Bowles v. Nu Way Laundry Co.

• Decision Date: 07 October 1944
• Docket Number: No. 2911.,2911.
• Parties: BOWLES, Adm'r, Office of Price Administration, v. NU WAY LAUNDRY CO.
• Court: U.S. Court of Appeals — Tenth Circuit

144 F.2d 741 (1944)

BOWLES, Adm'r, Office of Price Administration, v. NU WAY LAUNDRY CO.

No. 2911.

Circuit Court of Appeals, Tenth Circuit.

August 28, 1944.

Rehearing Denied October 7, 1944.

A. M. Dreyer, Atty., Office of Price Administration, of Washington, D.C. (Thomas as I. Emerson, Fleming James, Jr., and David London, all of Washington, D.C., David Love and Amos Coffman, both of Dallas, Tex., and O. B. Martin, of Oklahoma City, Okl., on the brief), for appellant.

J. B. Dudley, of Oklahoma City, Okl. (Ross N. Lillard and Duke Duvall, both of Oklahoma City, Okl., on the brief), for appellee.

Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

This appeal involves the correctness of a judgment of the District Court holding that the appellee, NuWay Laundry Company, had not violated the Emergency Price Control Act of January 30, 1942, 56 Stat. 23, 50 U.S.C.A.Appendix, § 901 et seq., as amended by the Inflation Control Act of October 2, 1942, 56 Stat. 765, 50 U.S. C.A. Appendix § 961 et seq., or the Maximum Price Regulations issued in pursuance thereof, and denying an injunction authorized by Section 205(a) as prayed by the Price Administrator in a suit specifically charging violations of Maximum Price Regulation 165, as amended. (7 F. R. 4734.)

Acting in pursuance of authority granted by Section 2(a) of the Act, the Price Administrator promulgated Maximum Price Regulation 165 on June 23, 1942. In substance and effect, and as applied to the appellee, the Regulation, as amended, provides that no person shall sell or supply laundry service at a price higher than that charged by the seller for the same or similar service to a "purchaser of the same class" during the month of March 1942, and expressly prohibits the evasion of any provisions of the Regulation, as amended, by changing customary allowances, discounts, or other price differentials. Secs. 1499.101-102.¹ A "purchaser of the same class" was defined and explained as practices adopted by the seller in setting different prices for the same services to different purchasers or kinds of purchasers, or for purchasers located in different areas, or for different quantities or grades, or under different conditions of sale. Sec. 1499.116(10).²

The complaint filed by the Administrator on March 3, 1943, charged that as an operator of a laundry and dry cleaning service establishment, the appellee was supplying a service for which maximum prices had been established by Maximum Price Regulation 165, as amended, and had violated the Act in the following particulars: In the month of November, 1942, the defendant discontinued a discount of 20 per cent which it had extended to its cash and carry customers in March, 1942, on work for the performance of which three days or longer were allowed. On and after September 22, 1942, defendant increased the prices of its laundry service on commercial flat work over the prices which it charged therefor in March, 1942. After March, 1942, defendant increased the price to a class of customers for its linen rental service over the highest price charged such class of purchasers for such services during March, 1942. On and after March 1, 1943, defendant increased the price of the service for finishing shirts to 15¢ each, being a price in excess of the highest price charged for the same service in March, 1942. A temporary and permanent injunction, as authorized by Section 205(a) of the Act was prayed restraining further violations of the Act.

By answer filed March 12, and amended answer April 1, the appellee admitted the nature of its business, but challenged the constitutionality of the Emergency Price Control Act as an unauthorized delegation of legislative power to the Administrator. It also challenged the validity of the Regulation as inapplicable to its business, and in the alternative alleged that if the Act was constitutional and did cover the appellee's business, the Regulation as sought to be applied went beyond the purpose and scope of the Act and hence not within the power of the Administrator to enforce; that in any event, it was carrying on and doing business in substantially the same manner as in March, 1942, and had not intentionally violated the Act or the Regulation, as amended. On March 13, and April 2, 1943, respectively, the Administrator moved to strike that part of the answer and amended answer which challenged the validity of the Regulation, and in support thereof alleged that the validity of this Regulation could not be tested in the trial court since by Section 204(a) (b) (d) of the Act, exclusive jurisdiction to try the validity of or annul any such regulation was committed to the Emergency Court of Appeals (created by Section 204(c) of the Act).

