Bowles v. Montgomery Ward & Co.

• Citation: 143 F.2d 38
• Decision Date: 26 May 1944
• Docket Number: No. 8481.,8481.
• Parties: BOWLES, Price Administrator, Office of Price Administration, v. MONTGOMERY WARD & CO., Inc.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

143 F.2d 38 (1944)

BOWLES, Price Administrator, Office of Price Administration, v. MONTGOMERY WARD & CO., Inc.

No. 8481.

Circuit Court of Appeals, Seventh Circuit.

May 26, 1944.

Winston, Strawn & Shaw, Stuart S. Ball, and John A. Barr, all of Chicago, Ill. (Edward J. Wendrow, of Chicago, Ill., of counsel), for appellant.

David London, Chief, Appellate Branch, Thomas I. Emerson, Deputy Administrator for Enforcement, Fleming James, Jr., Director, Litigation Division, and A. M. Dreyer and Karl E. Lachmann, Attys. Office of Price Administration, all of Washington, D. C., and Alex Elson, John F. Manierre, and Harry E. Witherell, all of Chicago, Ill., for appellee.

Before MAJOR, KERNER, and MINTON, Circuit Judges.

KERNER, Circuit Judge.

Defendant appeals from an order granting a preliminary injunction pending the determination of the principal action. The issues are whether there is sufficient evidence upon which to base a preliminary injunction and, if the evidence establishes that defendant has violated the regulation, is the injunction broader than the violations warrant.

The application for the injunction was brought by the Price Administrator pursuant to § 205(a) of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix § 901 et seq., to enforce compliance with § 4 of the Act. Section 4 of the Act makes it unlawful for a person to sell or deliver any commodity in violation of specified orders or regulations of the Administrator. A regulation issued under § 2 of the Act prescribed the maximum prices at which women's, girls' and children's outerwear garments might be lawfully sold. These garments were first made subject to price control by the General Maximum Price Regulation (April 28, 1942, 7 Fed. Reg. 3153). That regulation fixed the maximum price at which any seller might sell any commodity subject to its provisions during 1942. It also required every person selling a commodity subject to the regulation to preserve for examination of the Office of Price Administration all of his existing records relating to the prices which he charged during March, 1942, and to prepare on or before July 1, 1942, a statement (commonly referred to as a base period statement) showing the highest prices which he charged for such commodities during March, 1942.

It further required every person offering to sell cost-of-living commodities at retail to file with the appropriate War Price and Ration Board of the Office of Price Administration a statement (commonly referred to as the cost-of-living statement) showing his maximum prices for each such commodity. See footnotes in Hecht Co. v. Bowles, 321 U.S. 321, 64 S.Ct. 587. June 15, 1942, women's, girls', and children's outerwear garments were excepted from the operation of the General Maximum Price Regulation and made subject to Regulation 153, 7 Fed.Reg. 4381, which was on February 24, 1943, superseded by Regulation 330, 8 Fed.Reg. 2209. This regulation regulated the retail prices of women's, girls' and children's outerwear garments. It divided the garments into size groups or categories and prohibited the sale of any garment at a higher price than the highest price at which the seller sold a garment in the same category during March, 1942.¹ The price limitation is hereinafter referred to as the highest price line limitation. It provided that for the purposes of the regulation, each separate department of a selling establishment should be considered as a separate seller, and as amended, it required each seller to prepare on or before September 1, 1943, a pricing chart giving detailed information as to the manner in which its maximum prices under the regulation were computed.² August 7, 1943, the regulation was amended (8 Fed.Reg. 11041) so as to prohibit the sale of any garment during the spring selling season (March 1, to July 31) for more than the highest selling price line at which the seller delivered a garment in the same category during March, 1942, or during the fall selling season for more than the highest selling price at which the seller delivered a garment in the same category either during March, 1942, or during the period from August 1 to December 31, 1941, as to certain garments, or during the period from August 1, 1942, to December 31, 1943, as to others.³

