Bowles v. Leithold

• Decision Date: 27 December 1945
• Docket Number: No. 8980.,8980.
• Citation: 155 F.2d 124
• Parties: BOWLES, Price Administrator, v. LEITHOLD et al.
• Court: U.S. Court of Appeals — Third Circuit

155 F.2d 124 (1945)

BOWLES, Price Administrator, v. LEITHOLD et al.

No. 8980.

Circuit Court of Appeals, Third Circuit.

Argued December 6, 1945.

Decided December 27, 1945.

Abraham L. Shapiro, of Philadelphia, Pa. (Shapiro & Shapiro, of Philadelphia, Pa., on the brief), for appellants.

Charles Rembar, of Washington, D. C. (George Moncharsh, Deputy Administrator for Enforcement, and David London, Acting Director, Litigation Division, both of Washington, D. C., and Robert J. Callaghan, District Enforcement Atty., and Sydney M. Friedman, Enforcement Atty., Office of Price Administration, both of Philadelphia, on the brief), for appellee.

Before BIGGS, GOODRICH, and McLAUGHLIN, Circuit Judges.

GOODRICH, Circuit Judge.

Only one question is involved in this appeal. That one question is rather important. The defendants violated the record-keeping provisions of GMPR¹ and action was brought pursuant to the Price Control Act.² They failed for twenty-seven months after the Regulation became effective to provide the Price Administrator with the information required from them as manufacturers of certain types of women's underwear. The information was furnished only after this suit had been begun, but was given prior to the date of hearing. The District Judge enjoined the defendants from further violation of the record-keeping provisions. He also enjoined them from violating price ceilings with regard to the goods manufactured by them.

The defendants do not contest the validity of the injunctive order so far as it relates to record-keeping. Indeed they could hardly do so if they would. They do object, however, to the injunction forbidding them to violate price ceilings. They say, correctly, that there was no allegation made against them charging them with violation of price ceilings. Therefore, they say, they should not be enjoined for what nobody has ever claimed they did or threatened to do. Their reliance is, naturally, upon the Express case, National Labor Relations Board v. Express Publishing Co., 1941, 312 U.S. 426, 61 S.Ct. 693, 85 L.Ed. 930; also New York, New Haven & Hartford, etc., R. Co. v. I. C. C., 1906, 200 U.S. 361, 26 S.Ct. 272, 50 L.Ed. 515. The doctrine in the Express case is well known and has been applied since its pronouncement in this³ and other⁴ Circuit Courts of Appeal.

We think the general problem of injunctions in the type of case here considered is the same as that involved generally in the granting of an injunction by an equity court. This view is fortified by the decision of the Supreme Court in the Hecht case (Hecht Co. v. Bowles, 1944, 321 U.S. 321, 64 S.Ct. 587, 591, 88 L.Ed. 754)⁵ and by the Senate Committee Report⁶ in presenting the statute to that body. There is a latitude of discretion on the part of the District Court in the granting of this form of relief and the order is not to be upset if an appellate court finds it to be within the bounds of that discretion. It is not necessary to cite authorities for the proposition that the discretion is not an uncontrolled one but is a legal discretion to be exercised within the limits of rules of law. With that as a background, we proceed with the injunction issued in this case.

The case for the Administrator may be stated in this wise: These defendants failed for more than two years to file the information material required of them. The record does not show why they failed to file the required reports. Whatever their state of mind may have been, the effect was as complete a disregard of the wartime control statute as if they were operating at the North Pole. It is not correct to say, as the defendants do, that the effect of the violation was complete at the end of the first day's failure to file so far as that failure bears upon their state of mind and attitude toward wartime price controls. They did withhold the information for twenty-seven months and only supplied it after the lawsuit had been brought against them. Furthermore, this information was the only foundation on which their price structure could be raised if that structure was to be in accordance with law. Their ceiling price was to be built upon sales during base period, or other information.⁷ One who withholds the data on which ceiling price is based makes it almost impossible to tell whether the price violation has occurred. Defendants say they kept books and the information could have been found by examination of their books. Some of it could, of course. The O.P.A. claims that all of the necessary figures could not be assembled even with accountants in defendants' plant to look over their records. At any rate, the defendants were required to furnish the information to the O.P.A. rather than have the Administrator come and get it. A defendant who has thus made it practically impossible for anyone to tell whether he is violating price ceilings or not, by withholding the fundamental information, is not unlikely to violate those ceilings under cover of the darkness which his failure to give information has created. At least it is not unreasonable for one to conclude that such a happening is within the range of probability and to guard against it by injunction.

