Desper v. Warner Holding Co.

• Citation: 219 Minn. 607,19 N.W.2d 62
• Decision Date: 04 May 1945
• Docket Number: No. 33956.,33956.
• Parties: DESPER v. WARNER HOLDING CO.
• Court: Supreme Court of Minnesota (US)

19 N.W.2d 62

219 Minn. 607

DESPER v. WARNER HOLDING CO.

No. 33956.

Supreme Court of Minnesota.

May 4, 1945.

Appeal from Municipal Court of Minneapolis; John A. Weeks, Judge.

Action by Ira A. Desper against the Warner Holding Company to recover penalties and attorneys' fees for exaction of rents exceeding amounts authorized by a maximum rent regulation of the Office of Price Administration. Judgment for plaintiff, and, from an order denying defendant's motion for amended findings or a new trial and to set aside the assessment of damages, defendant appeals.

Affirmed.

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

Thomas Tallakson, of Minneapolis for respondent.

Fleming James, Jr., Director, Litigation Division, David London, Chief, Appellate Branch, and Edward H. Hatton, Atty., all of Washington, D. C., Harry E. Witherell, Acting Regional Atty., and Abraham H. Maller, Atty., both of Chicago, Ill., and Harris J. Nuernberg, Dist. Enforcement Atty., of St. Paul, Office of Price Administration, filed a brief for Chester Bowles, Administrator, amicus curiae.

THOMAS GALLAGHER, Justice.

This is an appeal from an order of the municipal court of Minneapolis denying the motion of defendant, a corporation, for amended findings or a new trial, and to set aside an assessment of damages against it as provided by the Emergency Price Control Act of 1942, § 205(e),¹ for eight monthly rental overcharges demanded and received by it from plaintiff, in violation of Maximum Rent Regulation No. 53, issued under § 2 of the act, 50 U.S.C.A.Appendix § 902.² Judgment was ordered for plaintiff in the sum of $400, $50 for each of the eight monthly violations, plus attorneys' fees of $100 as provided for by the act.

The facts are as follows: Plaintiff was a tenant and defendant the landlord of certain premises located in the city of Minneapolis. The tenancy began September 1, 1942, at a rental rate of $63.50 per month less a $5 per month discount if paid by the 10th of each month. Maximum Rent Regulation No. 53, hereinbefore referred to, had been issued effective November 1, 1942, and applied to the premises occupied by the tenant and established as a rental ceiling therefor the rental rate prevailing for said apartment on March 1, 1942, which was $52.50 per month. Notwithstanding this, from November 1, 1942, to July 30, 1943, defendant demanded and received a rental of $58.50 per month in violation of such regulation and the Emergency Price Control Act. Defendant contended that because of better furnishings he was entitled to more than the maximum rent, and, further, since the statute involved is penal in nature and of a foreign sovereignty, that it could not be enforced in the Minnesota courts.

The trial disclosed that additional furniture had been moved into the premises, and, further, that defendant had filed a petition for adjustment with the Office of Price Administration seeking to obtain higher rentals, but that the court made findings upholding the act and determining that defendant was guilty of violations thereof.

1. The validity of the Maximum Rent Regulations of the Emergency Price Control Act of 1942 is not in question. Nor can the Minnesota courts pass upon the merits of a petition filed by defendant on July 20, 1943, to obtain an increase, nor upon the order denying such petition made on August 19, 1943, by said administrator. Sections 203 and 204 of the act indicate that Minnesota courts do not have jurisdiction for the determination of these questions. Section 204(d), 50 U.S.C.A.Appendix § 924(d) provides:

"* * * The Emergency Court of Appeals, and the Supreme Court upon review of judgments and orders of the Emergency Court of Appeals, shall have exclusive jurisdiction to determine the validity of any regulation or order issued under section 2, of any price schedule effective in accordance with the provisions of section 206, and of any provision of any such regulation, order, or price schedule. Except as provided in this section, no court, Federal, State, or Territorial, shall have jurisdiction or power to consider the validity of any such regulation, order, or price schedule, or to stay, restrain, enjoin, or set aside, in whole or in part, any provision of this Act authorizing the issuance of such regulations or orders, or making effective any such price schedule, or any provision of any such regulation, order, or price schedule, or to restrain or enjoin the enforcement of any such provision." (Italics supplied.)

Under the provisions of § 203, 50 U.S.C. A.Appendix § 923, one desiring to contest the validity of a regulation applicable to him, may file a protest with the price administrator, stating objections to the regulation or order, and may likewise file a petition for adjustment seeking an increase in his particular case. Upon a denial thereof, the complainant may file a protest with the Emergency Court of Appeals § 204(a), 50 U.S.C.A.Appendix § 924(a), "to set aside such regulation, order, or price schedule, in whole or in part, to dismiss the complaint, or to remand the proceeding." Such language effectively eliminates the jurisdiction of the state or other federal courts on such issues.

