Illinois Packing Co. v. Defense Supplies Corporation, Civ. No. 44 C 865.

• Decision Date: 29 September 1944
• Docket Number: Civ. No. 44 C 865.
• Citation: 57 F. Supp. 8
• Parties: ILLINOIS PACKING CO. v. DEFENSE SUPPLIES CORPORATION.
• Court: U.S. District Court — Northern District of Illinois

57 F. Supp. 8

ILLINOIS PACKING CO. v. DEFENSE SUPPLIES CORPORATION.

Civ. No. 44 C 865.

District Court, N. D. Illinois, E. D.

September 29, 1944.

Walker and Atwood, of Chicago, Ill., for plaintiff.

Lee Walker, M. O. Hoel, and Stephen R. Chummers, all of Chicago, Ill., for defendant.

LA BUY, District Judge.

On October 25, 1943, Fred M. Vinson, Director of the Office of Economic Stabilization, issued a Directive, pursuant to authority conferred on him by the Act of October 2, 1942, passed by the Congress of the United States, which Act is entitled "An Act to amend the Emergency Price Control Act of 1942, to aid in preventing inflation, and for other purposes," 50 U.S.C.A.Appendix, §§ 961-971, and also pursuant to authority of Executive Order No. 9250 of October 3, 1942, 50 U.S.C.A.Appendix, § 901 note, and to Executive Order No. 9328 of April 8, 1943, 50 U.S.C.A.Appendix, § 901 note. The portion of said Directive insofar as same is material herein is as follows:

"5. Slaughterers who during the year 1942, or a representative portion thereof, sold and who currently sell 98% or more of the total dressed carcass weight of cattle slaughtered by them in the form of carcasses, wholesale cuts, frozen boneless beef (Army specifications) (carcass equivalent) or ground beef, shall be paid in addition to the payments authorized by Regulation No. 3 of Defense Supplies Corporation (Livestock Slaughter Payments), the amount of $0.80 per cwt. of cattle slaughtered during the month for which such payments are made."

"6. Defense Supplies Corporation is directed to amend Regulation No. 3 (Livestock Slaughter Payments) in accordance with this Directive."

Pursuant to said Directive the defendant issued on October 30, 1943, Amendment No. 2 to its Regulation No. 3, which amendment provided for extra compensation for slaughterers of beef. The material portion of said Amendment No. 2 is as follows:

"(1) `Non-processing slaughterer of beef' means an unaffiliated slaughterer as hereinafter defined who during six consecutive months of 1942, sold, and who currently sells, 98% or more, measured in dressed carcass weight, of the total beef produced from cattle slaughtered by him in all his establishments, in the form of carcasses, wholesale cuts, boneless beef or ground beef.

"(2) `Unaffiliated slaughterer' means a slaughterer who does not own or control a processor or purveyor of meat, and who is not owned or controlled by a processor or purveyor of meat. `Unaffiliated slaughterer' shall not include any institution, representative or agency of Federal, State or local governments.

"(3) `Processor or purveyor of meat' means a person who processes fresh beef or sells or dispenses fresh or processed meat or products containing meat, at wholesale or at retail, or in a hotel, restaurant or other eating establishment.

"(4) `Own or control' means to own or control directly or indirectly a partnership equity or in excess of ten per cent of any class of outstanding stock or to have made loans or advances in excess of five per cent of the other person's monthly sales."

Upon the issuance of said Directive and said Amendment No. 2, the plaintiff filed claims with the defendant for the payment of extra compensation on account of cattle slaughtered on and after November 1, 1943, up to and including April 30, 1944, and the defendant paid to plaintiff on account of said claims so filed the sum of $308,520.08 for extra compensation for said period of time. Subsequently plaintiff filed a claim for basic and extra compensation for the month of May, 1944. The basic compensation was paid by defendant, but the defendant did not pay the claim of the plaintiff for extra compensation for said month of May in the amount of $51,785.84. The plaintiff also filed claims with the defendant for basic and extra compensation for the month of June, 1944. The basic compensation in the sum of $47,932.54 and the extra compensation in the sum of $46,405.88 have been allowed by the defendant, but not paid to the plaintiff.

