United States v. Gordin

• Decision Date: 24 November 1922
• Docket Number: 74.
• Citation: 287 F. 565
• Parties: UNITED STATES v. GORDIN.
• Court: U.S. District Court — Southern District of Ohio

287 F. 565

UNITED STATES v. GORDIN.

No. 74.

United States District Court, S.D. Ohio, Western Division.

November 24, 1922

Thomas H. Morrow, U.S. Dist. Atty., of Cincinnati, Ohio.

Chase Stewart, of Springfield, Ohio, for defendant.

SATER District Judge.

Counsel have submitted on each side much matter of an historical character in connection with the arguments on the demurrer. To what extent it is evidential, and not such as may be judicially noted, is unimportant, as both sides desire its consideration in the determination of the points urged. No extended review of the same will be made.

Under the Act of June 3, 1916 (39 Stat. 166), there was established a Council of National Defense, with authority to constitute subordinate agencies and boards. One of the boards created by virtue of such authority was the War Industries Board. It was advisory to the Council of National Defense, and eventually became the personal agency of the President, from whom it obtained subsequently large powers. In 1918 it became apparent to the War and Navy departments and others immediately engaged in and responsible for the conduct of the war that the supply of wool would prove greatly inadequate to the needs of the army and navy and our civilian population. The wool obtainable could, of course, be acquired by commandeering. The government, through the War Industries Board, devised a scheme, however, through which the United States in effect took over the entire wool clip of that year although the wool not needed in the prosecution of the war and which could be applied to civilian use, was suffered to be diverted for such purpose. The price which the government fixed was to the grower based on the Atlantic seaboard price as established on July 30, 1917, less the profit allowed to the dealer and less freight to the Atlantic seaboard, moisture shrinkage, and interest.

Regulations were promulgated controlling the purchase and disposition of wool. The regulations provided that country dealers should be allowed a profit of 1 1/2 cents per pound on wool purchased by them, and that, if their gross profit for the season's business should be in excess of that sum, such 'excess profit shall be disposed of as the government may decide. ' The dealers were licensed. On June 1, 1918, the defendant received from the wool division of the War Industries Board a permit to operate as an approved wool dealer in country districts, and agreed to operate subject to the rules for handling the wool clip of 1918 theretofore adopted by such board for the handling of fleece wools, which permit it was stipulated should be subject to immediate revocation for failure to comply with such regulations. His subsequent report to the government shows that he made a profit in excess of that prescribed by the regulations and which he had previously agreed to accept. The government sues to recover such excess. The defendant demurs to the petition.

It has been held that given articles and property may, by virtue of circumstance, become clothed with a public interest, when used in a manner to make them of public concern and affect the community at large. Thus affected with a public interest are elevators or storehouses, where grain or other property is stored, Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77; Budd v. N.Y., 143 U.S. 517, 12 Sup.Ct. 468, 36 L.Ed. 247; Brass v. North Dakota ex rel. Stoeser, 153 U.S. 391, 14 Sup.Ct. 857, 38 L.Ed. 757; the business of insurance, German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 34 Sup.Ct. 612, 58 L.Ed. 1011, L.R.A. 1915C, 1189; irrigation, Clark v. Nash, 198 U.S. 361, 25 Sup.Ct. 676, 49 L.Ed. 1085, 4 Ann.Cas. 1171; temporarily the renting of houses, Block v. Hirsh, 256 U.S. 135, 41 Sup.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165; Marcus Brown Co. v. Feldman, 256 U.S. 170, 41 Sup.Ct. 465, 65 L.Ed. 877. In Lajoie v. Milliken, 136 N.E. 419, decided by the Supreme Judicial Court of Massachusetts, September 25, 1922, it was ruled that a state of war may affect with a public interest articles, such as coal, which under normal conditions are free to commerce in its usual channels, and thus render subject to governmental regulations that which would otherwise be unobstructed and unhindered by the law, and in such case the war powers of the federal government are at least as extensive as the police powers of the states. It must be held that during the war wool was affected with a public interest and became subject to government control. When it became established that the wool clip through the necessities of war became affected with such interest, the regulation of its price became one of the first forms in which such interest should be asserted. The validity of a regulation of that character has been settled since the decision of Munn v. Illinois was promulgated. Block v. Hirsh, 256 U.S.at page 157, 41 Sup.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165. For an illustration of a price or rate regulation by a subdivision of the War Industries Board, see American Smelting & Refining Co. v. U.S., 259 U.S. 75, 42 Sup.Ct. 420, 66 L.Ed. 833, decided by the United States Supreme Court, May 15, 1922.

