Bryne v. United States

• Decision Date: 12 January 1955
• Docket Number: No. 4872.,4872.
• Parties: George M. BRYNE, d/b/a General Contractors, Defendant, Appellant, v. UNITED STATES of America, Plaintiff, Appellee.
• Court: U.S. Court of Appeals — First Circuit

218 F.2d 327 (1955)

George M. BRYNE, d/b/a General Contractors, Defendant, Appellant, v. UNITED STATES of America, Plaintiff, Appellee.

No. 4872.

United States Court of Appeals, First Circuit.

January 12, 1955.

Robert Haydock, Jr., Washington, D. C., with whom Neil Leonard and Sumner H. Babcock, Boston, Mass., were on the brief, for appellant.

David E. Place, Asst. U. S. Atty., Boston, Mass., with whom Anthony Julian, U. S. Atty., Boston, Mass., and Oscar S. Burrows, Asst. U. S. Atty., Roxbury, Mass., were on the brief, for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Chief Judge.

On September 26, 1952, while the Defense Production Act of 1950, 50 U.S. C.A.Appendix, § 2061 et seq., was still in effect, the United States filed its complaint in the district court under § 409 (c) of the Act, as amended, 64 Stat. 811, 65 Stat. 136, seeking to recover treble damages for overcharges alleged to have been made by defendant in sales of sulphur at a price in excess of that established by the General Ceiling Price Regulation, 16 F.R. 808, the buyer having failed to sue for damages under § 409(c) within 30 days from the date of the occurrence of the violation alleged in the complaint. Defendant filed an answer denying the material allegations of the complaint, and setting up that his sales of the commodity in question were exempted from price control by § 14(m) of the regulation, 16 F.R. 815. Subsequently, the parties filed a Stipulation as to Agreed Facts. Upon the basis of the pleadings and stipulation, the United States moved for summary judgment for treble damages in the amount prayed for in the complaint. Defendant also filed a motion for summary judgment. On May 26, 1954, the district court entered summary judgment for the plaintiff in the sum of $55,140.45, from which judgment the defendant appealed.

From the stipulation the following facts appear:

The defendant has been in the general contracting business for over 55 years, specializing in underwater construction, such as construction and repair of submerged water pipes, under harbors and rivers, foundations and piers, sewage pipes. Since 1932 he has been a successful bidder on seven contracts with the United States Army Engineers, one with the Port of Boston Authority, and one with the United States Light House Department, some of these contracts having involved the raising and removal of sunken vessels.

On May 7, 1951, the motorship Arizona Sword, conveying a cargo of crude sulphur, collided with another vessel in the Cape Cod Canal and as a result of such collision sank in the canal. The owners and the insurance companies carrying the insurance on the vessel and cargo abandoned the motorship and cargo as a total loss.

Subsequently the Army Engineers having charge of the canal came to the conclusion that the sunken wreck constituted a menace to navigation, and it then became their duty to remove it. On June 13, 1951, the Corps of Engineers invited bids on a contract for dismantling and removal of the wreck. The defendant having been the successful bidder, on July 6, 1951 entered into a contract with the Corps of Engineers (acting as an agency of the United States Government) to remove the wreck from the canal for a cash consideration of $227,000, which sum was subsequently paid to the defendant in accordance with the terms of the contract. The defendant proceeded immediately with the performance of the contract, in the course of which he removed from the sunken ship approximately 4,000 tons of sulphur, which had been damaged by salt water due to the submergence. Under the terms of the contract with the government, the defendant received title to the damaged sulphur.

The defendant "was advised by his own counsel and by his own special counsel in Washington" that the damaged sulphur recovered by him from the wreck was exempt from price control by virtue of § 14(m) of the General Ceiling Price Regulation.

On September 14, 1951, the defendant addressed a brief letter to the New England Regional Counsel of the Office of Price Stabilization. This letter merely stated that the defendant was in the process of salvaging the sunken Arizona Sword under contract with the Army Engineers, the wreck having been abandoned by the owners and insurance companies and having become a hazard to navigation; that the defendant hoped to recover a large percentage of the damaged sulphur on board, which sulphur "we will offer for sale"; that the defendant was under the impression that such proposed sale would be exempt from price regulation under § 14 of the General Ceiling Price Regulation, but that "to be completely in the clear in the matter, we would appreciate your official findings in the case."

