Mechanical Farm Equipment Distributors v. Porter

• Decision Date: 24 June 1946
• Docket Number: No. 11227.,11227.
• Parties: MECHANICAL FARM EQUIPMENT DISTRIBUTORS, INC., v. PORTER.
• Court: U.S. Court of Appeals — Ninth Circuit

156 F.2d 296 (1946)

MECHANICAL FARM EQUIPMENT DISTRIBUTORS, INC., v. PORTER.

No. 11227.

Circuit Court of Appeals, Ninth Circuit.

June 24, 1946.

Howe & Finch, of Palo Alto, Cal., for appellant.

George Moncharsh, Deputy Adm. for Enforcement, Milton Klein, Director, Litigation Division, David London, Chief, Appellate Branch, and Harold Craske, Attorney, OPA, all of Washington, D. C., and Herbert H. Bent, Regional Litigation Attorney, and William H. Brunner, Dist. Enforcement Attorney, OPA, both of San Francisco, Cal., for appellee.

Before DENMAN, BONE and ORR, Circuit Judges.

BONE, Circuit Judge.

Appellant is a dealer in used tractors. On October 5, 1944, appellee-Administrator instituted an action against appellant alleging that appellant had sold used tractors at prices in excess of M.P.R. No. 133 and M.P.R. No. 136, both as amended. The Administrator, under Section 205(e) of the Emergency Price Control Act, 50 U.S.C.A. Appendix, § 925(e) (hereinafter referred to as the Act), demanded damages in treble the amount of the overcharges, and, under Section 205(a) of the Act, asked for a final injunction enjoining appellant from violating the above Regulations or the Act. The district court ordered and entered judgment against appellant for the actual amount of the overcharges which the Administrator alleged, and granted an injunction. The appeal is from this judgment.

It was stipulated by the parties that all the sales of crawler tractors here involved were made to farmers for general farming and agricultural uses, except one which was purchased for use in lumbering operations. Also that all of the sales in question, thirteen in number, were made in the period between August 1, 1943 and September 25, 1943, and that none of the purchases or sales was made for use and consumption other than in the course of trade or business.

Appellant raises three contentions on this appeal: First, that sales of crawler tractors to farmers during this period did not come within the scope of M.P.R. No. 136, and were, therefore, left subject to the G.M.P.R. Second, that if the sales do come under M.P.R. No. 136, then the Teresi and Badami sales were at prices under the ceilings provided by that Regulation, and that damages should not have been assessed upon those sales. Third, the issuance of an injunction was not proper in this case.

First. M.P.R. No. 136, which controls the maximum sales prices for used crawler tractors, provided in § 1390.2 for exclusion, from its application, of certain types of sales. Among such exempted categories were sales defined in § 1390.2(f) which states: "Any sale or delivery at retail of a machine or part by a person other than the manufacturer thereof. * * * For the purpose of this exclusion, a sale or delivery is deemed to be `at retail' (1) when made to an ultimate consumer, other than an industrial, commercial, or governmental user * * *".

Appellant claims that under a proper interpretation of this Section a farmer is not a commercial user, and, therefore, sales to him would be excluded from the scope of M.P.R. No. 136.

However the Administrator has consistently interpreted M.P.R. No. 136 as covering sales to farmers. In Price Interpretation 17, dated November 15, 1942, it is said: "Repair Services on Tractors. The Regulation M.P.R. No. 136 is applicable to repair services on industrial and crawler tractors, even though the tractors are used for agricultural purposes." 8 O.P.A.Services, p. 40:2018.

On September 1, 1943, the Administrator issued an interpretation of M.P.R. No. 136 as follows: "Crawler type tractor sold by one farmer to another. The sale of crawler tractor by one farmer to another is subject to the regulation. Such a sale is not a sale `at retail', except pursuant to Section 1390.2(f), because a farmer is a commercial user. A farmer is considered a commercial user, since he operates his farm as a commercial activity and purchases the equipment for use in carrying out that activity."

This interpretation is cited with approval and quoted in Bowles v. Trullinger, 9 Cir., 152 F.2d 191, 193.

If the meaning of the words of an administrative interpretation is in doubt, the court must look to the administrative construction of the regulation. And this construction is "of controlling weight unless it is plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700; Bowles v. Crawford & Doherty Co., 9 Cir., 154 F.2d 431, 433. Certainly there is nothing erroneous or irrational in interpreting the word "commercial" as including farming activities. Farmers have been construed to be in a "trade or business" within the purview of Section 205(e) of the Act. Bowles v. Trullinger, supra, and cases cited, and see Speten v. Bowles, 8 Cir., 146 F.2d 602, 604 n. 5. The term "commercial" may have a broad or narrow meaning, and in its broad meaning it encompasses all business activities. United States v. Public Service Co., 10 Cir., 143 F.2d 79.

Appellant directly attacks the Administrator's interpretation of the language of Section 1390.2(f), maintaining that the phrase "industrial, commercial, or governmental user" should be construed narrowly. It cites cases which narrowly construed the word "commercial" or like words in similar phrases in variously unrelated statutes.¹ Appellant claims that in the light of these cases, the phrase should be narrowly construed. In view of the Administrator's interpretation, however, we do not find these cases persuasive.

Appellant points to no inconsistent interpretations on the part of the Administrator.² There was, however, a circular letter sent on July 10, 1943 to members of the trade including appellant by the "San Francisco district price specialist" which stated that a sale of a used crawler tractor to a farmer would be a sale at retail and therefore excluded from M.P.R. No. 136 and, instead, would come under the G.M.P.R. Appellant does not claim that this letter works an estoppel upon the Administrator, for a "district price specialist" is not an officer whose interpretation binds the Administrator. See O.P.A. Revised Procedural Regulation No. 1 (7 F.R. 8961, O.P.A.Service p. 310:51) §§ 54, 55(b); Wells Lamont Corp. v. Bowles, Em. App., 149 F.2d 364, 367; Schreffler v. Bowles, 10 Cir., 153 F.2d 1. It appears from the record, moreover, that appellant continued to set its prices by the formulas provided in M.P.R. No. 136, and not those in the G.M.P.R.

Second. Appellant maintains that if M. P.R. No. 136 applies to these sales, still the sales to Teresi and Badami were at prices under the ceilings provided in that regulation since each sale was of a reconditioned tractor, guaranteed in writing and so invoiced. M.P.R. No. 136, § 1390.11(b) (1) provides that, as applicable to the tractors under consideration, the maximum price for a rebuilt, tested, and guaranteed machine, shall be 85% of the new base price, whereas under § 1390.11(c) (1) the legal price for such secondhand tractor, when not rebuilt and guaranteed, shall be only 55% of the new base price. § 1390.11 (2) which defines a rebuilt tested and guaranteed machine, is set out below.³ Appellant argues that the contract of sale to...