160 F.2d 906 | D.C. Cir. | 1947
The Price Administrator, who was appellant’s predecessor as a party to this case,
Appellee Van Der Loo was in the business of selling women’s outerwear garments at retail. She purchased garments at many cost prices, which varied only slightly one from the other.; for example, she bought dresses at $8.75, $9.75, $10.75, $11.75, etc. The garments bought at each cost price were called a “cost price line”. In the spring and summer of 1941 her store was
In September, 1944, tlie Administrator promulgated Revised Maximum Price Regulation 330.
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« * * * 'pjjg ‘page period’ for retailers is the period between August 1 and December 31, 1941; * * *
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“ * * * jn order to price under this regulation you must have a pricing chart. * *
“ * . * * Each pricing chart must contain the following:
* * * * * *
“(5) A list of the cost prices at which you purchased garments in each’ of these ■categories. * * *
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“(7) The selling price at which you delivered, during the base period, the largest number of garments of each cost price listed in (5): * * *
“(8) The percentage markup taken on each selling price listed in 7.
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"(1) Rule y, * * * The ceiling price for a garment which has a cost to you the ■same as a cost price listed for that category on your pricing chart is the selling price listed for that cost price on your «chart.
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“(2) Rule 2. * * *
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“(iii) * * * Your ceiling price for a garment whose cost is between the lowest and the highest cost price listed on your pricing chart for the same category, but is not the same as any cost price listed on the chart for that category, is calculated by applying to the cost of the garment you are pricing, the percentage markup listed on your pricing chart for the next lower cost price in that category. * * * ”
The regulation gave an example of the operation of this latter rule as follows:
“For example: You want to find your ceiling price for women’s dresses (Category 21) that you now buy at $7.75. On your pricing chart you have listed women’s dresses at cost prices of $6.75 and $8.75, but none at $7.75. To calculate your ceiling price you take the percentage markup listed on your chart for women’s dresses costing $6.75. This is 38.4%. You apply this markup to your cost of $7.75 and find that your ceiling price is $12.58. * * * ”
A sample of a retailer’s pricing chart was also given in the regulation. Each selling price shown on the sample chart was in excess of the cost price, and each cost price line showed the percentage of this increase of selling price over cost. The instructions with the chart told the retailer to compute markups by subtracting cost from selling price.
Mrs. Van Der Loo prepared and filed a pricing- chart, following the provision of the regulation, as above quoted, “You find your ceiling price under this regulation by calculating the markup which you took on garments you delivered during the ‘base period’, * * * ” She entered on the chart all the cost price lines as to which she had “markups”. Thus, for example, she entered cost prices of $22.75, $23.75, $26.75, and $27.75 and showed the ceiling prices and the percentage markups on each such line. She had had in the base period, a line of dresses costing $25.00, which had been involved in the clearance sale, and it happened that the greatest number of such garments sold by her during that time had been sold at $15.00 each. She did not enter on her chart the selling price at which she delivered during the base period the largest
The local Office of Price Administration advised her that this chart was unsatisfactory, but we are not told whether any reasons were assigned or corrections suggested. Thereupon Mrs. Van Der Loo employed a firm of accountants which had advertised as having experience in the preparation of pricing charts, and they prepared a chart. This chart also was pronounced unsatisfactory by the Price Administrator; the record does not disclose whether she was advised as to the respects in which it was unsatisfactory. Mrs. Van Der Loo then employed a firm of attorneys, eminent at the bar and thoroughly familiar with price administration. These attorneys prepared another pricing. chart, in which they followed the same principle as that followed by Mrs. Van Der Loo in the first instance. At the same time, the attorneys requested from the Administrator an interpretation of the regulation in respect to base-period sales below cost.
On April 25, 1945, the District Price Attorney in the local Office of Price Administration advised the attorneys by letter that the chart must show the selling price at which the retailer delivered during the base period the largest number of units of each cost price line, even if such selling price was below cost; that the retailer could not use Rule 2 to compute a ceiling price in such instances; that the only relief would be to discontinue the particular line of garments, and that there was no provision for an adjustment under this regulation. Thereupon counsel prepared another pricing chart, following that ruling. Thus, for example, this last chart (called Price Chart IV in this litigation) showed a cost price line of dresses at $25.-00, in which the selling price for the greatest number of articles sold during the base period was $15.00. The effect was to fix permanently a ceiling price of $15.00 on all dresses purchased by Mrs. Van Der Loo for $25.00. At the same time, the proper and legal ceiling price on dresses purchased by her for $23.75 or for $26.75 was $45.00, as shown by this same chart.