The Regional Counsel replied, under date of September 18, 1951, in a rather noncommittal letter which set forth the conditions for exemption under § 14(m) which "must first be satisfied." The answer concluded with the statement: "Since this is an unusual situation, I would suggest that you contact our Chemicals Branch in Washington to determine whether they would be agreeable to recommending an Amendment exempting this merchandise from price control." So far as appears, the defendant took no further steps in the direction either of obtaining an official interpretation that the proposed sales of the damaged sulphur were exempt from price control under § 14(m) or of obtaining an amendment to the regulation specifically exempting such sales from price control.

On September 28, 1951, the defendant entered into a contract to sell the damaged sulphur to O'Donnell Transportation Co., Inc., of New York City, for $60 a ton; and in compliance with said contract "there was sold and delivered about the middle of October 1951 approximately 618 net tons of such sulphur." It is this sale that the government claims was made at a price in excess of the applicable maximum price established by the General Ceiling Price Regulation.

On this appeal it is asserted that the district court erred in not granting defendant's motion for a summary judgment, on two grounds: (1) That the sales were exempt from price control under § 14(m) of the regulation, and (2) that in making the sales the defendant acted in reliance upon and in conformity with an official interpretation of the regulation. Neither ground is well taken.

The first of these contentions is based upon § 14(m) of the regulation, 16 F.R. 815, which provided that the General Ceiling Price Regulation should not apply to:

"Sales and deliveries of damaged commodities by insurance companies, transportation companies, or agents of the United States Government or by any other person engaged in reconditioning and selling damaged commodities received, in direct connection with the adjustment of losses, from insurance companies, transportation companies, or agents of the United States Government: provided that such person is engaged principally and primarily in such business and is not engaged in selling new or second-hand commodities for his own account."

We agree with the district court that the stipulated facts do not as a matter of law require a ruling that the defendant was engaged "principally and primarily" in the business of "reconditioning and selling damaged commodities received, in direct connection with the adjustment of losses, from insurance companies, transportation companies, or agents of the United States Government". The defendant had the burden of establishing that he met the conditions precedent to exemption under § 14 (m).

As to appellant's second contention above, it is difficult to believe that this was advanced seriously. Price Procedural Regulation 1, Revised, 16 F.R. 4979, said in § 71 that action "taken in reliance upon and in conformity with an official interpretation of a provision of any regulation or order * * * shall constitute action in good faith pursuant to the provision of the regulation or order to which such official interpretation relates." This must be projected against the provision of § 409(c) of the Defense Production Act, 64 Stat. 811-12 to the effect that no action by the United States for treble damages on account of overcharges shall be instituted if the violation arose because the person selling the commodity "acted upon and in accordance with the written advice and instructions of the President or any official authorized to act for him". Section 71(b) of the procedural regulation provided that interpretations of regulations or orders would be regarded by the Office of Price Stabilization as official only when issued by the Chief Counsel or one of his delegatees (which included "any Regional Counsel", 16 F.R. 4261), "and shall be given only in writing." Section 72 prescribed the procedure for requesting such an official interpretation and required the applicant to "set forth in full the factual situation out of which the interpretative question arises". Defendant's letter of September 14, 1951, to the Regional Counsel did not contain the full factual basis necessary for a determination whether the § 14(m) exemption applied. Furthermore, as above indicated, it is obvious that the Regional Counsel did not give an official interpretation to the effect that the proposed sales of the damaged sulphur were exempt under § 14(m), but upon the contrary implied that the proposed sales were probably subject to price control and that the defendant had better seek an amendment to the regulation. In going ahead and making the sales nevertheless, the defendant certainly did not take action "in conformity with an official interpretation".

On the other hand, we think that the district court erred in giving summary judgment for the plaintiff as prayed in the complaint.

In the first place, it could not be determined from a reading of the pleadings and the stipulation, and from an examination of the terms of the General Ceiling Price Regulation, just what was the...