159 F.2d 725 | Emer. Ct. App. | 1947
This is the first case we have had involving the validity of Maximum Price Regulation No. 574 — Live Bovine Animals (Cattle and Calves), issued January 29, 1945 (10 F.R. 1270). In several previous cases the related regulation, Revised Maximum Price Regulation No. 169 — Beef and Veal Carcasses and Wholesale Cuts (7 F.R. 10381) has been under fire. Armour & Co. v. Bowles, Em.App., 1945, 148 F.2d 529, certiorari denied, 1945, 325 U.S. 871, 65 S.Ct. 1411, 89 L.Ed. 1989; Oswald & Hess Co. v. Bowles, Em.App., 1945, 148 F.2d 543, certiorari denied, 1945, 325 U.S. 871, 65 S.Ct. 1411, 89 L.Ed. 1990; Heinz v. Bowles, Em.App., 1945, 149 F.2d 277, and upon reconsideration, Em.App., 1945, 150 F.2d 546; The E. Kahn’s Sons Co. v. Bowles, Em.App., 1945, 149 F.2d 277, certiorari denied, 1945, 326 U.S. 719, 66 S.Ct. 24; Ben H. Rosenthal & Co., Inc., v. Porter, Em.App., 1946, 158 F.2d 171.
The total maximum permissible payment (without loss of subsidy) for all cattle slaughtered during a monthly accounting period was computed in the following manner: After slaughter, the dressed carcasses were graded.
Pursuant to a Directive of the Office of' Economic Stabilization, issued January 10,
MPR 574 in addition established an overriding ceiling price, without regard to grade, for sale or delivery of any live bovine animal or lot of live bovine animals. Although the overriding ceiling was technically applicable to the sale of any grade of cattle, its practical purpose was to put a price limit on sales of choice cattle while avoiding the difficulty of grading each animal on the hoof. The overriding ceiling was applicable both to seller and buyer.
Federated Meat Corp. and United Meat Co., Inc., are both engaged in the slaughtering business in Brooklyn, New York. They filed their separate protests against MPR 574 on February 20, 1946. The protests were consolidated by the Administrator since they raised identical objections to the regulation, and on March 26, 1946, the Administrator issued his order denying both protests. Protestants having introduced no evidence in the protest proceedings, some of their objections necessarily failed for lack of factual support in the record. Upon denial of their protests, the two companies filed a joint complaint in this court.
Since livestock were removed from price control by Amendment 64 to Supplementary Order 132, issued October 15, 1946 (11 F.R. 12093), this case would now be moot but for the fact, as we are informed, that there are several criminal complaints pending against each of the present complainants in the War Emergency Court of the City of New York, charging them with violations of MPR 574 during the period April 2, 1945, through March 31, 1946. These prosecutions are not founded on the Emergency Price Control Act but upon a provision of the Administrative Code of the City of New York making it unlawful for any person to sell or deliver any commodity, or in the course of trade or business to buy or receive any commodity, at a price in excess of an applicable maximum price regulation issued by the Office of Price Administration of the United States of America. The penalties provid
It is objected that MPR 574 is contrary to law in that the statutory authority to impose price controls necessarily implied that such controls must be imposed upon sellers, and not upon buyers only. The premise upon which this objection is based does not accurately reflect the effect of the regulation. The overriding ceiling price was imposed upon buyer and seller alike. Where each sale was viewed separately, any restriction on the price the buyer might pay was likewise a restriction on the price the seller might charge. The obligation imposed upon the buyer only was to keep the total amount paid for all cattle during the accounting period within the maximum permissible cost, computed as above described. We have no doubt that the Administrator was authorized by the Act to impose such an obligation upon the buyer. Section 2(a), 50 U.S.C.A.Appendix, § 902(a), empowers the Administrator to establish “such maximum price or maximum prices as in his judgment will be generally fair and equitable and will effectuate the purposes of this Act.” Section 2(c) broadly provides that price regulations “may be established in such form and manner * * * as in the judgment of the Administrator are necessary or proper in order to effectuate the purposes of this Act.” That Congress contemplated the imposition of controls upon buyers in the course of trade or business is manifest from § 4(a), 50 U.S.C.A.Appendix, § 904(a). There is nothing in the record to challenge the determination of the Administrator that it was wholly impracticable to go further in imposing direct controls upon sellers of live cattle than was provided in MPR 574. The cattle stabilization plan, as incorporated in the subsidy regulation of the Defense Supplies Corporation, was instituted pursuant to § 2(e) of the Price Control Act (see Illinois Packing Co. v. Bowles, Em.App., 1945, 147 F.2d 554, and its validity is not here in question. Considering the peculiar administrative problems as they became manifest in the evolution of the program for controlling meat prices, we think it was appropriate for the Administrator to reenforce the cattle stabilization plan in the manner provided in MPR 574.
Complainants urge that MPR 574 was arbitrary and capricious in its application to slaughterers in that it was not until after the cattle had been slaughtered and dressed that determination could be had of the price which the slaughterer should have paid at the time and place of purchase; thus “at the only time that the slaughterer can determine as a practical matter that he has overpaid for the beef, he is already liable for a breach of the regulation.”
It is true that the buyer, by misjudging the dressing yield or grade which a given lot of live cattle would produce, might unintentionally pay more than he should for the particluar lot.' But this in itself would not put the buyer in violation of the regulation. The particular overpayment might be offset by other purchases during the accounting period. Compliance was measured solely by the over-all result of the whole accounting period.
