Curtiss Candy Co. v. Clark

• Decision Date: 28 January 1948
• Docket Number: No. 424.,424.
• Citation: 165 F.2d 791
• Parties: CURTISS CANDY CO. v. CLARK.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

165 F.2d 791 (1948)

CURTISS CANDY CO. v. CLARK.

No. 424.

United States Emergency Court of Appeals.

Heard December 16, 1947.

Decided January 28, 1948.

Rehearing Denied March 5, 1948.

Peter B. Atwood, of Chicago, Ill. (Irwin N. Walker and Walker, Atwood, Zurowski & McFarland, all of Chicago, Ill., on the brief), for complainant.

Josephine H. Klein, Sp. Atty., Dept. of Justice, of Washington, D. C. (Tom C. Clark, Atty. Gen., T. Vincent Quinn, Asst. Atty. Gen., and Floyd L. Cook and Charles G. Mulligan, Attys., Dept. of Justice, both of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and McALLISTER and LINDLEY, Judges.

Heard at Chicago, December 16, 1947.

LINDLEY, Judge.

Complainant, a leading manufacturer and vendor of packaged food, including 5¢ candy bars, filed its complaint in this court after denial of its protest. An enforcement action is pending, charging that complainant manufactured, sold and delivered candy bars after May 11, 1942 materially reduced in size and weight to less than the lowest size and weight of those sold in March 1942, so that purchasers received approximately 6% less candy than they did during March 1942, without any corresponding reduction in the price charged therefor, whereby complainant increased the price of commodities sold and delivered by it in excess of the highest price charged by it during the month of March 1942.

Complainant attacks the validity of two regulations upon which the government relies in the enforcement suit. General Maximum Price Regulation issued November 9, 1942 (7 F.R. 9244) provided, as to foods, that the seller's maximum price for any commodity should be the highest charged by it during March 1942. Maximum Price Regulation 262, having to do with peanut bars, issued December 14, 1942 (8 F.R. 262), Sections 1351.955 (b) .956, .965 and .966, prescribed a formula in effect reaching the same result as General Maximum Price Regulation. Consequently, for the purposes of this decision, the applicable regulations established maximum prices for complainant's candy bars as the highest price charged during March 1942.

Complainant attacks the interpretation of the regulations by the Administrator to the effect that they prohibited the reduction of the weight of candy bars below the lowest actual running weight thereof during March 1942, regardless of any statement as to weight on the labels of the packages, unless the reduction of weight was accompanied by a corresponding reduction in the seller's March 1942 price. This interpretation was approved by the Circuit Court of Appeals for the Eighth Circuit, in Brown v. Mars, Inc., 135 F.2d 843, 849, an enforcement action, wherein the decision of the same District Court which has jurisdiction of the enforcement suit now pending against complainant was reversed. The court said: "That these products are sold by piece and not by weight is of no effect. Candy is a food. Weight is one measure of the amount of food. Many kinds of foods are sold by piece or by package. Any decrease in weight of such without a corresponding decrease in price has clearly the same effect, on the purchaser and on the seller, as an increase in price — less is sold for the same money. The degree of decrease in weight with resultant effect of increase in price is not material for reasons hereinbefore stated. That taste is the purchasing incentive is not material — the Act has no concern with why the purchaser buys but only with whether he pays more than the established maximum price." This was in substantial agreement with the Administrator's interpretation: "Decreases in size, where the new size replaces the old, and especially where it is offered for sale to the same purchasers, must in all cases be accompanied by a proportionate decrease in price unless, as will rarely be the case, the seller can establish that he is meeting a distinctly different market demand. * * * Manufacturers who are in doubt as to the application of this standard should apply for a section 3 (b) order or, if circumstances of hardship or out-of-lineness are present, in the alternative for adjustment under Section 18. * * * Where the proportionate increase or decrease results in a unit figure containing a fraction of a cent, the manufacturer or wholesaler must multiply such fractional per unit figure by the number of units in each order."

