Woods v. Stone

• Citation: 92 L.Ed. 815,68 S.Ct. 624,333 U.S. 472
• Decision Date: 15 March 1948
• Docket Number: No. 392,392
• Parties: WOODS, Housing Expediter, v. STONE
• Court: United States Supreme Court

333 U.S. 472

68 S.Ct. 624

92 L.Ed. 815

WOODS, Housing Expediter,

v STONE.

No. 392.

Argued Feb. 4, 1948.

Decided March 15, 1948.

Mr. Stanley M. Silverberg, of Washington, D.C., for petitioner.

James F. Brennan, of San Francisco, Cal., for respondent.

Mr. Justice JACKSON delivered the opinion of the Court.

Respondent Stone owned a house in Mooresville, Indiana which he rented to one Locke for $75 per month begining on or about August 1, 1944. As this was the first rental of the premises, the applicable law¹ and regulations² imposed on the owner a duty to file a registration statement within thirty days.

The respondent failed to register the property. He sold it in April 1945 and registration by the new owner brought notice to the Area Rent Director of respondent's prior renting of the property without complying with the registration requirement. On June 28, 1945, the Director, pursuant to the regulations reduced the rental from $75 to $45 per month, effective from the first rental, and ordered the excess refunded within thirty days thereafter. Respondent failed to refund, the tenant did not sue and this action was instituted by the Price Administrator. The District Court and the Court of Appeals, among other things, held that the one-year statute of limitations ran from the dates of payment of the rentals. 6 Cir., 163 F.2d 393. This conflicted with the holding of the Court of Appeals for the Fourth Circuit which, under similar circumstances, held that the limitation period started upon default in refunding the excess within thirty days after the refund order. Creedon v. Babcock, 163 F.2d 480. We granted certiorari limited to this question. Creedon v. Stone, 332 U.S. 835, 68 S.Ct. 218.

No question is raised, and none could have been raised in this proceeding, as to the validity of the relevant regulations and the refund order, either on the ground of retroactivity or otherwise, because any challenge to the validity of either would have to go to the Emergency Court of Appeals. 50 U.S.C.App., Supp. V, § 924, 50 U.S.C.A.Appendix, § 924; Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892. See also Woods v. The Cloyd W. Miller Company, 333 U.S. 138, 68 S.Ct. 421. Taking the legislation, the regulations and the order to be valid exercises of governmental power, as we are thus required to do, the only question before us is when do excessive collections by the landlord begin to enjoy the shelter of the statute of limitations?

Under the system of rent control as established, a landlord is required to register rented accommodations within thirty days after they are first devoted to that use. This brings notice to the control authority that the premises are within its official responsibility and provides data for quick, if tentative, determination as to whether the rental exacted exceeds the level permitted by the policy of Congress set out in the statute.

But when, as in this case, the landlord does not comply with this requirement, there is likelihood that, as hap- pened here, his transaction will be overlooked for some time or perhaps escape scrutiny entirely. But the landlord is not allowed thus to profit from his own disobedience of the law. If he could keep the excess collections by thus retarding or preventing scrutiny of his contract, he would gain an advantage over all landlords who complied with the Act as well as over tenants whose necessity for shelter is too pressing to admit of bargaining over price. The plan therefore provides that, despite his failure to register, the landlord may continue to collect his unapproved price, but only on condition that it is subject to revision by the public authority and to a refund of anything then found to have been excessive.³ The plan of the statute and the regulations issued pursuant to it was applied in this case. The landlord failed to register the property. His rental operations escaped notice of the authorities until fortuitously disclosed. He collected as he had a right to do, but subject to readjustment, a rental fixed by himself that was found on inquiry to exceed by 66-2/3% what was fair rental value of the property. He was ordered to refund the excess. He now contends that he can keep all of it that he collected upwards of a year before the action was commenced, upon the ground that the one-year statute of limitations runs,⁴ not from the date of his default in obeying the refund order, but from the date of each collection of rental.