Even before price control, the success of a slaughterer’s business required some skill or expertness in buying cattle on the hoof. The buyer had to be pretty good at estimating the probable grade and yield in order to determine the amount he could afford to pay for the cattle consistently with making a profit at the prevailing prices for dressed beef.
Another factor of uncertainty stressed by the complainants is that, when they made a purchase of cattle through an agent in the western market, it was requisite, in order to keep in compliance with MPR 574, to make a fairly correct estimate of the loss of yield due to shrinkage incidental to transportation of the cattle to complainants’ slaughtering plants in Brooklyn, New York (zone 19). This again was an estimate the slaughterer had to make as an ordinary incident of his business prior to
“Reduction in live weight in transit is not a factor in computing maximum permissible cost. Compliance with the maximum permissible cost provisions is determined on the basis of the calculated live weight which depends on the carcass weight rather than the actual live weight. There is, of course, some flesh shrinkage in shipping live animals, and if the carcass of an animal shipped to an eastern point weighs less than the carcass of such animal slaughtered at the purchasing point, the calculated live weight at the eastern point would be less than the calculated live weight would have been if it had been slaughtered at the point of purchase. Applying the same maximum price to the calculated live weight would mean a lower permissible cost to the eastern slaughterer. Because of this factor of flesh shrinkage and transportation, the maximum range prices applicable to eastern slaughterers are higher than the maximum range prices applicable to midwestern slaughterers who are near the center of cattle production; and the higher maximum range prices in the eastern area, together with the transportation allowance, take into consideration the factors of transportation and flesh shrinkage experienced by eastern slaughterers when purchasing in the Middle West.”
In the absence of evidence to the contrary, we must assume that the zone differentials above referred to were adequate to compensate for these factors of transportation costs and anticipated flesh shrinkage.
Pursuant to our leave, the Administrator submitted directly to the court as additional evidence a study indicating that the industry as a whole managed to purchase cattle within the maximum permissible costs as prescribed in the cattle stabilization plan and MPR 574. The study does indicate, however, a considerable amount of individual noncompliance; and indeed, in a few of the price zones, the combined cost for all slaughterers located therein was above the prescribed maximum for certain accounting periods. It may be that a slaughterer who, after the dressed carcasses were weighed and graded, discovered that he had paid more than the permissible maximum cost for a particular lot of cattle, might in some cases have found it difficult or impossible, due to the pressure of live cattle prices, to make an offsetting purchase at less than the maximum during the same accounting period.
But giving full weight to the possibility that a slaughterer, at the end of a given accounting period, might have found himself inadvertently and unintentionally out of compliance with MPR 574, that in itself would not render the regulation invalid. The criminal penalties of § 205(b) of the Price Control Act, 50 U.S.C.A.Appendix, § 925(b), attach only where the regulation was “willfully” violated. The civil penalty of treble damages in § 205(e) of the Act is imposed upon sellers only, not buyers who violate a price regulation. So far as concerns the loss of subsidy, that is governed by the provisions of the subsidy regulation of the Defense Supplies Corporation -rather than by MPR 574.
We are informed by counsel for complainants that, under the criminal provisions of the Administrative Code of the City of New York, as interpreted, complainants may he convicted in the local War Emergency Court for violation of MPR 574, even though their violations were not willful. If so, a question might arise as to the constitutionality of the Administrative Code as applied to complainants in the circumstances of the particular cases pending before the War Emergency Court. But complainants are free to raise such a constitutional question in the local court. Cf. Yakus v. United States, 1944, 321 U.S. 414, 430, 64 S.Ct. 660, 88 L.Ed. 834.
A judgment will be entered dismissing the complaint.
In the Statement of Considerations accompanying the issuance of MPR 574, the Administrator stated: “Accurate determination of the grade of live cattle and calves can only be made after the grading of the beef and veal produced from such cattle and calves. Descriptions of most grades of live cattle and calves have been issued by the United States Department of Agriculture. Although these informal standards are used by that agency in reporting and quoting live cattle and calf prices at the major markets throughout the United States, they have not been promulgated as official standards. In view of tbe difficulties and imperfections involved in trying to determine the grades of cattle and calves, on the hoof, and the greater importance-of the dressed grades to the consumer,, official grading is confined to the dressed' stage.”
The appropriateness of these standard percentage yields was questioned in the protests, but no evidence was offered in support of the objection and it' has not been carried forward into the complaint.
“Assume two steers of commercial grade each weighing 1,000 pounds. One yields 56 percent of beef, the standard.
Although the steer yielding only 53 percent of beef actually weighed a thousand pounds, its ‘calculated live weight’ as computed under the provisions of the Regulation in terms of cattle yielding 56 percent is only 946.4 pounds. The maximum price of $13.55 per 100 pounds on the calculated live weight is equal to only $12.82 on the actual live weight. The slaughterer can pay $13.55 per 100 pounds actual live weight for the steer yielding 56 percent of commercial beef and ' remain in compliance with the maximum permissible cost but can pay only $12.82 for a similar steer yielding 53 percent and remain in compliance with the maximum permissible cost. It follows, therefore, that the Regulation, in effect, establishes lower prices than the maximum range prices set up in the table of the Regulation for cattle having a lower yield than the standard conversion yield.” While the price paid by the slaughterer for any particular lot of cattle might prove to be higher than the maximum permissible cost as thus computed, this excess might be offset by purchases of other lots during the accounting period. The important thing was the over-all result of the purchases of all grades of cattle during the month.
The administrative burden of making the necessary factual determinations would probably have rendered it -impracticable for the subsidy regulation to provide that the subsidy would not be withheld in cases where the slaughterer’s noncompliance was not attributable to liis own willfulness or lack of due diligence.