Fleming v. Moberly Milk Products Co.

• Decision Date: 14 February 1947
• Docket Number: No. 9475.,9475.
• Citation: 160 F.2d 259
• Parties: FLEMING et al. v. MOBERLY MILK PRODUCTS CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

160 F.2d 259 (1947)

FLEMING et al. v. MOBERLY MILK PRODUCTS CO.

No. 9475.

United States Court of Appeals District of Columbia.

Argued February 7, 1947.

Decided February 14, 1947.

Writ of Certiorari Dismissed May 5, 1947.

COPYRIGHT MATERIAL OMITTED

Mr. Carl A. Auerbach, of Washington, D. C., Gen. Counsel, OPA branch, Office of Temporary Controls, with whom Messrs. William R. Ming, Jr., and Albert M. Dreyer, both of Washington, D. C., OPA branch, Office of Temporary Controls, were on the brief, for appellant Fleming.

Mr. George Morris Fay, U. S. Atty., of Washington, D. C., was on the brief for appellant Anderson.

Mr. Richard E. Guggenheim, of Washington, D. C., Atty., Department of Justice, also entered an appearance for appellant Anderson.

Mr. Raymond R. Dickey, of Washington, D. C., with whom Messrs. Joseph B. Danzansky, Bernard Margolius, Edward L. Koepenick, and Carleton U. Edwards II, all of Washington, D. C., were on the brief, for appellee.

Messrs. Charles M. Fistere and Leo N. McGuire, both of Washington, D. C., on behalf of the American Bulk Condensed Milk Association, filed a brief as amicus curiae, urging reversal.

Before EDGERTON, WILBUR K. MILLER and PRETTYMAN, Associate Justices.

Writ of Certiorari Dismissed May 5, 1947. See 67 S.Ct. 1304.

PRETTYMAN, Associate Justice.

Appellee company brought a civil action in the District Court to enjoin appellants, the Administrator of the Office of Temporary Controls, successor in authority to the Office of Price Administration, and the Secretary of Agriculture, from enforcing certain provisions of an order¹ relating to allotments of sugar, in so far as those provisions made quotas dependent upon the historical practices of milk processors, or contained restrictions which would prevent any small plant capable and desirous of participating in the expansion, resumption, or initiation of production for nonwar use, from participating in such production. Trial was had, and the District Court made findings of fact, reached conclusions of law, and rendered judgment for the plaintiff-appellee. The defendant officials appealed.

Appellee company is a producer of sweetened milk in bulk for bakeries, ice cream makers, and similar enterprises. It began business in May, 1946. Its principal materials are sugar and skimmed milk. From September, 1942, until November, 1946, allocations of sugar were made by the Administrator to manufacturers in this industry on a "provisional allowance basis."² This was an allotment proportioned upon the estimated needs of the various users, as indicated by the amount of unrationed raw commodity (milk) available to each. As of November 1, 1946, the Administrator changed to the "historical-use basis" of allocation for this industry.³ Under it a user is allocated sugar on the basis of a percentage of the quantity of sugar actually used by him in some past period.⁴ Concerns which used sugar before January 1, 1945, were allotted a proportion of a "base," which was computed from their actual use of sugar in 1943, 1944 and 1945.

Because appellee company did not use sugar prior to October, 1945, its allotment beginning November 1, 1946, was determined by the provision of the amended Order applicable to such users. Its allotment was computed by the Administrator under the amended Order in five steps: (1) The amount of sugar used by the company in May, June, July and August, 1946, was stated.⁵ This totaled 127,710 pounds. (2) The percentage which the average May-August production of the industry bore to the average annual production of the industry, was computed. This was 48½ per cent. (3) By the use of this percentage figure, the amount of sugar actually used by appellee in May-August, 1946, was blown up into a theoretical or "projected" yearly total. This was 263,320 pounds. (127,710 pounds is 48½ per cent of 263,320 pounds.) (4) This "projected" yearly total was spread over the calendar months according to the average monthly production percentages of the industry. Thus, on the average, the industry production for September was 6½ per cent of the average annual production. So September was allotted 6½ per cent of the amount allotted for the year. Appellee company's September allowance, subject to Step 5, was computed at 6½ per cent of 263,320 pounds, its projected annual total. (5) Each monthly allotment shown by the foregoing was cut 50 per cent. This was because the amount of sugar used by the industry in 1946 was twice the average amount used in the base period 1943-1945. The reduction was to put 1946 users on a comparable basis with 1943-1945 users.

