Borelli v. Reconstruction Finance Corp.

• Decision Date: 10 April 1952
• Docket Number: No. 578.,578.
• Citation: 196 F.2d 730
• Parties: BORELLI v. RECONSTRUCTION FINANCE CORP.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

196 F.2d 730 (1952)

BORELLI v. RECONSTRUCTION FINANCE CORP.

No. 578.

United States Emergency Court of Appeals.

Heard December 15, 1951.

Filed April 10, 1952.

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

Maurice S. Meyer, Atty., Department of Justice, Washington, D. C., with whom J. Gregory Bruce, Atty., Department of Justice, Washington, D. C., was on the brief, for the respondent.

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

Heard at Washington, D. C., December 15, 1951.

McALLISTER, Judge.

Frank Borelli, doing business as the Gilroy Meat Company, filed his complaint pursuant to the Emergency Price Control Act of 1942, as amended,¹ seeking to set aside the determination of respondent Reconstruction Finance Corporation, that he was not entitled to special subsidy payments as a non-processing slaughterer of beef.

Prior to July, 1943, complainant had purchased a slaughterhouse in Gilroy, California, and from that date throughout the meat subsidy program, operated this slaughterhouse as the Gilroy Meat Company. During this same period, Borelli was also the owner of the "Public Drive-In Market," a retail meat market located in Hollister, California. As the Gilroy Meat Company, he sold to the Public Drive-In Market — that is, to himself — a certain amount of the beef produced in his slaughtering establishment.

The controlling regulation² provided that extra compensation was, under certain conditions, to be paid during the period here in question to all non-processing slaughterers, as that term was defined by the regulation.

In order to be eligible for such extra compensation, a slaughterer, according to the regulation, must have been an "unaffiliated slaughterer³ * * * who during six consecutive months of 1942, sold, and who currently sells, 98% or more, measured in dressed carcass weight, of the total beef produced from cattle slaughtered by him in all his establishments, in the form of carcasses, wholesale cuts, boneless beef or ground beef."⁴ An unaffiliated slaughterer, according to the regulation, meant "a slaughterer who does not own or control a processor or purveyor of meat."⁵

The regulation further provided for the manner of filing claims by persons eligible to receive such extra compensation and the amount of payment to which they would be entitled.⁶ A directive, or regulation, here applicable, further provided that "Slaughterers who during the year 1942 or a representative portion thereof sold and who currently sell 98% or more of the total dressed carcass weight of cattle slaughtered by them in the form of carcasses, wholesale cuts, frozen boneless beef * * * or ground beef shall be paid in addition to the payments authorized by Regulation No. 3 of Defense Supplies Corporation * * *, the amount of 0.80 per cwt. of cattle slaughtered during the month for which the payments are made."

These regulations established the criteria of eligibility applicable to the base period and to the subsidy period. Under the criteria applicable to the 1942 base period, unaffiliated slaughterers who had sold 98% or more of their beef in the four prescribed forms were eligible non-processors.

Under the criteria applicable to the subsidy period, slaughterers who sold 98% or more of their beef in the prescribed forms were entitled to extra compensation for the months during which they were unaffiliated.

Respondent, Reconstruction Finance Corporation, accepts the 1942 operations of complainant, while he was doing business as the Hollister Meat Company, as the base for computing eligibility of the Gilroy Meat Company during that period, although complainant later sold the Hollister plant; subsequently bought a plant at Gonzales, California, thereafter sold that plant, and afterward purchased the Gilroy plant, all of which he operated, at various times, during the subsidy period, and upon which operations he claims the extra compensation provided by the regulation.

When complainant filed his application for eligibility for the additional payments above provided, respondent informed him that he was not eligible for such extra compensation on account of his ownership of the retail meat market, presumably because such ownership made him an affiliated rather than an unaffiliated slaughterer; and no affiliated slaughterers were eligible to receive the extra compensation.⁷

On being informed of this disqualification, complainant sold his retail meat market. He subsequently resubmitted his application for extra compensation, which was again denied on the ground that more than 2% of complainant's wholesale sales of beef were made to his "affiliated retail market;" that in order to entitle an applicant to extra compensation, sales in all such cases must have been sales to strangers and could not include transfers or sales from one affiliate to another; that, therefore, complainant's actual wholesale sales in 1942 were less than 98% of his beef production; and that, accordingly, under the governing directive, or regulation, heretofore referred to, complainant was not eligible for the subsidy claimed.