The scope of our authority on matters of interpretation is discussed in Alan Levin Foundation v. Bowles, Em.App., 152 F.2d 467; Marlene Linens v. Bowles, Em.App., 144 F.2d 874; Conklin Pen Co. v. Bowles, Em.App., 152 F.2d 764; Veillette v. Bowles, Em.App., 150 F.2d 862; Darling & Co. v. Fleming, Em.App., 158 F.2d 387; Collins v. Fleming, Em.App., 159 F.2d 426; Van Der Loo v. Porter, Em.App., 160 F.2d 110; Superior Packing Co. v. Clark, Em.App., 164 F.2d 343. What we have announced must be construed in the light of the language of the Supreme Court in Collins v. Porter, 328 U.S. 46, 66 S.Ct. 893, 894, 90 L.Ed. 1075, where the court said: "The Emergency Court sustained the challenged regulation. It refused to pass on the applicability of the regulation to the petitioners. It left that question to the District Court before which the treble damage suit is pending. Had petitioners' contentions come before the Emergency Court through the protest proceedings under § 203 (a) 50 U.S.C.A. Appendix, § 923 (a) that court would have adjudicated both issues. Conklin Pen Co. v. Bowles, Em.App., 152 F.2d 764; Collins v. Bowles Em.App., 152 F.2d 760, supra. And in the event that the Emergency Court had found the regulation inapplicable and such decision had been made before a judgment was rendered in the District Court, its ruling would be binding upon the District Court." Here the District Court has, in two interlocutory memorandum orders in the enforcement action, adopted the construction of the Court of Appeals for the Eighth Circuit in the Mars case, as, indeed, it was bound to do, as it is located in that circuit; but it has made no final decision upon the merits. Obviously it must follow the United States Circuit Court of Appeals' decision on final hearing. We think, in this situation, that it may well be our duty, in order to afford complainant a full remedy, to accept the interpretation of the regulations which the district court is thus in duty bound to adopt and apply in the enforcement suit now pending against complainant.

If, however, the question of interpretation is open to us, we think there can be no question but that the Court of Appeals correctly decided the issue. We agree that the Administrator adopted the correct standard, in determining whether a seller of candy bars had adhered to his ceiling price as fixed by the regulations in question, in holding that he should determine whether a smaller package is being delivered at the same price. We are dealing with facts, not theories. What was actually sold to the customer for a certain price in March 1942, the vendor was bound to sell thereafter at the same price. The label weights admittedly were not accurate statements of the actual contents of packages. Indeed, the actual weights at that time universally exceeded the label weights. What was actually being delivered can be the only dependable test. The effort to restrain inflation by maintenance of existing March 1942 levels would have been easily defeated if, at their pleasure, vendors of candy bars had been at liberty to reduce the actual amount of candy in the package and still sell it at the same price.

Inasmuch, therefore, as the regulations have been correctly interpreted, we reach the further question of whether, as thus interpreted, they are valid. Complainant asserts that they are arbitrary and capricious in that they establish maximum prices for candy bars by reference to their base period actual weights rather than by their label weights. It directs our attention to the fact that the industry advisory committee, after the expiration of the period during which the alleged violations occurred, recommended that the ceiling price should be fixed by adoption of the March 1942 lowest wrapper weight designation. In other words, the committee recommended that the base period label weight should be accepted as the actual average weight. It seems obvious that such a provision would have simply amounted to a price increase in view of the industry's universal custom of putting more in the package than appeared on the label. It appears that complainant's bars ordinarily contained from 10 to 28% more weight than the label indicated. Complainant designates this excess a gratuity, but the fact remains that it was and had been the custom, in selling candy bars, to include more than the label indicates. Whether it was a gratuity or not, the truth is that it constituted an additional amount of candy sold at the March 1942 price. The amount was reduced; automatically the price was raised. Absar Realty Co. v. Bowles, Em. App., 149 F.2d 654; Johnson v. Bowles, Em.App., 145 F.2d 166.

In this connection complainant urges that tolerances are not recognized by the regulations and that to ignore their existence is arbitrary and capricious. The regulations say nothing about tolerance. The interpretation of the Administrator and of the Circuit Court of Appeals for the Eighth Circuit does not touch this question; and, in our opinion, it is strictly one for the District Court and upon appeal by the Court of Appeals for that Circuit. In other words, whether the Administrator seeks to recover for violation without allowance of reasonable tolerance is a question purely for the enforcement court which must decide from the evidence whether the respondent gave proper consideration to legitimate tolerances. That is a question arising upon the proof, which is not presented to us.

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