Cullen v. Bowles
Decision Date | 04 April 1945 |
Docket Number | No. 253.,253. |
Citation | 148 F.2d 621 |
Parties | CULLEN et al. v. BOWLES, Adm'r, Office of Price Administration. |
Court | U.S. Court of Appeals — Second Circuit |
Samuel Mermin, Sp. Appellate Atty., Thomas I. Emerson, Deputy Adm'r for Enforcement, Fleming James, Jr., Director, Litigation Division, and David London, Chief, Appellate Branch, Office of Price Administration, all of Washington, D. C., Paul L. Ross, Regional Enforcement Executive, and John D. Masterton, Regional Litigation Attorney, Office of Price Administration, both of New York City, for Chester Bowles, intervenor-appellant.
James A. Beha, of New York City, for Thomas J. V. Cullen, Chapter X Trustee, petitioner-appellee.
Richard L. Rosenbaum, of New York City, for 325 East 72nd Street, Inc., debtor, appellee.
Before L. HAND, AUGUSTUS N. HAND, and CLARK, Circuit Judges.
On May 29, 1943, the debtor, 325 East 72nd Street, Inc., filed a petition for reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq. The petition was approved and Thomas J. V. Cullen was appointed trustee on June 3, 1943. Its principal asset was an apartment house at No. 325 East 72nd Street, Borough of Manhattan. Twenty-three of the apartments were owned by proprietary tenants who were stockholders of the debtor corporation under ninety-nine year leases and it is conceded that the rent regulations hereafter described did not apply to them. Thirty-five of the apartments were rented under written leases on an ordinary commercial basis. Only the rent of these apartments is involved in this proceeding. The reorganization had been pending for over four months when New York City was declared a Defense Rental Area, and the Emergency Price Administrator issued rent regulations on October 8, 1943, effective November 1, 1943. These regulations froze rentals at the level of March 1, 1943. Of the thirty-five apartments leased on a commercial basis there were on November 23, 1943 ten where the rentals were higher than the maximum rental allowable under the Emergency Price Control Act and the rent regulations promulgated thereunder. On an annual basis the rentals charged by the trustee exceeded the maximum prescribed rentals by $2,661, but were found by the District Court to be $1,084 less than the fair and comparable rental value for such premises.
The trustee went into possession of the above premises on June 4, 1943, and by petition filed in the District Court on November 23, 1943, sought to have it determined whether he was subject to the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix § 901 et seq., and the rent regulations for housing thereunder, or was only subject to the order of the Bankruptcy Court under the general provisions of Chapter X of the Bankruptcy Act. His petition also sought to obtain an order authorizing him to collect the rents chargeable under these existing leases and directing him to abstain from filing notices of maximum rents and registration statements under the regulations of the Office of Price Administration.
The District Court held that the Emergency Price Control Act, and the regulations under it, are not controlling because (1) it does not repeal expressly or impliedly any portion of the Bankruptcy Act, (2) the property and its income are vested in and subject to the jurisdiction of the Bankruptcy Court, and (3) the jurisdiction to determine whether or not a plan of reorganization is fair, equitable and feasible is solely in that court and cannot be shared with any other tribunal or administrative body.
The District Court further held that it did not declare the Emergency Price Control Act or any regulation promulgated thereunder invalid or to go counter to Section 204(d) thereof, 50 U.S.C.A.Appendix § 924(d), but merely held that the Emergency Price Control Act did not apply because there had been no repeal of any part of the Bankruptcy Act and that to imply any repeal would interfere with the control of Bankruptcy Courts over corporate reorganizations and might at times make them not feasible.
In accordance with these views the court made an order directing Thomas J. V. Cullen as trustee to collect the rents chargeable under the existing leases and to abstain from filing notices of maximum rent and registration statements under the regulations of the Office of Price Administration, and adjudging that the powers of the trustee in the present reorganization proceeding are not curtailed by the Emergency Price Control Act of 1942 and the Rent Regulations for Housing in the New York City Defense-Rental Area which had been promulgated thereunder.
We think it evident that the District Court erred in authorizing the trustee to establish or collect rents determined on a basis contrary to the regulations promulgated under the Emergency Price Control Act and in holding that a trustee in reorganization might resort to a Bankruptcy Court to obtain an adjudication as to whether he was subject to the regulations. Indeed, aside from every other consideration, Section 305 of the Act, 50 U.S.C.A.Appendix § 945, would seem to negative the conclusion reached by the court below when it says: "No provision of law in force on the date of enactment of this Act shall be construed to authorize any action inconsistent with the provisions and purposes of this Act * * *." Moreover, Section 204(d) of the Act provides in part as follows:
The objects of the Emergency Price Control Act are set forth therein as follows:
In our opinion one of the most important purposes of establishing the Emergency Court of Appeals was to create a single court which, subject to review by the Supreme Court, can determine whether the Price...
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