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Bowles, Price Administrator v. Lentin.

November 9, 1945


Author: Kerner

Before EVANS, SPARKS, and KERNER, Circuit Judges.

KERNER, Circuit Judge.

Defendant appeals from a judgment awarding plaintiff damages under § 205(e) of the Emergency Price Control Act, 50 U.S.C.A.Appendix § 925(e), and an injunction enjoining defendant from any further violations of the lumber regulations adopted by the Price Administrator.

In plaintiff's complaint defendant was charged with having knowingly and wilfully purchased and sold lumber at prices in excess of the maximum prices prescribed by the Price Schedules.Defendant denied the charges and questioned the propriety of issuing an injunction.

The applicable price regulations are Maximum Price Regulation 94,*fn* as amended, 7 Fed.Reg. 10848, and 458, as amended, 8 Fed.Reg. 11736 (hereinafter referred to as MPR94 and MPR458).

Mexican Ponderosa Pine. There is no claim that the lumber was improperly priced under the regulation. In fact, no such claim could be made since that is a matter within the exclusive jurisdiction of the Emergency Court of Appeals, § 204(d), Emergency Price Control Act, 50 U.S.C.A.Appendix, § 924(d), and Yakus v. United States, 321 U.S. 414, 429, 64 S. Ct. 660, 88 L. Ed. 834.

The record reveals that from December 29, 1942, defendant, with his place of business in Chicago, Illinois, has been engaged in the business of buying and selling western pine and associated species of lumber and oak flooring, and that during the period in question, October 20, 1943, to April 27, 1944, he purchased from the Pan-American Trading Company of Kansas City, Missouri, 28 carloads of Mexican Ponderosa pine, in widths and lengths well assorted between 10' and 20', at $63.00 per 1,000 board feet. In his order for the purchase of this lumber there were no specifications concerning the percent of the various lengths to be furnished. This lumber defendant sold and delivered to purchasers for use or consumption in the usual course of trade or business, and the payment received therefor exceeded the applicable maximum price by $22,588.84. The invoices rendered by defendant to his customers purchasing the lumber designated the lumber as common No. 3, indicating, according to the trade practices of the lumber industry, that the lumber described in the invoices was predominately No. 3, but other and better grades of lumber were included; that is to say, No. 3 and better is a combination grade. The applicable regulation of prices for No. 3 Common Board pine is Table 3, § 1381.513 Appendix A, MPR 94. It covers common boards of Ponderosa pine and includes five numerical types which are graded Nos. 1 to 5. § 1381.506(d), MPR94. It defines the method of invoicing combination grades: "Lumber sold on combination grades may not be sold at above the maximum price for the lowest grade actually named in the combination." The combination grades described in defendant's invoice showed a ceiling price of as much as $14 less than the $63 per 1,000 board feet at which the pine was purchased.

The trial judge made special findings of fact upon which he stated his conclusions of law. In his findings he found that the defendant on divers dates from October 20, 1943, had purchased and sold lumber at prices in excess of the maximum prices established therefor under MPR94, as amended; that the sales made by him were not made to purchasers for use or consumption other than in the course of trade or business, but were made to retailers or wholesalers; that these sales and purchases, at prices in excess of the maximum prices, were knowingly and wilfully made by defendant, and were known by him at the time to be in violation of the applicable regulations; that the testimony of defendant with respect to his purchases and sales of lumber was otherwise false in material respects; and that the amount by which the prices received by defendant exceeded the applicable maximum prices therefor was $22,832.97. (This sum includes $244.13 involved in the sale of oak flooring, presently to be discussed.) Upon these facts he concluded that the purchases and sales of lumber in excess of the applicable maximum prices constituted violations of the mentioned regulations and of the Emergency Price Control Act of 1942, and that plaintiff was entitled to an injunction and to a judgment for $45,665.94.

At the outset, we are met with the contention that plaintiff was estopped from recovering any damages because of statements appearing in a press release issued by the Office of Price Administration and because of oral statements alleged to have been made to defendant by an employee of plaintiff.

The publication relied upon affords no solace to defendant. It is a press release dated September 20, 1943, and while it states, "There are no price ceilings on the purchase of Mexican pine lumber outside the United States," the context is that Defense Supplies Corporation, a subsidiary of Reconstruction Finance Corporation, is authorized to sell only to Government procurement agencies. It is worthy of note that defendant did not buy this lumber in Mexico or outside the United States. He purchased it from Pan-American, f.o.b. El Paso, Texas. Not even the most generous interpretation could bring defendant within the cloak of such an authorization.

As to the oral statements, it is claimed that before defendant purchased the lumber from Pan-American he made telephonic inquiries of one Huntley, an employee in the Office of Price Administration, if the purchase could be made at the quoted price, and that he was told it was permissible. Huntley, however, denied having any conversation with defendant about Mexican Ponderosa pine. Under such circumstances, it is the function of the trial court to weigh the evidence and decide which of two witnesses is telling the truth. The court preferred to credit Huntley's testimony. In such a situation, when there are conflicts in the evidence which cannot be reconciled, it is our duty to accept the conclusion of the trial judge. Especially is this so where the court found as a fact that defendant's testimony was false in material respects. Moreover, we have already concurred in the view that the Administrator cannot be bound by oral interpretations of his employees which are contrary to official published regulations. Bowles v. Indianapolis Glove Co., 7 Cir., 150 F.2d 597, 601.

It is next contended that defendant was a mere broker or factor. To be sure, under § 205(e) which relates to enforcement of the Act, sellers alone are made subject to the provisions of damages. But § 205(e) does not purport to list the types of persons covered by the Act. It provides the measure of damages and steps to be taken by the Administrator should the buyer of an above the maximum-priced commodity fail to institute action. An examination of the entire Act fails to produce a list of the types of persons covered. It is necessary to look elsewhere, and MPR94, which establishes the maximum price for Ponderosa pine, does enumerate the persons covered. Section 1381.502(3)(c), MPR94 states: "Any person who makes the kind of sale or purchase, or who acts as broker in a sale covered by this regulation, is subject to it." Since the record discloses that defendant was engaged in the lumber business as a wholesale distributor, that Pan-American sold and defendant purchased the lumber, and that he in turn sold it to his customers, we are unable to see any merit in this contention.

It is claimed that some of the overcharges were not adequately proved.

Plaintiff's original complaint charged that 19 carloads of pine were purchased and sold in violation of the regulation. During the trial plaintiff established that defendant had purchased and sold 9 additional carloads, and to include these the complaint was amended. The 19 cars were sold for $63 per 1,000 board feet. Defendant testified that he sold every carload received exactly the same way as the 19 carloads. No claim is made that the overcharges for the 19 carloads were not correctly computed at $16,126.36. Defendant was allowed the presumption that all the cars were sold as carloads and the divisor used by the court to compute the overcharges on the 9 cars was $63 per 1,000 board feet, and thus the overcharges were computed at $6,462.48. Now, defendant insists that plaintiff was required to prove his right to damages to a certainty, and that damages may not be assessed by a "conjectural ...

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