Thereupon the Administrator initiated the present proceeding. The overcharges which he alleged as the basis of his claim for damages were based in major part
The parties agreed below that the memorandum opinion of the District Court should serve as its findings of fact and conclusions of law. 71 F.Supp. 242. In that opinion the court said:
“I find the respondent, despite what might be termed slipshod business practice, has acted in good faith and made an honest effort to comply, and, as a consequence, should not be held liable m damages.”
The opinion did not contain any finding or statement that Mrs. Van Der Loo had violated the regulation, in respect to the injunction phase of the case, the court concluded “that until administrative determination is made of respondent’s protest, Price Chart IV, so-called, is to be deemed valid, in full force and effect, and the respondent enjoined from violation of the same.”
This appellee was liable for damages only if she had violated the regulation.
The foregoing is sufficient to dispose of the appeal, but the nature of the contentions made to us compels some further observations.
Two succeeding paragraphs of the same section of the statute are pertinent.
The provision in paragraph (d) that damages shall not lie for an act done in good faith pursuant to a regulation even if that regulation be subsequently modified, is striking. One would assume that damages would not lie under those circumstances without any such statutory prohibition. The insertion of the novel precaution serves to emphasize that a modification of a regulation does not carry retroactively
The District Court found as a fact that Mrs. Van Der Loo acted in good faith. No dispute is offered to that finding. The Administrator says that his ruling of April 25, 1945, was an interpretation of the regulation ; that it was a proper interpretation, and that, therefore, any deviation from it was, from the beginning, a violation.
Section 2 of the regulation was headed “How to find your ceiling prices under this regulation”. It plainly directed retailers to compute their ceiling prices by applying “markups”. To the ordinary person, and likewise in the dictionaries, “markup” indicates a price above cost. We are told by the Administrator that in the trade a “markup” may be either plus or minus. But the record does not show that to be the case, and we are referred to no authority which does. Webster’s New International Dictionary gives the meaning of the word in commerce as “the amount added to the cost price in figuring a selling price to cover overhead and profit.” Without evidence or authority of a trade usage to the contrary, it would be a tortured interpretation of “markup” to say that it meant a price below cost. Moreover, as we have pointed out, the regulation contained a sample pricing chart, and that chart included no sales below cost. Every cost line shown by it had a sales price above cost, and hence a markup. The detailed instructions which accompanied the sample chart told the retailer :
“Step 1. You subtract the cost price (Column B) from the selling price line (Column D) and the difference is the dollar markup.
“Step 2. Divide this dollar markup by the selling price line (Column D) and the result is the percentage markup.”
Thus, the instruction was specific that a markup was a price above cost, calculated by deducting cost from selling price.
The Administrator says that the regulation required that the first column of a pricing chart contain every cost price line, and that the ensuing computations and results automatically followed. It is true that the regulation required a list of the cost prices at which the retailer purchased garments, but the final computation required on the chart was “the percentage markup taken on each selling price”, and the instruction as to “How to find your ceiling prices” was an unqualified “You find your ceiling price under this regulation by calculating the markup which you took on garments you delivered during the ‘base period’, and then applying that markup to the cost of the garments you are pricing.”
No basic concept of price control gives warning that the Administrator must have meant that sales below cost, by the accident of clearance sales in the base period, should be perpetuated. The retailer’s cost was the wholesaler’s selling price, and that price had a ceiling fixed by the Administrator’s regulations. If the wholesaler’s price be not violative of the requirements of price control, no reason would dictate that the retailer take a loss on that price. Any concept of price control would necessarily contemplate that prices at one level would follow through in normal course in ascending grades to the consumer. This is simple sense. So that a student of these regulations, observing the failure to mention sales prices below cost in the base period, would readily and reasonably conclude that the Administrator meant that ceilings in cost price lines where sales below cost
Furthermore, the Administrator himself later amended the regulation
The Administrator’s position in the case at bar is the barest technicality. He admits that if Mrs. Van Der Loo bought a dress at $23.75, she could properly sell it at $45.00, and that if she bought one at $26.75, she could sell it at the same $45.00. Moreover, under his contention, if she bought a dress at $24.75, she could sell it at $46.88 because, since no $24.75 cost appeared in the first column of the approved Chart IV, she could compute the ceiling under Rule 2(iii), so that the percentage markup of the next lower cost price line (in this instance $23.75, for which the percentage markup was 47.2%
The Administrator’s ruling here involved was in the form of a letter written in this particular case by a local enforcement officer. Technically it automatically became an official act of the Administrator by operation of a general procedural rule of his office. But it was not a published ruling, nor, so far as the record shows, was it public. It was not an administrative interpretation of long standing but was made after this controversy had arisen; was written two years after MPR 330 was issued, and was thereafter nullified by Amendment No. 5. Thus, it does not carry the great weight of presumptive validity which attaches to long-continued, consistent, published administrative rulings.
