Cates v. Haderlein, No. 10312.

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: DUFFY, FINNEGAN and LINDLEY, Circuit
• Citation: 189 F.2d 369
• Parties: CATES v. HADERLEIN.
• Docket Number: No. 10312.
• Decision Date: 23 May 1951

189 F.2d 369 (1951)

CATES
v.
HADERLEIN.

No. 10312.

United States Court of Appeals Seventh Circuit.

May 23, 1951.

189 F.2d 370

Frank E. Gettleman, Arthur Gettleman and Edward Brodkey, all of Chicago, Ill., for appellant.

Otto Kerner, Jr., U. S. Atty., John Peter Lulinski and C. Wylie Allen, Assts. U. S. Atty., all of Chicago, Ill., for appellee.

Before DUFFY, FINNEGAN and LINDLEY, Circuit Judges.

DUFFY, Circuit Judge.

In this action plaintiff seeks to restrain and enjoin the postmaster of the city of Chicago from carrying out the terms of a Fraud Order issued by the Postmaster General after a hearing. The district court denied the plaintiff's motions for a preliminary injunction and for a permanent injunction, and dismissed the complaint.

In the complaint herein plaintiff described in detail the administrative procedure of the Post Office Department with reference to the hearing before that agency which led to the issuance of the Fraud Order. Appellant, trading as Glory Bee Products and Glory Bee, was charged with conducting a scheme for obtaining money through the mails by means of pretenses which were knowingly false and fraudulent, in violation of Secs. 259 and 732, Title 39 U.S.C.A. Appellant advertised its products, "Glory Bee Fast Luck Brand Incense" and "Incense Number Tablets," by sending printed circulars through the mails.

In answer to the complaint filed in the proceedings before the Post Office Department, appellant admitted that he had, in order to sell his products, caused to be printed and disseminated through the mails the circulars referred to, but he denied that

189 F.2d 371

the import of such advertising was as stated in said complaint, and also denied that any false or fraudulent representations had been made. On the hearing before the trial examiner, the government offered the testimony of a post office inspector and a medical officer of the Federal Food and Drug Administration. Appellant herein did not offer any testimony. The trial examiner, after the hearing, made findings of fact and recommendations to the Postmaster General for the issuance of a fraud order. On August 16, 1950, the Postmaster General issued the Fraud Order

Appellant contends that before a valid fraud order may be issued the Postmaster General and the Post Office Department must subject themselves to the provisions and requirements of the Administrative Procedure Act of 1946, 5 U.S.C.A. § 1001 et seq., and grant a fair hearing, as required by Sec. 5(c) of that act.

The terms of the statutes under which the Fraud Order here under consideration was issued,¹ make no provision for a hearing in connection with the issuance of fraud orders, but provide, "The Postmaster General may, upon evidence satisfactory to him", issue such orders. After it was held in American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 23 S.Ct. 33, 47 L.Ed. 90, that a court review could be had to test the validity of such fraud orders, the constitutionality of the sections authorizing their issuance was upheld in Public Clearing House v. Coyne, 194 U.S. 497, 24 S.Ct. 789, 48 L.Ed. 1092, and Donaldson v. Read Magazine, 333 U.S. 178, 68 S.Ct. 591, 92 L.Ed. 628.

Despite these rulings, appellant contends that the Fraud Order here involved is void for failure on the part of the Postmaster General to comply with the Administrative Procedure Act. Appellant specifically relies on the language of Sec. 5, as follows:

"In every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing, * * *

* * * * * *

"(c) The same officers who preside at the reception of evidence pursuant to section 7 shall make the recommended decision * * * no such officer shall consult any person or party on any fact in issue unless upon notice and opportunity for all parties to participate; nor shall such officer be responsible to or subject to the supervision or direction of any officer, employee, or agent engaged in the performance of investigative or prosecuting functions for any agency. No officer, employee, or agent engaged in the performance of investigative or prosecuting functions for any agency in any case shall, in that or a factually related case, participate or advise in the decision, recommended decision, or agency review pursuant to section 8 except as witness or counsel in public proceedings. * * *"

We think that by its very terms the Administrative Procedure Act, applying as it does to cases "of adjudication required by statute to be determined on the record

189 F.2d 372

after opportunity for an agency hearing," is inapplicable to a mail fraud order issued under 39 U.S.C.A. §§ 259 and 732, since those statutes contain no requirement for hearing or opportunity therefor

The legislative history of the Administrative Procedure Act generally, or in connection with the provisions of Sec. 5, will not be referred to as it has been held to be "more conflicting than the text is ambiguous." Wong Yang Sung v. McGrath, 339 U.S. 33, 49, 70 S.Ct. 445, 14 L.Ed. 616. In that case, however, it was ruled, 339 U.S. at page 50, 70 S.Ct. at page 454: "We think that the limitation to hearings `required by statute' in § 5 of the Administrative Procedure Act exempts from that section's application only those hearings which administrative agencies may hold by regulation, rule, custom, or special dispensation; not those held by compulsion. We do not...