United States v. Kinnebrew Motor Co.

• Decision Date: 12 November 1934
• Docket Number: No. 10909.,10909.
• Citation: United States v. Kinnebrew Motor Co., 8 F.Supp. 535 (W.D. Okla. 1934)
• Parties: UNITED STATES v. KINNEBREW MOTOR CO. et al.
• Court: U.S. District Court — Western District of Oklahoma

8 F. Supp. 535

UNITED STATES v. KINNEBREW MOTOR CO. et al.

No. 10909.

District Court, W. D. Oklahoma.

November 12, 1934.

William C. Lewis, U. S. Dist. Atty., of Oklahoma City, Okl., and A. W. De Birny, Associate Counsel, NRA, of Washington, D. C., for the United States.

J. B. Dudley, of Oklahoma City, Okl. (Herbert K. Hyde, Duke Duvall, and Paul Dudley, all of Oklahoma City, Okl., on the brief), for defendants.

VAUGHT, District Judge.

The defendants in this action are charged by indictment with violation of the Act of Congress of June 16, 1933, known as the National Industrial Recovery Act (48 Stat. 195).

It is charged that the Kinnebrew Motor Company, an Oklahoma corporation, and Jackson A. Kinnebrew, defendants, are local dealers in Oklahoma City in Nash automobiles, and as said dealers purchase new Nash cars from the Nash Motor Company at Kenosha, Wis., and have the automobiles shipped to their place of business in Oklahoma City, Okl., where said automobiles are sold at retail, and where said defendants allow to purchasers of new cars a trade-in value for used cars.

The indictment further alleges that the said defendants are engaged in a retail business which constitutes interstate commerce in that the prices fixed for new cars, and the prices paid for used cars, affect and burden interstate commerce throughout the country.

The indictment further alleges that, by virtue of the power vested in the President of the United States by said act, and delegated by the President to the National Administrator of the Automobile Code, a certain code was adopted by the President on the recommendation of the National Administrator, which code fixes the prices at which new cars may be sold, and the prices which may be allowed for secondhand automobiles as credit on the purchase price of new automobiles.

The first count charges that the defendants did unlawfully sell one 1934 Nash automobile as a demonstrator for the sum of $800 which was less than the full retail price of $1,004.95, in a transaction in and affecting interstate commerce; that said automobile, manufactured in the state of Wisconsin for the purpose of sale in the state of Oklahoma, had not been in use for a period of sixty days from the date of registration with the Advisory Committee for the state of Oklahoma, and had not been registered at any time as provided by article 4, section B, paragraph 1 of the aforesaid Code, or by any regulation of the Administrator so made, adopted, and approved under the authority of the National Industrial Recovery Act; that said defendants did then and there knowingly, wilfully, and unlawfully commit a certain offense against the United States, to wit, violate article 4, section B, paragraph 1, in a transaction in and affecting interstate commerce, and by reason thereof did become subject to the provision of section 3(f) of the aforesaid National Industrial Recovery Act (15 USCA § 703(f), and so forth.

The second count charges that the defendants did unlawfully accept in trade a used Nash Victoria coupé at an allowance price of $181.22, in a transaction in and affecting interstate commerce, when the allowance price fixed by the code for such car was $25 as ascertained by the Administrator for Industrial Recovery, and so forth.

Count 3 charges that the defendants did unlawfully represent that the sale price of a 1934 Nash Town sedan was $1,005; whereas, in truth and in fact the sale price of said car was $899 delivered in Oklahoma City.

In count 4 the indictment charges that the defendants did unlawfully accept in trade a certain used Nash Special sedan at an allowance price of $200 in a transaction in and affecting interstate commerce, which used automobile had a value of $25 under the code as ascertained by the Administrator for Industrial Recovery.

The defendants have filed their joint and separate demurrers to each and all of the counts of said indictment, the said demurrers alleging that sections 701, 702 (a, b), 703 (a, b, c, d, f), 704 (a, b), 705, 706 (a, b, c), and 707 (a, b, c, d) of title 15, USCA, sections 1, 2(a, b), 3(a, b, c, d, f), 4(a, b), 5, 6(a-c), 7 (a-d) of the Act of Congress of June 16, 1933, known as the National Industrial Recovery Act, being the act referred to in said indictment, and the Code of Fair Competition for the Motor Vehicle Retailing Trade adopted October 3, 1933, pursuant thereto, and particularly section B, paragraph 1, and section A, paragraphs 2 and 5 of article 4 thereof, being the code and provisions thereof referred to in said indictment, are void and violative of (a) section 1, article 1 of the Constitution of the United States, (b) the Fifth Amendment to the Constitution of the United States, and (c) the Tenth Amendment to the Constitution of the United States.

The demurrers also allege that the business transactions referred to and set out in said indictment are private ones in which these defendants had a right to engage under the Fifth Amendment to the Constitution of the United States; that the Congress of the United States is without power to regulate, restrict, or restrain these defendants in such business transactions under the Tenth Amendment to the Constitution of the United States; and said demurrers further allege that the business transactions referred to and set out in said indictment are not interstate transactions; that the Congress of the United States has no power to legislate concerning the same under section 8, article 1 of the Constitution of the United States, the commerce clause thereof; that Congress exceeded its authority in passing said act; and that such act and the code adopted thereunder are void and in violation of said commerce clause.

The demurrers further alleged that said indictment does not state facts sufficient to constitute an offense under any valid law of the United States.

The statute under which the offense in this indictment is charged is the Act of Congress approved June 16, 1933, known as the National Industrial Recovery Act, and the pertinent provisions of the act are the following:

"Sec. 1. Declaration of policy. A national emergency productive of wide-spread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources." (15 USCA § 701.)

"Sec. 2. Administrative agencies. (a) To effectuate the policy of this chapter, the President is hereby authorized to establish such agencies, to accept and utilize such voluntary and uncompensated services, to appoint, without regard to the provisions of the civil service laws, such officers and employees, and to utilize such Federal officers and employees, and, with the consent of the State, such State and local officers and employees, as he may find necessary, to prescribe their authorities, duties, responsibilities, and tenure, and, without regard to the Classification Act of 1923, as amended chapter 13 of Title 5, to fix the compensation of any officers and employees so appointed.

"(b) The President may delegate any of his functions and powers under this chapter to such officers, agents, and employees as he may designate or appoint, and may establish an industrial planning and research agency to aid in carrying out his functions under this chapter.

"(c) This chapter shall cease to be in effect and any agencies established hereunder shall cease to exist at the expiration of two years after the date of enactment of this Act June 16, 1933, or sooner if the President shall by proclamation or the Congress shall by joint resolution declare that the emergency recognized by section 1 section 701 has ended." (15 USCA § 702.)

"Sec. 3. Codes of fair competition. (a) Upon the application to the President by one or more trade or industrial associations or groups, the President may approve a code or codes of fair competition for the trade or industry or subdivision thereof, represented by the applicant or applicants, if the President finds (1) that such associations or groups impose no inequitable restrictions on admission to membership therein and are truly representative of such trades or industries or subdivisions thereof, and (2) that such code or codes are not designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them, and will tend to effectuate the policy of this title: Provided, That such code or codes shall not permit monopolies or monopolistic practices: Provided further, That where such code or codes affect the services and welfare of persons engaged in other steps of the economic process, nothing in this section shall deprive such persons of the right to be heard prior to approval by the President of such code or codes. The President may, as a condition of his approval of any such code, impose such conditions (including requirements for the making of reports and the keeping of accounts) for the protection of consumers, competitors, employees, and others, and in furtherance of the public...