Armour & Co. of Delaware v. Brown

• Decision Date: 06 August 1943
• Docket Number: No. 26-28.,26-28.
• Parties: ARMOUR & CO. OF DELAWARE v. BROWN, Price Adm'r.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

137 F.2d 233 (1943)

ARMOUR & CO. OF DELAWARE v. BROWN, Price Adm'r.

Nos. 26-28.

United States Emergency Court of Appeals.

Heard July 8, 1943.

Decided August 6, 1943.

Donald R. Richberg, of Chicago, Ill. (George E. Leonard, Jr., of Chicago, Ill., on the brief), for complainant.

William R. Ming, Jr., of Washington, D. C. (George J. Burke, Gen. Counsel, Thomas I. Emerson, Associate Gen. Counsel, Nathaniel L. Nathanson, Asst. Gen. Counsel, and Carl H. Fulda and Henry S. Sellin, Attys., Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and MAGRUDER and LAWS, Judges.

MAGRUDER, Judge.

In No. 26, Armour & Company claims to be aggrieved by the Price Administrator's order issued February 13, 1943, denying its protest against Order No. 1 under Maximum Price Regulation No. 169, which latter order denied an application by complainant, filed August 18, 1942, seeking adjustment of maximum prices for carcass beef to be delivered to the United States under certain contracts. In No. 27, Armour claims to be aggrieved by an order issued March 6, 1943, denying its protest against Order No. 20 under Maximum Regulation No. 169, which latter order denied two similar applications for adjustment filed October 30, 1942, and November 7, 1942, respectively. In No. 28, Armour claims to be aggrieved by an order issued March 8, 1943, denying its protest against Order No. 8 under Maximum Price Regulation No. 169, which latter order denied a similar application for adjustment filed September 8, 1942. By order of this court the three cases were consolidated for purposes of hearing and disposition. They present the same questions, and hereafter in this opinion reference will be made only to the record in No. 26.

A somewhat detailed recital of the sequence of procedural steps is necessary in order to make clear the narrow issue now properly before us for decision.

Maximum Price Regulation No. 169, Beef and Veal Carcasses and Wholesale Cuts, was issued June 19, 1942, to become effective July 13, 1942. 7 F. R. 4653. The maximum price for each grade of each beef or veal carcass was fixed at the highest price actually charged by the seller during the base period March 16 to March 28, 1942, at or above which at least 30% of the total weight volume of the sellers' sales of carcasses of the same grade were made during such period. Meat prices were sought to be controlled at the packer level without maximum price control of livestock prices. It was thought by the Administrator that control of the prices of live meat animals would present serious administrative problems in view of the number of sellers, their wide distribution, and the difficulties of grading beef on the hoof. Further, it was considered that such control was not necessary in order to assure the packers a generally fair and equitable margin of profit because of the predominant influence of the wholesale price of meat in determining the level of livestock prices which resulted from the fact that the domestic meat packing industry is the sole outlet for beef cattle.¹

Section 1364.60 of the regulation provides that the office of Price Administration may by order adjust any maximum price for any seller who petitions for such adjustment in accordance with Procedural Regulation No. 1, in any case in which such seller shows:

"(1) That such maximum price causes him hardship and is abnormally low in relation to the maximum prices established for competitive sellers;

"(2) That establishing for him a maximum price bearing a normal relation to the maximum prices established for competitive sellers will not cause or threaten to cause an increase in the level of retail prices."

Armour did not petition for adjustment under this provision; and there are no facts in the present record indicating that it would have any case for adjustment thereunder.

On July 14, 1942, the Administrator issued Supplementary Order No. 9, applicable generally to maximum price regulations theretofore issued or to be issued thereafter. 7 F. R. 5444. This order, so far as now material, reads: "Any person who has entered into or proposes to enter into a contract with the United States or any agency thereof, * * * who believes that a maximum price established by any price regulation of the Office of Price Administration impedes or threatens to impede production of a commodity * * * which is essential to the war program and which is or will be the subject of such contract * * *, may file an application for adjustment of such maximum price in accordance with Procedural Regulation No. 6. Upon the filing of an application for adjustment and pending the issuance of an order granting or denying such application, contracts * * * may be entered into, or offered to be entered into, and deliveries may be made, at the price requested in such application. If, however, the order issued denies the application in whole or in part, the contract price shall be revised downward to the maximum price ordered, and if any payment has been made at the requested price, the applicant may be required to refund the excess."

