made on account of meat derived from slaughter prior to termination of price control but remaining on hand at the time of such termination, plaintiff being...