United States v. Futura, Inc.

• Decision Date: 02 March 1972
• Docket Number: Crim. No. 3170.
• Citation: 339 F. Supp. 162
• Parties: The UNITED STATES of America v. FUTURA, INC., a corporation, etc. and Charles F. Tunnicliff.
• Court: U.S. District Court — Northern District of Florida

339 F. Supp. 162

The UNITED STATES of America v. FUTURA, INC., a corporation, etc. and Charles F. Tunnicliff.

Crim. No. 3170.

United States District Court, N. D. Florida, Tallahassee Division.

March 2, 1972.

Stewart J. Carrouth, Asst. U. S. Atty., Tallahassee, Fla., for plaintiff.

Philip Parsons, Fla., Julius F. Parker, Jr., Tallahassee, Fla., for defendants.

OPINION-ORDER

PRELIMINARY STATEMENT OF THE CASE

MIDDLEBROOKS, District Judge.

This cause is before this Court defendants having waived their right to trial by jury and having consented to trial of this cause by the Court pursuant to Rule 23(c), Federal Rules of Criminal Procedure. Also pending is defendants' motion to dismiss the information wherein it is alleged that the provisions of the Act and the regulations promulgated thereunder, under which the offense is charged did not create any crime or define any prohibited criminal conduct and did not provide for punishment thereof. Additionally, defendants argue that if the Act and the rules and regulations promulgated thereunder impose criminal sanctions, then they are unconstitutionally vague and void.

Defendants are the owners of certain rental property in Tallahassee, Florida. By information the United States of America has alleged that these defendants did willfully violate the Economic Stabilization Act of 1970, as amended, and the rules and regulations promulgated thereunder. The pertinent provisions of the Act read as follows:

"Whoever willfully violates any order or regulation under this title shall be fined not more than $5,000." Section 204 of the Economic Stabilization Act of 1970, Title II of Public Law 91-379, 84 Stat. 799 (August 15, 1970); as amended by Public Law 91-558, 84 Stat. 1468 (December 17, 1970); Public Law 92-8, 85 Stat. 13 (March 13, 1971); Public Law 92-15, 85 Stat. 38 (May 18, 1971) (hereinafter referred to as the Act of 1970).

In Count I of the information it is charged that these defendants did willfully demand and receive from their tenants during the period between October 15, 1971, and November 15, 1971, rent approximately $60.00 in excess of the $100.00 ceiling rent prevailing on said property during the base period of July 16, 1971, through August 14, 1971, in violation of Section 2(c) of Economic Stabilization Regulation No. 1, Amendment No. 2, (36 F.R. 17434, August 31, 1971) pursuant to the Act of 1970 as amended and Executive Order 11615, Section 1(a) (36 F.R. 15127, August 17, 1971).

Count II charges that the defendants willfully engaged in a practice constituting a means to obtain a higher rent than permitted by Regulation 1, Section 10(a) (36 F.R. 16516, August 21, 1971) issued pursuant to the Act of 1970, as amended, and Executive Order 11615 (36 F.R. 15127, August 17, 1971) in violation of the Act of 1970, as amended, and Executive Order 11627, Section 1 (a), (36 F.R. 20140, October 16, 1971). The substance of this charge is that defendants attempted to induce their tenants to inform the Internal Revenue Service that defendants had rolled back their rents in compliance with the Act of 1970 (when in fact defendants had not rolled back the rent) in return for a $10.00 "kickback" on the amount of rent paid by the tenants to defendants.

Count III charges a willful violation by defendants of Section 300.11 of the Price Commission's regulations (36 F.R. 23976, December 16, 1971) for their having charged their tenants during the period between November 15, 1971, and December 15, 1971, rent in excess of the base price for the rental property owned by defendants in violation of the Act of 1970, and Executive Order 11627, Section 1(a) (36 F.R. 20140, October 16, 1971).

MOTION TO DISMISS

In addition to the grounds for dismissal already mentioned, defendants move to dismiss the information on the grounds that the Act of 1970 is an unconstitutional delegation of legislative authority to the Executive Branch and on the further ground that the Act and the Executive orders issued thereunder, by allowing authority to make exceptions and to grant exemptions, denies these defendants equal protection under the law. This very argument was advanced in an unrelated civil suit for declaratory and injunctive relief heard by a special three-judge tribunal of the District of Columbia wherein plaintiffs sought to enjoin enforcement of the Act, but the Court in a well-reasoned and comprehensive opinion rejected this constitutional challenge. See Amalgamated Meat Cutters and Butcher Workmen of North America v. Connally et al. 337 F.Supp. 737 (D.D.C.1971) (Three-Judge Court). This Court does not choose to depart from those principles contained therein and thus defendants' argument in this respect must fall.