The regulations for the control of the wool clip of 1918 had their origin in the necessities of war. In time of war, by virtue of the Constitution and usually by standing statutory enactments of Congress, comprehensive powers reside in the President of the United States as commander-in-chief of the army and navy. As illustrative of his power, he may form temporary civil government in a conquered country and may impose duties on imports and tonnage for the support of the government and to sustain the burdens of war. See Cross v. Harrison, 16 How. 164, 190, 14 L.Ed. 889; Hamilton v. Dillin, 88 U.S. (21 Wall.) 78, 87, 88, 22 L.Ed. 528; Dooley v. U.S., 182 U.S. 222, 21 Sup.Ct. 762, 45 L.Ed. 1074; U.S. v. Heinszen & Co., 206 U.S. 370, 27 Sup.Ct. 742, 51 L.Ed. 1098, 11 Ann.Cas. 688. In proper cases and under proper circumstances property may be taken in time of war for defense or attack, for food or medicine for the army and navy, and for the transportation of troops and munitions of war. Clothing may be taken to supply the naval and military forces. U.S. v. Russell, 80 U.S. (13 Wall.) 623, 627, 628, 20 L.Ed. 474; Roxford Knitting Co. v. Moore & Tierney (C.C.A.) 265 Fed.at page 179, 11 A.L.R. 1415. If clothing may be thus appropriated, the materials, it would seem, out of which it is made, may also be taken, if the exigencies of war so require. When such action is taken, every presumption, as in other cases, is in favor of the legality of the acting officers, and, in the absence of evidence to the contrary, such presumption prevails. Lajoie v. Milliken, supra. The President of necessity is required to act largely through heads of departments and subordinates, and it was not required that the defendant's license should have been immediately issued or signed by the President. Roxford Knitting Co. v. Moore & Tierney, 265 F. 190, 11 A.L.R. 1415. The regulations governing the wool clip of 1918 and the permit issued to the defendant were, however, acts of the President, although prepared and executed by his chosen agents.

It is urged in defense that the President and his subordinates were without authority to prescribe such regulations or to exact the license granted to and the contract made with the defendant. Much may be said to sustain the view that the broad powers vested in the President by the Constitution and congressional enactments conferred on him the right to control the wool clip in the manner in which it was done and to impart invalidity to the contracts made with country wool dealers; but whether he and his subordinates acted beyond his power is, however, immaterial in the light of subsequent legislation. It is clear that Congress could by appropriate legislation have conferred on him the authority to control the wool clip and to make such a contract as is here in question.

The courts always presume that Congress acts advisedly and with full knowledge of the situation. The acquisition of such knowledge is not limited to the formal investigation of committees, nor are the courts at liberty to inquire how such knowledge was obtained. They must accept its action as that of a body having full power to act, and only acting when it has acquired sufficient information to justify its action. Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S. 238, 245, 22 Sup.Ct. 881, 46 L.Ed. 1144. It sufficiently appears that Congress was apprised of the action of the War Industries Board and did not by enactment confer broader powers, because those possessed were believed to be adequate for the course it was pursuing. It may also be assumed that the conflict in which the United States was engaged was of such paramount interest that members of the supreme legislative body were informed as to the steps taken to protect the army and navy and the civilian population. After the Armistice, as reflecting on the government's intent to take over the entire wool clip of the season, it may be noted that it continued to receive at the stipulated price all domestic wool which was on board of cars by December 31, 1918, a portion of which it was compelled to sell at a substantial loss. The activities of the War Industries Board were transferred to the Bureau of Markets, and to enable such bureau to complete the work of the domestic wool section of the War Industries Board a request for an appropriation of funds was made of proper committees of both the House and the Senate by the then Secretary of Agriculture. The Act of Congress approved July 24, 1919 (41 Stat. 267), making appropriations for the fiscal year 1920, contains the provision:

'To enable the Bureau of Markets to complete the work of the domestic

...