Berchem v. Reconstruction Finance Corp., 556.

• Decision Date: 19 October 1951
• Docket Number: No. 556.,556.
• Citation: 191 F.2d 922
• Parties: BERCHEM et al. v. RECONSTRUCTION FINANCE CORP.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

191 F.2d 922 (1951)

BERCHEM et al. v. RECONSTRUCTION FINANCE CORP.

No. 556.

United States Emergency Court of Appeals.

Heard September 21, 1951.

Decided October 19, 1951.

Rehearing Denied November 2, 1951.

Alexander Boskoff, Washington, D. C., for the complainant.

George Arthur Fruit, Washington, D. C., (J. Gregory Bruce, Washington, D. C., on the brief), for the respondent.

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

Heard at Philadelphia September 21, 1951.

MARIS, Chief Judge.

The complainant, a slaughterer of meat, seeks review by this court of the action of the respondent in refusing to pay certain claims for livestock slaughter subsidy payments. The complainant operated as a slaughterer during the entire period of the livestock slaughter subsidy program. Under the regulations¹ providing for livestock slaughter subsidy payments the complainant filed claims for and received subsidy payments for periods subsequent to March, 1946. Complainant, however, did not file claims for subsidy payments for the years 1943, 1944 or 1945 or for January, February or March, 1946, until recently. When these claims were filed payment of them was refused by the respondent. On December 13, 1950, the complainant filed a protest against this action which protest was denied by the respondent by a letter dated May 2, 1951, from which it appears that the original refusal by the respondent to pay these claims was solely upon the ground that they had not been timely filed.

Livestock Slaughter Payments Regulation No. 3 provided in Section 7003.3(c) as follows: "Application for payments shall be filed after the last day of the accounting period in which the slaughter took place, and on or before the last day of the calendar month following the end of the accounting period in which the slaughter took place." Section 7003.10(a) of the same regulation provided in part: "Defense Supplies Corporation shall have the right to declare invalid, in whole or in part, any claim which does not meet the requirements of this regulation * * *."

Revised Livestock Slaughter Payments Regulation No. 3 included substantially the same provisions although the provision relating to the time of filing claims was transferred from paragraph (c) to paragraph (b) of Section 7003.3. By Amendment 3² to Revised Livestock Payments Regulation No. 3 the provisions of Section 7003.10(a) with respect to the right of Defense Supplies Corporation to declare invalid claims which did not meet the requirements of the regulation were transferred to Section 7003.9(e) of the regulation.

Defense Supplies Corporation was dissolved, effective July 1, 1945, and its functions were transferred to the respondent by the Act of June 30, 1945, c. 215, 59 Stat. 310, 15 U.S.C.A. § 611 note.

It will thus be seen that the regulations from the beginning expressly gave Defense Supplies Corporation and the respondent as its successor the right to declare claims for livestock slaughter subsidy payments invalid if they did not meet the requirements of the regulation, one of which was that the claims must have been filed before the last day of the next full calendar month following the end of the accounting period in which the slaughter for which subsidy was claimed took place. It is undisputed that the claims here in controversy were filed long after the expiration of the time thus limited by the regulations and that the respondent declared them invalid and refused to pay them solely on that ground. The complainant asserts, however, that the authority conferred upon the respondent and its predecessor by the regulations to invalidate claims which did not comply with the regulations with respect to the time of their filing did not impose the absolute duty to do so but that Section 7003.9(e) conferred upon the respondent a discretionary power to invalidate such claims which it might or might not exercise depending upon the circumstances.

The respondent concedes that the power to invalidate claims which was conferred upon it by the regulations was discretionary and that pursuant thereto it has in suitable cases accepted and paid claims for livestock slaughter subsidy payments which were filed after the expiration of the time fixed by the regulations. It argues, however, that such payments were made merely as a matter of grace and as such are no concern of this complainant who is bound by the terms of the regulations and the respondent's action thereunder with respect to his claims. Accordingly, says the respondent, the extent of the jurisdiction of this court to review the denial of the complainant's claims is limited to a determination whether the regulations by their terms authorize the respondent's action with respect thereto and the court may not review the respondent's exercise of discretion in determining that the complainant's claims should not as a matter of grace be accepted and paid even though filed out of time.

We do not construe the power of this court in the premises to be quite so narrowly limited. It is, of course, true that the court may not control the exercise of the discretion which has been vested in the respondent by the regulations except for such an abuse thereof as may fairly be characterized as arbitrary or capricious conduct. Silberschein v. United States, 1924, 266 U.S. 221, 225, 45 S.Ct. 69, L.Ed. 256; Illinois Packing Co. v. Snyder, Em. App. 1945, 151 F.2d 337, 339. But it is settled that an order of the respondent invalidating and denying a subsidy claim is an order under Section 2 of the Emergency Price Control Act of 1942 as amended, 50 U.S.C.A. Appendix, § 902, which is reviewable by this court. Illinois Packing Co. v. Bowles, Em.App. 1945, 147 F.2d 554, 558; Belle City Packing Co. v. Reconstruction Finance Corp., Em.App. 1948, 169 F.2d 413, 414; Merchants Packing Co. v. Reconstruction Finance Corp., Em.App. 1949, 176 F.2d 908, 912. And upon such review it is the duty of the court under Section 204(b) of the act to determine not only whether or not the order is in accordance with law but also whether or not it is arbitrary or capricious. Moreover this court has repeatedly held that the subsidy program was complementary to the price control program in the sense that the livestock slaughter subsidy was provided in part at least to render valid the maximum prices imposed upon the slaughterers which otherwise might have been invalid as generally unfair and inequitable. Illinois Packing Co. v. Snyder, Em.App. 1945, 151 F.2d 337, 339; Earl C. Gibbs, Inc. v. Defense Supplies Corporation, Em.App. 1945, 155 F.2d 525, 526, certiorari denied, 329 U.S. 737, 67 S.Ct. 51, 91 L.Ed. 637; Earl C. Gibbs, Inc. v. Reconstruction Finance Corp., Em.App. 1948, 169 F.2d 654, 656; Evergreen Meat Co. v. Reconstruction Finance Corp., Em.App. 1951, 188 F.2d 368, 370. The complainant is, therefore. not in the position of one who seeks a mere gratuity or bounty. Accordingly if it can be shown that the respondent has established standards for the exercise of its discretionary power to invalidate subsidy claims untimely filed and that in the present case it has clearly departed from those standards in invalidating the complainant's claims the...