In his complaint, plaintiff alleged that between February 24, 1943, and the date of the filing of the complaint (September 4, 1943), defendant sold garments listed in Regulation 330, at prices in excess of the maximum prices established by the regulation. It also alleged that on December 21, 1942, defendant had been enjoined by the court in Civil Action 4809 from selling or delivering, or offering, agreeing, or attempting to sell or deliver any commodity subject to the General Maximum Price Regulation at prices in excess of the maximum prices therefor as determined under the provisions of the General Maximum Price Regulation as now or hereafter amended, issued under the Emergency Price Control Act of 1942, and that the injunction remains in full force and effect. Plaintiff prayed for an injunction enjoining defendant from selling, delivering, or offering for sale or delivery women's, girls', and children's outerwear garments in violation of the regulation; from doing, or omitting to do, any other act in violation of any regulation or price schedule heretofore or hereafter issued by the Office of Price Administration, and for such similar, other and further relief as may be equitable. In its answer defendant denied that it had sold, delivered, or offered for sale or delivery at retail any of the garments in violation of the regulation.

The motion for the preliminary injunction was heard upon affidavits and evidence submitted by both parties. The court sustained the motion and defendant was enjoined (1) from selling, or delivering, women's, girls', and children's outerwear garments at prices in excess of the maximum prices established by Regulation 330 as heretofore or hereafter amended; (2) from doing, or omitting to do, any act in violation of any regulation, order, or price schedule now or hereafter issued by the Office of Price Administration pursuant to the Emergency Price Control Act of 1942; and (3) from offering, soliciting, agreeing, or attempting to do any of the foregoing.

Defendant is the owner and operator of more than 640 retail stores located throughout the United States. It is not disputed that in a majority of these stores, defendant, during the period in question, sold the garments listed in the regulation.

The evidence showed that in April, 1943, the Office of Price Administration investigated 25 of these stores to determine whether defendant was complying with the highest price line requirement of the regulation. From actual examinations of defendant's records, and on information furnished by defendant's employees, qualified to give the information, the investigators ascertained each store's highest price lines in March, 1942, and the highest price lines at which these stores were selling garments between February 24 and August 13, 1943; that at 7 of the stores, women's outerwear garments delivered to the stores after February 24, 1943, had been sold in each sale at prices from $1 to $13.25 in excess of the highest prices charged by these stores during March, 1942, and that in 18 other stores, women's coats, skirts, dresses and suits had been sold in each sale at prices from $1 to $18.02 in excess of the highest prices charged at these stores during March, 1942.

It also appears that on August 3, 1943, an investigation was made of defendant's store at La Grange, Illinois; that when the investigator requested the "cost-of-living statement" and attempted to check defendant's highest price lines during March, 1942, against the "base period statement," the store's assistant manager, then in charge of the store, informed the investigator that the store had neither of such statements and that defendant's central office instructed him as to the amount to be charged for such items. From the records available, the investigator compiled a list of highest sales prices during March, 1942, and after correlating the items listed with the categories established in the regulation, he found that the highest selling price at which the store offered misses' and junior misses' suits, during March, 1942, was $16.98, and that the store was at that time offering for sale and selling the garments for $19.98.

Upon the conclusion and consideration of all the evidence, the court, after stating it was very favorably impressed by the appearance and demeanor of plaintiff's witnesses and that their training and experience was such that their testimony could be relied upon, stated: "the defendant did not deny that it had done what the plaintiff charged it had done, * * *. The attitude of the defendant has been * * * not that it did not do what it is charged to have done, but that the plaintiff has not proved * * * that it did do those things. * * * Basing the conclusions the court is about to express upon the affidavits * * *, upon the evidence produced * * *, and what has been said and done in the case, the court is satisfied that the defendant has not made any attempt to comply with Regulation 330. As a matter of fact, on the goods which came out of its various stores from New York City, the prices are apparently fixed in New York City without regard to what prices had been paid for like goods in the same category in...