Atlantic Meat Co. v. Reconstruction Finance Corp., 4250.

• Decision Date: 05 February 1948
• Docket Number: No. 4250.,4250.
• Citation: 166 F.2d 51
• Parties: ATLANTIC MEAT CO., Inc., v. RECONSTRUCTION FINANCE CORPORATION.
• Court: U.S. Court of Appeals — First Circuit

166 F.2d 51 (1948)

ATLANTIC MEAT CO., Inc., v. RECONSTRUCTION FINANCE CORPORATION.

No. 4250.

Circuit Court of Appeals, First Circuit.

February 5, 1948.

Lawrence Black (of Lyons & Black), of Boston, Mass., for appellant.

John J. Burns, of Boston, Mass. (John F. Rich, Harold B. Dondis, and Burns, Blake & Rich, all of Boston, Mass., of counsel), for appellee.

Before MAHONEY and WOODBURY, Circuit Judges, and HEALEY, District Judge.

MAHONEY, Circuit Judge.

The plaintiff brought this action in the district court to obtain a declaratory judgment that the Defense Supplies Corporation was indebted to it in the sum of $674,847.94 as payment for subsidies allegedly owed to it.¹

The Director of the Office of Economic Stabilization on October 25, 1943, "pursuant to the authority vested in him by the Act of October 2, 1942, entitled `An Act to amend the Emergency Price Control Act of 1942, to aid in preventing inflation and for other purposes,'" 50 U.S.C.A.Appendix, § 961 et seq., and certain executive orders, issued a directive which provided for the payment of a special subsidy to certain non-processing slaughterers of meat, and directed the Defense Supplies Corporation to amend its Regulation No. 3 in accordance with the directive.²

On October 30, 1943, Amendment No. 2 to Regulation No. 3 was issued by the Defense Supplies Corporation. It provided for extra compensation for non-processing slaughterers of beef and contained the condition that to be entitled to such special subsidy a non-processing slaughterer must be an "unaffiliated slaughterer," in that it does not own or control and is not owned or controlled by a processor or purveyor of meat.³

The plaintiff was denied the subsidy by the Defense Supplies Corporation on the ground that the plaintiff was not an unaffiliated slaughterer within the definition contained in Amendment No. 2 to Regulation No. 3. From November 1943 until March 1944, the plaintiff and Batchelder & Snyder Company, Inc., a "Hotel Supply House" were owned by General Foods Corporation. After March 1944, the plaintiff was wholly owned by Batchelder & Snyder.

The plaintiff in its complaint alleged that it always has been a non-processing slaughterer within the definition contained in the directive and is entitled to the additional payment specified therein, since it currently sells, and its predecessor in title sold during a representative portion of 1942, 98% or more of the total dressed carcass weight of cattle slaughtered by them in the form of carcasses, wholesale cuts or frozen boneless beef or ground beef. It asserted that Batchelder & Snyder is a Hotel Supply House within the definition contained in the Revised Maximum Price Regulation 169 and that Batchelder & Snyder Company is engaged in the fabrication of meat cuts and the sale of fabricated meat cuts as distinct from processed meat to purveyors of meals. The plaintiff asserted that the condition imposed by Amendment No. 2 that a non-processing slaughterer also be unaffiliated constitutes an imposition of a condition by an agency of the Government not authorized by the provisions of the Emergency Price Control Act or any other Act or lawful regulation; that the condition imposed by the Defense Supplies Corporation, that a non-processing slaughterer in order to qualify as such for the additional subsidy not be under joint control with a processor of meat, constitutes the imposition of a condition not authorized by the provisions of the Emergency Price Control or any other Act and is not authorized even under the defendant's Amendment No. 2 to Regulation No. 3; that the fabrication of beef by a Hotel Supply House is not processing and that a Hotel Supply House is not a processor or purveyor of meat within the definition contained in the defendant's Regulation No. 3 as amended, and thus the condition imposed by the defendant that a non-processing slaughterer, in order to qualify as such for the additional subsidy, may not be owned by or under joint control with a Hotel Supply House, constitutes the imposition of an unauthorized condition, even under the defendant's amended Regulation No. 3.

Thus, the plaintiff's claims, summarily stated, are that it is a non-processing slaughterer of meat; that it comes within the terms of the Directive of October 24, 1943; that Amendment No. 2 to Regulation No. 3 is invalid because it adds unauthorized conditions to the Directive; that in any event the plaintiff has fulfilled the conditions of Regulation No. 3 as amended; and that if plaintiff is not given the subsidy the effect of price regulations will be to deprive it of property without due process of law.