Two simple facts seem indisputable. First: The company's production of sweetened milk depends upon sugar. The Administrator controls sugar, and thus directly controls the company's production of sweetened milk. Second: The company's allotment of sugar under the amended Order is computed from and upon its actual use of sugar in May-August, 1946. If it had been in existence and had used sugar in 1943-1945, it would come under a different rule in the amended Order, and its allotment for all future time so long as the Order remained in effect, would have been different, depending upon its actual use of sugar in those years. If, perchance, it had used more sugar in May-August, 1946, than it actually did use, its future annual and monthly allotments would have been correspondingly more; and if it had used less, its allotments would have been less.⁶

The company says that by the amended Order the Administrator has made its production of sweetened milk dependent upon its existence in May-August, 1946, and upon its operations in that period. Factually, there is no possible denial of that conclusion. The company says that, therefore, the amended Order is in direct violation of the provision of the War Mobilization and Reconversion Act⁷ which says: "Such expanded, resumed, or initiated production for nonwar use * * * shall not be made dependent upon the existence of a concern or the functioning of a concern in a given field of activity at a given time; * * *"⁸

Certainly the initial impression upon reading the statute in the light of the facts is that the District Court was correct in its view. The production of bulk sweetened milk, a nonwar use of sugar, had expanded from 82,467 tons in 1943 to 198,463 tons in 1946. The production of this company had been "initiated" in 1946. So its production was an initiated one, part of an expanded one. The amended Order made that production dependent upon the existence of the company prior to August 31, 1946. Moreover, the non-existence of the company prior to December 31, 1945, and thus its existence only in the period May-August, 1946, was a determining factor in the computation of its permitted production. The extent of its operations, which would seem to be its "functioning" between specified dates which would seem to be "a given time", in the production of sweetened milk, which would seem to be "a given field of activity", determined its allotment of sugar. The allotment of sugar fixed its production. This is what seems to be "a clear-eyed reading of the statute".⁹

The company also says that the amended Order violates that section of the statute which provides:¹⁰

"(a) Whenever the expansion, resumption, or initiation of production for nonwar use is authorized, on a restricted basis, by any executive agency having control over manpower, production, or materials, the restrictions imposed shall not be such as to prevent any small plant capable and desirous of participating in such expansion, resumption, or initiation of production for nonwar use from so participating in such production.

"(b) Whenever such executive agency allocates available materials for the production of any item or group of items for nonwar use, it shall make available a percentage of such materials for the exclusive use by small plants for the production of such item or group of items. Such percentage shall be determined by the head of such agency after giving full consideration to the claims presented by the chairman of the board of directors of the Smaller War Plants Corporation and shall be fair and equitable."

This latter contention of the company is based upon three features of the amendment. (1) The use of a base which terminates August 31, 1946, and which thus automatically excludes new users who after that date desire to participate in production. (2) The specific provision of the amended Order which excludes new users. That provision reads, "Any person who did not use sugar for such purpose at any time from January 1, 1943 through August 31, 1946 is not eligible to register."¹¹ A user must register in order to secure any allotment. (3) No percentage of the available sugar is made available for the exclusive use of small plants.

Appellants do not contradict the factual premises of the company's position, but rather seek to avoid the conclusion by several contentions. (1) They deny the jurisdiction of the District Court. (2) They say that the quoted provisions of the Act have not come into effect and will not become operative until the total amount of sugar available for nonwar industrial use has increased over the amount available for that use in 1944, when the Act was passed. They base this contention upon the statutory provision as to expansion of production for nonwar use. (3) They say that the "existence" of a concern, within the meaning of the statute, is its bare existence in the form in which it presently does business; for example, corporate form. And they say that "functioning" means the bare fact of operation and has no quantitative meaning; i. e., it does not refer to the amount, method or other features of operation apart from the simple fact of functioning. (4) They admit that the Amendment would be invalid in its exclusion of new users and its failure to make special provision for small plants, if the Act were now operative. In reply to that contention...