Orenstein v. United States

• Decision Date: 22 August 1951
• Docket Number: No. 4556,4557.,4556
• Citation: 191 F.2d 184
• Parties: ORENSTEIN v. UNITED STATES. UNITED STATES v. ORENSTEIN.
• Court: U.S. Court of Appeals — First Circuit

191 F.2d 184 (1951)

ORENSTEIN v. UNITED STATES.

UNITED STATES v. ORENSTEIN.

Nos. 4556, 4557.

United States Court of Appeals First Circuit.

July 25, 1951.

Rehearing Denied August 22, 1951.

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Louis Winer, Boston, Mass., for Louis Orenstein.

Francis X. Riley, Special Litigation Attorney, Office of the Housing Expediter, Washington, D. C., (Ed Dupree, General Counsel, Leon J. Libeu, Asst. General Counsel, and William A. Moran, Special Litigation Attorney, all of Office of Housing Expediter, all of Washington, D. C., on brief) for the United States.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Chief Judge.

These are cross-appeals from a judgment under § 206(b) of the Housing and Rent Act of 1947, as amended, 61 Stat. 199, 63 Stat. 27, 50 U.S.C.A.Appendix, § 1896(b), ordering restitution to two tenants of the amount of rent overcharges, and enjoining the landlord from further violations. Though the case is a small one, we have had some difficulty in deciding what to do with it.

The housing accommodation in question was the first-floor apartment of a two-family dwelling house at 169 Mountfort Street, Brookline, Massachusetts, which was owned by the defendant Orenstein during the period of the alleged overcharges, the upper-floor apartment being at that time occupied by the defendant himself. It was agreed and stipulated that the established legal maximum rent for the first-floor apartment was $70 per month, unfurnished. The first tenant to whom restitution was ordered was Irving Miller, who occupied the apartment from October 1, 1947, to March 1, 1948. Harold L. Miller, the second tenant to whom restitution was ordered, occupied the apartment from March 6, 1948, to May 5, 1949.

On August 18, 1949, the United States filed its complaint in the present case. In the complaint were enjoined (1) a cause of action for injunction and restitution to the tenants under § 206(b) of the Housing and Rent Act, and (2) a cause of action for three times the amount of the overcharges occurring within a year prior to the filing of the complaint, payable to the United States, pursuant to § 205 of the Housing and Rent Act of 1947, as amended, 63 Stat. 27, 50 U.S.C.A.Appendix, § 1895, the tenants having failed to bring suit.

Defendant made seasonable demand for a jury trial on the factual issues of the complaint generally. The United States moved to strike the claim for a jury trial, which motion was allowed by the court. Thereafter, the case proceeded to trial before the district judge sitting without a jury.

The district judge found that defendant Orenstein conceived the idea of renting the premises as a furnished apartment and made application on October 1, 1947, to the Office of the Housing Expediter for an appropriate upward adjustment of the maximum rent on account of the proposed change from an unfurnished to a furnished apartment. See Forde v. United States, 1 Cir., 1951, 189 F.2d 727. However, the landlord withdrew this application the next day. He rented the apartment to Irving Miller beginning October 1, 1947, under an arrangement whereby the tenant was to pay $70 per month rental for the apartment, tied in with a rental of furniture from B. A. Holmes Co., Inc., at $115 per month. The district judge found as a fact that this corporation was entirely owned and controlled by the defendant and that it was "perfectly apparent that the defendant, without authority, tied in the rental of his furniture with the ceiling rental of his apartment. This is illegal under the statute and regulations." Similar findings were made as to the second tenant, Harold L. Miller, who occupied the premises from March 6, 1948, to May 5, 1949; for that period the tenant paid a total of $160 per month, apportioned $70 for the apartment and $90 for the furniture.

These findings were amply supported by the evidence, and cannot be upset on appeal as being "clearly erroneous". At the argument before us Orenstein did not seriously contend otherwise. On the basis of these findings the district judge correctly concluded that the defendant had violated the statute and the applicable regulation; that Irving Miller was overcharged the total sum of $575 for the whole period of his occupancy; and that Harold L. Miller was overcharged the total sum of $1260 for the whole period of his occupancy.

