Bowles v. Jung

• Decision Date: 21 November 1944
• Docket Number: Civil Action No. 3475.
• Citation: 57 F. Supp. 701
• Parties: BOWLES, Adm'r, Office of Price Administration, v. JUNG et al.
• Court: U.S. District Court — Southern District of California

57 F. Supp. 701

BOWLES, Adm'r, Office of Price Administration, v. JUNG et al.

Civil Action No. 3475.

District Court, S.D. California, Central Division.

November 21, 1944.

Wm. U. Handy and Arline Martin, Office of Price Administration, both of Los Angeles, Cal., for plaintiff.

Louis Lerner, of Los Angeles, Cal., for defendants.

YANKWICH, District Judge.

The action was instituted on February 25, 1944, by Chester Bowles, the Administrator of the Office of Price Administration, against Jim Jung, individually, and doing business as Victory Produce Company. It charges violation by the defendant of Maximum Price Regulation 292, as amended (8 Federal Register 135). The complaint avers total excess charges of $1414.17, and seeks to recover $4242.51, being three times the aggregate amount by which the price received by the defendant from the sale of 1581 lugs of tangerines is alleged to have exceeded the maximum prices provided in the regulation.

The defendant is a produce merchant engaged in selling, as a wholesaler and, what the regulation calls, "an intermediate seller," selling to other intermediate sellers and retailers. Although he engaged in the selling of all kinds of produce, the transaction involved was his sole venture into the field of tangerines, and covered only the short period between November 26 and December 6, 1943. The individual sales were made from two bulk purchases made by the defendant. In view of the discussion to follow, we reproduce in full, in the margin, the definitions which the regulation gives to certain terms, and the formulae which it establishes for determining prices.¹

It was the contention of the Administrator in the pre-trial brief that one of the purchases was made by the defendant as an intermediate seller, and the other as a commission merchant on consignment. At the trial, the Administrator modified his position as to the first purchase by endeavoring to show that the purchase was a direct purchase by the defendant from a grower, through an agent.

The first of these transactions may be designated as the George Ko transaction involving 481 lugs of tangerines. The defendant's resale price on this shipment was $2.90 per lug on cash-and-carry sales and $3.20 on delivered sales. The Administrator contends that these charges were erroneous, that the ceiling price on cash-and-carry sales was $1.65 per lug and $1.82 on delivered sales. The Administrator's computation is arrived at as follows:

                     30 pounds net at .045 lb.      ==   $1.35 Packer's f.o.b. ceiling
                                                         price at point of shipment
                                                         Bakersfield area, California
                     Freight to Los Angeles via
                     Pacific Produce Co. trucks
                     based on actual freight paid.        .1545
                                                         ______
                                                        $1.5045 Packer's delivered
                                                                ceiling price to Los
                                                                Angeles
                     Victory Produce Co. Intermediate
                     Seller ceiling prices
                         $1.5045 at 1.095   ==  $1.65 Wholesaler cash-and-carry
                                                      ceiling price
                          1.5045 at 1.21    ==  $1.82 Service wholesaler ceiling
                                                      price
                

The facts relating to this transaction, as testified to by the manager of the defendant, were these:

Ko was a Chinese who represented to the defendant that he might supply him with produce originating in Bakersfield, Kern County, California. The defendant agreed to secure for him an agent's license under the laws of California, California Agricultural Code, Sec. 1263(b), St.1939, p. 2327, and to repay him the amounts expended in purchasing produce and, in addition, pay him a commission. Some tomatoes were shipped under this agreement.

However, before the tangerine deal got under way, this arrangement was abandoned and the defendant, through his general manager, agreed with Ko that Ko should buy produce for his own account and resell it to the defendant, drawing against them, in his own name, for the amount of the purchase. While the oral testimony given in the courtroom by Ko, called as a witness by the Administrator on rebuttal, is somewhat at variance with the summary I have just given, I believe that, on the whole, the testimony offered by the defendants, corroborated by the written evidence in the case, shows unequivocally that the transaction was carried out in substantially the manner in which the manager testified.

