United States v. Ericson

• Decision Date: 27 December 1951
• Docket Number: Civ. No. 3904.
• Citation: 102 F. Supp. 376
• Parties: UNITED STATES v. ERICSON et al.
• Court: U.S. District Court — District of Minnesota

102 F. Supp. 376

UNITED STATES v. ERICSON et al.

Civ. No. 3904.

United States District Court D. Minnesota, Fourth Division.

December 27, 1951.

COPYRIGHT MATERIAL OMITTED

C. U. Landrum, U. S. Atty., and Alex Dim, Sp. Asst. U. S. Atty., St. Paul, Minn., for plaintiff.

J. A. A. Burnquist, Atty. Gen. and Irving M. Frisch, Asst. Atty. Gen. for State of Minnesota, for defendant Ericson.

Edward J. Callahan, Minneapolis, Minn., for defendant Rose Lang.

Reginald Ames and Ray Cummins, St. Paul, Minn., Samuel Maslon, Minneapolis, Minn., Frederick P. Memmer, Milton H. Altman, St. Paul, Minn., amici curiae.

JOYCE, District Judge.

Plaintiff brings this action seeking an injunction against the Liquor Control Commissioner for the State of Minnesota and Rose Lang, owner of the Tower Liquor Store, a retail liquor establishment in Minneapolis, to enjoin violations of Office of Price Stabilization regulations issued pursuant to the Defense Production Act of 1950, as amended, 50 U.S.C.A. Appendix, § 2061 et seq. Motion for a preliminary injunction filed with the complaint on November 14, 1951, was argued on December 14, 1951, during the course of which the court heard the testimony of Mr. Maxwell, a special investigator for the Office of Price Stabilization, and Miss Ethel Hecht, manager of the Tower Liquor Store. In addition affidavits were filed in support of the motion and one in opposition thereto by Dudley C. Ericson, Liquor Commissioner.

In brief the complaint alleges that acting pursuant to the Defense Production Act of 1950, the Director of Price Stabilization on January 26, 1951, issued a General Ceiling Price Regulation (GCPR) which at all times pertinent to the matters here involved still is in full force and effect, establishing as ceiling price for all commodities and services, except those specifically exempted, the highest price at which the seller sold the commodity or rendered the service to the purchaser of the same class during the base period from December 19, 1950 to January 25, 1951; and that for the purpose of setting the pattern of a complete set of tailored regulations establishing ceiling prices for sales by all sellers of both domestic and imported distilled spirits and wines he issued on October 1, effective October 8, 1951, Ceiling Price Regulation 78; that this regulation does not by itself set ceiling prices but from time to time supplementary regulations are issued explaining how sellers are to calculate ceiling prices for the sale of liquor and wine; that Supplementary Regulation 2 to CPR 78 was issued on October 31, 1951, and becomes effective January 1, 1952, unless the retailer selects an earlier date between October 31, 1951 and January 1, 1952; that CPR 78 and SR 2 to CPR 78 will definitely be the successor regulations to GCPR, beginning January 1, 1952.

The complaint further alleges that Dudley C. Ericson, hereinafter referred to as the Commissioner, as Liquor Control Commissioner is an officer of the State of Minnesota, vested by Chapter 400 of the Laws of Minnesota 1951, M.S.A. § 340.97 et seq., with certain regulatory powers over distilled liquors and wines in Minnesota, including the power to enforce as minimum consumer resale prices uniformly throughout Minnesota the prices quoted by the wholesalers and brand owners to the Commissioner and published by him in a minimum consumer resale price list effective July 1, 1951; that he has issued certain regulations and a minimum consumer resale price list effective July 1, 1951, requiring retailers of distilled liquors and wines in Minnesota to sell distilled liquors and wines at not less than the minimum consumer resale prices therein set forth, regardless of the ceiling prices established for such distilled liquors and wines by GCPR, CP 78 and SR 2 to CPR 78.

It is further alleged that since July 1, 1951 and up to the present the defendant Lang and other retail liquor dealers have sold and delivered and intend to sell and deliver liquors and wines in accordance with the rules and regulations of the Commissioner and at prices in excess of the ceiling prices established by GCPR. Plaintiff seeks to enjoin the Commissioner and all in active concert with him from enforcing Chapter 400 or establishing prices in excess of the ceiling prices established by GCPR as amended. A like order is sought against defendant Lang enjoining her from sales at prices in excess of the ceilings established by the Federal regulations cited.