We cannot sustain his contention. The statute and regulations made his rentals tentative but not unlawful. Until the contingency of readjustment occurred, the tenant could have had no cause of action for recovery of any part of the rental exacted by the landlord. The cause of action now does not rest upon, and hence cannot date from, mere collection. The duty to refund was created and measured by the refund order and was not breached until that order was disobeyed. It would be unusual, to say the least, if a statutory scheme were to be construed to include a period during which an action could not be commenced as a part of the time within which it would become barred. United States v. Wurts, 303 U.S. 414, 58 S.Ct. 637, 82 L.Ed. 932. We think no such reu lt was expressed or intended. It was from the violation which occurred when the order was not obeyed within the required time that the statute of limitations commenced to run. Cf. Rawlings v. Ray, 312 U.S. 96, 61 S.Ct. 473, 85 L.Ed. 605; Fisher v. Whiton, 317 U.S. 217, 602, 63 S.Ct. 175, 87 L.Ed. 223; Cope v. Anderson, 331 U.S. 461, 67 S.Ct. 1340.

It is now suggested that no cause of action can be based on a refund order, irrespective of its validity. As we have pointed out, the validity of the regulation and order are conclusive upon us here. This cause of action is based upon violation of an 'order * * * prescribing a maximum (rent) * * *.' The command to refund cannot be treated as a thing apart, but must be taken in its setting as an integral and necessary part of the order fixing the maximum rent. It was this order that was disobeyed. It would be a strange situation if there were authority to order the landlord to make a refund but no legal obligation on his part to pay it. We think it clear that default in obedience to the requirement of refund gives rise to the cause of action sued upon herein.

It is also suggested that the refund order applies the law to the landlord retroactively. Quite apart from the fact that this is an objection to the order itself rather than to the question of limitation of time, we think the suggestion to be without merit. This is not the case of a new law reaching backwards to make payments illegal that were free of infirmity when made. By legislation and regulation in force before the collections were made, the landlord's own default in registering had rendered these payments conditional, subject to revision and to refund. Readjustment under these conditions cannot be said to be retroactive law making.

We hold that the one-year statute of limitations began to run on the date that a duty to refund was breached, and on this point only we reverse the judgment of the court below.

Reversed.

Mr. Justice FRANKFURTER, concurring.

I had supposed that no rule of judicial administration was better settled than that the Court should restrict itself to the questions presented in a petition for certiorari. This is especially true where, as here, the petition was granted but 'limited to the question as to the statute of limitations presented by the petition for the writ, and the case is transferred to the summary docket.' 332 U.S. 835, 68 S.Ct. 218. The exceptions to this rule are rare, as where the jurisdiction of this Court or of the lower courts is plainly wanting, or where a patent error in favorem vitae is to be noted. In any event, it is clear that this case could not be one of them. The exclusive jurisdiction provisions of the Emergency Price Control Act may well preclude our consideration of the validity of the 'retroactive order.' But since an issue other than that pertaining to the statute of limitations has been dealt with, I would like to add a few words to Mr. Justice Jackson's opinion, inasmuch as his immoderate restraint does not lay bare the 'merits' of the controversy.

The crux of the matter is that where a landlord rents new housing accommodations but, as here, disobeys the regulatory scheme and fails to file a registration statement, if he chooses to collect the rent that he himself has fixed, he can do so only contingently. The Administrator may catch up with him and fix what was the proper amount from the beginning. The excess is illegal and must therefore be refunded.

There is nothing novel about a regulatory scheme whereby landlords who violate the law are denied the right to profit thereby. It has consistently been upheld by the Emergency Court of Appeals. 150 East 47th Street Corp. v. Creedon, Em.App., 162 F.2d 206; see Senderowitz v. Clark, Em.App., 162 F.2d 912, 917, cf. Easley v. Fleming, Em.App., 159 F.2d 422. When Congress provided in § 2(g) of the Act that regulations 'may contain such provisions as the Administrator deems necessary to prevent the circumvention or evasion te reof,' 56 Stat. 23, 27, 50 U.S.C. Supp. V, § 902(g), 50 U.S.C.A.Appendix, § 902(g), it plainly authorized effective administrative remedies for dealing with evasion.

If such an order is to be termed 'retroactive,' it comes within the Court's recent ruling that 'such retroactivity must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal and equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is not the type of retroactivity which is condemned by law.' Securities & Exchange Commission v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1581.

Mr. Justice DOUGLAS, dissenting.

I think it is plain that a ...