Hanock v. Eck

• Decision Date: 11 September 1950
• Docket Number: No. 9866.,9866.
• Citation: 183 F.2d 632
• Parties: HANOCK v. ECK et al.
• Court: U.S. Court of Appeals — Seventh Circuit

183 F.2d 632 (1950)

HANOCK v. ECK et al.

No. 9866.

United States Court of Appeals, Seventh Circuit.

July 20, 1950.

Rehearing Denied September 11, 1950.

Harold O. Mulks, Chicago, Ill., for appellant.

Julius E. Solomon, Chicago, Ill., for appellee.

Before KERNER, FINNEGAN, and SWAIM, Circuit Judges.

KERNER, Circuit Judge.

This appeal is from a judgment for plaintiff in a suit under the Emergency Price Control Act of 1942 as amended and extended, 50 U.S.C.A.Appendix, § 901 et seq., against two defendants to recover overceiling rentals and a bonus alleged to have been paid by plaintiff for the rental of certain housing accommodations.

There is no serious dispute over the basic facts that plaintiff paid the sum of $266.67 over and above the maximum rental established for the apartment involved and that he paid $300 as a bonus for the rental of the apartment. The questions raised are as to the sufficiency of the evidence to sustain the judgment against Mrs. Eck; the legal effect as to Mrs. Gaebel of the entry of a default judgment only against Mrs. Eck, subsequently vacated on the latter's petition; and whether plaintiff's asserted cause of action was in fact grounded on entrapment.

The complaint named Julia Eck and Flora Gaebel as defendants and alleged that Eck "holds the legal title to the property * * *" and that Gaebel "is either the agent for the defendant, Julia Eck, or is the beneficial owner of the property * * *." It further set forth that defendants, on or about December 10, 1946, rented an apartment to plaintiff at a rental of $65 a month under a lease for a period from January 1, 1947 to December 31, 1947; that as a condition of the renting, defendants required plaintiff to pay to them a bonus of $325, and that the maximum rent established for the apartment was $40.

Following service on both defendants and appearance by neither, the matter came on for ex parte hearing, and on February 6, 1948, the court entered judgment. After reciting that there had been personal service on both defendants but both were in default in that neither had filed appearance, and that evidence had been taken in open court, it found that defendant Eck held the legal title to the property involved and rented an apartment therein to plaintiff by lease for a rental in excess of the maximum established under the Emergency Price Control Act of 1942, and therefore rendered judgment against her.

On September 14, 1948, the court granted a motion filed on July 26 by Eck with a supporting affidavit, to vacate the judgment of February 6, and thereafter the matter was set for regular hearing. At this hearing plaintiff and defendant Eck were present in person and by counsel; counsel representing Gaebel was also present throughout the hearing but did not ask leave to enter appearance or file answer, claiming that his client was no longer a defendant in the cause for the reason that the entry of the default judgment of February 6 against Eck operated as a judgment of dismissal as to her. Mrs. Gaebel, however, was present as a witness, being called upon by each party to testify.

Upon hearing all the evidence offered by both parties, the trial judge found that on December 10, 1946, Mrs. Eck held title to the property and Mrs. Gaebel had possession of the apartment here involved, and that they conspired to and did rent the apartment to plaintiff under lease for a year at $65 a month although the maximum rental therefor was $40 a month. He further found that plaintiff paid defendants $266.67 in excess of the maximum for the period from December 11, 1946 through October, 1947; that plaintiff paid defendants $300 as a condition precedent to the renting of the apartment and that there was connivance and conspiracy between the two defendants in exacting that bonus and in compelling plaintiff to pay a sum in excess of the established monthly rental. He therefore rendered judgment for plaintiff against both defendants for twice the amount of the overcharges and of the bonus, and for $450 attorney's fees.

Defendants contend that the record does not sustain the judgment against either of them; that it is erroneous as to Mrs. Gaebel because the court lost jurisdiction over her after entry of the judgment against Mrs. Eck, and reopening of the cause on the latter's petition did not revive the cause as to Gaebel; that it is erroneous as to Mrs. Eck for the reason that there is no evidence whatever that she ever demanded or received any of the payments alleged to constitute overcharges under the provisions of the Price Control Act; and that there is no evidence to support the court's finding of connivance and conspiracy between her and Mrs. Gaebel. They further contend that in the event that this court finds that the judgment is erroneous as to either of them, it must be reversed as to both for the reason that it is a unit, binding both of them jointly, and reversal as to one, under Illinois law, operates as a reversal as to both.

In support of their assertion of error as to the judgment against Mrs. Gaebel, defendants rely upon Robinson v. Brown, 82 Ill. 279; Bakula v. Schwab, 167 Wis. 546, 168 N.W. 378; James v. Evans, 3 Cir., 149 F. 136, and other cases. We have examined all the cases cited and deem it unnecessary to discuss them beyond stating that none is authority for the proposition stated. Here both defendants were in default; the court so found, but entered judgment against only one; that one successfully petitioned to have the judgment vacated and the cause reopened; the other chose not to join in the reopened proceeding, as would no doubt have been permitted had she asked leave to file appearance and answer instanter; instead she stood on the supposed bar of further proceedings against her arising out of the vacated judgment. In colloquy preceding the hearing of evidence in the cause the court indicated his view that the vacating of the judgment and reopening of the cause disposed of counsel's argument that the entry of the judgment against the other defendant operated as a dismissal as to the one against whom it was not directed. Under the circumstances we are convinced that the court correctly held that the case should be retried as to both defendants, and that inasmuch as Mrs. Gaebel did not then ask to be relieved of the default and permitted to plead and be heard, she could not later complain that she had not been heard in defense of the action against her — having become in default by her failure to file appearance, she remained in default throughout the proceedings and was not entitled to obtain a benefit from the fortuitous circumstance that the judgment originally entered upon the default of both herself and her fellow-defendant did not run against herself.

The issue raised by Mrs. Eck is one of fact, and it is necessary for us to consider the evidence introduced on the hearing in order to determine whether or not she was liable as charged in the complaint for the violation of the Act, keeping in mind that under Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., the findings of the District Court are not to be set aside unless clearly erroneous, Tornello v. Deligiannis Brothers, 7 Cir., 180 F.2d 553, and that where the evidence is in dispute, the...