The Administrator says that his letter to Mrs. Van Der Loo was an interpretation. But if, in fact, it was a change in meaning, it was a modification. He had power either to interpret or to amend.
The District Court gave appellee the benefit of her clear good faith and so, in effect, held that she was not “violating” the regulation; that in following what was both its letter and its sense, she was acting pursuant to it within the meaning of the two pertinent paragraphs of the statute. We agree with that view. The ordinary meaning of “markup” does not include a sale below cost, and that ordinary meaning is consistent with the purpose of the Act and with the later thought of the Administrator. We think it was the meaning of the regulation, and that the “interpretation” was really a change in meaning.
The question is not whether the ruling
We are cited to Bowles v. Seminole Rock Co., 1945, 325 U.S. 410, 65 S.Ct. 1215, 89 L.Ed. 1700. In that case the Supreme Court first read the regulation and ascertained the meaning thus revealed. It found a clear meaning in the words used. It then considered a series of public administrative rulings made concurrently with the regulation. The claim initially made for treble damages was not before the Court, only the injunction being involved there. The opposites of all these features are in the case at bar.
In his brief the Administrator tells us that Mrs. Van Der Loo’s interpretation would leave “her at liberty to handle such cost price lines thereafter free from price control.” Of course, neither her action nor her contention remotely suggests any such result. She applied Rule 2(iii) of the Administrator’s regulation to these items, instead of Rule 1. Rule 2(iii) does not afford freedom from price control.
Some reference has been made to Mrs. Van Der Loo’s case before the Emergency Court of Appeals.
Affirmed.
A motion to substitute the Temporary Controls Administrator in the place of the Price Administrator in this case was made and granted in this court without objection by appellee. The propriety of such substitution over objection is pending before the Supreme Court of the United States in Porter v. Mohawk Wrecking and Lumber Co., 67 S.Ct. 1129.
56 Stat. 33, 58 Stat. 640, 50 U.S.C.A. Appendix, § 925.
This regulation was originally issued February 18, 1943. 8 F.R. 2209. The revision was a redraft with some amendments. 9 F.R. 11350.
Only these sales are discussed by appellant in his briefs here.
Sec. 205(e) of the Act.
Rule 52(a), Federal Rules Civil Procedure, 28 U.S.C.A. following section -723c.
Rule 46, Federal Rules Civil Procedure.
Sec. 205 (a) of the Act.
Sec. 205, pars, (d) and (e), of the Act,
“(d) No person shall he held liable for damages or penalties in any Federal, State, or Territorial court, on any grounds for or in respect of anything done or omitted to be done in good faith pursuant to any provision, of this Act or any regulation, order, price schedule, requirement, or agreement thereunder, or under any price schedule of the Administrator of the Office of Price Administration or of the Administrator of the Office of Price Administration and Civilian Supply, notwithstanding ' that subsequently such provision, regulation, order, price schedule, requirement, or agreement may be modified, rescinded, or determined to be invalid. * * *
“(e) If any person selling a commodity violates a regulation, order, or price schedule prescribing a maximum price or maximum,,prices, the person who buys such commodity for use or consumption other than in the course of trade or business may, within one year from the date of the occurrence of the violation, except as hereinafter provided, bring an action against the seller on account of the overcharge. In such action, the seller shall be liable for reasonable attorney’s fees and costs as determined by the court, plus whichever of the following sums is the greater: (1) Such amount not more than three times the amount of the overcharge, or the overcharges, upon which the action is based as the court in its discretion may determine, or (2) an amount not less than $25 nor more than $50, as the court in its discretion may determine: Provided, however, That such amount shall be the amount of the overcharge or overcharges * * * if the defendant proves that the violation of the regulation, order, or price schedule in question was neither wilfull nor the result of failure to take practicable precautions against the occurrence of the violation. * * • If any person selling a commodity violates a regulation, order, or price schedule prescribing a maximum price or maximum prices, and the buyer either fails to institute an action under this subsection within thirty days from the date of the occurrence of the violation or is not entitled for any reason to bring the action, the Administrator may institute such action on behalf of the United States within such one-year period. * * *»
Amendment No. 5, issued April 11, 1946. 11 F.R. 4035.
Statement of Considerations Involved in the Issuance of Amendment No. 5 to RMPR 330, filed with the Division of the Federal Register April 11, 1946.
The instructions in the regulation were to compute a markup as its percentage of selling price, instead of cost, with permission to compute it on cost if tho retailer used the latter method in the base period. An algebraic formula is-necessary, to compute a price under the former method.
Sec. 204(a) of the Act, 50 U.S.C.A. Appendix, § 924(a).
Van Der Loo v. Porter, Em.App., 160 F.2d 110, certiorari denied, 67 S.Ct. 193.