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Bowles v. Krodel.

May 16, 1945

BOWLES, ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION,
v.
KRODEL.



Author: Major

Before MAJOR, KERNER, and MINTON, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal by the Price Administrator from a default judgment entered in his favor in an action brought under Sec. 205(e) of the Emergency Price Control Act of 1942, as amended by the Stabilization Extension Act of 1944, 50 U.S.C.A.Appendix ยง 925(e).

The court, in conformity with the allegations of the complaint, found that on or about October 11, 1943, the defendant sold a 1939 Ford V-8 truck to one Lucille Miller for the sum of $600, and that the maximum price at which the truck could be sold (including equipment), as established by Maximum Price Regulation No. 341, was $468.45. Thus, the overcharge as found was $131.55. Judgment was allowed for such amount.

The Administrator makes no contention that the violation was willful or that the court abused its discretion in allowing a judgment only for the amount of the overcharge. The sole question, therefore, raised by the Administrator is whether it was mandatory to impose a judgment for treble the amount of the overcharge, since the defendant offered no testimony to bring himself within the proviso hereinafter referred to. The question presented requires a construction of the applicable provision of the Price Control Act. As stated, defendant defaulted in the court below and also makes no appearance in this court.

The section upon which the action is predicated provides for "an action against the seller on account of the overcharge." It states: "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 or $25, whichever is greater, 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."

The Administrator contends that under the circumstances of this case the court had no discretion but to award a judgment in treble the amount of the overcharge. The Administrator in his brief interprets the provision as follows:

"First, where the seller proves that his violation was neither wilful nor the result of a failure to take practicable precautions against its occurrence, his liability is restricted to the amount of the overcharge.

"Secondly, when the seller fails to prove that his violation was not wilful or deliberate, he is liable for the full statutory maximum, three times the amount of the overcharge or $50, whichever is the greater.

"Thirdly, where the seller proves that the violation was not wilful or deliberate, but fails to prove that he had taken practicable precautions against its occurrence, then his liability is to be determined on the basis of the degree of his fault or culpability, but may not exceed the statutory maximum nor be less than statutory minimum."

The Administrator stresses the legislative history of the amended Act. We think no useful purpose would be served in reviewing this history for the reason that it furnishes little, if any, support to the Administrator's contention. In connection with this history, however, it is pertinent to note that the original Act provided that an action could be brought "either for $50 or for treble the amount by which the consideration exceeded the applicable maximum price, whichever is the greater, plus reasonable attorney's fees and costs as determined by the court." This provision made it mandatory upon the court, regardless of the circumstances of the case, to allow judgment for $50 or for treble the amount of the overcharge, whichever was the greater. The only thing which is disclosed by the legislative history with any degree of certainty is that Congress intended to relieve the courts of the mandatory duty thus imposed and to vest them with a discretion as to the amount of the judgment within the minimum and maximum amounts provided.

Evidently the proviso, "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," was adopted for the benefit and protection of the defendant. It is further evident, so we think, that in order for a defendant to take advantage of such provision he must plead it by way of answer to the complaint. It was so held in Bowles v. Glick Bros. Lumber Co., 9 Cir., 146 F.2d 566, 571. Being obliged to plead the defense, the burden is upon the defendant to establish it.In this connection, we note that the Administrator contends that the trial court erred in holding that such burden was upon the plaintiff. This is a misconception of what the court held. It merely stated in its findings "that the plaintiff did not show that the said unlawful charge was wilful, etc." The finding of the court, while perhaps immaterial, was an undisputed fact. It does not represent a conclusion of law that the plaintiff had such burden.

As noted from the contention of the Administrator (heretofore quoted), he would interpret the proviso as providing for two defenses, (1) that the violation was not wilful and (2) that it was not the result of failure to take practicable precautions. We think the proviso is not subject to such interpretation. The two elements taken together constitute the defense. The language, "was neither wilfull nor the result of failure, etc.," by which these elements are joined, plainly so indicates. In Bowles v. Hasting, 5 Cir., 146 F.2d 94, 95, the court, in discussing this proviso stated: "The burden is on the defendant to show both an absence of wilfulness, and the presence of care to prevent the occurrence of violations."

It appears to be the theory of the Administrator, as stated in his third proposition (above quoted), that it is only where the defendant attempts but fails to establish the proviso defense that the court has discretion as to the amount of the judgment. This is a novel as well as an untenable theory, both as a matter of construction and procedure. True, this proviso defense is not absolute, and only where it is established does it have any effect upon the court's ...


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