United States v. Spokane Dry Goods Co.

• Citation: 264 F. 209
• Decision Date: 13 March 1920
• Docket Number: 3364-3366.
• Parties: UNITED STATES v. SPOKANE DRY GOODS CO. SAME v. HILL BROS. SHOE CO. SAME v. CULBERTSON-GROTE-RANKIN CO.
• Court: U.S. District Court — Eastern District of Washington

264 F. 209

UNITED STATES v. SPOKANE DRY GOODS CO. SAME v. HILL BROS. SHOE CO. SAME v. CULBERTSON-GROTE-RANKIN CO.

Nos. 3364-3366.

United States District Court, E.D. Washington, Northern Division.

March 13, 1920

Francis A. Garrecht, U.S. Atty., and Charles H. Leavy, Asst. U.S Atty., both of Spokane, Wash.

Danson Williams & Danson, of Spokane, Wash., for defendant Spokane Dry Goods Co.

Graves Kizer & Graves, of Spokane, Wash., for defendant Hill Bros Shoe Co.

Wakefield & Witherspoon and Turner, Nuzum & Nuzum, all of Spokane, Wash., for defendant Culbertson-Grote-Rankin Co.

RUDKIN District Judge.

The indictments in these cases were returned under the act of Congress of October 22, 1919, known as the 'Food Control and the District of Columbia Rents Act.' 41 Stat. 297, c. 80. The first section recites:

'That by reason of the existence of a state of war, it is essential to the national security and defense, for the successful prosecution of the war and for the support and maintenance of the army and navy, to assure an adequate supply and equitable distribution, and to facilitate the movement of foods, feeds, wearing apparel, containers primarily designed or intended for containing foods, feeds, or fertilizers, fuel, including fuel oil and natural gas, and fertilizer and fertilizer ingredients, tools, utensils, implements, machinery, and equipment required for the actual production of foods, feeds, and fuel, hereafter in this act called necessaries; to prevent, locally or generally, scarcity, monopolization, hoarding, injurious speculation, manipulation, and private controls affecting such supply, distribution, and movements; and to establish and maintain governmental control of such necessaries during the war. For such purposes the instrumentalities, means, methods, powers, authorities, duties, obligations, and prohibitions hereinafter set forth are created, established, conferred, and prescribed. The President is authorized to make such regulations and to issue such orders as are essential effectively to carry out the provisions of this act.'

By section 2 it is made unlawful, among other things, for any person 'to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries.'

The three indictments contain upwards of 200 counts, but so far as material to our present inquiry all counts are the same, and are open to the same objections, if any. The first count of the indictment in case No. 3364 charges that the defendant did--

'knowingly, willfully and unlawfully make an unjust and unreasonable rate and charge in the handling and dealing in and with certain necessary articles of wearing apparel, to wit, one certain ladies' coat, which said ladies' coat had theretofore been procured by said defendant at a cost to defendant of the sum of twenty-one and 98/100 dollars ($21.98), and which said ladies' coat, upon the date aforesaid, the said defendant did then and there sell and dispose of at a certain sale shown by defendant's 'The Crescent' sale slip, to wit, name, R. C. Dahlhjelm, bearing No. 12351 and No. 7, to a certain purchaser, a person to the grand jurors unknown, at the price and for the sum of forty-five dollars ($45.00); said selling price, rate and charge of forty-five dollars ($45.00) being then and there an unreasonable, unfair, and excessive price, the addition of twenty-three and 02/100 dollars ($23.02) to the sum of twenty-one and 98/100 dollars ($21.98), the cost to defendant of said ladies' coat, being an undue, exorbitant, immoderate, excessive, and monstrous profit, and the said sum and price of forty-five dollars ($45.00) so extorted, exacted and required from said purchaser for said ladies' coat being an unfair, unjust and unreasonable rate and charge in the handling and dealing in and with said necessary article of wearing apparel.'

