Smith v. United States, 4641.

• Decision Date: 18 November 1952
• Docket Number: No. 4641.,4641.
• Court: U.S. Court of Appeals — First Circuit
• Parties: SMITH v. UNITED STATES.

199 F.2d 377 (1952)

SMITH v. UNITED STATES.

No. 4641.

United States Court of Appeals First Circuit.

October 29, 1952.

Rehearing Denied November 18, 1952.

Morris H. Kramer, Boston, Mass., for appellant.

Cecil H. Lichliter, Sp. Litigation Atty., Office of Rent Stabilization, Washington, D. C. (Ed Dupree, General Counsel, A. M. Edwards, Jr., Asst. Gen. Counsel, Nathan Siegel, Sol., and Isadore A. Honig, Sp. Litigation Atty., all of Office of Rent Stabilization, Washington, D. C., on brief), for appellee.

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

MAGRUDER, Chief Judge.

Acting under § 206(b) of the Housing and Rent Act of 1947, as amended, 63 Stat. 27, 50 U.S.C.A.Appendix, § 1896(b), the court below entered judgment on January 22, 1952, ordering restitution to a tenant, John Shanks, in the sum of $517.70, as a refund of rent collected by defendant landlord in excess of the maximum legal rent during the period December 1, 1948, to March 29, 1951, and permanently enjoining defendant from further violations of the Act and the regulations thereunder. Judgment was entered pursuant to motion for summary judgment filed by the United States as plaintiff in the action. The landlord has taken this appeal.

It was alleged in the complaint that the maximum rent for the housing accommodation in question, described as Apartment No. 2, 198 Billings Road, Quincy, Massachusetts, was established under the Emergency Price Control Act of 1942, 50 U.S. C.A.Appendix, § 901 et seq., and the applicable regulations issued thereunder, and under the Housing and Rent Act of 1947, as amended, 50 U.S.C.A.Appendix, § 1881 et seq., and the regulations issued pursuant thereto; that the defendant demanded and received for the use and occupancy of the apartment for the whole period December 1, 1948, to March 29, 1951, the sum of $50 per month, whereas the maximum legal rent was $30 per month from December 1, 1948, to April 13, 1949, and $31.80 per month from April 13, 1949, to March 29, 1951, the total overcharge, for which restitution to the tenant was demanded, being calculated in the sum of $517.70.

In his answer to the complaint, the defendant denied "that the maximum rent of the premises was established under the Emergency Price Control Act of 1942"; and alleged "that said premises at that time were occupied by the owner of the dwelling house and were not subject under the Housing and Rent Act of 1947, as amended"; and that the schedule in the complaint setting forth the maximum legal rent per month was erroneous and misleading. Further answering, the defendant said "that on or about the first day of December, 1948, he rented the premises to, one John Shanks, as an individual, for living quarters, and to the said John Shanks for and in behalf of a distinct entity, a partnership known and operated under the firm name and style of South Shore Express, which said partnership operated under franchises granted by the Interstate Commerce Commission; that said business was transacted and continuously conducted from and on said premises and that the telephone number was plainly marked on two trucks owned by said South Shore Express. And the defendant further says that said arrangement is not in violation of the Rent Act or any part thereof for the reason that the business so conducted is strictly commercial in nature and does not come within the express or implied terms and provisions of the Act."

In response to a request for admissions filed by plaintiff under Rule 36(a), Fed. Rules Civ.Proc., 28 U.S.C.A., the landlord admitted that he had filed a registration statement in the Eastern Massachusetts Area Rent Office in November, 1950, "setting forth that the maximum rent for the controlled housing accommodations, Suite 2, 198 Billings Road, Quincy, Massachusetts, was $50.00 per month and that the first rental subsequent to March 1, 1942 was December 1, 1948"; but he explained "that said registration contemplated and included a disconnected commercial use which does not appear upon the registration because no provision was made on said form by the Area Rent Office to include a commercial rent." In response to a request for admission that during the period in question he had demanded and received as rent a sum in excess of the maximum legal rent as set forth in the said schedule, defendant denied the allegation, and alleged "that no part of the rent received was in excess of the maximum legal rent for said apartment for the reason that said rentals came from two distinct sources, one being for the occupancy by John Shanks for dwelling purposes, and the other as rental for the use and occupation of the said premises by the South Shore Express, a commercial enterprise operating under Interstate Commerce Commission franchises and that on said December 1, 1948, said South Shore Express was a partnership composed of John Shanks and another."

