Bowles v. Chew

• Decision Date: 13 January 1944
• Docket Number: No. 22778-G.,22778-G.
• Citation: 53 F. Supp. 787
• Parties: BOWLES, Administrator, Office of Price Administration, v. CHEW.
• Court: U.S. District Court — Northern District of California

53 F. Supp. 787

BOWLES, Administrator, Office of Price Administration, v. CHEW.

No. 22778-G.

District Court, N. D. California, S. D.

January 13, 1944.

George Moncharsh, W. Dunlap Cannon, Jr., and Thomas C. Ryan, Office of Price Administration, all of San Francisco, Cal., for plaintiff.

J. Thaddeus Cline, of San Francisco, Cal., for defendant.

GOODMAN, District Judge.

On September 26, 1943, plaintiff, as Administrator of the Office of Price Administration, commenced this action, pursuant to § 205(e) of the Emergency Price Control Act of 1942, Public Law, 421, 77th Congress 2nd Sess., 56 Stat. 23, 50 U.S.C. A. Appendix, § 925(e), to recover treble damages from defendant, a lumber broker and wholesaler, because of sales in excess of established maximum prices. Maximum Price Regs. 26, 215.

The record shows that in August 1943, representatives of plaintiff, acting upon information received that defendant was violating maximum price regulations, visited defendant's place of business, and, after exhibiting to the defendant's bookkeeper, one Raylyn Hoover, a copy of § 15 of Maximum Price Regulation 26,¹ were permitted to examine defendant's books and sales records. Copies of such records were made by plaintiff's representatives, and the data thus obtained bottoms the complaint herein.

Two motions of defendant have been argued and submitted for decision:

1. Motion to suppress all documents, records and information obtained by plaintiff as a result of the so-called "search and seizure" at defendant's place of business, for the return of any data, records or copies taken or made by plaintiff, and for an order directing plaintiff to desist from further proceeding herein based upon the information so acquired.

2. Motion to dismiss on the ground that the evidence referred to was secured in violation of the Constitution (Amds. IV and V), that the complaint does not state a cause of action, and that § 205(e) of the Emergency Price Control Act is unconstitutional.

Motion to Suppress and Return Evidence.

It is clear from the affidavits submitted, pro and con, that no "force" or "seizure" occurred at the time of the examination of defendant's records, and I so find. Defendant's employee voluntarily permitted the examination, when she was shown and read § 15 of Regulation 16, supra. Sufficient factual basis for the motion is therefore lacking. Thus there is no need to pass upon the contention of plaintiff that such a motion will not lie in a civil action, citing Rule 12(b), Rules of Civil Procedure, 28 U.S.C.A. following section 723c.

But defendant contends that § 202(b) of the Act, 50 U.S.C.A. Appendix, § 922(b),² by which the Administrator is authorized by regulation to require persons engaged in business to keep records and permit inspection thereof by the Administrator, and the regulations (§ 15 Reg. 16; § 15 Reg. 215) promulgated by its authority, are unconstitutional and violate the Fourth and Fifth Amendments to the Constitution, and that the Administrator's examination of the defendant's books was therefore unlawful and the evidence obtained thereby cannot be used.

In a consideration of this question, it must first be noted that the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 901 et seq., was passed fifty-three days after the Declaration of war upon Japan. Congress expressly stated (Sec. 1) that it (the Act) was: "necessary to the effective prosecution of the present war." (Declaration of war against Germany and Italy followed shortly after December 8, 1941.)

It was "a statute born of the exigencies of war." Scripps-Howard Radio, Inc., v. Federal Communications Commission, 316 U.S. 4, 17, 62 S.Ct. 875, 883, 86 L.Ed. 1229. If National Security demands, the limits within which the war powers may be exercised are not circumscribed. United States v. MacIntosh, 283 U.S. 605, 51 S.Ct. 570, 75 L.Ed. 1302. The battle against inflation, to preserve the domestic economy, was regarded by Congress as important as the armed conflict itself. It "is now unlimited national mobilization in a war for survival." (Senate Rep. 931, 77th Congress, 2nd Sess.)

Viewed against such a background, the requirement that records be kept by merchants and be open to inspection has no constitutional inhibitions. Furthermore, it is no longer open to question, that records designated to be maintained by statute are of a quasi-public nature and thereby automatically open for government inspection. United States v. Mulligan, D.C., 268 F. 893; cf. Baltimore & Ohio R. R. v. Interstate Commerce Commission, 221 U.S. 612, 31 S.Ct. 621, 55 L.Ed. 878; Standard Home Co. v. Davis, D.C., 217 F. 904.

In United States v. Mulligan, supra, the defendant was indicted for refusal to permit government inspection of records of sugar sales, required to be kept, pursuant to § 5 of the Lever Act, 40 Stat. 277, a statute passed during World War I. By the Lever Act the President was authorized to issue licenses as a condition to doing business. So authorized is the Administrator under the Price Control Act. (§ 205(f) (1). The court held that the provision for inspection was not in derogation of the Fourth and Fifth Amendments. "Regulation which would not permit the government representatives to ascertain anything about the dealers' business would be no regulation. * * * It is a very feeble government which, in time of war, can have no supervision over dealers in the sale of necessaries, without which the war could not be safely conducted." 268 F. 897.

Cudahy Packing Co. v. United States, 7 Cir., 15 F.2d 133, where the demand of the Secretary of Agriculture, pursuant to § 402 of Packers and Stock Yards Act 1921, 7 U.S.C.A. § 222, for access to and right to copy books of account and records of plaintiff packing company was held unreasonable and violative of the Fourth Amendment, is distinguishable, because not involving the war powers of Congress, as pointed out, supra.

Furthermore, defendant's claim of violation of rights guaranteed by the Fourth Amendment is not factually sustained in the record. Here there was inspection, under claim of right, consented to.

Claim of violation of rights guaranteed by the Fifth Amendment is without merit, since this is not a criminal action. Nor is the cause of a penal nature, in the sense that the damages sought are by way of punishment for an offense, against the state, which the Executive has power to pardon. Huntington v. Attrill, 146 U.S. 657, 668, 13 S.Ct. 224, 36 L.Ed. 1123. Congress, having in mind the precedents of other legislation, not only did not consider the action for damages to be penal, but purposed an entirely different format and objective: "actions to recover damages— such actions have proved valuable in the enforcement of other regulatory statutes, such as the Fair Labor Standards Act 29 U.S.C.A. § 201 et seq., both to relieve the government of a part of the burden of enforcement and to deter initial violations." Sen.Rep.No.931, 77th Cong. 2d Sess. p. 9.

The motion to suppress on the grounds urged must be denied.

Motion to Dismiss.

Defendant urged that the Administrator has no power under Sec. 205(e) of the Act to sue defendant, a wholesaler, for treble damages. He contends that the Administrator can sue only if the buyer may not maintain an action and that this is a case where, under the Act, only a buyer may sue. Defendant's construction of Sec. 205 (e), following the reasoning of Judge Hall in Brown v. Glick Bros. Lumber Co., D.C., 52 F.Supp. 913, is that any merchant, wholesaler or retailer, may, if injured, sue any other merchant for treble damages, and further that the Administrator is precluded, in such event, from suing, unless the defendant is a "boot...