FEDERATED MEAT CORPORATION v. Fleming

• Decision Date: 12 February 1947
• Docket Number: No. 330.,330.
• Citation: 159 F.2d 725
• Parties: FEDERATED MEAT CORPORATION et al. v. FLEMING, Temporary Controls Administrator.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

159 F.2d 725 (1947)

FEDERATED MEAT CORPORATION et al. v. FLEMING, Temporary Controls Administrator.

No. 330.

United States Emergency Court of Appeals.

Heard December 6, 1946.

Decided February 12, 1947.

Morris Fierson, of New York City, with whom Jack Kranis, of New York City, was on the brief, for complainants.

Irving J. Helman, Attorney, of Washington, D. C., with whom Richard H. Field, General Counsel, Carl A. Auerbach, Associate General Counsel, and William R. Ming, Jr., Chief, Court Review Price Branch, all of the Office of Price Administration, all of Washington, D. C., were on the brief, for respondent.

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

Heard at New York December 6, 1946.

MAGRUDER, Judge.

This is the first case we have had involving the validity of Maximum Price Regulation No. 574 — Live Bovine Animals (Cattle and Calves), issued January 29, 1945 (10 F.R. 1270). In several previous cases the related regulation, Revised Maximum Price Regulation No. 169 — Beef and Veal Carcasses and Wholesale Cuts (7 F.R. 10381) has been under fire. Armour & Co. v. Bowles, Em.App., 1945, 148 F.2d 529, certiorari denied, 1945, 325 U.S. 871, 65 S.Ct. 1411, 89 L.Ed. 1989; Oswald & Hess Co. v. Bowles, Em.App., 1945, 148 F.2d 543, certiorari denied, 1945, 325 U.S. 871, 65 S.Ct. 1411, 89 L.Ed. 1990; Heinz v. Bowles, Em.App., 1945, 149 F.2d 277, and upon reconsideration, Em.App., 1945, 150 F.2d 546; The E. Kahn's Sons Co. v. Bowles, Em. App., 1945, 149 F.2d 277, certiorari denied, 1945, 326 U.S. 719, 66 S.Ct. 24; Ben H. Rosenthal & Co., Inc., v. Porter, Em.App., 1946, 158 F.2d 171.

We refer to our opinion in Armour & Co. v. Bowles, Em.App., 148 F.2d 529, at pages 531-533, for a somewhat detailed statement of the evolution of the price control program as applied to meat. The difficulties encountered seem to have been attributable in large part to the fact that it was deemed impracticable to establish ceiling prices on live cattle because of the difficulty of grading cattle on the hoof, and particularly the difficulty of determining the grade of carcass beef which any individual animal will produce. The cattle stabilization plan instituted pursuant to the Directive of the Office of Economic Stabilization issued October 25, 1943 (8 F.R. 14641), sought to impose an indirect control upon live cattle prices by depriving the buyer of his subsidy to the extent that his total monthly payments for all grades of cattle purchased exceeded the price ranges established for the various grades. These price ranges were fixed with a view to bringing into proper relationship the prices for live cattle and the prices for beef carcasses and wholesale cuts established in RMPR 169.

