Brown v. Hecht Co.

• Decision Date: 22 July 1943
• Docket Number: No. 8498.,8498.
• Citation: 78 US App. DC 98,137 F.2d 689
• Parties: BROWN, Adm'r of Office of Price Administration, v. HECHT CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

78 US App. DC 98, 137 F.2d 689 (1943)

BROWN, Adm'r of Office of Price Administration, v. HECHT CO.

No. 8498.

United States Court of Appeals for the District of Columbia.

Argued June 15, 1943.

Decided July 22, 1943.

Writ of Certiorari Granted October 18, 1943.

Mr. Fleming James, Jr., Chief, Litigation Branch, O. P. A., of Washington, D. C., with whom Messrs. George J. Burke, General Counsel, Thomas I. Emerson, Associate General Counsel, David London, Head Appellate Section, George M. Austin, Head Special Litigation Section, and A. M. Dreyer, all of the Office of Price Administration, all of Washington, D. C., were on the brief, for appellant.

Mr. Charles A. Horsky, of Washington, D. C., with whom Mr. Spencer Gordon and Miss Amy Ruth Mahin, both of Washington, D. C., were on the brief, for appellee.

Before GRONER, Chief Justice, EDGERTON, Associate Justice, and EICHER, Chief Justice of the District Court of the United States for the District of Columbia.

Writ of Certiorari Granted October 18, 1943. See 64 S.Ct. 81, 88 L.Ed. ___.

EDGERTON, Associate Justice.

This is a suit for an injunction, brought by the Price Administrator against the Hecht Company under Section 205(a) of the Emergency Price Control Act of 1942.¹ After issuing a temporary restraining order and holding a full hearing, the District Court dissolved the restraining order and dismissed the complaint.²

Section 205(a) 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, he may make application to the appropriate court for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, and upon a showing by the Administrator that such person has engaged or is about to engage in any such acts or practices a permanent or temporary injunction, restraining order, or other order shall be granted without bond." Italics supplied. The pertinent language of section 4, 50 U.S.C.A.Appendix, § 904, is: "(a) It shall be unlawful * * * for any person to sell or deliver any commodity * * * or otherwise to do or omit to do any act, in violation of any regulation or order under section 2, or of any price schedule effective in accordance with the provisions of section 206, or of any regulation, order, or requirement under section 202(b) or section 205(f), or to offer, solicit, attempt, or agree to do any of the foregoing."

The complaint charges the Company with several sorts of violations of the General Maximum Price Regulation which was issued under the authority of the Act on April 28, 1942.³ These include failures to determine maximum prices in accordance with the Regulation; failures to keep, post or furnish required records, notices, statements, and reports; and selling goods, and offering goods for sale, at more than ceiling prices. The complaint asks an injunction to restrain the defendant, its officers, agents, etc. from similar acts. The Company's answer denies all violations. Without admitting any failure or neglect to comply with any regulation, it alleges that if there has been such failure or neglect it has been involuntary, corrected as soon as discovered, inconsequential, and unsubstantial. It alleges that the Company has made and is making, at great expense, every possible effort to comply; that it would be impossible for it to comply more fully; and that an injunction would injure the Company's reputation and benefit no one.

