Thomas Paper Stock Co. v. Bowles

• Decision Date: 27 March 1945
• Docket Number: No. 159.,159.
• Citation: 148 F.2d 831
• Parties: THOMAS PAPER STOCK CO. et al. v. BOWLES, Price Administrator.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

148 F.2d 831 (1945)

THOMAS PAPER STOCK CO. et al. v. BOWLES, Price Administrator.

No. 159.

United States Emergency Court of Appeals.

Heard November 30, 1944.

Decided March 27, 1945.

Writ of Certiorari Granted June 4, 1945.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jack H. Oppenheim, of Chicago, Ill. (David L. Bazelon, of Chicago, Ill., on the brief), for complainants.

Nathaniel L. Nathanson, Associate Gen. Counsel, of Washington, D. C. (Richard H. Field, Gen. Counsel, Jacob D. Hyman, Chief, Court Review Price Branch, and Josephine H. Klein, Atty., all of the Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and LINDLEY and LAWS, Judges.

Heard at Chicago November 30, 1944.

Writ of Certiorari Granted June 4, 1945. See 65 S.Ct. 1409.

MARIS, Chief Judge.

On June 15, 1944 the complainants filed a protest with the Price Administrator against Maximum Price Regulation No. 30, Wastepaper, as applied to unsorted wastepaper dealt in by them. Their protest was denied on July 29, 1944 and on August 26, 1944 they filed their complaint in this court. On December 17, 1943 the complainants had been indicted in the United States District Court for the Northern District of Illinois for violations of MPR 30. On June 29, 1944 the Price Administrator instituted against the complainants in that court a civil action for treble damages and an injunction. Both proceedings involved sales of unsorted wastepaper alleged to have been made between July 16th and September 11, 1943 at more than the maximum price fixed by MPR 30. Both proceedings are still pending.

Maximum Price Regulation No. 30¹ established ceiling prices for wastepaper. Subsection (d) of Section 1347.14 of the Regulation established ceiling prices for unsorted wastepaper. It is this provision of the Regulation to which complainants' protest was directed. In its present form² Section 1347.14(d) reads:

"The maximum prices for sales of unsorted wastepaper to any person shall not exceed the maximum price prescribed by this regulation for `No. 1 mixed paper,' regardless of the grades and quantity of each grade contained in such unsorted wastepaper."

The complainants protested Section 1347.14(d) upon two grounds. Both are based upon the fact that the section fixes the maximum price for a type of wastepaper, unsorted wastepaper, in terms of a specification or standard, "No. 1 mixed paper",³ and that for this reason the provision runs afoul of Subsection (j) of Section 2 of the Emergency Price Control Act of 1942, known as the Taft amendment, which was enacted on July 16, 1943.⁴ The subsection reads as follows:

"(j) Nothing in this Act shall be construed (1) as authorizing the elimination or any restriction of the use of trade and brand names; (2) as authorizing the Administrator to require the grade labeling of any commodity; (3) as authorizing the Administrator to standardize any commodity, unless the Administrator shall determine, with respect to such standardization, that no practicable alternative exists for securing effective price control with respect to such commodity; or (4) as authorizing any order of the Administrator fixing maximum prices for different kinds, classes, or types of a commodity which are described in terms of specifications or standards, unless such specifications or standards were, prior to such order, in general use in the trade or industry affected, or have previously been promulgated and their use lawfully required by another Government agency."

The first objection which was asserted by the complainants in their protest to support their contention that the Regulation is invalid is based upon the legal premise that the Administrator is prohibited by the Taft amendment from establishing maximum prices by the use of a standard or specification in the absence of one of the two conditions described in clause (4) of Section 2(j). They reason that clauses (3) and (4) of Section 2(j) are to be construed as wholly separate and independent provisions, that clause (4) absolutely prohibits the use of specifications or standards in connection with the fixing of maximum prices unless they (a) were prior to the Regulation "in general use in the trade or industry affected" or (b) "have previously been promulgated and their use lawfully required by another Government agency." They assert that the section of the Regulation under attack involves the use of a specification or standard within the meaning of Section 2(j), that prior to the Regulation the specification or standard in question was not in general use in the wastepaper industry and that it had not previously been promulgated and its use required by another Government agency.

