Duncan Coffee Co. v. Reconstruction Finance Corp.
| Decision Date | 16 December 1949 |
| Docket Number | No. 500.,500. |
| Citation | 178 F.2d 926 |
| Parties | DUNCAN COFFEE CO. v. RECONSTRUCTION FINANCE CORPORATION. |
| Court | U.S. Temporary Emergency Court of Appeals Court of Appeals |
Samuel H. Peak, Houston, Tex., for complainant.
George Arthur Fruit, Attorney, Department of Justice, Washington, D.C., with whom Joseph M. Friedman, Special Assistant to the Attorney General, was on the brief, and William G. Winters, Jr., Assistant United States Attorney, Houston, Texas, for respondent.
Before MARIS, Chief Judge, and McALLISTER and LINDLEY, Judges.
Heard at Houston, Texas, September 29, 1949.
Complainant, Duncan Coffee Company, brought suit in this court* to review the denial by respondent, Reconstruction Finance Corporation, of respondent's contractual liability to complainant under a coffee subsidy contract. The liability was determined to be $189,194.64. Complainant admits a liability of $110,135.28, and seeks, therefore, to recover the difference of $79,059.36 from subsidies now withheld from it by the Reconstruction Finance Corporation.
An outline of the background of the controversy may serve to clarify the issues. In 1945, coffee was scarce in this country as a result of was conditions; and because of that fact and to secure necessary coffee imports, without increasing prices to consumers above the price ceiling then existing, or resuming coffee rationing, the Director of Economic Stabilization, in accordance with the authority vested in him by law, ordered the Reconstruction Finance Corporation to subsidize coffee imports by paying 3 cents per pound for green coffee imported in accordance with certain prescribed conditions.
The purpose of the subsidy was to enable the importers who received it to pay the additional 3 cents per pound to their foreign sources of supply which were demanding such increased prices. The subsidy was paid to importers in this country through contracts which were entered into between the coffee importers and the Reconstruction Finance Corporation. All of the agreements entered into with the various importers were substantially similar in terms, except as to the quantities of coffee to be imported.
The contract entered into between the Duncan Coffee Company and the Reconstruction Finance Corporation, which is designated as contract No. 268, was executed November 19, 1945, and according to its terms, respondent agreed to pay the Duncan Coffee Company 3 cents per pound on green coffee purchased for import prior to April 1, 1946, and received in the United States not later than June 30, 1946. A maximum of coffee to be imported was specified of 11,946,580 pounds. In paragraph 13 of the contract, it was provided that its terms could be modified by mutual consent at any time; and that it might be modified or canceled by the Reconstruction Finance Corporation on ten days' notice to complainant. It was also provided that such modification or cancellation, either by both parties or by the Reconstruction Finance Corporation alone, would not affect any rights accrued under the contract prior to modification.
The contract was twice amended, in accordance with its terms, by mutual action, but never under the provision permitting modification by respondent alone.
The first amendment took place March 19, 1946, and added paragraph 14. This provided for increasing the maximum amount of coffee to be imported by the Duncan Coffee Company by more than 100%; extended the term for purchase of such coffee from March 31, 1946 to June 30, 1946; and added the following paragraph to the coffee subsidy contract: "In the event of an increase in OPA maximum prices on coffee, the importer shall pay to RFC an amount equal to the increase in maximum prices per pound on each type of coffee (not to exceed three cents a pound, green basis) times the number of pounds of each type of coffee which the importer owns in the continental United States at the close of business on the day prior to such increase in maximum prices, less the amount of such coffee which the importer has contracted to sell at a fixed price not to exceed the OPA maximum prices for such coffee in effect April 1, 1946, provided that the total amount of repayment to RFC shall not exceed the amount of payments by RFC to the importer under this agreement as amended."
The second amendment occurred on May 7, 1946. It extended the time for the arrival of imported coffee to August 15, 1946; and extended the time for filing claims for subsidies from July 31, 1946 to September 30, 1946. It further amended the contract by modifying paragraph 14 thereof to read as follows:
On June 30, 1946, the Emergency Price Control Act of 1942, as amended, expired, and OPA prices on coffee ended. On July 25, 1946, maximum prices on coffee were reimposed under the Price Control Extension Act of 1946, at June 30, 1946 levels, and were later increased. The subsidy program was, however, never renewed.
Upon the termination of the subsidy program and the increase in the OPA maximum prices on coffee, the Reconstruction Finance Corporation withheld from the Duncan Coffee Company the sum of $189,194.64, calculated on the basis of the Duncan Coffee Company's entire coffee inventory at that time. Of this sum, $110,135.28 was for the green coffee actually imported by the complainant and on which it had been paid subsidies. It is admitted by Duncan that the RFC is entitled to recapture this amount of subsidy under the provisions of paragraph 14, as amended. However, it is contended that respondent has no right to recover the balance of $79,059.36 attributable to that part of Duncan's inventory of coffee which had not been imported by Duncan, but which had been purchased by it in this country from others who had imported it.
Emphasizing that it had received no subsidies for the coffee in its possession which had been imported by others, complainant contends that the Reconstruction Finance Corporation is entitled to recapture subsidies related only to coffee acquired by Duncan as an importer, but can not recapture any money for coffee which it had acquired in this country from other importers and which Duncan had purchased only in its role as a roaster of coffee.
The Reconstruction Finance Corporation, as has been mentioned, denied the Duncan Coffee Company's protest against the determination that the company was liable, under the subsidy recapture provision of the subsidy contract, on the basis of Duncan's entire inventory of coffee on hand at the time of the increase in OPA prices on coffee.
After the denial of its protest, the Duncan Coffee Company instituted an action against respondent in the District Court for the Southern District of Texas. Respondent, contending that by Section 204(d) of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 924 (d), the Emergency Court of Appeals is given exclusive jurisdiction of such complaints, contended that the district court lacked jurisdiction; and, on November 15, 1948, the suit was dismissed for that reason on the authority of the decisions in Armour & Co. v. Reconstruction Finance Corporation, Em.App.1947, 162 F.2d 918, and Wm. Schluderberg, T. J. Kurdle Co. v. Reconstruction Finance Corporation, Em.App.1948, 169 F.2d 419. Plaintiff appealed from such dismissal to the Court of Appeals for the Fifth Circuit, and during the pendency of such appeal, filed its complaint in this court.
Although the jurisdiction of the Emergency Court of Appeals to decide this case has not been challenged, it seems proper at the outset, because of a certain novel aspect, to determine that question. Under Section 204(d) of the Emergency Price Control Act, it is provided that 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." In the instant case, no regulation was issued under Section 2...
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