Brief for the Respondents in Opposition — Speten v. Bowles

INDEX

VPage

Opinions below —_- P sete = 1

Jurisdiction : ; as , 1

Questions presented ; : - 2

Statute and regulation involved oe 2

Statement ; 3

Argument 4

Conclusion ; 9

Appendix 10

CITE ANTIONS

Cases:

Baltimore & Ohio Southwestern R. Roy. United States, 220

U.S. 94 ae eae 8

Bowles v. Glick Brothers Lumber Co.. VA6 KF, 2d 566. 5,6

Bowles v. Rock, 55 F.Supp. 865 7

Bowles v. Rogers, 57 F. Supp. 987 : ts 5

Bowles ve Seminole Rock and Sand Co., 145 F. 2d 4892.

certiorari granted, March 12, 1945, No. 914. this Teym.. 5,7

Bowles vo Silverman, 57 ¥. Supp. 990 ae) Bo. 7

Chicago, BL & Q. Ry. Co. v. United States, 220 U. 8. 559... 8

Helvering v. Mitchell, 308 U.S. 391 au : s

Hepner v. United States, 213 UL 8. 103__- Seam 8

Lighthody v. Russell, 298 N.Y. 492, 58 N. . 24 508 5

OQeeanic Sieam Navigation Co. v. Stranahan, 214. U. 5S, 320. 8

Constitution and Statutes:

Constitution of the United States:

Article HT, Section 2.00000 Pls Se . 8

Fifth Amendment

pee coe 8

Sixth Amendment aad bins uhtaen acai nh S

Eimergeney Price Control Act of 1942 (Act of Jauuary 30,

1942, 56 Stat. 23, 50 U. S.C. App., Supp. IIT, See. 901

et seq.):

See. 4 (a) ae S 10

See. 205 (e) : 2, 4, 5, ©, 7,10

Stabilization Extension Aet of 1944 (Aer of June 30, 1944,

oS Stat. G40, 50 US. CL AL App., See. 925):

Sec. LOS (b)-

Sec. 108 (e)

4,11

13

(ht)

GSse21 45

Miscellaneous:

Conference Report on the Price Control Bill, H. Rep. No.

1658, 77th Cong., 2d sess. (1942) OD ccauneasaccnneus

Hearings before Senate Banking Committee on the Price

Control Bill, H. R. 5990, 77th Cong., Ist sess. (1941),

BRAD. nas. .-.noneesessorensasnnsnesasononsnses

Maximum Price Regulation No. 133, 7 F. R. 3185, issued

April 28, 1942, effective May 11, 1942, as amended

January 4, 1943, 8 F. R. 234, and February 20, 1943,

8 F. R. 2286: —

a’

Inthe Supreme Gourt of the Wnited States

Ocroser Term, 1944

No, 999

H. H. Speren, PeririoNer

v.

CHesrer BowLes, ADMINISTRATOR, OFFICE OF PRICE

ADMINISTRATION

ON PETITION FOR WRIT OF CERTIORARI TO THE CIRCUIT

COURT OF APPEALS POR THE BIGHTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

No opinion was rendered by the District Court.

Its findings of fact and conclusions of law appear

in the Record (R. 15-18). The opinion of the

Cireuit Court of Appeals for the Eighth Circuit

(R. 31-35) is reported in 146 F. 2d 602,

JURISDICTION

The judgment of the Cireuit Court of Appeals

for the Eighth Circuit was entered on January 17,

1945. The petition for a writ of certiorari was

filed in this Court on February 28, 1945. Juris-

;

/

;

eee |

st

2

diction of this Court is invoked under Section

240 (a) of the Judicial Code, as amended by the

Act of February 13, 1925.

QUESTIONS PRESENTED

1. Whether the statutory right of action for

damages for a price overcharge which Section

205 (e) of the Emergency Price Control Act as

amended vests respectively (1) ‘in the person

who buys * * * for use or consumption

other than in the course of trade or business’’,

and, (2) in the Price Administrator when ‘‘the

buyer * * * is not entitled for any reason to

bring the action’, belongs to the Administrator

in the case of an over-ceiling sale to a farmer of

a combine for use in harvesting his g ‘ain and for

general farming use.

9. Whether the provision authorizing the Ad-

ministrator to recover damages constitutes a

taking of property without just compensation

prohibited by the Fifth Amendment.

STATUTE AND REGULATION INVOLVED

The case involves the Emergency Price Control

Act of 1942 (Act of January 30, 1942, 56 Stat.

93, 50 U. S. C. App. Supp. III, See. 901), as

amended by the Stabilization Extension Act of 1944

(Act of June 30, 1944, 58 Stat. 640, 50 UL S.C. A.

