Somerville Dressed Meat Co. v. Reconstruction Finance Corporation

• Decision Date: 05 February 1947
• Docket Number: No. 335.,335.
• Citation: 159 F.2d 716
• Parties: SOMERVILLE DRESSED MEAT CO. v. RECONSTRUCTION FINANCE CORPORATION.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

159 F.2d 716 (1947)

SOMERVILLE DRESSED MEAT CO. v. RECONSTRUCTION FINANCE CORPORATION.

No. 335.

United States Emergency Court of Appeals.

Heard January 13, 1947.

Decided February 5, 1947.

Joseph Kruger, of Boston, Mass. (Martin Ritvo, of Cambridge, Mass., and Widett & Kruger, of Boston, Mass., on the brief), for complainant.

John C. Erickson, of Washington, D. C. (John D. Goodloe, George B. Stoner, and James L. Dougherty, all of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and MAGRUDER and McALLISTER, Judges.

Heard at Boston January 13, 1947.

MAGRUDER, Judge.

This complaint challenges the validity of a provision of Amendment No. 2 (9 F.R. 1820) to Regulation No. 3 (8 F.R. 10826) issued by the Defense Supplies Corporation, under which provision respondent has ruled that Somerville Dressed Meat Company, complainant, was ineligible, during the period November 1, 1943, to January 17, 1944, to receive the special subsidy of 80¢ per cwt. payable to nonprocessing slaughterers of cattle.¹

Amendment No. 2 established a special subsidy to non-processing slaughterers pursuant to a Directive of the Economic Stabilization Director issued October 25, 1943 (8 F.R. 14641), and attached certain conditions to the payment of such subsidy. To be eligible for the special subsidy, a nonprocessing slaughterer, as defined, must be an "unaffiliated slaughterer," that is, it must not "own or control," or be "owned or controlled by," a "processor or purveyor of meat." The phrase "own or control" is defined as meaning "to own or control directly or indirectly a partnership equity or in excess of ten percent of any class of outstanding stock or have made loans or advances in excess of five per cent of the other person's monthly sales."

Somerville Dressed Meat Company, a Massachusetts corporation, was organized in April, 1941. It then issued 300 shares of common stock without par value and 200 shares of non-voting preferred stock. From the outset, and at all times thereafter, one Frank Brezniak has held 100 shares of the common stock and 150 shares of the preferred. In July, 1943, Brezniak together with one Henry A. Waddell, opened a retail meat stand in Faneuil Hall market, in Boston, Mass., as co-partners, under the name of H. A. Waddell Company.

By letter to complainant dated January 17, 1944, Defense Supplies Corporation ruled that, under the affiliation provisions of Amendment No. 2 to the subsidy regulation, complainant was ineligible to receive the special subsidy for the reason that Brezniak, a partner in H. A. Waddell Company, retail meat dealers, was a "purveyor of meat" owning in excess of 10 per cent of the outstanding capital stock of complainant.

On December 13, 1945, complainant filed with the Reconstruction Finance Corporation its protest against the validity of Amendment No. 2 and also against the ruling of the Defense Supplies Corporation in its letter of January 17, 1944.

Reconstruction Finance Corporation, by letter dated April 12, 1946, denied the protest; and thereafter Somerville Dressed Meat Company duly filed its complaint in this court. In its answer to the complaint, respondent "admits that except for the part ownership by Frank Brezniak of Complainant and H. A. Waddell Co., that Complainant is a wholly independent business entity not otherwise affiliated or integrated with or deriving financial benefit from H. A. Waddell Co."

The affiliation provisions of the subsidy regulation here under attack were upheld by...