Bowles v. Eastern Sugar Associates
| Decision Date | 15 January 1946 |
| Docket Number | Civil Action No. 2345. |
| Citation | 64 F. Supp. 509 |
| Parties | BOWLES, Price Administrator, v. EASTERN SUGAR ASSOCIATES et al. |
| Court | U.S. District Court — District of Maryland |
Francis Key Murray, of Baltimore, Md., and Atwood Cranston, and Wm. W. Kapell, both of Washington, D. C., for Price Administrator.
Harry N. Baetjer and Edward H. Burke, both of Baltimore, Md., for defendant.
This is a suit whereby the Price Administrator, Office of Price Administration, seeks an injunction and treble damages under Section 205(a) and (e) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix, § 925(a) and (e), against Eastern Sugar Associates, hereinafter called the Sugar Company, for alleged violation of ceiling prices for services which it obligated itself to render in connection with the sale of raw Puerto Rican cane sugar to the other defendant, The Coca Cola Company, for a period of three years, pursuant to a written contract dated September 23, 1943. These services consisted of furnishing storage facilities for the sugar, including the building of warehouses; substitution of new sugar for the old remaining at the end of each year; sharing the losses resulting from storage, and bagging and rebagging the sugar as stipulated in the contract. The contract price for these services was $1.80 per bag of 250 pounds for the entire three year term of the contract, or a total payment of $720,000 on 402,010 bags stored, subject to certain adjustments.
As originally filed, the complaint also claimed that the ceiling price for the sugar itself, stipulated in a written contract made contemporaneously with the contract for services in connection with the sugar, as differentiated from the ceiling price for these services themselves, had been violated. However, subsequently and prior to the hearing, the Coca Cola Company entered into a contract with the Commodity Credit Corporation, an agency of the Government, whereby it sold to that corporation all of the sugar covered by its contract with the Sugar Company, and also transferred to the Commodity Credit Corporation all of its rights under the contract which it had with the Sugar Company for services as aforesaid. Thereupon, the Government dismissed the present suit as to the Coca Cola Company for reasons which are not entirely clear on the record but which we need not here consider, with the result that there is before us merely a complaint for damages for the sale of services by the Sugar Company at a price in excess of the alleged ceiling price for such services, and for an injunction against carrying out the provisions of the service contract in so far as they may violate this alleged ceiling price.
The Government claims that there has been an overcharge for these services in the amount of $285,829.20, and damages treble that amount are sought, or $857,487.60. Since, as already stated, the service contract was for a period of three years, it has been stipulated that for the purposes of the present case the Sugar Company is to be treated as though it had completely performed these services for the full three year period. As a matter of fact, the contract had been completely executed at the time of the original filing of this suit, namely, September 23, 1944, except the last installment, namely, $180,000, due the Sugar Company for servicing the sugar had not, at that time, become due and payable.
The Sugar Company claims that it is guilty of no ceiling price violation with respect to the services which it rendered pursuant to the written contract with the Coca Cola Company, for two main reasons: (1) Since the services were rendered by the Sugar Company in Puerto Rico, they were excluded from any ceiling price regulation promulgated by the Office of Price Administration which might otherwise have been applicable; and (2) failure on the part of the Office of Price Administration to disapprove, until October 13, 1943, the price for these services as set forth in the service contract was deemed, pursuant to the price regulations effective at the time, a binding approval of such price.
At the close of the presentation of the case for the Administrator, counsel for the Sugar Company moved for dismissal of the suit on these two grounds. If either one of them be sound, the suit must be dismissed.
It is to be noted at the outset that the Sugar Company claims that it is not here contesting the validity as such of any ceiling price regulation, but claims that there was no ceiling price in effect applicable to the services in question which it rendered, and that, therefore, it has been guilty of no ceiling price violation. If this contention of the Sugar Company be sound, then this Court has jurisdiction of the case; but if the validity of a price regulation be in fact in issue, this is a matter within the exclusive jurisdiction of the Emergency Court of Appeals and cannot be adjudicated in the present proceeding. Emergency Price Control Act of 1942, §§ 204(d), 205(e), as amended, 50 U.S.C.A. Appendix, §§ 924(d), 925(e); Lockerty v. Phillips, 319 U.S. 182, 63 S.Ct. 1019, 87 L.Ed. 1339; Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834; Bowles v. Willingham, 321 U.S. 503, 64 S. Ct. 641, 88 L.Ed. 892; Bowles v. American Brewery Co., 4 Cir., 146 F.2d 842; Bowles v. Meyers, 4 Cir., 149 F.2d 440.
We believe that the Sugar Company's contention is sound, namely, that this Court does have jurisdiction to adjudicate the issues here raised because they do not in fact involve the validity per se of an order or of a price regulation but, as the Sugar Company contends, involve the question whether there was, for the period in question, a ceiling price applicable to the services here involved, rendered by the Sugar Company. In other words, we believe that the issues here presented are properly before us, being akin to the issues raised in Bowles v. American Brewery, supra, where the Circuit Court of Appeals for this Circuit held that this Court had rightly assumed jurisdiction in a suit, where a motion was made by the defendant to dismiss the action on the ground that the commodity there in issue was not subject to any price regulation during the period when sales were alleged to have been made by the defendant.
The existence in the present case of an order of the Price Administrator based on a price regulation, whereas in the American Brewery case the suit was predicated on an alleged violation of a price regulation alone, is not, we think a material distinction. The Act, after authorizing the Administrator to issue such regulations and orders as he may deem necessary and proper in order to carry out the Act's purposes and provisions, denies jurisdiction to any Court, other than the Emergency Court, "to consider the validity of any such regulation, order, or price schedule * * *." Section 204(d), 50 U. S.C.A.Appendix, § 924(d). So the fact that both a regulation and an order based on that regulation are involved in the same controversy, does not affect this Court's jurisdiction any more than it would be affected if only a regulation were involved. The distinction is between refusal to obey an order of the Administrator based upon a price regulation, or to conform to a price regulation on the ground of the invalidity of the regulation or order, or both, and refusal to do so on the ground that no order or price regulation was in fact in force at the time in question, applicable to the commodity or services rendered. That such distinction exists in the present case can only be completely understood by a review of the sequence of regulations upon which the Government relies, but which the Sugar Company asserts are not applicable to the services which it rendered and which are here in issue.
In considering this sequence we will divide the matter into two parts: First, that which has to do with the Sugar Company's first ground of defense, namely, that apart from all other considerations, since the services were performed by the Sugar Company in Puerto Rico, they are expressly excluded from all ceiling price regulations; and second, that which has to do with the Sugar Company's second ground of defense, namely, that inaction on the part of the Office of Price Administration resulted, by virtue of its own express regulations, in authorizing the price for these services which was stipulated in the written contract pursuant to which these services were rendered.
On the first point, we find the regulations to be as follows: (1) Effective August 19, 1942, Section 1499.119 of "Maximum Price Regulation No. 165, As Amended — Services," provided: (2) However, there was, on September 28, 1943, the date when the contract for services here in issue became effective, and there has been in effect, continuously thereafter up to the present time, the following provision, Section 1499.22 of General Maximum Price Regulation — a blanket regulation purporting to establish maximum selling prices not otherwise established. It is to be noted that this provision is in direct conflict with the provision in Maximum Price Regulation No. 165, just quoted, in so far as territories and possessions are concerned: (3) Section 1499.119 of Maximum Price Regulation No. 165, above quoted, was amended July 1, 1944, effective August 1, 1944, to read as follows:
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