App. See. 925), and Maximum Price Regulation No.

133, as amended, 7 F. R. 3185 and 8 F. R. 234,

2986. The pertinent provisions of the Act and

3

the Regulation are set forth in the Appendix,

infra,

STATEMENT

The Administrator instituted this action in the

Distriet Court for the District of North Dakota

pursuant to Section 205 (e) of the Act to recover

statutory damages from the petitioner for selling

two combines to farmers on July 27, 1943, at

prices over the ceiling.” The facts were stipulated

CR. 10-14), and the findings of faet CR. 16-17)

are unchallenged,

The facts, in so faras they are pertinent to the

Issues How raised, are merely that the petitioner

sold the combines at prices higher than those

permitted under the regulations, and that the

purchasers were farmers who obtained the com-

bines in order to use them in the course of their

farming operations,

Petitioner's defenses were (1) that under See-

tion 205 (e) of the Emergency Price Control Act

the right of action for damages was vested in the

farmer-purchasers and not in the Administrator,

on the ground that the purchases by the farmers

were “for use and consumption other than in the

course of trade or business’*; and (2) that the

vesting of the right of action for damages in the

Administrator and not “for the benefit of the

‘The Administrator also sought and obtained an injune-

tion pursuant to Section 205 (a) of the Act CR. 4. 7, 18,

83-34). Petitioner raises no question here which relates to

the propriety of the injunction.

ar

tic T he oe |

4

‘injured parties’ ’” was unconstitutional (R.

9-10).

The district court, overruling these contentions,

granted the Government’s motion for summary

judgment, and awarded the Administrator dam-

ages totalling three times the aggregate of the

overcharges (R. 18-19). The conelusions of the

district court were approved by the circuit court

of appeals (R. 31-33), but the ease was remanded

in order to permit the petitioner to take advan-

tage of an intervening amendment to the Act,”

which provided that if the defendant proved that

a violation was not wilful nor the result of failure

to take practicable precautions, the recovery

should be in the amount of the overcharges or

$25, whichever was the greater, instead of treble

damages (R. 34-35).

ARGUMENT

1. The rulings below that the statute gives the

right of action to the Administrator and not to

the farmer purchasers are plainly correct.

It is contended that the term “use or consump-

tion other than in the course of trade or business”’

(Section 205 (e) ) means use or consumption by

an ultimate user or consumer even though in the

course of trade or business, so long as there is no

resale; and, accordingly, that the Administrator

2 Added by Section 108 (b) of the Stabilization Extension

Act of 1944 (Act of June 30, 1944, 50 U.S.C. A. App. See.

925), infra, p. 11.

o

has the right of action only when the purchase

is for resale. But obviously ‘‘in the course of

trade or business”? has a much broader meaning

than ‘*for resale’’, and the court below, together

with the other appellate courts to which the issue

has been presented, rightly so held. See Bowles

v. Seminole Rock and Sand Co., 145 F. 2d 482

(C. C. A. 5), certiorari granted on another issue,

March 12, 1945, No. 914, this Term; Lightbody v.

Russell, 293 N. Y. 492, 58 N. E. 2d 508. Cf.

Bowles vy. Glick Brothers Lumber Co., 146 F. 2d

966 (C. C. A. 9)?

Section 205 (e) looks to two broad classes of

purchasers: (1) those who buy for personal con-

sumption other than in the course of trade or

business, e. g., the housewife buying at the local

store; and (2) those who buy for use or consump-

tion in the course of their trade or business. The

first class is given a right of action for over-

charges. But those in the second class may be

able to include the amount they are overcharged in

the price of their own product, so that they might

receive a windfall if permitted also to recover

damages from the seller. In order that those who

sell to such purchasers should not escape civil

liability, the statute granted the Administrator

the civil right of action against them.

“A decision to the contrary in Borles vy. Rogers. 57 F.Supp.

9ST CN. D. Ind. 1944) is pending on appeal to the Circuit

Court of Appeals for the Seventh Circuit.

esky Cea eco |

6

In addition, Section 205 (e) carries forward

the parallel distinction contained in Section 4 of

the Act, which in establishing the statutory pro-

hibitions does not reach the non-commercial buy-

er. but which makes the buyer in the course of

trade or business subject to the statutory prohibi-

tions to the same extent as the seller (Appendix,

infra, p. 1). Congress had been advised that

(Hearings before the Senate Banking Committee

on the Price Contre! Bill, H. R. 5990, 77th Cong.,

Ist sess. (1941), p. 141 (testimony of David Gins-

burg, General Counsel of OPACS and OPA)):

* * * y Jot of pressure on sellers

comes from the buyers themselves. ‘This

does not apply to the ordinary purchaser

of household goods for immediate consump-

tion; it only applies to persons who buy in

the course of trade or business, so that the

price regulation is made applicable both to

the seller and to the buyer, and only to

those buvers who buy for business pur-

poses in business transactions.