The defendant on May 20, 1944, notified the plaintiff that it considered the plaintiff had obtained payment of the extra compensation in the sum of $308,520.08 without right or justification because at the time that said payment of extra compensation was made over 10% of the outstanding capital stock of the plaintiff was owned or controlled, directly or indirectly, by Pfaelzer Brothers, a processor or purveyor of meat. The defendant thereupon notified the plaintiff that it would withhold all future payments of compensation, both basic and extra, which might be payable to the plaintiff under the Directive of the Administration of the Office of Economic Stabilization or under Regulation No. 3, and any amendments thereof which might accrue after May 29, 1944 (the date of the transfer of said stock previously held by said Pfaelzer Brothers to one Fred B. Salmon who was not and is not a processor or purveyor of meat), until such time as all extra compensation received by the plaintiff during the said period of November 1, 1943 to April 30, 1944, in the amount of $308,520.08 had been paid by set-off out of compensation (either basic or extra) which would become due to the plaintiff in the future. Pursuant to said notice the defendant has not made any further payments of either basic or extra compensation to the plaintiff.

Plaintiff seeks a declaratory judgment finding that the portion of said Amendment No. 2 which provides that "`own or control' means to own or control directly or indirectly a partnership equity or in excess of ten per cent of any class of outstanding stock or to have made loans or advances in excess of five per cent of the other person's monthly sales" is invalid, and as a matter of law is null and void. The complaint in its various counts sets up several reasons for the claimed invalidity of said portion of said Amendment No. 2, some of which reasons are as follows: (a) It provides in substance that in order to be disqualified for the receipt of extra compensation, the plaintiff was required to both own or control a processor or purveyor of meat, and be owned or controlled by a processor or purveyor of meat, and that plaintiff did not own or control a processor or purveyor of meat and was not owned or controlled by a processor or purveyor of meat at any time between November 1, 1943, up to May 29, 1944; (b) that said Amendment sets up a conclusive presumption of fact, without basis or relation to actual facts and contrary to the actual facts, and denies the plaintiff the right to rebut the said presumption, contrary to the rights of the plaintiff under the Fifth Amendment to the Constitution of the United States; (c) that said regulation is contrary to the provisions of Executive Order No. 9250 of the President of the United States in that under said Executive Order No. 9250 and under the Directive of the Office of Economic Stabilization, the defendant had no power to promulgate rules and definitions which were beyond the scope of the authority thereof in that same is an attempt by the defendant to limit and define the class of persons who are entitled to payment of extra compensation under the said Directive of the Office of Economic Stabilization, and as such, beyond the scope of the authority of the defendant; (d) that in the definition of "own or control" in said Amendment, there is no rational connection between the declared policy of the Directive of October 25, 1943, and the said regulation; (e) that said definition is an arbitrary limitation of the class of persons who were entitled to compensation under the provisions of paragraph 5 of the said Directive, and as such, in excess of the power of the defendant to promulgate, and contrary to the provisions of Executive Order No. 9250 of the President of the United States and the provisions of the Directive of October 25, 1943.

The defendant has filed its written motion to strike the complaint on the ground that the court has no jurisdiction of the subject matter of this suit, because the exclusive jurisdiction of the question involved is vested in the Emergency Court of Appeals.

Under Executive Order No. 9250 the Office of Economic Stabilization was established and the Administrator of this office, the Economic Stabilization Director, was authorized with the approval of the President to formulate and put into effect an economic policy relating to prices, rationing, subsidies and other matters relating to the control of civilian purchasing power. The Director was given the power to issue directives on policy to the federal departments or agency concerned; the power to direct any Federal department or agency including, but not limited to the Department of Agriculture (including the Commodity Credit Corporation and the Surplus Marketing Administration), the Department of Commerce, the Reconstruction Finance Corporation, and other corporations organized pursuant to Section 5d of the Reconstruction Finance...