Ko was given a book containing unfilled drafts. He was authorized to fill out a draft for each purchase, giving in detail the article, the purchase price, both unit sale and total, and to draw the draft for the total amount. The original of the draft was sent to defendant's bank at Los Angeles, a copy was sent to the defendant's office, and a third copy was retained in the book. Upon receipt of the draft, the bank notified the defendant, who then issued a check to cover the amount, and the bank, thereupon, honored the draft.

The testimony of Ko, given orally in court, confirms the conclusion that he bought the tangerines for his own account and resold them, as an accommodation, to the defendant. He testified that the grower from whom he bought the tangerines (Gus Crane) charged his account with their price, that he had had other transactions with him, and that he settled with him from time to time. When he received the money from the drafts, he did not turn it over to Crane. He deposited it to his own account in his own bank. From this account he paid the growers with whom he dealt, including Crane. Had Ko disposed of the tangerines to others, or had he failed to pay the grower, the latter could not have sued the defendant. And Crane, even if he knew of the existence of the Victory Produce Company, and that the tangerines were being shipped to them, could not have recovered from them the price Ko had agreed to pay him.

Ko testified that he was to receive a commission of five cents per lug, in addition to the price he actually paid. There is no evidence in the record that he ever did receive it. The books of the company, the inspection of which was available to the Administrator, fail to disclose any payment to Ko other than the payment of the drafts for the actual amount of the purchase price.

The defendant's file in the case of each purchase, contained a copy of the draft, a copy of the check, and a credit memorandum prepared by the defendant showing the transaction in detail.

In view of the discussion to follow, we set forth in the margin the form of one of these drafts:

In making the resale, the defendant took the price he paid to Ko and added to it the 9½ per cent mark up allowed by the regulation on cash and carry sales and 20 per cent on delivery sales.

The Administrator challenges the resale prices on two grounds.

He contends that the defendant cannot take as his base price the price he paid to Ko, unless Ko computed the price at which he was selling according to the regulation. I do not think that the regulation, read as a whole, supports this contention.

Section 1355.1405(c) of the regulation is to the effect that the base price of the intermediate seller shall be the base price "furnished to him by his supplier." (Italics added)

Subdivision (d) of the same section fixes the base price of an intermediate seller who purchases from another intermediate seller as "the same `base price' reported to him by his supplier." (Italics added) Words in a regulation must be given their ordinary meaning. Of course, in interpreting a regulation made under a statute of this character, Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix § 901 et seq., we must bear in mind the "necessities of the public interest which Congress has sought to protect." Hecht Co. v. Bowles, 1944, 321 U.S. 321, 330, 64 S.Ct. 587, 592, and United States v. Morgan, 1939, 307 U.S. 183, 194, 59 S.Ct. 795, 83 L.Ed. 1211.

To "furnish" means to supply, to give. To "report" means to give an account of, to relate, to tell.

It is the contention of the Administrator that these drafts did not comply with the requirement of Section 1355.1405, because they did not take the form of the ordinary commercial invoice. I cannot agree. The Office of Price Administration could have provided a specific form for the "furnishing" or "reporting" of a price. They did not do so. Consequently, we must assume that any method which one merchant uses to indicate to another the price at which he sells a commodity is sufficient.

The sample draft, here reproduced, constituted a memorandum sufficient to satisfy the California Statute of Frauds. For it contained the names of the parties, the price, the quantities, the place of delivery and the signature of the seller. See: California Code of Civil Procedure, Sections 1973, 1973a; Brewer v. Horst & Lachmund Co., 1900, 127 Cal. 643, 60 P. 418, 50 L.R.A. 240; Albion Lumber Co. v. Lowell, 1912, 20 Cal.App. 782, 793, 130 P. 858, 864. This accords with the law elsewhere. See 37 C.J.S., Frauds, Statute of, §§ 191-196, 199c(3, 4).

And it certainly cannot be argued that the Office of Price Administration, having failed to provide for a particular form of notification, can insist that one which would be a binding contract under the law of California is insufficient for the purposes of this regulation.

Nor can I follow the Administrator in his contention that before the defendant could pay the price asked by Ko, it was imperative that Ko shall have computed correctly the base price at which he was selling. The regulation, and especially the clauses of the section referred to, (see (c) and (d)) do not place such responsibility upon an intermediate seller. They permit him to ground his price upon the price furnished or reported to him by the seller. They do not make it his duty to ascertain whether the seller had computed the price...