It would not have been feasible to grant the

civil remedy to a class of buyers who might them-

selves be chargeable with violating the statute

with respect to the same transaction. Accordingly

the Price Administrator was given the right

to institute suit for statutory damages in all

‘ases of “industrial buyers” (id., at p. 216),' and

the only purchasers who were empowered to sue

in their own right for overcharges were ‘non-

—

*Cf, Bowles v. Glick Brothers Lumber Co., supra.

commercial consumers” (Conference Report on

the Price Control Bill, H. Rep. No. 1658, 77th

Cong., 2d sess. (1942), p. 26), ‘*the housewife, in ef-

fect’ (Senate Hearings, op. cit., at p. 141). The

contention that Section 205 (e) draws a distine-

tion between persons in ‘trade or business’” who

purchase for resale, and those who are “ultimate

consumers”” is thus without foundation in the

language of the Act, or the legislative history.

Petitioner’s attempted reading of the statute

would subvert its policy. Those who consume in

the course of trade or business include some of

the largest and most influential purchasers. Com-

non examples are the steel mill buying coal for

consumption in its blast furnaces, the department

store buying delivery trucks, or the railroad buy-

ing ballast for its right of way. (Bowles v. Semi-

nole Rock and Sand Co., supra). Cf. also Bowles

V. Rock, 55 F. Supp. 865 (D. Neb. 1944); Bowles

v. Silverman, 57 F. Supp. 990 (D. 8S. Dak. 1944).

Petitioner makes no contention, other than the

point just considered—which relates to all

producers who use a purchased product in. the

course of business but do not resell it—that

farming is not a ‘‘trade or business*’, and that a

purchase of harvesting and threshing machinery

for carrying on general farming operations is not

for use “in the course of trade or business”

Within the meaning of Section 205 (e). Peti-

tioner did present such an argument to the Circuit

Court of Appeals, and the opinion below collects

638621--45——-2

8

the authorities which demonstrate that farming

is properly to be regarded as a trade or business

within the meaning of the Act (R. 32, n. 9).

2 Petitioner contends that because the Admin-

istrator is not suing for actual damages which

he or the Government has suffered, the proceed-

ine violates the provision of the Fifth Amend-

ment that private property shall not be “‘taken

for public use without just compensation’’.” The

thought apparently is that the Constitution pro-

hibits the Federal Government from imposing

civil penalties payable to it in the absence of

pecuniary injury to it.

But Congress has frequently availed itself of

the civil penalty as a method of law enforcement,

and this Court has held that there was no consti-

tutional objection to its doing so. Hepner v.

United States, 213 U. 8S. 103 (transporting an

alien into the country unlawfully); Oceanic

Steam Navigation Co. v. Stranahan, 214 U.S.

320 (same); Chicago B. & Q. Ry. Co. v. United

States, 220 U. S. 559, 578 (Safety Appliance

Act); Baltimore & Ohio Southwestern | ie ae

United States, 220 U. S. 94 (Care of Animals 1n

Transit Act); Helvering v. Mitchell, 303 U. 8.

391, 399-404, and cases cited therein.

5 Petitioner’s answer did not advert to the Fifth Amend-

ment but to Article IIL, Section 2 and the Sixth Amendment

ax support for the constitutional contention (R. 10).

9

Thus the Administrator’s right of recovery is

entirely constitutional even if regarded as penal.

A fortiori, there can be no constitutional objec-

tion to giving the Government a right of recovery

for overcharges in lieu of those purchasers as to

whom the granting of such a remedy was not

deemed desirable.”

CONCLUSION

The decision of the court below is correct and is

supported by the decision of the other appellate

courts. Accordingly we respectfully submit that

ceertiorart should be denied.

CHARLES Fany,

Solicitor General.

Roserr L. STERN,

Special Assisiant to the Attorney General,

THomas I. Emerson,

Deputy Administrator for Enforcement,

FLEMING JAMES, Jr.,

ABRAHAM GLASSER,

NaTHAN SIEGEL,

Office of Price Administration.

Apri, 1945.

*In so far as petitioner is complaining of the liquidated

damages in the amount of twice the overcharge, as distinet

from the overcharge itself, the case is premature, Inasmuch as

the remand requires the district court to determine, under

the test. prescribed in the 1944 amendment to the Act (supra,

p. 4), whether petitioner is liable for more than the amount

of the overcharge.