The entire procedure contained in said sections, as well as the constitutionality of the act, has been upheld in the following cases: Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834; Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892; United States v. Pepper Bros., 3 Cir., 1944, 142 F.2d 340; Bowles v. Nu Way Laundry Co., 10 Cir., 1944, 144 F.2d 741; Brown v. Warner Holding Co., D.C. Minn.1943, 50 F.Supp. 593. Accordingly, the validity of the act, as well as the merits of defendant's petition for an adjustment, is reserved exclusively to the administrative process, with judicial review lying in the Emergency Court of Appeals only, as provided by the act.

2. Defendant contends that the court below improperly exercised jurisdiction over the present action on the grounds that the state courts will not entertain actions based on penal laws of a foreign sovereignty.

The Emergency Price Control Act was passed by congress to prevent inflationary price rises occasioned by the war. Housing accommodations are particularly subject to inflationary increases, because labor and material shortages eliminate the possibility of housing expansion, while at the same time the expansion of industry brings with it a proportionate increase in the demand for housing accommodations. Section 205(e) of the act was designed to create an effective deterrent against landlords seeking to increase rental demands. If this is to be effective, the remedy provided for therein should be capable of enforcement, and claimants thereunder should have access to local courts for such purpose.

Said § 205(e) provides that any action or suit thereunder may be brought in any court of competent jurisdiction, and § 205 (c) of the act provides:

"The district courts shall have jurisdiction of criminal proceedings for violations of section 4 of this Act, and, concurrently with State and Territorial courts, of all other proceedings under section 205 of this Act."

The language indicates that congress intended the state courts to take jurisdiction where otherwise competent to do so. The remedy therein was patterned after the Fair Labor Standards Act, authorizing the recovery of double the amount of wrongfully withheld wages. The phrase contained in the Fair Labor Standards Act³ has been universally construed to authorize the maintenance of suits for double damages in state courts otherwise competent to exercise jurisdiction. See, Abroe v. Lindsay Bros. Co., 211 Minn. 136, 300 N.W. 457; Adair v. Traco Division, 192 Ga. 59, 14 S. E.2d 466; Forsyth v. Central Foundry Co., 240 Ala. 277, 198 So. 706; Emerson v. Mary Lincoln Candies, Inc., 173 Misc. 531, 17 N.Y.S.2d 851; Owens v. Chicago, G. W. Ry. Co., 113 Minn. 49, 128 N.W. 1011; State ex rel. Schendel v. District Court, 156 Minn. 380, 194 N.W. 780. Since under Minnesota statutes the municipal court of Minneapolis has jurisdiction of civil actions of this type within certain limits not here involved, we hold that that court is a competent court of jurisdiction within the meaning of § 205(c, e) of the act.

With respect to the argument that the cause of action is penal and the United States must be regarded as a foreign sovereignty, it is sufficient to note that the section in question provides for a private remedy to the person wronged by the violation of the act. In Huntington v. Attrill, 146 U.S. 657, 667, 13 S.Ct. 224, 227, 36 L. Ed. 1123, 1127, the court stated:

"Penal laws, strictly and properly, are those imposing punishment for an offense committed against the state, and which, by the English and American constitutions, the executive of the state has the power to pardon. Statutes giving a private action against the wrongdoer are sometimes spoken of as penal in their nature, but in such cases it has been pointed out that neither the liability imposed nor the remedy given is strictly penal."

See, also, Whitman v. Oxford Nat. Bank, 176 U.S. 559, 20 S.Ct. 477, 44 L.Ed. 587; Kirtley v. Holmes, 6 Cir., 1901, 107 F. 1, 46 C.C.A. 102, 52 L.R.A. 738; Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241. Nor does the fact that § 205(e) authorizes the recovery of a flat sum transform the cause of action from a remedial to a penal one. See, Brady v. Daly, 175 U.S. 148, 20 S.Ct. 62, 44 L.Ed. 109; Atchison, T. & S. F.Ry. Co. v. Nichols, 264 U.S. 348, 44 S. Ct. 353, 68 L.Ed. 720; Hocking Valley R. Co. v. New York Coal Co., 6 Cir., 1914, 217 F. 727, 132 C.C.A. 387.

Under the foregoing authorities, the conclusion cannot be escaped that § 205(e) is clearly remedial. Thereunder the action is brought by the person injured, and the entire amount remains his property. Furthermore, it has universally been held that in actions of this ...