The final finding of fact by the district judge was as follows: "I cannot find that the overcharge was willful as, in fact, the tenants were dealing with an individual on one hand and a corporate entity on the other. While such activity was illegal, it does not necessarily follow that it was a willful violation." The judge made no finding as to whether the violations, if not willful, were the result of negligence. But under § 205 of the Housing and Rent Act of 1947, as amended, whether the suit for damages is brought by the tenant, or by the United States in default of suit by the tenant, the landlord is liable for three times the amount of the overcharges unless he "proves that the violation was neither willful nor the result of failure to take practicable precautions against the occurrence of the violation", in which latter case "the amount of such liquidated damages shall be the amount of the overcharge or overcharges". In other words, in order to reduce the amount of his liability for damages to the amount of the overcharge or overcharges, the defendant has the burden of establishing that his violation was neither willful nor negligent.

In the ensuing judgment now before us on review, the district court, in addition to issuing a permanent injunction against further violations of the Act and the regulation, ordered Orenstein to refund to the Treasurer of the United States the sum of $1835.00, to be disbursed by the Treasurer $575.00 to Irving Miller and $1260.00 to Harold L. Miller. This was all under § 206(b) of the Act. The judgment made no award of damages to the United States on account of its cause of action under § 205 of the Act, not even single damages for the amount of the overcharges exacted within a year prior to the filing of the complaint, let alone treble damages.

No. 4556 is an appeal by the defendant Orenstein, principally on the ground that the court below committed error in denying his claim for a jury trial. The United States cross-appealed from the same judgment, in No. 4557, on the ground that the trial court erred in not awarding statutory damages to the United States as provided under § 205 of the Act.

As to the cause of action for injunction and restitution under § 206(b) of the Act, it is clear that that is equitable in nature, and that therefore the defendant had no constitutional right to trial by jury. McCoy v. Woods, 4 Cir., 1949, 177 F.2d 354. See the discussion by Mr. Justice Story in Parsons v. Bedford, Breedlove & Robeson, 1830, 3 Pet. 433, 446, 447, 7 L.Ed. 732. If the equitable jurisdiction of the court has been properly invoked for injunctive purposes, restitution to the tenant of the amount of the overcharges can be regarded as within the incidental powers of a court of equity. Another view supporting such an order for restitution is that the order may be regarded as an "other order" of an equitable nature under § 206(b), appropriate to enforce compliance with the Act. Porter v. Warner Holding Co., 1946, 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332, applying the similar provisions of the Emergency Price Control Act of 1942. On the latter view, though for some reason the United States might not be entitled to ask for an injunction — for instance, where the premises had been decontrolled subsequent to the date of the violations — "an equitable decree of restitution would be within the section 206(b) if it was reasonably appropriate and necessary to enforce compliance with the Act and effectuate its purposes." United States v. Moore, 1951, 340 U.S. 616, 619, 71 S.Ct. 524, 526. It would seem to follow that, even though the United States in its complaint under § 206(b) asks only for a decree of restitution to the tenant, this being a remedy equitable in nature, to be distinguished from a judgment at law for damages payable to the United States as plaintiff, the defendant then is not entitled as of right to a jury trial. The Supreme Court did not need to make an explicit ruling to that effect in United States v. Moore, supra, because there the defendant had never made demand for a jury trial as required by Rule 38, Fed.Rules Civ. Proc., 28 U.S.C.A., so that any right to a jury trial, assuming its existence, had been waived.

The cause of action for treble damages under § 205 of the Housing and Rent Act of 1947 is a different matter. This section, like its counterpart in § 205(e) of the Emergency Price Control Act of 1942, as amended, 58 Stat. 640-41, 50 U.S.C.A.Appendix, § 925(e), provides that an aggrieved tenant may, within one year from the date of the occurrence of the violation, bring suit for damages on his own behalf; and further provides that if the tenant should fail to bring such suit within 30 days of the date of the violation, the United States may, within the one-year period, institute such action for damages, the amount recovered in such case to be paid into the treasury of the United States for the account of the United States, of course. The Supreme Court pointed out, in Porter v. Warner Holding Co., supra, 328 U.S. at page 402, 66 S.Ct. at page 1091, 90 L.Ed. 1332, that a court giving the relief of damages under § 205(e) of the Emergency Price Control Act § 205 of the Housing and Rent Act of 1947 "acts as a court of law rather than as a court of equity", in contrast to the other provision of law under which an injunction and restitution to the tenant are decreed. The Congress itself, in enacting the Emergency Price Control Act, recognized that this provision for damage actions afforded "a remedy at law to persons...