Demurrers have been interposed to the several counts of the indictments on the ground that they fail to state facts sufficient to constitute offenses against the United States. The objections to the indictments are twofold. First, because the act of Congress is invalid; and, second, because the indictments do not charge or allege when the goods were purchased or procured, or that the selling price was in itself unreasonable or unjust. Again, the objections to the act are twofold. The first objection goes to the power of Congress to enact such legislation in any form, while the second is based on the ground that the language of the act defining the crime is too indefinite and uncertain.

1. Taking up first the objection to the form of the indictments, it is contended that, inasmuch as the date of purchase is not alleged, the mere difference between the purchasing and selling price of an article does not necessarily disclose an unjust or unreasonable charge for handling the same, because the owner is entitled to the full benefit of the increase in the value of his merchandise accruing from natural causes between the date of purchase and the date of sale. This is perhaps true, but the indictments do not stop with the mere averment of the difference between the purchasing and selling price. It is further charged that the selling price, rate, and charge was an unreasonable, unfair, and excessive price, and this latter averment, coupled with the averment showing the difference between the purchasing and selling price, brings the case clearly within the prohibition of the statute.

2. The importance of the first objection urged against the Food Control Act cannot be overestimated, as it challenges the power vested by the Constitution in the legislative and executive branches of the government in time of war and public danger. If I understand their position correctly, the contention of counsel for the defendants amounts to this: The war power of the federal government under the Fifth Amendment to the Constitution is only commensurate with the police power of the states under the Fourteenth Amendment, and inasmuch as the states are powerless to regulate prices in cases such as those now before the court under the Fourteenth Amendment the federal government is equally powerless to regulate such prices under the Fifth Amendment, even as a war measure.

It must be conceded that there is great force in this argument, and that it finds support in many adjudications and declarations of the Supreme Court. Thus, in Ex parte Milligan, 4 Wall. 2, 120 (18 L.Ed. 281), the court said:

'Time has proven the discernment of our ancestors; for even these provisions, expressed in such plain English words, that it would seem the ingenuity of man could not evade them, are now, after the lapse of more than seventy years, sought to be avoided. Those great and good men foresaw that troublous times would arise, when rulers and people would become restive under restraint, and seek by sharp and decisive measures to accomplish ends deemed just and proper; and that the principles of constitutional liberty would be in peril, unless established by irrepealable law. The history of the world had taught them that what was done in the past might be attempted in the future. The Constitution of the United States is a law for rulers and people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances. No doctrine, involving more pernicious consequences, was ever invented by the wit of man than that any of its provisions can be suspended during any of the great exigencies of government. Such a doctrine leads directly to anarchy or despotism, but the theory of necessity on which it is based is false; for the government, within the Constitution, has all the powers granted to it, which are necessary to preserve its existence; as has been happily proved by the result of the great effort to throw off its just authority.'

And in the very recent case of Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 40 Sup.Ct. 106, 64 L.Ed. . . ., decided December 15, 1919, the court said:

'The war power of the United States, like its other powers and like the police power of the states, is subject to applicable constitutional limitations; * * * but the Fifth Amendment imposes in this respect no greater limitation upon the national power than does the Fourteenth Amendment upon state power.'

Again, the court said:

'If the nature and conditions of a restriction upon the use or disposition of property is such that a state could, under the police power, impose it consistently with the Fourteenth Amendment without making compensation, then the United States may for a permitted purpose impose a like restriction consistently with the Fifth Amendment without making compensation; for prohibition of the liquor traffic is conceded to be an appropriate means of increasing our war efficiency.'

If the war power of Congress and the President is to be thus limited and restricted, it will be difficult, if not impossible, to sustain much of the war-time legislation of Congress. The acts and regulations fixing the price of coal, of sugar, of wheat and its products, the act taking over control of the railroads, and perhaps numerous other acts and regulations of that period, cannot be justified as mere peace time police regulations. It was suggested on the argument that the act taking over the railroads finds justification in the commerce clause, but this is more than questionable. Doubtless the government might operate the railroads temporarily in some great emergency in time of peace; but the power would pass with the emergency, and an act taking them over for an indefinite period, and fixing arbitrarily the compensation of the owners, finds no justification in the Constitution. Of course it will...