United States v. A-1 Meat Company, 155

• Decision Date: 23 May 1958
• Docket Number: Docket 24702.,No. 155,155
• Citation: 255 F.2d 491
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. A-1 MEAT COMPANY, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

255 F.2d 491 (1958)

UNITED STATES of America, Plaintiff-Appellee, v. A-1 MEAT COMPANY, Inc., Defendant-Appellant.

No. 155, Docket 24702.

United States Court of Appeals Second Circuit.

Argued February 4 and 5, 1958.

Decided May 23, 1958.

Saul A. Finkel, New York City (William Macy, New York, City, on the brief), for defendant-appellant.

Robert J. Ward, Asst. U. S. Atty., New York City (Paul W. Williams, U. S. Atty., for Southern Dist. of New York, New York City, on the brief), for plaintiff-appellee.

Before MEDINA, WATERMAN, and MOORE, Circuit Judges.

MEDINA, Circuit Judge.

A-1 Meat Company, Inc. appeals from a judgment, entered by the court below on motion of the Government, for summary judgment, which awarded the United States the restitution of subsidy payments made by it to A-1, a livestock slaughterer, pursuant to Section 2(e) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.Appendix, § 902(e). A-1 also appeals from that part of the judgment which denied its crossmotion for summary judgment on its claim that it was entitled to a further and additional subsidy payment.

By way of background to the controversy in the case at bar we shall consider the statutory framework against which the Government's subsidy program was carried on during the Second World War, from 1942 to 1946. Section 2(e) of the Emergency Price Control Act of 1942, 50 U.S.C.Appendix, § 902(e), authorized the Federal Loan Administrator to pay subsidies "in such amounts and in such manner and upon such terms and conditions" as the Administrator, with the approval of the President, should determine to be necessary to obtain the required production of commodities previously determined by the President to be "strategic" or "critical." This section further provided that these subsidies were to be paid by corporations created and organized pursuant to Section 5d of the Reconstruction Finance Corporation Act, as amended, 15 U.S.C. § 606b (3).^* Since the President defined meat as a "strategic or critical material," the Federal Loan Administrator, with the approval of the President, was thus authorized to determine the necessity for subsidy payments to producers of this commodity.

On May 7, 1943 the Livestock Slaughter Subsidy Program was instituted, and, on this same day, the Federal Loan Administrator directed the President of the Defense Supplies Corporation, a corporation created pursuant to Section 5d of the Reconstruction Finance Corporation Act, to pay subsidies to livestock slaughterers, packers and wholesalers. The purpose of the subsidy was to relieve the squeeze upon slaughterers and wholesalers which resulted from uncontrolled live cattle prices and controlled meat prices.

The Defense Supplies Corporation was dissolved by Congress on June 30, 1945, and its subsidy administration functions were transferred to the Reconstruction Finance Corporation. On June 30, 1946, the price and subsidy programs lapsed temporarily but they were reinstated by the Price Control Extension Act of 1946, 60 Stat. 664, effective July 25, 1946. The subsidy program terminated when the Price Administrator ended price controls on October 15, 1946.

The large number of monthly subsidy claims made the prompt determination of the validity of each claim administratively impossible. On the other hand, delay in the payment of these claims would have deprived the slaughterers of the working capital necessary for the continuance of their operations. Accordingly, slaughterers were permitted to certify that their claims were accurate and that they had not wilfully violated any regulation of the Office of Price Administration or of the War Food Administration during the monthly reporting period covered by each claim. This certification was required because, in order to further the goal of the price and distribution control programs, compliance with the regulations of the OPA and the WFA was a condition precedent to the slaughterers' right to receive subsidy payments. Thus, the Defense Supplies Corporation was authorized to pay, upon preliminary approval alone, subsidy claims duly certified by a slaughterer. However, "upon a determination of any court of first instance" that the slaughterer had violated "any substantive provision of an (OPA) meat or livestock regulation or order," the Defense Supplies Corporation was authorized to "withhold payment of all subsidy claims of the applicant for the accounting period in which the violation is found to have occurred." Section 7 (b) (2), Directive 41 of the Office of Economic Stabilization, as added by Amendment 2, 11 F.R. 1215, 32 C.F.R. (1946 Supp.) p. 5069. To further insure compliance with regulations adopted under the price and distribution control programs, the RFC was directed to "declare invalid, in whole or in part, any claim of any applicant who * * * (t)he Price Administrator certifies to (the RFC) has been determined in a civil proceeding to have violated a substantive provision of any regulation or order of the (OPA) applicable to the purchase or sale of livestock or to livestock slaughter or to the sale or distribution of meat * * *," Section 7003.10(a) (2), Amendment No. 15, Regulation No. 3, Revised, of the Reconstruction Finance Corporation; and "(o)n a finding that (a) claim is invalid or defective, (the) Defense Supplies Corporation after June 30, 1945, the RFC shall have the right to require restitution of any payment or any part thereof." Section 7003.9, Regulation No. 3, Revised, of Defense Supplies Corporation, 10 F.R. 4241, 32 C.F.R. (1945 Supp.) p. 3603.

The procedure for review to be followed is set forth in some detail in the statutory and administrative scheme applicable to these subsidy payments. Both administrative and judicial review of administrative orders requiring restitution of subsidy payments was expressly provided for in the Emergency Price Control Act of 1942. "At any time" after the issuance of an order under Section 902 of the Act, any person subject to the provisions of the order was entitled to file a protest with the Administrator, who was required to act on this protest within thirty days. 50 U.S.C. Appendix, § 923(a). After denial of the protest, judicial review by the Emergency Court of Appeals, and by writ of certiorari to the Supreme Court was then available. 50 U.S.C.Appendix, § 924(a), (d). It was also provided, however, that the final date for filing a protest against an administrative order was December 15, 1950, RFC Regulation 11, 15 F.R. 6193; and the denial of such a protest was a prerequisite to review of the order by the Emergency Court of Appeals.

With this statutory and administrative background in mind, we turn now to an examination of the facts in the case at bar. A-1 submitted a claim to the RFC for meat subsidies for the December, 1945 accounting period. Early in 1946, after preliminary approval, this claim was paid in the amount of $3,750.39. In February, 1946, the United States sued to restrain A-1 from continuing to slaughter cattle and, on March 29, 1946, secured a temporary injunction ordering A-1 not to do or omit to do any act or acts in violation of MPR 574, and not to pay, nor offer, solicit, attempt or agree to pay more than the maximum amount for cattle which it slaughtered.

Thereafter, the RFC notified A-1 by means of letters and adjustment forms that its December, 1945 subsidy claim was invalid and demanded restitution of the amount paid as a subsidy, less $578.19, the amount of A-1's January, 1946 subsidy claim,¹ which was applied against the Government's claim for $3,750.39. In addition to demanding restitution because of a violation of an OPA regulation for the December, 1945 period, the first letter sent to A-1, dated May 8, 1946, notified the company that an "Agent's Adjustment Form" specifying the amount due would follow shortly, and also stated that interest at the rate of 4% per annum would be computed on the unpaid balance due to the Government. The adjustment form was sent on July 10, 1946, and on May 12, 1947 another letter was sent to A-1 requesting payment of the balance of the subsidy plus interest in the amount of $171.25, and notifying the company that interest would continue to accrue. On August 27, 1947 another letter demanding payment informed A-1 that the claim for $3,172.20 "resulted from the invalidation of your December 1945 cattle claim by reason of OPA certification of wilful violation" of a price regulation. The final letter sent to A-1, dated March 10, 1948, again sought payment "(b)efore recommending to our Washington Office, that the receivable be referred to the U. S. Department of...