In its findings of fact or in an accompanying opinion the District Court said among other things: "The defendant and its employees have attempted, in good faith, to comply with the act, and have taken vigorous steps to do so. The compliance thus resulting has been very substantial. * * * Violations occurred but I do not consider them numerous in view of the difficulties involved in defendant's efforts to comply with the act and regulation. * * * The defendant took timely, positive and vigorous measures to understand the requirements and to meet them. It set up a capable organization with an unlimited expense account, charged with the duty of directing and supervising the personnel in an honest and sincere effort to comply in full measure with the requirements of the act and regulation. * * * I do not find that the defendant company is chargeable with bad faith or * * * disloyal motive or purpose. It is not charged that the defendant was wilful in its violations and I think it appropriate to say that the element of wilfulness is entirely lacking in the evidence. * * * Some of the violations may have resulted from negligence or carelessness but I find them innocent in character. No inference of intentional wrong doing may be drawn from them. It may be said to the credit of the defendant company that all errors and mistakes were promptly corrected as soon as they were discovered. It should also be added that the defendant has consistently improved its methods and its records to more fully meet the requirements of the act and regulation and to combat the difficulties which arise from the elements of human frailty. * * * These mistakes in pricing and listing were all made in good faith and without intent to violate the regulations. The performance of the store as to posting was excellent. * * * There is manifestation of good faith by the defendant, and I find no likelihood of further violation by it." But the court's conclusions of law show, and the Company concedes, that this last statement means only that "there will be no further violations except such as may be caused by human frailties." The Company concedes that there will be further violations, and contends that it cannot avoid them.⁴

The court also found that "an injunction would have no effect by way of insuring better compliance in the future and would be unjust to the defendant. An injunction would not be in the public interest." These findings regarding the effect of an injunction are immaterial, in the view we take of the law, and we need not consider whether the evidence supports them. The court's other findings are supported by substantial evidence and we therefore accept them as correct. We do not understand either party to question any of these other findings which we understand the court to make. The Administrator concedes that the Company's violations were not wilful. It is clear that the Company made serious and costly efforts to comply with the law.

But it is also clear that in many hundreds of instances the Company failed to comply with the law. This suit was based upon a "spot check" which the Administrator made in a few departments of the Company's store. The Company does not question the correctness of the Administrator's statement that "the evidence showed without dispute that in a space of only five months in but seven of the 100 or more departments defendant in direct violation of the * * * Regulation, (1) made 3,838 sales at prices in excess of the legal maximum; (2) collected at least $4,623.15 more than it was legally entitled to do; (3) failed to include on the Cost-of-Living Statement which it was required to file with the appropriate War Price and Ration Board more than 460 articles which should have been included thereon; and (4) failed to describe with sufficient clarity more than 410 items scheduled on the Cost-of-Living Statement which it did file. * * * Wherever investigation was made violations were found."

Within the meaning of § 205(a) the Company "has engaged * * * in * * * acts or practices which constitute * * * a violation of * * * section 4." Many statutes are interpreted to mean that one who actually does what the statutes prohibit is guilty of violating them notwithstanding his good faith. "Many instances of this are to be found in regulatory measures in the exercise of what is called the police power where the emphasis of the statute is evidently upon achievement of some social betterment rather than * * * punishment * * *".⁵ Statutes may be interpreted in this way despite the fact that they impose criminal penalties. In the case just quoted the Supreme Court interpreted in this way a statute which made it a crime to sell narcotics, as applied to a defendant who was not shown to have known that he was selling narcotics.

Our case is a clearer one for the application of the principle that good faith is no defense, since § 205(a) imposes no criminal penalties. Its purpose is not in any degree to punish the defendant, but solely to protect the public. It is a police regulation of great scope and importance. Innocent non-conformity with the Price Control Act is as inflationary and as damaging to competitors and the public as guilty non-conformity. The intention of Congress in § 205(a) to cover well-intentioned as well as ill-intentioned conduct is emphasized by the contrast between the language which Congress used in this subsection and in the one which immediately follows it. § 205(b), which imposes criminal penalties, deals with "any person who willfully violates any provision of section 4," while § 205(a), which provides for injunctions, deals with "any acts or practices which constitute or will constitute a violation of any provision of section 4."

Despite the Company's past and present good intentions, by the express terms of the statute the Company's past violations authorized the District Court to enjoin future violations.⁶ In order to justify the granting of an injunction under an express and unrestricted statutory authority, no balancing of equities is necessary and neither threatened irreparable injury nor lack of an adequate remedy at law need be shown. General equitable doctrines "do not militate against the capacity of a court of equity as a proper forum in which to make a declared policy of Congress effective."⁷

The question remains whether the Act merely authorized the court to grant an order without regard...