In her separate answer the defendant Lang denies a violation of GCPR and she alleges that to the best of her knowledge the prices of retail liquor sold in her store did not exceed the highest price obtained for it during the period between December 19, 1950 and January 25, 1951; that she has conformed to Chapter 400 of the Laws of Minnesota 1951 and the Minimum Price List published in accordance therewith. She further alleges that SR 2 to CPR 78 has superseded GCPR and changed entirely the method of computing the sale price of liquor under OPS regulations; that ceiling prices under said regulations went into effect January 1, 1952, or at such prior date as may be elected by the retailer subsequent to October 31, 1951, and prior to January 1, 1952; that to determine the price at which liquor may be sold in accordance with said regulations involves a great deal of clerical work and that she is presently engaged in making such computations; that the issuance of injunctive relief now would be unreasonable and would result in depriving defendant of her property without due process of law. She further alleges that brand owners and wholesalers from whom she purchases liquors and wines are indispensable parties in this action for the reason that they establish the prices published by the Commissioner; and that if the regulations of the Government of the United States as they are sought to be applied here are in some particulars in conflict with the Laws of Minnesota, said regulations are in those particulars of no force and effect, but are beyond the legislative power of the Government and an invasion of the sovereignty of the State of Minnesota and its constitutionally retained powers and a violation of the 21st Amendment to the Constitution of the United States and the powers specifically exercised thereunder in Chapter 400 of the Minnesota laws.

The separate amended and re-amended answers of defendant Commissioner deny that he sets the minimum retail price at which liquor or wine may be sold by the off-sale retailers and alleges that their prices are set by the brand owners and wholesalers in the price schedules the Minnesota Act requires them to file with him; that said brand owners and wholesalers have made no exceptions in the price schedules which they have filed with this defendant to enable any off-sale retailer to comply with his price ceilings in any case where his price ceiling is lower than the minimum retail price set forth in the price schedule; that said brand owners and wholesalers are indispensable, necessary and proper parties and without them this court has no jurisdiction. He further alleges that to the extent the Defense Production Act of 1950 is in conflict with the Laws of Minnesota, it is repugnant to the United States Constitution as violative of the Fifth, Tenth and Twenty-first Amendments; and that to the extent there is conflict between the Federal Regulations relating to liquor and the State law set forth in Chapter 400, the former are invalid.

The defendant Commissioner also counterclaims seeking injunctive relief against plaintiff restraining the enforcement and operation of the Defense Production Act insofar as it is repugnant to the United States Constitution by reason of its conflict with the laws of Minnesota, and prays for a hearing and determination of this controversy by a district court of three judges, in accordance with the procedure set forth in 28 U.S.C.A. § 2284.

At the close of the testimony defendants made numerous motions to dismiss, both on the ground that the facts showed no violation of the price regulations and on the various grounds asserted as defenses in the answers. The court shall treat the various points raised in what it regards as the proper sequential order.

1. Both defendants argue that the action of the plaintiff is premature inasmuch as the complaint does not charge a violation of SR 2 to CPR 78, the only regulation they contend is now in effect. They urge that SR 2 to CPR 78 in effect suspends the operation of GCPR and that inasmuch as they have not yet finished their computations of the ceiling prices under the new regulation there can be no determination now whether there is such a violation. SR 2 promulgated on October 31, 1951, was therein declared to be effective on January 1, 1952 unless the retailer selects an earlier date between October 31, 1951 and January 1, 1952. They contend that GCPR has been rendered ineffective by virtue of the issuance of CPR 78 and SR 2 to CPR 78 and that they are without any restrictions insofar as the Federal regulations are concerned.

The court fails to understand or follow this line of argument in view of the clear language used in the regulations. Section 1 of GCPR provides that: "The purpose of this regulation is to establish ceiling prices for all commodities and services (except those specifically exempt) upon the basis of prices in effect during the period December 19, 1950 to January 25, 1951, inclusive. This period is referred to as the `base period'."

This regulation was approved January 26, 1951, and was effective immediately by its own terms.

Section 1 of SR 2 to CPR 78 provides in part: "* * * As a result of this supplementary regulation retail sales of imported packaged distilled spirits and wines by the sellers covered herein are no longer governed by CPR 31. In addition, both wholesale sales of those imported items, and retail and wholesale sales of domestic packaged distilled spirits and wines by...