United States v. San Juan Lumber Co.
| Citation | 313 F. Supp. 703 |
| Decision Date | 19 November 1969 |
| Docket Number | Civ. A. C-1315. |
| Parties | UNITED STATES of America, Plaintiff, v. SAN JUAN LUMBER CO., Inc., Defendant. |
| Court | U.S. District Court — District of Colorado |
COPYRIGHT MATERIAL OMITTED
James L. Treece, U. S. Atty., Denver, Colo., Harold D. Rhynedance, Jr., and W. Risque Harper, Federal Trade Commission, Washington, D. C., for plaintiff.
Bodie, Minturn & Glantz, by James F. Bodie, Prineville, Or., Cake, Jaureguy, Hardy, Buttler & McEwen, by Donald W. McEwen and John R. Faust, Portland, Or., and Robert C. Duthie, Durango, Colo., for defendant.
This matter is before the Court on the motions of both plaintiff and defendant for summary judgment. Both parties submitted briefs and oral argument was had. The complaint as filed seeks relief on two counts. The first count, brought under 15 U.S.C.A. § 49, seeks an order in the nature of mandamus commanding the defendant San Juan Lumber Company to comply with the special order of the Federal Trade Commission issued on September 25, 1968 directing San Juan to file a special financial report. The second count, brought under 15 U.S.C.A. § 50, is for recovery of forfeitures arising from the failure of the defendant corporation to file this special report in the time required. This section provides that if the failure of the corporation to file the special report shall continue for thirty days after notice of default, the corporation shall forfeit to the United States the sum of $100 for each and every day such failure thereafter continues.
After the filing of this suit the defendant complied with the special order of the Federal Trade Commission, and on May 5, 1969 filed its special report. Therefore, count one is moot on the motions for summary judgment, and this order deals only with the second count.
The uncontroverted facts as outlined in the pretrial order, briefs of the parties on the motion for summary judgment, and the argument of counsel are as follows:
1) Defendant San Juan Lumber Co., Inc., is a Colorado corporation engaged in interstate commerce in the manufacture and sale of lumber.
2) On June 20, 1961, the Federal Trade Commission adopted a Resolution providing for an investigation and the collection of information as to costs, profits and related financial data showing business conditions within the various industries and lines of commerce of the United States. A copy of this Resolution was not published in the Federal Register.
3) On September 25, 1968, the Commission issued a special order to San Juan Lumber Company to file with the Commission a report containing the information specified on an accompanying form within ten days of receipt of the order. This special order, a copy of the Resolution of June 20, 1961, and the Commission's form MG-3 were placed in an envelope by an employee of the Commission's Division of Financial Statistics.
4) This envelope was addressed to the defendant and was mailed by registered mail. It was received by an employee of the defendant on September 28, 1968. This employee signed the return receipt as the addressee's agent. This employee was not an officer, director or supervising employee of the defendant corporation.
5) On October 23, 1968, the Commission issued a Notice of Default which was received by an employee of the defendant by registered mail on October 25, 1968. This employee also signed the return receipt as the addressee's agent, but was not an officer, director or supervising employee of defendant corporation.
6) The defendant did not file the special report until May 5, 1969, on which date the completed form MG-3 was filed and accepted by the Commission as constituting compliance.
7) The Federal Trade Commission had previously transmitted the following orders and notices to the defendant San Juan Lumber Company pursuant to the Resolution of June 20, 1961:
a. Special Order October 28, 1966
Notice of Default November 18, 1966
b. Special Order June 20, 1967
Notice of Default July 19, 1967
c. Special Order October 25, 1967
Notice of Default November 24, 1967
The special order of October 25, 1967 was not complied with within thirty days after the notice of default of November 24, 1967. This failure to report was the basis of Civil Action No. C-949 in this Court, resulting in a Consent Order dated July 19, 1968, which directed the defendant San Juan Lumber Company to file the special report required by the special order of October 25, 1967.
The issues formulated by the pretrial order, the motions for summary judgment, and the briefs in support thereof may be summarized as follows:
1. Is it necessary that the Resolution of the Federal Trade Commission of June 20, 1961 be published in the Federal Register in order to bind the defendant?
2. Do 15 U.S.C.A. §§ 46(b) and 50 authorize the Federal Trade Commission to serve special orders and notices of default by registered mail? If so, does such service satisfy the standard of constitutional due process?