Plaintiff sought as relief a declaration that it had complied with the directive, that the amendment was invalid, that in any event it had complied with the regulation as amended, and that the failure to pay the subsidy denied plaintiff of property without due process of law; and an injunction requiring defendant to pay plaintiff the subsidy.

The defendant moved to dismiss upon the grounds that the court was without jurisdiction to entertain the complaint and the action was against the United States, which had not consented to be sued. While this matter was pending, the plaintiff brought suit against the same defendant in the United States Emergency Court of Appeals, making substantially the same allegations. In an opinion filed May 8, 1946, that court held that it had jurisdiction; that Batchelder & Snyder Company is a processor of meat within the meaning of Amendment No. 2; that the amendment denying the special subsidy to any slaughterer who is owned or controlled by a processor of meat is a reasonable and proper provision for carrying into execution the general policy laid down in the Directive of October 25, 1943, and that the amended regulation is broad enough to cover a non-processing slaughterer who is under the joint control of a common parent with a processor. A judgment of the Emergency Court of Appeals was entered dismissing the complaint. Atlantic Meat Co. v. Reconstruction Finance Corp., Em.App., 1946, 155 F.2d 533, certiorari denied, 1946, 329 U.S. 737, 67 S.Ct. 52.

On May 31, 1946 the defendant, without waiving its motion to dismiss, filed a motion in the district court for summary judgment on the ground that the judgment of the United States Emergency Court of Appeals dismissing the above described action between the same parties was res judicata of the issues in the instant case. On June 10, 1946 the motion to dismiss and the motion for summary judgment were heard and taken under advisement. The lower court on October 30, 1946 granted the motion for summary judgment and ordered judgment for the defendant. The plaintiff appealed, contending that the Emergency Court was without jurisdiction and its judgment was a nullity.

In this court, both parties briefed and argued the case on the question of the effect of the judgment of the Emergency Court. Upon our study of the case, however, we had serious doubts as to the jurisdiction of the district court to entertain the action. Both parties were given an opportunity to file additional memoranda on the question of the district court's jurisdiction.

After consideration of the memoranda submitted to us, our doubts were affirmed, and we now conclude that the district court below was without jurisdiction. The plaintiff purported to base its action upon § 2(m) of the Emergency Price Control Act as added by the Act of June 30, 1944, 58 Stat. 632, 50 U.S.C.A.Appendix, § 902(m)⁴ and the Declaratory Judgment Act, 48 Stat. 955, 28 U.S.C.A. § 400. Section 2(m) gives the district courts jurisdiction to grant declaratory judgments and appropriate relief in cases of unlawful conditions or penalties imposed in the payment of sums relating to the production or sale of agricultural commodities. It must be noted that this is a limited grant, which was clearly enacted for the benefit of the farmer. Both § 2 and § 3 of the Emergency Price Control Act contain many exceptions for the benefit of farmers, who were given special consideration throughout the entire Act. Congress was anxious that the elaborate farm control system which had evolved in the last decade not be upset by the Price Control Act. Thus, numerous exceptions were made in relation to agricultural commodities but it can hardly be supposed these were for the benefit of large industrial processors.

In both § 2 and § 3, "agricultural commodity" is used in contradistinction to "commodity manufactured or processed in whole or substantial part from any agricultural commodity." See, e.g., §§ 2(e), 2(i), 3(c), 3(e). It is clear that the plaintiff here is engaged in the production and sale of commodities manufactured or processed from agricultural commodities, and that the subsidy it is seeking relates to production of commodities manufactured from agricultural commodities,⁵ not to the production of agricultural commodities. The legislative history of § 2(m) does not indicate that producers of commodities processed from agricultural commodities were to be included. The withholding from a farmer of rationing coupons for failure to participate in the program of the War Food Administration was cited as a representative abuse that § 2(m) was designed to correct. See Sen.Rep. No. 922, 78th Cong., 2d. Sess. 9 (1944). Nowhere is there any indication that Congress intended to allow large processors, such as packers, to resort to the district courts to contest orders or conditions. The Committee which conducted hearings and drafted the proposed bill was largely concerned with what was called "bureaucratic blackmail." All the examples given were of conditions imposed by local bodies — largely the War Food Administration — on local farmers. See Hearings Before Committee on Banking and Currency on S. 1764, 78th Cong., 2d Sess., 464-71 (1944). It was stated that the bill was intended to prevent flagrant misuse of authority for imposition of...