Brown v. Warner Holding Co.

• Decision Date: 19 June 1943
• Docket Number: No. 884.,884.
• Parties: BROWN, Administrator, Office of Price Administration, v. WARNER HOLDING CO.
• Court: U.S. District Court — District of Minnesota

50 F. Supp. 593

BROWN, Administrator, Office of Price Administration, v. WARNER HOLDING CO.

No. 884.

District Court, D. Minnesota, Fourth Division.

June 19, 1943.

R. H. Fryberger and M. R. Keith, both of Minneapolis, Minn., for defendant.

R. M. McCareins, of Minneapolis, Minn., and David Ginsburg, Gen. Counsel, and Thomas I. Emerson, Asst. Gen. Counsel, both of Washington, D. C., Alex Elson, Regional Atty., and John F. Manierre, Regional Enforcement Atty., both of Chicago, Ill., Nobel Shadduck, Dist. Counsel Twin Cities Dist. Office, and R. M. McCareins, Chief Atty., Minneapolis-St. Paul Defense-Rental Area, both of Minneapolis, Minn., and George J. Burke, of Washington, D. C., and Arthur Magid, of Chicago, Ill., for plaintiff.

JOYCE, District Judge.

On March 5th and 6th, 1943, hearing was had before the undersigned judge of this court on plaintiff's motion for a preliminary injunction and defendant's demurrer to the complaint herein. Mr. R. M. McCareins appeared in behalf of the plaintiff and Mr. R. H. Fryberger and Mr. M. R. Keith appeared in behalf of the defendant. Argument was heard and briefs were thereafter filed.

The complaint in this proceeding alleges that the defendant has demanded and received rents from the tenants occupying its apartments in the City of Minneapolis, Minnesota, in amounts which are in excess of the maximums permitted therefor under maximum rent regulations No. 53 (7 Fed. Reg. 8596), effective November 1, 1942, issued by the Administrator pursuant to Section 4 of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 904. The relief sought is founded on Section 205(a) of the act, 50 U.S.C.A.Appendix, § 925(a), and plaintiff seeks to enjoin the defendant from continued violations of said maximum rent regulation No. 53.

The defendant has interposed a demurrer asserting the unconstitutionality of the act and its repugnancy to numerous provisions of the Constitution of the United States. Specifically, and among other things the defendant claims: (1) that the act exceeds the powers granted to Congress under the war power clause of the Constitution; (2) that the act denies the defendant due process and permits of its property being taken without just compensation; (3) that Congress has indulged in the giving of an unlawful, unwarranted and unauthorized delegation of power to the administrator; (4) that the powers delegated are unaccompanied by sufficient or reasonable standards to govern the administrator's actions; (5) that the administrator is permitted to make and enact laws by regulation and order without sufficient controls or limitations surrounding his activities; (6) that the defendant is afforded no protection against arbitrary and capricious regulations of the administrator. Particularly, violations are claimed of Article I, section 1 and of Article I, Section 8, and the IVth, Vth, and VIth "Articles in addition to, and amendments of the Constitution of the United States of America."

The Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq., is a "statute born of the exigencies of war". Scripps-Howard Radio, Inc., v. Federal Communications Commission, 316 U.S. 4, 62 S.Ct. 875, 883, 86 L.Ed. 1229. Its constitutional basis is found in Article I, section 8 of the Constitution, which reads in part as follows:

"The Congress shall have Power To lay and collect Taxes, * * * to pay the Debts and provide for the common Defence and general Welfare of the United States; * * *

"To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

"To raise and support Armies, * * *;

"To provide and maintain a Navy;

"To make Rules for the Government and Regulation of the land and naval Forces;

"To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions; * * *

"To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, * * *."

The act was passed on Jan. 30, 1942, Congress expressly finding that it was "necessary to the effective prosecution of the present war". A reading of Section 1 (a) will impress one with the earnestness and acute appreciation with which the law-making body approached the performance of its functions with reference to the national defense and the public interest.

