Avant v. Bowles

• Decision Date: 31 December 1943
• Docket Number: 64.,No. 63,63
• Citation: 139 F.2d 702
• Parties: AVANT et al. v. BOWLES, Price Administrator. BUSH et al. v. SAME.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

139 F.2d 702 (1943)

AVANT et al. v. BOWLES, Price Administrator. BUSH et al. v. SAME.

Nos. 63, 64.

United States Emergency Court of Appeals.

Heard October 20, 1943.

Decided December 31, 1943.

Charles J. Bloch, of Macon, Ga., for complainants.

Sol M. Linowitz, Chief, Court Review Rent Branch, of Washington, D. C. (George J. Burke, Gen. Counsel, Nathaniel L. Nathanson, Associate Gen. Counsel, and Herbert H. Bent and Harry H. Schneider, Attys., all of the Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

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

Heard at Atlanta October 20, 1943.

MAGRUDER, Judge.

On August 28, 1942, a large number of landlords in Macon, Georgia, filed with the Price Administrator a consolidated protest against Maximum Rent Regulation No. 26 for the Macon Defense-Rental Area. At the request of the protestants, the Administrator on September 18, 1942, granted them an extension of time within which to present further evidence. On April 17, 1943, the Administrator issued an order incorporating into the record certain statistical materials and economic data and affording protestants an opportunity to present rebuttal evidence within thirty days thereafter. No such rebuttal evidence was filed, and on June 8, 1943, the Administrator issued an order, with accompanying opinion, denying the consolidated protest. The several protestants then split into two groups, each of which filed a separate complaint in this court under § 204 of the Emergency Price Control Act of 1942, 56 Stat. 31, 50 U.S.C.A.Appendix, § 924. The two cases were consolidated for argument and disposition by order of this court. Since there was only one protest proceeding, the transcripts in the two cases are identical. The issues raised by the two complaints are the same, with the exception that the complainants in No. 64 present an additional issue, which we shall subsequently refer to.

Maximum Rent Regulation No. 26 was issued June 30, 1942, effective July 1, 1942. 7 F.R. 4905. For housing accommodations rented on April 1, 1941, the rental prevailing on that date is fixed as the maximum rent. We have already upheld this method of rent control as a generally fair and equitable method of establishing maximum rents in a defense-rental area. Chatlos v. Brown, Em.App., 1943, 136 F.2d 490 (1943). Section 5 of the regulation provides several grounds on which a landlord may file a petition for adjustment to increase the maximum rent otherwise allowable.

Aside from questions as to the constitutionality of the Act, 50 U.S.C.A. Appendix, § 901 et seq., the main issue in these cases is whether the Administrator was arbitrary or capricious in selecting April 1, 1941, as the rent-freezing date.

The Macon Defense-Rental Area consists of the counties of Bibb, Houston and Peach, Georgia. In 1940 this area had a population of 105,464 persons, of whom 57,865 resided in the city of Macon. The first effects of defense activities on rentals in the area were not felt prior to October 12, 1940, on which date plans for the construction of Camp Wheeler and a naval fuse loading plant were announced. Construction of the camp was begun on December 12, 1940, and of the fuse loading plant on February 5, 1941. Construction of Cochran Field, an Army Air Corps basic flying school, was begun on February 6, 1941. On September 1, 1941, there was begun the construction of the Georgia Air Depot, a repair and supply base for all Army aircraft in the southeastern states. War contracts awarded by the Government totalled $34,000,000 by the end of August, 1941, and by June, 1942, this total had reached $48,000,000, a sum nearly double that of the value of all products manufactured in the area in 1939.

By February, 1941, 10,500 persons were employed on military construction projects. The impetus of defense construction and increased manufacturing activities caused a great migration into the area. In this connection the Administrator stated in his opinion: "The number of civilian migrants attracted to Macon during the first year of the defense program was roughly equal to its population gain during the entire decade of the 1930's. From December 1940 to June 1941, 5,000 persons migrated to the Area. This figure reached 8,000 by December 1941, and by June 1942 had increased to 20,000 persons. These figures do not include military personnel who numbered 10,000 as early as May 1941, and by June 1941 numbered 17,000. Between April 1940 and June 1942 the population of the City of Macon increased at least 25 percent. By April 1941 this vast influx of migrants — construction, manufacturing, and service workers, and military and naval personnel and their families — drawn to the Macon Area by its defense activities, had created a tremendous demand for housing accommodations. In addition, rising employment and increased income led to a greatly increased housing demand by families which previously had been forced to double up or to live in substandard or unsuitable dwellings. This increased demand, combined with the housing demand of defense workers and of military personnel, created an acute housing shortage in the Area by April 1941."