The Administrator's answer to the complainants' contention is that, conceding the facts to be as asserted by the complainants,⁵ there is a third situation in which Section 2(j) authorizes him to make use of specifications or standards for the purpose of fixing maximum prices. This, he says, is the situation described in clause (3) of Section 2(j), which clause expressly authorizes him to standardize a commodity if he determines that no practicable alternative exists for securing effective price control with respect to such commodity. It is the Administrator's contention that clauses (3) and (4) of Section 2(j) are to be read together as providing three alternative situations in any one of which he is authorized to employ specifications or standards in connection with price control.

The construction which the Administrator seeks to place upon Section 2(j) was assumed in Avon Western Corporation v. Bowles, Em.App., 1944, 145 F.2d 473, and in United States v. Pepper Bros., 3 Cir., 1944, 142 F.2d 340. We think it is correct. While it is true that clauses (3) and (4) are arranged in the subsection in the disjunctive and are, therefore, susceptible to the construction sought to be placed upon them by the complainants we are satisfied that such a construction would leave clause (3) without any practical meaning or effect. For the Administrator's function is to control prices — not to standardize commodities. Any standardization of commodities in which he indulges may only be in connection with and for the purpose of making more effective his control of prices. Therefore, if clause (3) is construed merely to authorize him to establish standards but not to apply them to practical use in his price control regulations it is wholly meaningless. Indeed the complainants frankly admit that this will be the result if we accept their contention that the Administrator may not utilize a standard for price control, unless one of the conditions described in clause (4) is present. Such a construction would clearly violate one of the primary canons of statutory construction.⁶

In fact clause (3) bears internal evidence that the standardization which it authorizes the Administrator to make was intended to be used in connection with price control. The authority which the clause gives to take such action is expressly limited to those cases where there is no other practicable alternative for effective price control. The inference is plain that the standardization when authorized is to be employed in order to secure effective price control.

Moreover the construction of the two clauses which is contended for by the Administrator is amply supported by the legislative history of the Taft amendment. Shortly before the enactment of the amendment a proviso had been inserted in the National War Agency Appropriation Act, 1944,⁷ which made appropriations for the Office of Price Administration. The proviso was as follows:

"Provided further, That no part of this appropriation shall be used for the promulgation or enforcement of orders requiring grade labelling or standardization of food products, wearing apparel or other processed or manufactured commodities or articles."

Immediately after the enactment of this proviso the Administrator raised the question that it would be too drastic in its effect upon existing price regulations in which he had utilized standards for price control purposes. His views in this regard having been communicated to the Committee on Banking and Currency of the Senate, the Committee proposed to the Senate that it add to a joint resolution which was then under consideration an amendment which would modify and clarify the ban upon grade labeling and standardization contained in the Appropriation Act which had just been passed. The amendment proposed by the Committee would have added to Section 2 of the Emergency Price Control Act a new subsection (j) as follows:

"Nothing in this Act shall be construed, (1) as authorizing the elimination of trade and brand names; (2) as authorizing the Administrator to require the grade labeling of any commodity; or (3) as authorizing the Administrator to standardize any commodity unless the Administrator shall determine with respect to such standardization that no practicable alternative exists for securing effective price control with respect to such commodity, but no order of the Administrator shall be deemed to require standardization because it fixes maximum prices, for different kinds, classes or types of a commodity, which are described in terms of specifications or standards, if such specifications or standards were prior to such order in substantial use in the trade or industry affected or have been established by another Government agency."

When this proposed amendment came up for consideration in the Senate Senator Taft offered on the floor a substitute amendment in the exact phraseology of subsection (j) as finally enacted and his substitute was adopted in lieu of the committee amendment. In this connection Senator Taft stated to the Senate:

"Mr. Taft. Mr. President, as the Senate will remember, in one of the appropriation bills we included a very tight provision against grade labeling and the elimination...