3. Was the special order sufficiently definite and certain to be binding upon the defendant?
4. Was the transmittal of the Resolution and form MG-3 with the special order by an employee of the Commission a lawfully delegated act by the Commission?
Issues 3 and 4 outlined above have been examined by the Court in light of the briefs and affidavits submitted and found to be wholly without merit, thereby warranting their dismissal without discussion.
The defendant contends that the failure of the Federal Trade Commission to publish the Resolution of June 20, 1961 in the Federal Register bars its liability for the forfeitures sought by plaintiff. We find however that 44 U.S. C.A. §§ 1505(a), 1507, and 5 U.S.C.A. § 552(a), the statutory predicate upon which any duty of the Commission to publish must be based, establish that a person with actual knowledge may not assert the failure to publish as a defense.
One case holds contrary to this finding. Hotch v. United States, 212 F.2d 280, 14 Alaska 594 (9th Cir. 1954), states that 44 U.S.C.A. § 1507 does not bar the defense of failure to publish where there is actual knowledge. At least three circuits disagree with the Hotch position. United States v. Aarons, 310 F.2d 341 (2d Cir. 1962), in an opinion by Judge Friendly, holds clearly that actual knowledge of the defendant under 44 U.S.C.A. § 1507 and 5 U.S.C.A. § 552(a) is a bar to the defense of failure to publish. Aarons has been followed by Kessler v. F.C.C., 117 U.S.App.D.C. 130, 326 F.2d 673, 690 (1963), and agreed with in dictum in Wyman-Gordon Co. v. N. L. R. B., 397 F.2d 394, 396 n. 1 (1st Cir. 1968). Hotch itself has been limited by the Ninth Circuit to a holding that failure to publish is a defense only where the matter not published established a criminal proscription. See, F. C. C. v. Schreiber, 329 F.2d 517, 528 n. 7 (9th Cir. 1964) and California Citizens Band Assn. v. United States, 375 F.2d 43, 48 (9th Cir. 1967). Davis, Administrative Law Treatise, § 6.10 criticize Hotch, and states that the "actual knowledge" rule applies to a defendant asserting failure to publish.
Thus, the question of the defendant's actual knowledge is presented. Defendant claims that the stipulated facts show only delivery of the special order, Resolution, and report form to an employee of the defendant. It argues that delivery to a mere employee of a corporation does not establish actual knowledge of the corporate entity. In support of this position the defendant cites 19 C.J.S. Corporations § 1079 for the proposition that notice to a mere servant or clerk, or other subordinate employee, will not be regarded as notice to the corporation, unless he stands in such a relation to it or to the fact communicated that it is his duty to communicate it to his superiors.
While defendant's argument is sound in the abstract, it cannot be accurately applied to the facts and circumstances surrounding the course of communication and dealing between the defendant and the Federal Trade Commission. We find that the defendant did have actual knowledge of the Resolution of June 20, 1961. Plaintiff's affidavits of May 29, 1969 establish that from October 1966 defendant had knowledge of the existence and contents of the Resolution and the information required by the special order. Although these affidavits do not include copies of the Resolution forwarded to the defendant on occasions prior to September 25, 1968, the copies of the special orders included state that a copy of the Resolution was included with each order.
Another factor establishing defendant's actual knowledge of the existence and contents of the Resolution may be found in the Consent Order in Civil Action No. C-949. That order of this Court, in paragraph 5, found that the Resolution of June 20, 1961 was adopted pursuant to statutory authorization. In paragraph 6 it found that defendant was served with the Resolution, special order and report form. This Court takes judicial notice of its prior order of July 19, 1968 in Civil Action No. C-949, and finds that such order constitutes notice to and actual knowledge on the part of the defendant of the existence and contents of the Resolution and of the information required by the special order.
Finally, the signature of the defendant's employee as agent for the addressee on the registered mail return receipt creates a presumption that the defendant in fact received the envelope containing the Resolution, special order of September 25, 1968, and report form. This presumption shifts the burden of going forward with evidence of nondelivery to the defendant. 39 U.S.C.A. § 5010(b); In Re Tax Claim Bureau of Chester Co., 208 Pa.Super. 384, 222 A.2d 602 (1966). Defendant has in fact offered no evidence of nondelivery, and we therefore conclude that from this actual delivery defendant received actual knowldge.
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