Fraser v. United States

• Decision Date: 26 February 1945
• Docket Number: No. 9639-9641.,9639-9641.
• Citation: 145 F.2d 139
• Parties: FRASER v. UNITED STATES (two cases). BARTON et al. v. SAME.
• Court: U.S. Court of Appeals — Sixth Circuit

145 F.2d 139 (1944)

FRASER v. UNITED STATES (two cases). BARTON et al. v. SAME.

Nos. 9639-9641.

Circuit Court of Appeals, Sixth Circuit.

October 3, 1944.

Writ of Certiorari Denied February 26, 1945.

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W. C. Rodgers, of Memphis, Tenn., for William Fraser and Mrs. William Fraser.

Fred Callahan, of Memphis, Tenn. (Fred Callahan and Granville Farrar, both of Memphis, Tenn., on the brief), for P. M. Barton et al.

Mary Connor Myers, of Washington, D. C., (J. Stephen Doyle, Jr., of Washington, D.C., and William McClanahan and R. G. Draper, both of Memphis, Tenn., on the brief), for the United States.

Before HICKS, SIMONS, and McALLISTER, Circuit Judges.

Writ of Certiorari Denied February 26, 1945. See 65 S.Ct. 684.

SIMONS, Circuit Judge.

These appeals challenge the liability of purchasers of non-quota cotton for penalties prescribed by the Agricultural Adjustment Act of 1938, 7 U.S.C.A. § 1348, as amended by Joint Resolution P.L. No. 74, 77th Congress, 7 U.S.C.A. §§ 1330, 1340. The original controversy arose between the producers and the purchasers as to which party was required to pay the penalty, but the United States intervened, and on the ground that the purchasers had made no accounting to the producers for the avails of the cotton, that they had neither paid the producers nor the government tax and had not segregated any fund for the payment of the penalty, nor given notice of any kind to the United States of the sale and transfer of the cotton, as provided by law, sought payment of the penalty from both producers and purchasers. The court gave judgment for the government in the amount of the penalty against both, and impounded avails of the cotton discovered in possession of Mrs. Fraser through pretrial depositions of the Frasers under Rule 26, Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723c, by interrogatories which are alleged by them to be an invasion of the privilege resulting from their marital relation.

Barton and others were owners of the Three-Way Land Company which, in 1941, leased some 15,000 acres, planted to cotton, on a share-crop basis. Negotiations with Fraser and Britton resulted in an agreement in the nature of an option exercised by Fraser as he secured buyers for the cotton. It is Fraser's contention that the contract relieved him and his associate from obligation to pay the penalty because in a letter on which the contract was based, he said, "we are not interested in any government tax." This observation is relied upon to show that the tax was to be paid by Barton. It is not to such extent unequivocal as to close the door to extrinsic proofs of the terms of the agreement. There was evidence that Fraser proposed to sell the cotton at a price sufficient to enable him to pay Barton 15½ cents a pound, or an average of $7 a bale "above loan values," and that Barton understood this to mean that it would be net to him after payment of all government claims. This understanding was confirmed in later letters between the parties, and there was testimony of trade usage that "above loan value" comprehended payment by the purchaser of government penalties. In view of the fact that Fraser's interpretation of the agreement would have enabled him to make a profit of over $46,000, while Barton and the farmers received less than $20,000, the contracting parties could not reasonably have intended such result. In any event, the trial judge who heard the evidence, decided the issue against Fraser, and we are unable to say that his holding was clearly wrong.

Barton's suit is challenged on the ground that he is not the proper party plaintiff, because in an earlier suit upon the same cause of action in Missouri, the complaint was filed on behalf of the Three-Way Land Company, a Corporation. It appears, however, that since the Missouri case was begun the corporation has surrendered its charter, and given Barton authority to liquidate and wind up its affairs. We think the suit was properly brought by Barton in view of the circumstances. No estoppel arises out of the fact that the earlier suit counted upon a contract evidenced by a letter of April 24, while the agreement here sued upon depends upon an April 2nd letter. The court found that reference to the April 24th letter in the Missouri suit, was the result of an error in the drafting of the complaint. While evidence to support this finding is meager, the April 24th letter was in existence, and the Missouri complaint was hurriedly drawn. There being no showing of wilful misstatement, and none of prejudice, there is no estoppel. Behr v. Connecticut Mutual Life Ins. Co., C.C., 4 F. 357, 362; Broyles v. Scottish Union & Nat. Ins. Co., 16 Tenn.App. 331, 336, 64 S. W.2d 517; Southern Coal & Iron Co. v. Schwoon, 145 Tenn. 191, 239 S.W. 398.

