Woods v. Benson Hotel Corporation, Civ. A. No. 2628.

• Decision Date: 15 January 1948
• Docket Number: Civ. A. No. 2628.
• Citation: 75 F. Supp. 743
• Parties: WOODS v. BENSON HOTEL CORPORATION.
• Court: U.S. District Court — District of Minnesota

75 F. Supp. 743

WOODS v. BENSON HOTEL CORPORATION.

Civ. A. No. 2628.

District Court, D. Minnesota, Fourth Division.

January 15, 1948.

COPYRIGHT MATERIAL OMITTED

William S. Kaplan, Chief, Litigation Unit, Regional Rent Office Region VI, of Chicago, Ill., and Alex Dim, Area Rent Atty., Minneapolis-St. Paul Defense Rental Area, of St. Paul, Minn., for plaintiff.

Rolf Ueland and Marcus G. Sundheim, both of Minneapolis, Minn., for defendant.

JOYCE, District Judge.

This is an action by the Housing Expediter under the Housing and Rent Act of 1947, 80th Cong., Public Law 129, Ch. 163, 1947 U.S.C. Cong., Service, p. 200, 50 U.S.C.A. Appendix, § 1881 et seq., to enjoin defendant from charging over-ceiling rents and to compel refunds to tenants of any over-ceiling rents already collected. Defendant, by counter-claim, seeks to enjoin plaintiff and the Area Rent Director from interfering in any manner with the collection, receipt, or retention by defendant of any rents whatsoever. The present proceedings arose from motions for a preliminary injunction by both parties. The facts were stipulated.

The Housing and Rent Act of 1947 (hereinafter called the Act) provides for a system of rent control over "controlled housing accommodations". Section 202(c) of the Act declares this phrase to mean "* * * housing accommodations in any defense-rental area, except that it does not include—(1) those housing accommodations, in any establishment which is commonly known as a hotel in the community in which it is located, which are occupied by persons who are provided customary hotel services such as maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy service".

Section 204(d) provides: "The Housing Expediter is authorized to issue such regulations and orders, consistent with the provisions of this title, as he may deem necessary to carry out the provisions of this section and section 202(c)."

Pursuant thereto the Housing Expediter issued Rent Regulation for Controlled forms in Rooming Houses and other Establishments on July 1, 1947, 12 F.R. 4302, which in its applicable parts is as follows:

"Sec. 1—Definitions—`Hotel' means any establishment which is commonly known as a hotel in the community in which it is located and which provides customary hotel services such as maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy service. Provided however, That if 75 per cent or more of the units in the establishment are self-contained units including a bathroom and kitchen and were rented on other than a daily term of occupancy on June 30, 1947, the establishment shall not be considered a hotel for the purpose of this regulation and the Housing and Rent Act of 1947."

"Sec. 1 (b) This regulation does not apply to the following:

* * * * * *

"(8) Accommodations in hotels, motor courts, tourist homes and other establishments. (i) Those housing accommodations, in any establishment which is commonly known as a `hotel' (see definition of "hotel" in section 1) in the community in which it is located, which are occupied by persons who are provided customary hotel services such as maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy service; * * * Provided, however, That all such rooms referred to in this paragraph shall be subject to this regulation unless the landlord files in the area rent office an application for decontrol of such accommodations on a form provided by the Expediter within 30 days after July 1, 1947, or within 30 days after the date of first renting, whichever is the later; And provided, further, That if a landlord fails to file said application for decontrol within the applicable specified period, such housing accommodations shall be and remain subject to the provisions of this regulation until the date on which he files said application."

