United States v. Lesniewski, 280

• Decision Date: 30 June 1953
• Docket Number: No. 280,Docket 22707.,280
• Citation: 205 F.2d 802
• Parties: UNITED STATES v. LESNIEWSKI.
• Court: U.S. Court of Appeals — Second Circuit

205 F.2d 802 (1953)

UNITED STATES v. LESNIEWSKI.

No. 280, Docket 22707.

United States Court of Appeals Second Circuit.

Argued June 2, 1953.

Decided June 30, 1953.

Nathan Siegel, Sol., Office of Rent Stabilization, Washington, D. C. (Robert A. Sauer, Acting Gen. Counsel, and A. M. Edwards, Asst. Gen. Counsel, Office of Rent Stabilization, Washington, D. C., on the brief), for plaintiff-appellant.

Martin F. Stempien, New Britain, Conn., for defendant-appellee.

Before SWAN, Chief Judge, and CLARK and FRANK, Circuit Judges.

CLARK, Circuit Judge.

By this appeal the United States of America seeks a modification, small in amount, but of potential importance in rent control, of a judgment it has obtained in the district court against an overcharging landlord. Under the district judge's findings of fact, which are not in dispute here, the overcharge of rent for an apartment in New Haven, Connecticut, made by defendant between April 1, 1949, and October 31, 1951 (when the rent was validly increased), was $497; of this, the amount accruing within the year before the commencement of the Government's suit was $106. The district court concluded on the evidence that, while defendant's violation was not willful, it was "the result of failure to take practicable precautions" against its occurrence since made without attempt to ascertain the law, and hence defendant could not avail himself of the Chandler defense, so-called, limiting all damages to the amount of the overcharge. Housing and Rent Act of 1947, as amended, § 205 (a), 50 U.S.C.Appendix, § 1895(a), superseding Emergency Price Control Act of 1942, as amended, § 205(e), 50 U.S.C.Appendix, § 925(e). But the court also concluded that the defendant's negligence was self-neutralizing; his failure to acquaint himself with the law had led to his not seeking an increase in the rent, which would have been allowable to an over-all amount substantially as large as the overcharges. While this was irrelevant as a legal defense, it did affect the exercise of judicial discretion, making the case in substance one for restitution, rather than for a penalty. The judge felt himself bound under the statute just cited to award the United States as a minimum the amount of the overcharge for one year, namely, $106; but he then went on to give judgment for the total amount of overcharge, $497, to be disbursed by the plaintiff to the tenant (the latter being found and willing to accept) and provided that "the payment by defendant of said Four Hundred and Ninety-seven ($497) Dollars shall satisfy the award of damages" first made. It is this last provision which the Government attacks and seeks to have stricken here.

The Government asserts that under the law the award of $106 is mandatory and no discretion is permitted the judge to pass its benefits on to the tenant. This raises a question purely of law. Had Judge Hincks the power, we do not think the exercise of his discretion could be properly attacked. Here he has held that a novice at the renting of real estate has penalized himself by his ignorance of the law, and that refund to the tenant, who gets this substantial benefit, is all that the law should demand. We turn therefore to the statutes.

The legislative ups and downs of price control, particularly as applied to rents, have not given us exactly clear-cut provisions with which to deal. From the beginning in 1942 the statutes above cited have provided a penalty for charges above legal ceiling prices. Before the 1947 amendments and after the 1951 amendments the award might be such an amount not more than three times the overcharge (and now at least $50), as the court in its discretion might determine; during the period 1947-1951 it had to be treble the overcharge. Until the 1944 amendment and again from the 1947 to the 1949 amendments the tenant alone could sue, within a year; from 1944 to 1947 and since 1949, if the person overcharged did not sue within thirty days after the violation, the United States could sue at any time within a year. These statutory variations are described in many cases, e. g., Mattox v. United States, 9 Cir., 187 F.2d 406; United States v. Gianoulis, 3 Cir., 183 F.2d 378, 381, note 7; United States v. Richards, D.C.M.D.Pa., 102 F. Supp. 302; and the opinion below.

An action for restitution of the overcharge is not in terms authorized in any of these successive Acts. But in the leading case of Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332, the Court held — against sharp dissent — that under the statutory provision prohibiting the overcharge and authorizing an injunction against it, § 205(a) of the earlier Act, 50 U.S.C.Appendix, § 925(a), now § 206(b) of the later Act, 50 U.S. C.Appendix, § 1896(b), an order for the recovery and restitution of illegal rents may be considered a proper "other order" under the statute either as an equitable adjunct to an injunction decree or as an order appropriate and necessary to enforce compliance with the Act. And this position has been reiterated, if not extended, against the dissent of four justices in United States v. Moore, 340 U.S. 616, 71 S.Ct. 524, 95 L.Ed. 582, upholding a district court's award — which had been overturned in the court of appeals — of restitution, as well as the statutory damages, in a case where no injunction was possible because the defense-rental area had now been decontrolled. It is therefore taken as settled law that the district court may in the exercise of discretion award restitution of the overcharges in addition to the statutory damages and in the same action, United States v. Ziomek, 8 Cir., 191 F.2d 818; United States v. Carter, 10 Cir., 197 F.2d 903; Woods v. Witzke, 6 Cir., 174 F.2d 855, and that this award is not limited to the one-year overcharge as is the damage award. United States v. Pileggi, 2 Cir., 192 F.2d 878; Mahanor v. United States, 1 Cir., 192 F.2d 873; Moore v. United States, 5 Cir., 196 F.2d 906.

Against this background the Government argues very strongly that the two remedies are entirely distinct and that the minimum award of the action "at law" must be kept entirely separate — and for governmental coffers alone — from the equitable remedy of restitution. But this, it seems to us, is to compartmentalize the law in ways not specified in the governing statutes or decisions and to a certain extent inconsistent with what has necessarily been held in other situations. Although no express provisions so state, the direction for payment to the tenant by way of restitution of money collected by the Government appears usual and is not challenged here; and while the Government originally claimed either treble damages for a year or, in the event restitution was ordered, double damages for a year as additional penalty, it appears to recognize, as it must, the right of the district court to limit the amount of total award against the landlord to single recovery of the overcharge just as was done. The narrow scope of the issue is whether the judge lacks power to direct the Government to pay over to the tenant the amount of the last year's overcharge which it recovered as damages. The question remains the same, of course, if we must employ labels to say that the judge has limited restitution to $391 and awarded damages of $106. For who is to get the damage award?

Here the Government betrays some inconsistency itself in limiting its demands — a policy "always taken," as it says — to double damages where restitution is being ordered. Judge Magruder for his court has argued cogently that Congress, in stating the limits of statutory damages, has intended to limit all recovery, even in a willful case,...