Complainant contends that the proper interpretation of the regulation in question is that, as an "affiliated slaughterer," he would not be entitled to the extra compensation provided by the subsidy regulation, but that when he sold his retail meat market, his so-called affiliation came to an end; that, although the affiliation had existed in 1942 on the part of complainant because of his ownership of the slaughtering establishment and the retail meat market, nevertheless, as an applicant basically eligible because of his non-processing operations during that year, he could and did qualify himself for future payments of extra compensation by ridding himself of the affiliation. Earl C. Gibbs, Inc., v. Defense Supplies Corp., Em.App.1946, 155 F.2d 525, certiorari denied 329 U.S. 737, 67 S.Ct. 51, 91 L.Ed. 637; Illinois Packing Co. v. Henderson, Em.App.1946, 156 F.2d 1000, certiorari denied 329 U.S. 783, 67 S.Ct. 202, 91 L. Ed. 671. In other words, complainant submits that his "affiliation" affected only current eligibility and not basic eligibility to receive the payments; that although he was affiliated during the base period, he could become currently eligible by ending his affiliation; and that the only basic requirement for eligibility was that the slaughterer must have sold at least 98% of his beef in the four different approved forms. Earl C. Gibbs, Inc., v. Defense Supplies Corporation, supra; Illinois Packing Co. v. Henderson, supra.

It appears from the foregoing authorities that affiliation only affects current eligibility; and upon divestiture of such affiliation, a non-processing slaughterer becomes eligible for the extra subsidy. This conclusion is strengthened by the fact that the regulation relating to affiliation is in the present tense — "a slaughterer who does not own or control a processor or purveyor of meat, and who is not owned or controlled by a processor or purveyor of meat." In no manner does the regulation relate back to the base period. It was obviously because of the language of the regulation that the agent of the Defense Supplies Corporation in California, in charge of the matter in question, advised the Washington Office, as more fully appears hereafter, that if complainant's operation of the Hollister Meat Company in 1942 was to be accepted as equivalent to the operation of the Gilroy Meat Company by complainant during that period, it would appear that complainant was entitled to the extra compensation from the date of sale of his retail meat market. Furthermore, Form No. 84, the form provided by the Defense Supplies Corporation, which was entitled "STATEMENT ESTABLISHING ELIGIBILITY FOR EXTRA COMPENSATION * * *" required the furnishing of data for two periods — the base period, and the current period. For the base period of 1942, an applicant was required to disclose the number of cattle which he had slaughtered during various periods of that year; the number of pounds of meat which he sold at wholesale; and the form in which such sales were made. All of this data relating to the base period, was concerned only with past operations. The information required in Form No. 84 for the current period was that the applicant furnish a list of partnerships in which he "now owns or controls directly or indirectly an equity, and all corporations in which the applicant now owns or controls directly or indirectly 10% or more of any class of outstanding stock." It was also required that, under the current ownership data, the applicant list all persons "who now own 10% or more of any class of outstanding stock of the applicant, or all persons who now own a partnership equity in the applicant." All of this data was for the present, or current operations. The foregoing would seem to indicate that the only information in which the agency was interested with regard to "affiliation" was current affiliation, in so far as it related to current eligibility. As was said by this court in Belle City Packing Co. v. Reconstruction Finance Corporation, Em.App. 1948, 169 F.2d 413, 416, "Presumably the form represented the subsidy-paying agency's interpretation of the eligibility requirements of the regulation." We are of the view that the foregoing discloses that it was intended by the Defense Supplies Corporation that current eligibility should depend upon current affiliation; and that when such current affiliation was discontinued, the applicant would be entitled to the extra subsidy, if he had been eligible during the base period.

Counsel for respondent argues that a non-processor who had an affiliate could not receive the extra subsidy while so affiliated; that respondent "allowed that affiliation to be cured during the subsidy period in certain cases, but not in cases of retail establishments." We do not perceive how, under the regulation, such a distinction can be made between an...