Aside from question of liability for penalties as between the parties to the contract, Fraser contends that he is not liable under the Act. He relies upon 7 U.S.C.A. § 1348, which provides, "any farmer who * * * markets cotton in excess of the * * * quota * * * shall be subject to the following penalties." 7 U.S.C.A. § 1372, however, provides that "the penalty * * * shall be collected by the buyer" and paid "as the Secretary may by regulations prescribe. Such penalties shall be remitted to the Secretary by the person liable for the penalty, except that if any other person is liable for the collection of the penalty, such other person shall remit the penalty." Section 1372 also provides that penalties shall be collected and paid in such manner, at such times, and under such conditions as the Secretary may, by regulations, prescribe, and in pursuance of such authority there were promulgated "Regulations Pertaining to Cotton Marketing Quotas for the 1941-1942 Marketing Year" identified as (Cotton 507) of which § 702 provides "the penalty in connection with the marketing of cotton by sale to any person within the United States shall be collected by the buyer at the time of sale. * * *" It is true that this regulation also recognizes an agreement between producer and buyer in reference to cotton, but this is limited to processed cotton. There must have been purpose and not inadvertence in the distinction. By § 703 of the Regulations, the penalty is to be remitted not later than 15 calendar days next succeeding the day on which the cotton was marketed by the producer.

The court held both parties liable, and we agree. Fraser withheld both from Barton and the United States, the amount of the penalty, and so in effect collected it. Tennessee cases holding that no one may be made a bailee without his consent, are unimportant, for we are concerned with a Federal statute implementing a policy of national control of agricultural marketing conditions, and insofar as it is a valid exercise of the commerce power, it is paramount to state law. No question of due process inheres in holding the buyer who collects the penalty liable for its payment. When, with notice, he buys non-quota cotton, he subjects himself to the provisions of the Act and may not complain. He is under no obligation to buy.

Fraser's contention that even if liable for penalties it is only to the extent of 3¢ per pound instead of 7¢ per pound, must be rejected. Originally the Act of 1938, as amended, 7 U.S.C.A. § 1348, 52 Stat. 59, provided for a penalty on non-quota cotton of 2¢ per pound if marketed during the first marketing year when quotas are in effect, and 3¢ per pound if marketed during any subsequent year. This provision was, however, amended by Joint Resolution No. 74, 77th Congress, captioned "Joint Resolution Relating to corn and wheat marketing quotas under the Agricultural Adjustment Act of 1938, as Amended." Subsection 9 of the Resolution raised the penalty on non-quota cotton for the 1941-1942 marketing year, to 7¢ per pound. No invalidity is perceived in this section by reason of the omission from the caption of any reference to cotton. While many state constitutions require the purpose of a statute to be fully expressed in its title, and while this requirement has been construed with varying degrees of liberality by state courts, no such requirement attaches to Congressional enactments. There would seem to be no more reason for eliminating cotton from subsection 9 by invoking the doctrine "expressio unius," than for inserting it in the caption if the doctrine ever could be invoked in a situation of this kind.

Fraser's complaint at being enjoined from transferring assets and being required to pay money disclosed in his wife's possession, into the registry of the court pending trial and final determination, is likewise without merit except insofar as the latter may involve the question of privilege to be hereinafter discussed. It has been held, Behre v. Anchor Ins. Co., 2 Cir., 297 F. 986, that an averment that a defendant intends to transfer funds out of the jurisdiction, is insufficient to support an injunction if the defendant is solvent. Here it was alleged that Fraser was insolvent, and he admitted inability to pay the full amount of the penalty. In H. P. Hood & Sons v. United States, 1 Cir., 97 F.2d 677, the defendant who was contesting the validity of the Marketing Agreement Act, was required to pay the sums alleged to be due under the Act, into court, pending determination of the controversy. United States v. Adler's Creamery, 2 Cir., 107 F.2d 987, is not in conflict for decision was rested upon absence of a showing that there was likelihood of irreparable injury pendente lite. In Mulford v. Smith, 307 U.S. 38, 45, 59 S.Ct. 648, 83 L.Ed. 1092, involving comparable provisions of the Act, it was noted, without criticism, that the District Court had directed payments required to be made under the law, to be paid into its registry pending determination. The proceedings below were in equity, and it would have been competent for the court to have appointed a receiver or custodian for the disputed...