Equitably administered, it would seem that rent control in war time is both a necessary and proper function of Government in its attempt to avoid the dangers of inflation. Not only the lives of its citizens may be directed but their complete resources as well may be utilized by the Government in its effort to survive when beset with dangers to its existence. In Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 426, 54 S.Ct. 231, 235, 78 L.Ed. 413, 88 A.L.R. 1481, the Supreme Court said:

"* * * Thus, the war power of the federal government is not created by the emergency of war, but it is a power given to meet that emergency. It is a power to wage war successfully, and thus it permits the harnessing of the entire energies of the people in a supreme co-operative effort to preserve the nation."

War is realistic and permits of no illusions. The marshalling of national assets presents many problems in reality and the Supreme Court has long recognized the power of the national government in the performance of its obligations directed toward the common good and the national defense. The court's views have covered a wide range, as witness the powers to take over and operate railroads, Northern Pacific Ry. Co. v. North Dakota, 250 U.S. 135, 39 S.Ct. 502, 63 L.Ed. 897; to take over and operate telephone and telegraph systems, Dakota Central Telephone Co. v. South Dakota, 250 U.S. 163, 39 S.Ct. 507, 63 L.Ed. 910, 4 A.L.R. 1623; to place compulsory orders of materials required for national defense, Moore & Tierney, Inc. v. Roxford Knitting Co., 2 Cir., 265 F. 177 (certiorari denied 253 U.S. 498, 40 S.Ct. 588, 64 L.Ed. 1032); to draft manpower for service in the armed forces, Selective Draft Cases (Arver v. United States), 245 U.S. 366, 38 S.Ct. 159, 62 L.Ed. 349, L.R.A. 1918C, 361, Ann.Cas.1918B, 856; to prohibit the manufacture or sale of alcoholic beverages, Hamilton v. Kentucky Distilleries, 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194, also Jacob Ruppert v. Caffey, 251 U. S. 264, 40 S.Ct. 141, 64 L.Ed. 260; to regulate prices of certain commodities, Highland v. Russell Car & Snow Plow Co., 279 U.S. 253, 49 S.Ct. 314, 73 L.Ed. 688; to control rents, Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165.

In Stewart v. Kahn, 11 Wall. 493, 506, 20 L.Ed. 176, the Supreme Court said: "Congress is authorized to make all laws necessary and proper to carry into effect the granted powers. The measures to be taken in carrying on war and to suppress insurrection are not defined. The decision of all such questions rests wholly in the discretion of those to whom the substantial powers involved are confided by the Constitution."

My conclusion is that the act does not exceed the power granted to Congress under the war powers clause of the Constitution for, as was stated in Henderson v. Kimmel, D.C., 47 F.Supp. 635, 642, "It must follow that Congress has the power to regulate the costs of commodities and facilities in order to insure the essential armaments, prevent defeat, and insure the victory."

Does the Act violate the due process clause of the Fifth Amendment?

By Section 2(b) of the act, the administrator is authorized to establish such maximum rents as in his judgment will be fair and equitable, whenever a rise in defense-area rents is threatened, in order to effectuate the purposes of the act.

Section 2(c) provides that any regulation or order may be established in such form or manner, may contain such classifications and differentiations, and may provide for such adjustments and reasonable exceptions as in the judgment of the administrator are necessary or proper in order to effectuate the purposes of the act.

By Section 2(d) the administrator is given authority to regulate or prohibit speculative or manipulative practices which may result in rent increases.

The exercise of the foregoing power delegated to the administrator necessarily flows from the disclosed purposes of Section 1(a), namely, to prevent inflationary increases in prices. If the act is an appropriate means to a permitted end there is little scope for the operation of the due process clause. Virginian Railway Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789; Henderson v. Kimmel, D.C., 47 F.Supp. 635. In Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 516, 78 L.Ed. 940, 89 A.L.R. 1469, the Supreme Court in connection with a state law controlling the sale of milk, said:

"The Constitution does not secure to any one liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of the people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the Legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty."

The restraint upon one charging as high a price as is obtainable during war time does not constitute taking. Nor does the failure of the act to guarantee a fixed return mean confiscation. All property rights are held subject to appropriate legislative regulation and if there is a loss resulting it is consequential. Knox v. Lee (Legal Tender Cases), 12 Wall. 457, 20 L. Ed. 287. For application of the foregoing principle to rent control see Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165. The Fifth Amendment is not a guaranty of untrammeled freedom of action and of contract. Virginian Railway Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789.

Opportunity for judicial review to one...