Bibb Mfg. Co. v. Bowles
| Decision Date | 12 January 1944 |
| Docket Number | No. 59.,59. |
| Citation | 140 F.2d 459 |
| Court | U.S. Temporary Emergency Court of Appeals Court of Appeals |
| Parties | BIBB MFG. CO. v. BOWLES, Price Administrator. |
A. O. B. Sparks, of Macon, Ga. (Charles M. Cork, of Macon, Ga., on the brief), for complainant.
Thomas I. Emerson, Associate Gen. Counsel, of Washington, D. C. (George J. Burke, Gen. Counsel, Nathaniel L. Nathanson, Asst. Gen. Counsel, and Sol M. Linowitz, Maurice Alexandre, and Nancy F. Wechsler, Attys., 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.
Complainant is the owner of cotton mills located in the Columbus and Macon, Georgia, Defense-Rental Areas. Within the vicinity of its mills it owns four hundred ninety-eight dwelling houses, known as "company houses", which are rented to its employees. About 30% of the company's employees in the Macon Area and about 37% of those in the Columbus Area live in these houses. The rents charged have been less than those charged by other landlords for comparable accommodations. On July 1, 1941, complainant increased its rents to a level claimed to be required to cover maintenance costs and depreciation. However, after said increases, the rents continued to be below the level of comparable accommodations in the Areas.
Pursuant to authority granted by the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq., respondent as Price Administrator issued maximum rent regulations governing both the Columbus and Macon, Georgia, Defense-Rental Areas. Maximum Rent Regulation No. 7, issued May 27, 1942, and effective June 1, 1942, established January 1, 1941, as the maximum rent date in the Columbus Area; and Maximum Rent Regulation No. 26, issued June 30, 1942, and effective July 1, 1942, established April 1, 1941, as the maximum rent date governing the Macon Area. Except as to the ceiling dates and the areas covered, these Regulations were identical.1 As applied to complainant, the effect of the Regulations was to reduce the rents which might be charged for company houses to the levels prevailing before the increases of July 1, 1941.
By Section 5(a) (4) of each Regulation it was provided that any landlord might file a petition for adjustment to increase the maximum rent otherwise allowable, upon the ground that "the rent on the date determining the maximum rent was materially affected by the blood, personal, or other special relationship between the landlord and the tenant and as a result was substantially lower than the rent generally prevailing in the Defense-Rental Area for comparable housing accommodations * * *." Shortly after issuance of the Regulations, complainant filed with the Area Rent Director for each of the two Areas, a petition for adjustment pursuant to Section 5(a) (4), seeking approval of the increased rents it had charged beginning July 1, 1941. The petition filed with the Area Rent Director in Columbus was originally granted, but was subsequently reconsidered and denied. Complainant's petition for adjustment in the Macon Area was also denied.2 These denials apparently were based upon an interpretation of Section 5(a) (4) made by the Office of Price Administration on September 30, 1942, to the effect that petitions for adjustments would be entertained only when the relationship of employer and employee had terminated, or probably would terminate in the near future.3 By Supplementary Amendment No. 12, adopted December 23, 1942, and effective December 24, 1942, this interpretation was formally written into the Regulations.4
On February 13, 1942, complainant filed a protest against Supplementary Amendment No. 12 and Maximum Rent Regulations Nos. 7 and 26 Supplementary Amendment No. 12. Upon denial of this protest, complainant instituted the proceedings now before us.
Although complainant's principal attack in this Court is against the action of the Administrator in promulgating Supplementary Amendment No. 12, yet in the proceedings before the Administrator and this Court it has made arguments which challenge the validity of Maximum Rent Regulations Nos. 7 and 26 because they control rents of company housing accommodations. Section 203(a) of the Act provides that protest against any provision of a regulation must be filed within sixty days after its issuance and that after such sixty days have expired no protest will be entertained except upon grounds which have newly arisen. More than seven months elapsed after issuance of the Regulations before the filing of the protest upon which this proceeding is based. Supplementary Amendment No. 12, which had been issued in the meantime, did not re-subject the Regulations to any right of protest which had been available at the time when they were first issued.5 Therefore, two of complainant's contentions are not properly before us, since they relate to the power to control rents of company houses. That power having been exercised by the Administrator's adoption of the original Regulations, attack upon it is barred by limitations of Section 203(a). One of these contentions is that company houses are far removed from communities affected by defense activities and, therefore, their rents are not within the control of the Administrator. The other is the argument that control of rents charged to employee-tenants constitutes a control of wages which is not within any powers granted the Administrator by the Act.
The principal attack in this case is made against Supplementary Amendment No. 12, which is said to deny to complainant and other owners of company houses individual adjustments of their rents, whereas by Section 5(a) (4) of the Regulations other landlords bearing the same kind of special relationships to their tenants are granted the right to seek adjustments. This action on the part of the Administrator is described as discriminatory and an arbitrary and capricious abuse of discretion.
The authority to establish specific categories as bases for individual adjustments was granted by Section 2(c) of the Emergency Price Control Act, which provides that the Administrator may include in any regulation such classifications and differentiations and may provide for such adjustments and reasonable exceptions as in his judgment are necessary or proper to effectuate the purposes of the Act. This Court has referred to the necessity, in the interest of effective administration of the Act, of allowing considerable leeway to the Administrator in the determination of the extent to which he will exercise the broad power conferred upon him by this Section,6 and has indicated that if there is rational basis for his exercise of judgment it will control free from interference by the courts.7
Section 5(a) (4) was first adopted as one of seven specified categories established by the Administrator as the only circumstances which would constitute grounds for individual adjustments beyond levels imposed by maximum rent ceilings.8 The provisions of the Section authorize landlords to apply for adjustments on the ground that the rent in effect on the maximum rent date was materially affected by the blood, personal or other special relationship between the landlord and tenant and as a result was substantially lower than the rent generally prevailing in the area for comparable housing accommodations on the maximum rent date. In commenting upon these provisions, we have stated that they relate to cases in which a rent concession has been given a favored tenant on some personal motive and the transaction does not represent a bargaining valuation of the property for rental purposes under existing market conditions of supply and demand.9 It is to be noted that the provisions of Section 5(a) (4) conform to the general pattern of the individual adjustment provisions, which is that individual increases of rents will be permitted in those cases in which experience has shown the likelihood of an increase after the maximum rent date even in the absence of a housing shortage brought about or accentuated by defense activities. These individual adjustment provisions have been determined by the Administrator to be "consistent with the general plan of establishing maximum rents at levels reached through the normal bargaining of landlords and tenants before the impact of defense activities on the rental market in the defense-rental area."10
It is apparent that, with exceptions not pertinent here, the Administrator made no provision for individual adjustments of rents which on the maximum rent date had been fixed by the normal process of bargaining between landlord and tenant. By upholding the maximum rent date method of rent control,11 we have approved the withholding of individual adjustments in such cases. The essential fairness of this method of control is found in its adoption of the rent levels established by landlords themselves at the most favorable rates which they could obtain by bargaining in a market unaffected by abnormal defense conditions. It is also apparent that the Administrator has made provision for individual adjustments of rents which on the maximum rent date had been fixed by landlords at rates below the level that would have been set by a normal bargaining process; in such cases the landlords had not sought to obtain from the transaction the available economic benefits. We find that this distinction is fair, since it would be unjust to deprive the landlords last mentioned of the benefit of the bargaining process, the element in the maximum rent date method which contributes so largely to its being fair and equitable. It remains for us to determine whether, after dealing differently with these two classes of cases, it was fair for the Administrator to exclude employer-landlords from the second class.
The record discloses that maintenance of company housing is a well established...
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