The total maximum permissible payment (without loss of subsidy) for all cattle slaughtered during a monthly accounting period was computed in the following manner: After slaughter, the dressed carcasses were graded.¹ The slaughterer determined the total tonnage of beef carcasses, by grades, obtained from the cattle slaughtered during the monthly accounting period. The equivalent or "calculated" live weight of cattle in each grade slaughtered during the period was computed from the dressed carcass weights by the use of conversion factors or average dressing percentages, each dressing percentage being the ratio of the weight of the dressed carcass of the particular grade to the calculated live weight of the animal. These conversion factors, which were determined and certified to the Defense Supplies Corporation by joint order of the Price Administrator and the War Food Administrator, were as follows for the different grades: Choice, 61%; good, 58%; commercial or medium, 56%; utility or common, 54%; canner and cutter, 46%; and bulls of canner and cutter grade, 53%.² That meant, for example, that a steer of "choice" grade was assumed to yield a dressed carcass weight of 61% of the live weight; and so on, through the various lower grades. The calculated live weight did not necessarily coincide with the actual weight of the steer before slaughter, but was arrived at by working backward from the graded dressed carcass, the weight of which was divided by the standard percentage yield factor applicable to the particular grade. The aggregate calculated live weight for cattle of each grade slaughtered during the accounting period was multiplied by the maximum price of the applicable range prices, and the amounts thus derived for each grade were added together. The resulting total figure was the maximum permissible amount which the slaughterer could pay for the cattle slaughtered during the accounting period without loss of subsidy. An illustration taken from the Price Administrator's opinion will serve to make clearer the method of computation.³ The determinations were made separately for each slaughtering plant where a slaughterer's cattle were slaughtered.

Pursuant to a Directive of the Office of Economic Stabilization, issued January 10, 1945 (10 F.R. 522), MPR 574 went a step further, and incorporated the cattle stabilization plan into the price regulation itself, thus adding the sanctions of the Price Control Act to the sanction of loss of subsidy in order to induce slaughterers to keep their purchases of live cattle within the prescribed range prices in the over-all monthly average. Section 2 provided that no person in the course of trade or business "shall pay for live cattle bought or received during any accounting period an amount higher than the maximum amount fixed by this regulation for such live cattle during such accounting period". This prohibition was imposed upon buyers of live cattle only, not sellers.

MPR 574 in addition established an overriding ceiling price, without regard to grade, for sale or delivery of any live bovine animal or lot of live bovine animals. Although the overriding ceiling was technically applicable to the sale of any grade of cattle, its practical purpose was to put a price limit on sales of choice cattle while avoiding the difficulty of grading each animal on the hoof. The overriding ceiling was applicable both to seller and buyer.

Federated Meat Corp. and United Meat Co., Inc., are both engaged in the slaughtering business in Brooklyn, New York. They filed their separate protests against MPR 574 on February 20, 1946. The protests were consolidated by the Administrator since they raised identical objections to the regulation, and on March 26, 1946, the Administrator issued his order denying both protests. Protestants having introduced no evidence in the protest proceedings, some of their objections necessarily failed for lack of factual support in the record. Upon denial of their protests, the two companies filed a joint complaint in this court.

Since livestock were removed from price control by Amendment 64 to Supplementary Order 132, issued October 15, 1946 (11 F.R. 12093), this case would now be moot but for the fact, as we are informed, that there are several criminal complaints pending against each of the present complainants in the War Emergency Court of the City of New York, charging them with violations of MPR 574 during the period April 2, 1945, through March 31, 1946. These prosecutions are not founded on the Emergency Price Control Act but upon a provision of the Administrative Code of the City of New York making it unlawful for any person to sell or deliver any commodity, or in the course of trade or business to buy or receive any commodity, at a price in excess of an applicable maximum price regulation issued by the Office of Price Administration of the United States of America. The penalties provided are a fine or jail sentence or both for each such violation. Since, under § 204 (d) of the Price Control Act, 50 U.S.C.A. Appendix, § 924(d), the Emergency Court of Appeals has exclusive jurisdiction to determine the validity of MPR 574, complainants now seek from us, to be used as a defense in the local enforcement proceedings, a judgment declaring that the regulation was void ab initio.

It is objected that MPR 574 is contrary to law in that the statutory authority to impose price controls necessarily implied that such controls must be imposed upon sellers, and not upon buyers only. The premise upon which this objection is based does not accurately reflect the effect of the regulation. The overriding ceiling price was imposed upon buyer and seller alike. Where each sale was viewed separately, any restriction on the price the buyer might pay was likewise a restriction on the price the seller might charge. The obligation imposed upon the buyer only was to keep the total amount paid for all cattle during the accounting period within the maximum permissible cost, computed as above described. We have no doubt that the Administrator was authorized by the Act to impose such an obligation upon...