At this point we pause to consider what would have been the maximum legal rent if it were open to the defendant to prove in the district court his aforesaid allegations, that the premises were occupied by the owner on March 1, 1942 (the freeze date established by the rent regulation issued under the Emergency Price Control Act of 1942); and that the premises were first rented on December 1, 1948, said rental being in part to John Shanks for dwelling purposes and in part to a trucking partnership for commercial purposes.

If such were assumed to be the facts, then no maximum rent for the premises was established under the Emergency Price Control Act of 1942. That Act terminated on June 30, 1947. On the next day the Housing and Rent Act of 1947 went into effect, 61 Stat. 193, § 202(c) (3) of which excluded from the definition of "controlled housing accommodations" dwelling units "which at no time during the period February 1, 1945, to January 31, 1947, both dates inclusive, were rented (other than to members of the immediate family of the occupant) as housing accommodations." Applying this exclusionary definition to the assumed state of facts, it would appear that the premises in question were not subject to rent control under the original terms of the Housing and Rent Act of 1947. The Housing and Rent Act of 1948, effective April 1, 1948, altered the aforesaid definition in § 202(c) (3) so as to exclude from the term "controlled housing accommodations" dwelling units "which for any successive twenty-four month period during the period February 1, 1945, to the date of enactment of the Housing and Rent Act of 1948, both dates inclusive, were not rented (other than to members of the immediate family of the landlord) as housing accommodations" 62 Stat. 94. This change did not affect the status of the premises in question, assuming the facts to be as alleged by the defendant; the premises remained free of rent control.

Section 202(c) (3) of the Housing and Rent Act of 1947 was further amended by the Housing and Rent Act of 1949, 63 Stat. 20, so as to bring the premises in question within the definition of "controlled housing accommodations" and to subject the same to rent control in case they should be rented on and after the effective date of the Housing and Rent Act of 1949, namely, April 1, 1949. Further, the 1949 Act added a new subsection (h) to § 204 of the Housing and Rent Act of 1947, reading as follows, 63 Stat. 25:

"(h) For controlled housing accommodations which were not included within the definition of `controlled housing accommodations\' as such definition read prior to the effective date of the Housing and Rent Act of 1949, the maximum rent shall be the maximum rent last in effect for such housing accommodations under Federal rent control, plus or minus applicable adjustments; or, if no maximum rent was ever in effect for such housing accommodations, the maximum rent shall be the rent generally prevailing in the defense-rental area for comparable controlled housing accommodations within such area, plus or minus applicable adjustments * * *."¹

The judgment now under review directs the landlord to make restitution of overcharges during the whole period December 1, 1948, to March 29, 1951, though under defendant's allegation of facts the premises could not have become subject to rent control until April 1, 1949, the effective date of the Housing and Rent Act of 1949.

There is the further complication that the Housing and Rent Act does not authorize the imposition of controls upon commercial rentals. In Volume 6 of the Office of the Housing Expediter Manual — Sec. 1 Definitions — III, an official interpretation of the rent regulation is given, as applied to premises rented for combined business and dwelling uses. The ruling is that where the business and dwelling portions are rented to a single tenant, but are separable from each other, only the dwelling portion is subject to the regulation. But where the business and dwelling portions, though rented to a single tenant, are not separable, in accordance with the criteria contained in the interpretation, then the premises as an entirety are either subject to control or free of control, dependent upon whether the predominant use is for housing accommodations or for business purposes. However, we gather that where the premises are rented to separate tenants, part for dwelling purposes and part for commercial use, then the rental to the commercial tenant is free of control, and only the rental to the tenant for housing purposes is subject to the regulation. See a similar administrative interpretation of the rent regulation under the Emergency Price Control Act, in Pike & Fischer OPA Service 200:851 (May, 1943). If the parties themselves have not apportioned the rent as between the commercial tenant and the housing tenant, then some apportionment as between the two uses would seem to be necessary, since the landlord is entitled to charge what he pleases to a commercial tenant.

In complainant's request for admissions, defen...