On March 18, the Administrator moved for a mandatory injunction, requiring the appellee to comply with Regulation 165 (Sec. 1499.108 (b)), by filing with the Oklahoma County War Price and Ration Board a statement showing the description or identification of each type or class of laundry service sold by it during March, 1942, and the highest price for which it sold such services, together with the pricing methods, charges, customary allowances, discounts, or other price differentials in effect during said month. In support of this motion it was alleged that according to an investigation of the State Office of Price Administration, and a written statement of appellee's General Manager, no such statement of maximum prices had been filed and that the records relating to the prices charged were not preserved for inspection by the Administrator as required by Section 1499.108(a), although under the Regulation the same should have been prepared and filed before September 10, 1942. It was specifically alleged that the said acts and practices of the appellee would "irreparably injure and jeopardize" the efforts of the United States to prevent inflation by the stabilization of prices in the interest of National Defense. On April 2, the Administrator applied to the court for an order under Rule 34, Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c (see also Sec. 202(b) of the Act), requiring appellee to produce for examination, copying and photographing, certain books and records "material to the matter involved in this action." The record does not reflect that any of these motions were heard or decided until after a stipulation of facts was filed and the case was heard on its merits October 7, 1943.

According to the stipulation, appellee owned and operated a laundry establishment known as the NuWay Laundry, Cleaners and Dyers, and was engaged among other things in the business of selling laundry, dry cleaning, and dyeing service to the general public within Oklahoma City and vicinity, and that on or about September 10, 1942, appellee deposited with "some clerk" of the Oklahoma County War Price and Ration Board a statement of the ceiling prices charged by it for laundry and dry cleaning services during March, 1942; that on March 3, 1943, it was discovered that the said statement had not been executed by the proper officials of the corporation, and at that time it was executed by the Vice-President of the company and filed with the Board as of that date. On October 7, 1943 (the date of trial), appellee filed an amendment to the list heretofore filed with the Board, showing its customary allowances, discounts, and other price differentials in effect during March, 1942. During this period (March, 1942) the appellee sold "commercial flat work" service to different customers at different prices, ranging from 2¢ to 8¢ per pound, and since November, 1942, it has increased the price for such services to some of its customers, and is now charging an increase in the price per pound over the price charged the same customers for the same service during March, 1942; that during the same base period the appellee sold "rental linen service" to different customers at different prices and between November, 1942, and March, 1943, increased the price for this service to some of its customers, and is now charging an increase per item over the price charged the same customers for the same service supplied during March, 1942. The different prices charged customers for the same service were fixed by appellee to meet competition from other laundries and apparently the price differentials have no other economic basis.

During March, 1942, appellee offered to the public as a part of its laundry service five separate types of bundle service, towit: "Budget Bundle" — completely finished — minimum 12 pounds for $1.49, over 12 pounds 9¢ per pound, shirts finished 8¢ each additional; "Fluff Dry Bundle" — only flat work all finished — minimum 9 pounds for 76¢, over 9 pounds 7¢ per pound, shirts finished 8¢ each additional; "Wet Wash Bundle" — everything returned damp — minimum 12 pounds for 49¢, over 12 pounds 4¢ per pound, shirts finished 10¢ each additional; "Thrifty Bundle" — flat work finished — wearing apparel returned damp — minimum 8 pounds for 49¢, over 8 pounds 6¢ per pound, shirts finished 8¢ each additional; "All Finish Bundle" — everything finished. Shirts plain 10¢, 15¢, 20¢ 25¢. Shirts pleated 25¢, shirts finished Deluxe 25¢, silk shirts 35¢. In each of the above five types of bundles, the same type and kind of service was performed in finishing the shirts contained therein.

On and after March, 1943, appellee increased the price for finished shirts over the price charged for the same shirts during March, 1942, from 8¢ to 12½¢ for each shirt in the "Thrifty," "Budget" and "Fluff Dry" bundles, and from 10¢ to 12½¢ in the "Wet Wash" bundle, and discontinued the 10¢ price in the "All Finish" bundle. In other respects the per pound price for each bundle service remained the same. In sum, the price charged for laundrying shirts in each type of service rendered was increased from 8¢ and 10¢ to 12½¢ and 15¢ each. During the month of July, 1943, app...