In fact, as the Administrator pointed out, the supply of housing accommodations in the area was inadequate even prior to the expansion resulting from defense activities. The habitable vacancy rate in the area in February, 1941, was 0.5% and only 0.2% of the dwelling units were vacant and available to white tenants. It was easy to be foreseen that the acute housing shortage would result in widespread rent increases. The Administrator found:

"The critical housing shortage resulting from the impact of the defense program led to widespread rent increases in the Macon Area. From October 1939 to April 1941, 47 out of every 100 white tenants in the City of Macon had rent increases. Although the average increase was 18.8 percent, 24 out of every 100 increases were from 25 to 35 percent. For those dwellings renting for less than $15 per month, 75 percent of the white tenants had rental increases averaging 21.7 percent. The rent increases during this period resulted in a rise of 8.8 percent in the index of average rentals for all white tenants, and a rise of 16 percent in the index of average rentals for those paying $15 or less per month.

"Rent increases after the maximum rent date were so large and widespread as to be clearly inconsistent with the Emergency Price Control Act of 1942. Between April 1941 and June 1942 more than 3 out of every 4 white tenants in Macon had their rents increased. Although the average rent increase was 22.5 percent, 1 out of every 3 increases was from 25 to 45 percent. The index of average rentals for white tenants rose 16.8 percent during this period.

"The full impact of defense activities on the rental market in the City of Macon is reflected in the rent increases that occurred between October 1939 and June 1942. During this period 94 out of every 100 white tenants had rental increases. While the average increase was 30.6 percent, 21 out of every 100 increases were from 40 to 70 percent. The index of average rents for white tenants rose 27 percent during this period. Rent increases were more severe for white than non-white tenants during this period and generally were greater in the lower rental brackets."

The Administrator concluded that though some rent increases had occurred up to April 1, 1941, as a result of the increased demand for housing accommodations created by the early stages of defense activities, these increases were "neither so severe nor so widespread as to warrant the establishment of maximum rents as of a date when such early rent increases began." He found, however, that the widespread increases subsequent to April 1, 1941, "were clearly inconsistent with the purposes of the Act." On the record before us we cannot say that the Administrator was arbitrary or capricious in selecting April 1, 1941, as the rent-freezing date. As we pointed out in the Chatlos case, this happens to be the very date suggested by Congress itself in § 2(b) of the Act, 50 U.S. C.A.Appendix, § 902(b), as one on which rentals then prevailing would probably not reflect increases due to the impact of defense activities. The objective of the maximum rent date method of rent stabilization is to roll back and freeze rentals as of an earlier date and at levels which landlords and tenants had worked out for themselves by free bargaining in a competitive market, prior to the time when defense activities had injected into the market an abnormal factor resulting, or threatening to result, in rent increases inconsistent with the purposes of the Act.

In their protests, complainants aver that the Administrator should not have frozen rents as of a date earlier than March 1, 1942. Rents in this area on April 1, 1941, they say, "were approximately 76 per cent. of the average of the rentals for the years 1920-38, and on September 1, 1941 were approximately 90 per cent. of that 18 year average." A similar argument was made in Spaeth v. Brown, Em.App., 1943, 137 F.2d 669, at page 670 and rejected by us in the following language: "But, says the Complainant, these increased rentals are still relatively lower than those which prevailed in Cleveland between 1919 and 1931 and which now prevail in some other communities. This may be conceded, but the answer is that it is wholly immaterial. Congress clearly authorized the Administrator to stabilize rents at the level at which they stood in the particular area in question on the most recent date which did not reflect increases resulting from defense activities. It did not intend that all rent control should be suspended until rentals reached the higher levels of an earlier generation."

Furthermore, complainants contend that the average rental increases between September 1, 1940, and March 1, 1942, just about kept pace with the general increase in...