We think this view is sound and we adopt it. In doing so we quite realize that the question is new, and our path is not clearly marked out by authority. The precise problem with which we are concerned has not been considered by the other circuits. Five cases, arising in four different circuits have dealt with related problems. Bowles v. Sacher, 2 Cir., 1944, 146 F. 2d 186; Bowles v. Town Hall Grill, 1 Cir., 1944, 145 F.2d 680; Bowles v. Montgomery Ward & Co., 7 Cir., 1944, 143 F.2d 38; Bowles v. May Hardwood Co., 6 Cir., 1944, 140 F.2d 914; Henderson v. Burd, 2 Cir., 1943, 133 F.2d 515, 146 A.L.R. 714. In both Bowles v. Sacher and Bowles v. Town Hall Grill, the latest of the circuit cases, the courts affirm a narrow injunction.⁸ That, of course, is the converse of our problem. The other three cases present three levels of our problem, but in a corollary field since in all three cases, there was a price violation to start with, as distinguished from the instant case. In Bowles v. May Hardwood Co., the plea for injunction was dismissed by the district court because a new ceiling higher than the violative price had been set prior to trial; the circuit court reversed and remanded on authority of the Express decision. The Burd case involved a broad decree which the appellate court narrowed on a ground not relevant here — namely, that the violation occurred because of a mistaken conception of relationship between defendants and a manufacturer, and hence was not likely to carry over into fields where the mistake had not occurred. Bowles v. Montgomery Ward & Co. involved a broad decree which the circuit court affirmed.⁹ At best, the light shed by these decisions is indirect. Nor do the many district court decisions¹⁰ bring the problem into brighter focus. The Supreme Court decisions have already been discussed.¹¹

In affirming we are not running contrary to decided cases. We conclude we are taking a position on a set of facts not heretofore dealt with by this Court nor any other of the Circuit Courts of Appeals. Every question must have its first decision and if we are otherwise right, are none the worse off for being first.¹²

Affirmed.

1 General Maximum Price Regulation (7 F.R. 3153 et seq.) as amended, provides: § 11 (§ 1499.11) "Base period records — Every person selling commodities or services for which, upon sale by that person, maximum prices are established by this regulation, shall:

"(a) Preserve for examination by the Office of Price Administration all his existing records relating to the prices which he charged for such of those commodities or services as he delivered or supplied during March 1942, and his offering prices for delivery or supply of such commodities or services during such month; and

"(b) Prepare, on or before July 1, 1942, on the basis of all available information and records, and thereafter keep for examination by any person during ordinary business hours, a statement showing:

"(1) The highest prices which he charged for such of those commodities or services as he delivered or supplied during March 1942, and his offering prices for delivery or supply of such commodities or services during such month, together with an appropriate description or identification of each such commodity or service; and

"(2) All his customary allowances, discounts, and other price differentials. * * *"

§ 12 (§ 1499.12) "Current records — Every person selling commodities or services for which, upon sale by that person, maximum prices are established by this Regulation, shall keep, and make available for examination by the Office of Price Administration, records of the same kind as he has customarily kept, relating to the prices which he charged for such of those commodities or services as he sold after the effective date of this Regulation; and, in addition, records showing, as precisely as possible, the basis upon which he determined maximum prices for those commodities or services."

Section 1315.1557 of Maximum Price Regulation No. 220 was also breached. That section refers to reports for goods containing elastic. But as the District Court points out the defendants had discontinued manufacture of elastic garments and thus were "no longer subject to Maximum Price Regulation No. 220." With respect to the injunction, however, future breaches are guarded against and MPR 220 is treated in the same manner as the GMPR.

2 Emergency Price Control Act of 1942 (56 Stat. 23) as amended, 50 U.S.C.A. Appendix § 925(a), 56 Stat. 33 provides: "Whenever in the judgment of the Administrator any person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of section 4 of this Act (section 904 of this Appendix), he may make application to the appropriate cou...