Insofar as defendants argue that no violations under the Act and the regulations have been charged in the information because no base period for computing rent existed at the time title to the property changed hands and ownership passed to defendants on September 22, 1971, this Court finds that argument unpersuasive, particularly when read in light of the regulations. See e. g. Economic Stabilization Regulation No. 1, Section 6(a) (2). Compare Rent Stabilization Regulation § 301.201(a) (36 F.R. 251, December 30, 1971).

Thus, there remains for disposition the statutory interpretation to be given the Act and the regulations by this Court. Necessarily helpful in this regard are the plain meaning and wording contained in the legislation and the legislative history surrounding its enactment.

The test most often articulated in determining whether a particular provision of legislation is civil or penal in character is "whether the legislative aim in providing the sanction was to punish the individual for engaging in the activity involved or to regulate the activity in question." Telephone News-System, Inc. v. Illinois Bell Telephone Co., 220 F.Supp. 621, 630 (N.D.Ill.1963) (Three-Judge Court), aff'd 376 U.S. 782, 84 S.Ct. 1134, 12 L.Ed.2d 83 (1964). Legislative intent if at all possible is to be measured by objective standards contained in the legislative history of the Act, but where relevant criteria are absent which evidence legislative intent creating a penal statute, then certain other factors must be considered. These factors have been stated as follows:

"Whether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment — retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned are all relevant to the inquiry, and may often point in different directions." Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-169, 83 S.Ct. 554, 567-568, 9 L.Ed.2d 644 (1963).

Adverting to these factors this Court finds that the statute and regulations issued pursuant thereto were intended to be penal in nature and reinforced by the possible imposition of criminal sanctions. The sanction which can be imposed does involve an affirmative disability or restraint. The monetary penalty, here a $5,000 fine, has traditionally been regarded as a form of criminal punishment. Violation of the Act is predicated upon a showing or finding of scienter, i. e. willful disobedience of the Act or regulations by the offender. The operation and enforcement of § 204 of the Act as a penal measure will promote the traditional aims of punishment, viz., retribution and deterrence.

Furthermore, even though § 204 of the Act lacks the generally present words of art "upon conviction thereof" so that it may be unclear on the face of the statute that the conduct to be punished is a crime, the Courts have uniformly held that if punishment in the form of a fine is imposed for violation of the statute, as distinguished from a civil remedy, the offense is criminal in nature. United States v. Krapf, 180 F. Supp. 886, 890 (D.C.N.J.1960), aff'd 285 F.2d 647 (3rd Cir. 1961).

Parenthetically, it should be noted that this Court has looked to subsequent congressional action in order to assess properly the legislative intent behind the enactment of § 204 of the Act. Examination of the legislative history of § 208 of Public Law 92-210, 85 Stat. 743 (December 22, 1971), the statutory successor of § 204, reveals that Congress did in fact intend that a crime be created and did intend to provide for criminal punishment for violations thereof. The report of the Committee on Banking, Housing and Urban Affairs, United States Senate Report No. 92-507, U.S. Code Cong. & Admin. News 1971, p. 2283, stated in part as follows:

* * * * * *

Sanctions

"Section 208 of the Economic Stabilization Act, as amended by this bill, relates to sanctions. There are two sanctions that may be imposed upon violators of any regulation or order issued under the authority of this committee bill. The existing criminal fine has been clarified to make it understood that the $5,000 fine is for each violation. Emphasis supplied

"A civil penalty of $2,500 for each violation may be imposed by a court. The power to impose a civil penalty gives flexibility to the court by avoiding sole alternatives of criminal sanction or nothing." Ibid. at 36-37.

Thus, it becomes clear that § 204 as written was purely a penal measure intended to obtain compliance with the Act. As amended § 208(b) provides for a civil penalty denominated as such with the element of scienter obviated from proof of the offense. This element, however, was not eliminated from § 204(a). In short, this entire section as amended allows an alternative means of enforcement, one with a less exacting standard of proof.

In light of the foregoing it can be reasonably concluded that § 204 of the Act of 1970 did create a crime and...