Before KERNER, LINDLEY and SWAIM, Circuit Judges.
The question presented by this appeal is whether housing accommodations in an establishment, commonly known as a hotel in the community in which it is located, the occupants of which were provided customary hotel services, were decontrolled by section 202(c)(1) of the Housing and Rent Act of 1947, 50 U.S.C.A. Appendix, § 1892, even though such establishment, on June 30, 1947, the effective date of the Act, had no transient guests nor accommodations for transients.
This action was brought by tenants of the Winshire Arms Apartment Hotel to recover statutory damages for alleged rental overcharges. It it admitted that there were rental overcharges and that the plaintiffs were entitled to the judgment entered by the trial court unless the establishment in question was decontrolled by the 1947 Act, the applicable portion of which is as follows:
"Sec. 202(c). The term 'controlled housing accommodations' means housing accommodations in any defense-rental area, except that it does not include -
"(1) those housing accommodations, in any establishment which is commonly known as a hotel in the community in which it is located, which are occupied by persons who are provided customary hotel services such as maid service, furnishing and laundering of linen, telephone and secretarial or desk service, use and upkeep of furniture and fixtures, and bellboy services."
The defendant insists that, on June 30, 1947, the establishment was commonly known as a hotel in the community in which it was located and its occupants were provided customary hotel services; and that by reason of these two facts the establishment was decontrolled by virtue of Section 202(c)(1) of the Act.
The trial court found that the three basic services of hotels, maid service, furnishing and laundering of linens and use and upkeep of furniture and furnishings, were made available and rendered to the occupants of the various apartments in said establishment, and, apparently satisfied that the establishment thereby met the requirements as to furnishing customary hotel services, passed to the question of whether it was commonly known as a hotel in the community. On this question the Court stated in his memorandum opinion that [80 F.Supp. 776, 779]: "By general custom in the Chicago area only those establishments will be included within the scope of the term 'hotel' [as used in Section 202(c)(1)] which appeal primarily to transient trade. Examples of this type are the Palmer House, Stevens Hotel, Drake Hotel, etc. The word 'primarily' is employed purposely for, admittedly, the mere fact that a building is operated, advertised and known as a hotel is not conclusive of the character of any particular occupancy therein, * * *."
The trial court stated further that an essential attribute of a hotel, whether it be transient, residential, family or apartment, is that it should have available, continuously, some accommodations for guests and that to be a guest of a hotel it is necessary that the person should be a transient. The Court pointed out that there was no testimony to the effect that the principal characteristic of the occupancy of the Winshire Arms Hotel was that of transiency, or that it was held out to the community as such. The court held that it was not a hotel and not decontrolled.
On this theory and construction of Section 202(c)(1) the trial court excluded evidence which, in our opinion, would have tended to show that the Winshire Arms Apartment Hotel was commonly known as a hotel in the community in which it was situated.
A review of the legislative and administrative history of Rent Control is necessary to a correct interpretation of the provision which we are here considering.
The Emergency Price Control Act of 1942, 50 U.S.C.A. Appendix, § 921, created the Office of Price Administration, placed the same under the direction of a Price Administrator and gave to such Administrator the power, by regulation or order, to establish such maximum rents as in his judgment would be generally fair and equitable and would effectuate the purpose of the Act.
Under this authority of the Administrator, housing accommodations were divided into two categories and rent regulations were accordingly issued for: (a), Housing (8 Fed.Reg. 7322) and (b), Hotels and rooming houses (8 Fed.Reg. 7334). Under these regulations all hotels which did not cater primarily to transients were required to register under, and be governed by, the Rent Regulations for housing. Those regulations defined "hotel" as follows: "'Hotel' means any establishment generally recognized as such in the community, containing more than fifty (50) rooms and used predominantly for transient occupancy." The Housing Regulations ( § 6) did not permit the eviction of a tenant so long as he continued to pay his rent. As a consequence, transient guests, in establishments which were not occupied predominantly by transients, could not be evicted, and the establishments eventually were, therefore, occupied by only permanent guests. In the instant case, while the Winshire Arms had no transient guests or accommodations on June 30, 1947, there was uncontroverted evidence to show that at an earlier date the management "catered to the transient trade" and that "during the war that was changed to more or less permanent."
In 1946 Congress amended the Price Control Act of 1942, 50 U.S.C.A. Appendix, § 902(b), by adding the following paragraph: "After the date upon which this paragraph takes effect [June 30, 1946], the Administrator, when establishing rent ceilings on hotels or when passing upon applications for adjustment of rent ceilings on hotels, is authorized to take into consideration the distinction between transient hotels, and residential or apartment hotels, including the difference in the investment, operation, expenses, and mechanical details of operation between the transient hotels and the residential and apartment hotels, and is ...