Procedural Regulation No. 6, above referred to, was issued July 1, 1942. 7 F. R. 5087. It prescribed the form of application to be made under Supplementary Order No. 9, which form called for precise details of cost data, also balance sheets and income statements for the preceding five years. Generally, applications were to be filed with the appropriate regional office, but by subsequent amendment issued July 22, 1942 (7 F. R. 5664), applications for adjustment under Maximum Price Regulation No. 169 and certain other enumerated regulations were required to be made direct to the Office of Price Administration in Washington. It was provided that "Any Government agency may appear as an interested party in the case of any such application." An order by the Administrator denying any application for adjustment was deemed to be an order under § 2 of the Emergency Price Control Act, 50 U.S.C.A. Appendix § 902 which the applicant was entitled to protest under § 203(a), and to have reviewed by this court under § 204(a) in case the protest were denied. 56 Stat. 24, 31, 50 U.S.C.A. Appendix §§ 923(a), 924(a). Consequently Procedural Regulation No. 6 contained the following provision: "Any applicant whose application for adjustment is denied in whole or in part by the Administrator may, within sixty days after the issuance of the Administrator's order finally denying such application, file a protest against such order in accordance with the provisions of Procedural Regulation No. 1 (7 F. R. 971)."²

The special adjustment provision in respect of commodities or services to be furnished under Government contract was originally made in Supplementary Regulation No. 4 to the General Maximum Price Regulation. The statement of considerations involved in the issuance of Supplementary Order No. 9 incorporates by reference the reasons set forth in the statement of considerations accompanying Supplementary Regulation No. 4, which are said to be "equally applicable with respect to commodities or services covered by any other Regulation heretofore or hereafter issued by the Office of Price Administration." O. P. A. Service 2:458-B. In the statement of considerations accompanying Supplementary Regulation No. 4, after referring to the fact that in general sales to the Government of any commodity covered by the General Maximum Price Regulation must be made at applicable maximum prices, the Administrator stated: "It is recognized that there will be cases in which it may be necessary to make adjustments from established maximum prices for a particular seller for whom such prices are unreasonably low. If such seller is engaged in essential war production and has entered or proposes to enter into a Government contract or subcontract, his request for relief must be handled as expeditiously as possible lest delay interfere with procurement." Id. at 11:260.

Pursuant to Supplementary Order No. 9 and Procedural Regulation No. 6 Armour on August 18, 1942, filed with the Office of Price Administration its application, dated August 14, 1942, "for adjustment of the maximum price established for Carcass Beef, which will be the subject of Government Contract No. W 2283 QM 1049, opening August 15, 1942, at Chicago Quartermaster Market Center, and for Government contracts opening weekly hereafter at Chicago Quartermaster Market Center." The application set forth that under Maximum Price Regulation No. 169 the applicant's maximum price per cwt. carload lots f.o.b. Chicago was $19.32. Attached to the application was Exhibit A showing "actual figures from actual operations as compiled by our accounting department." This exhibit shows $21.24 as Armour's total dressed cost f.o.b. Chicago of Army Grade C dressed beef (O. P. A. commercial grade A) based on cost of cattle purchased July 21, 1942, adjusted to market as of August 13, 1942, with full credit for by-products — indicating an actual loss of $1.92 per cwt. on the pending contracts with the Government. Applicant requested to be allowed to charge a price of $21.66 f.o.b. Chicago, representing its actual cost with 2% profit added. It is recited in the application that Armour will bid at such prices on the proposals for carcass beef as requested by the Chicago Quartermaster Market Center "until further notice or until new application is made and pending final action by the Office of Price Administration." As a reason for requesting the price adjustment, applicant states: "Obviously, no seller can continue indefinitely to furnish the large amount of carcass beef required by the Army at a substantial loss. The armed forces must be fed and the applicant desires to cooperate fully in that task, but should not be asked to do so at a loss. Notwithstanding applicant's desire to cooperate with the armed forces it has had several priorities served upon it...