Defendant filed an application for decontrol under this regulation, but there is no evidence of any action taken by plaintiff with respect thereto. On August 8, 1947, the above regulations were amended, 12 F. R. 5457, by substituting the word "including" for the words "such as" following the words "customary hotel service"; the part of the definition of hotel in section 1 following the words "Provided however" was eliminated, and the time specified by section 1 (b) (8) for filing applications for decontrol was extended another thirty days. On September 5, 1947, plaintiff issued Housing and Rent Act Memorandum No. 21, which was his official interpretation of the regulations. It was not however, published in the Federal Register. On September 29, 1947, defendant filed an application for decontrol on the revised forms. This application was denied by the Area Rent Director as to 190 dwelling units in the Hotel Leamington by order dated October 16, 1947, the reason given being that on June 30, 1947, these units did not receive all five of the so-called specified services, namely, maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy service. The 190 units involved each contain kitchen and bath and are rented on a weekly or monthly basis for a charge which covers (with occasional exceptions) the use of the unit space, carpets, gas stove, refrigerator, curtains or draperies, and window shades. Additional charges are made if the tenant desires regular maid or linen service, or furniture service. As of June 30, 1947, all of these units received telephone and desk or secretarial service and bellboy service; 7 received maid service; 31, linen service; 66, complete furniture; and 115, partial furniture service. None received all the services. On June 30, 1947, each of these services was and since that date has been available to tenants in the sense that they might request and receive it within a reasonable time by paying an additional charge, but not otherwise. On and since August 1, 1947, defendant has requested, billed, and received from tenants of 189 of these units rents over and above the maximum rent in effect on June 30, 1947. With only a few exceptions these units continue to receive only those services which they were receiving on June 30, 1947.

Defendant contends (1) that the Act is unconstitutional in that (a) in passing it Congress exceeded its legislative powers and (b) it violates due process, and (c) that there is an unconstitutional delegation of legislative authority to an administrative body; (2) that if the Act is held to be constitutional then Section 202(c)—the decontrol section—is self-executing and the Housing Expediter had no right to promulgate regulations requiring any action by him before an establishment is decontrolled; (3) the regulations as applied by the Housing Expediter in this case are not consistent with the Act and hence are invalid.

1. The Constitutional Issue.

The trend of decisions dealing with Congressional enactments bearing upon legislation regulatory in character tends to support the constitutionality of the act in question on the theory that an act of Congress is presumed to be constitutional and may not be lightly struck down by the courts. As Judge Jones said in Creedon v. Miller, D.C.Ohio, 1947, 74 F.Supp. 546, 547, "only if some substantial constitutional right of the citizen has been infringed or impaired should the courts strike down an act of Congress." The Housing and Rent Act was designed to attempt to remedy the consequences of upset economy and distorted social life which arose out of the war and which did not end immediately upon the cessation of the shooting war. In the case of Block v. Hirsh, 256 U.S. 135, at page 154, 41 S.Ct. 458, 459, 65 L.Ed. 865, 16 A.L.R. 165, dealing with an Act the provisions of which Congress declared were made necessary by emergencies growing out of World War I, Justice Holmes said: "But a declaration by a legislature concerning public conditions that by necessity and duty it must know, is entitled at least to great respect. In this instance Congress stated a publicly notorious and almost world-wide fact. That the emergency declared by the statute did exist must be assumed, and the question is whether Congress was incompetent to meet it in the way in which it has been met by most of the civilized countries of the world." See also Creedon v. Stratton, D.C.Neb., 1947, 74 F.Supp. 170; Granberry v. Creedon, D.C, Colo.1947,¹ and Creedon v. Seele, D.C.S.D. Ill., 1947, 75 F.Supp. 767. Cf. Lewis v. Anderson D.C.Cal., 1947, 72 F.Supp. 119.

That the Act is a proper exercise of the war powers of Congress, see Fleming v. Mohawk Co., 331 U.S. 111, 67 S.Ct. 1129; Hamilton v. Kentucky Distilleries Co., 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194.

Nor does it violate due process. Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892; Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165; Marcus Brown v. Feldman, 256 U.S. 170, 41 S.Ct. 465, 65 L.Ed. 877. The delegation of authority to the Expediter is of the same nature as that approved in Bowles v. Willingham, supra, under earlier price control legislation. In my judgment the Act is constitutional.

2. Is Section 202 of the Act Self-executing?

Section 202(c) (1) excludes from "controlled housing accommodations" those establishments meeting certain requirements. Defendant claims that it meets the statutory test and that therefore the Housing Expediter has no jurisdiction at all with respect to the Hotel Leamington. However, by the express language of Section 204(d) "the Housing Expediter is authorized to issue such regulations and orders, consistent with the provisions of this title, as he may deem necessary to carry out the provisions of this section and section 202(c)." This...