The opinion of the court was delivered by: Hoffman, District Judge.
On March 7, 1952, plaintiff filed his complaint alleging that
he was the occupant of certain premises located in Chicago,
Illinois, owned by the defendants; that the premises were housing
accommodations subject to the Housing and Rent Act of 1950 and
the Housing and Rent Act of 1951, the Housing and
Rent Act of 1947, as amended, 50 U.S.C.A.Appendix, § 1881 et
seq., and that the defendants had collected or received the sum
of $1425 in excess of the maximum rent for the premises occupied
by the plaintiff during the period between August 23, 1950, and
February 1, 1952.
On April 8, 1952, the defendants moved to dismiss the complaint
on the ground that the premises involved were not subject to rent
control. In their motion the defendants asserted their belief
that the basis for the plaintiff's action was an order of the
Area Rent Director dated February 18, 1952, decreasing the
maximum rent for the premises, retroactive to August 23, 1950,
the day the premises were first rented. The plaintiff
subsequently filed a brief in answer to the defendants' motion
reciting that the plaintiff's cause of action arose out of the
February 18, 1952 order of the Area Rent Director. A copy of this
order was attached to and incorporated in plaintiff's brief.
Subsequently, on July 22, 1952, the defendants filed an amended
motion to dismiss, in which they asserted that on July 15, 1952,
the Area Rent Director had modified his earlier order to make the
reduction of rent therein provided effective as of the date of
the order (February 18, 1952).
On June 9, 1953, the defendants filed a second amended motion
to dismiss in which they asserted the order of February 18, 1952,
of the Area Rent Director reducing the rental retroactively to
August 23, 1950, the modification of this order on July 15, 1952,
to remove the retroactive operation of it, and further alleged
that the plaintiff had appealed to the Office of Rent
Stabilization in Washington and that on May 13, 1953, this office
had affirmed the order of the Area Rent Director of July 15,
1952. A copy of the order of the Office of Rent Stabilization was
attached to this second amended motion to dismiss.
The defendants filed a brief in support of the second motion to
dismiss the complaint, arguing that the elimination of the
retroactive effect of the rent reduction automatically removed
the basis of the cause of action and that the Area Rent Director
had ample authority under the statute and the regulations to
modify his earlier order. The plaintiff filed an answer entitled
"Plaintiff's reply to defendants' second amended motion to
dismiss," supported by a brief, admitting the orders and
modifications thereof above recited but arguing that the Area
Rent Director had no authority under the statute or regulations
to modify the first order. More particularly, the plaintiff
argued that the Area Rent Director was limited by the Rent
Regulations issued by the Office of Rent Stabilization to fixing
the maximum rent effective as of either the date on which rent
control first became effective or the date on which the
particular premises involved were first rented. This latter date
was August 23, 1950. The defendants have filed a brief in reply
to the plaintiff's answer.
Rule 12 of the Federal Rules of Civil Procedure, 28 U.S.C.A.,
Paragraph (b), provides that if, on a motion directed at a
pleading and asserting failure to state a claim upon which relief
can be granted, matters outside the pleading are presented to and
not excluded by the court, the motion shall be treated as one for
summary judgment and disposed of as provided in Rule 56, provided
that all parties shall be given reasonable opportunity to present
all material pertinent to such a motion under Rule 56. The
complaint filed herein makes no reference to the orders of the
Area Rent Director; it merely alleges an overcharge for the
period between August 23, 1950, and February 1, 1952. It is
admitted in the subsequent pleadings of both parties that the
overcharge depends on the Area Rent Director's order of February
18, 1952. It is likewise admitted that there was a subsequent
modification determining that the order was not to be
retroactive. In presenting matters outside of the pleadings, both
parties appear to have brought themselves within the provisions
of Rule 12. Accordingly the matter can be disposed of as one for
summary judgment since
it further appears that both parties have had ample opportunity
to present all the material that might reasonably bear on the
The plaintiff's case turns on the validity of the order of the
Area Rent Director of July 15, 1952. There is no allegation that
the Director's action was arbitrary or capricious, nor is a
constitutional question raised. The plaintiff merely maintains
that the order could not be validly made under the regulation.
The Defense Production Act of 1950, 50 U.S.C.A.Appendix, § 2061
et seq., sets out a procedure for the review of regulations and
orders issued pursuant to the Defense Production Act of 1950 or
to the Housing and Rent Act of 1947, as amended,
50 U.S.C.A.Appendix, § 1881 et seq. This procedure is outlined in
Sec. 408 of the Defense Production Act, 50 U.S.C.A.Appendix, §
2108, and continues, with modifications not relevant here, the
procedure made available to protestants of any order or
regulation under earlier emergency legislation.
By this legislation Congress has established an Emergency Court
of Appeals to hear objections to administrative rulings made
under the Housing and Rent Act of 1947, as amended.
It has been repeatedly held that the Emergency Court of Appeals
has exclusive jurisdiction, subject to the right of review in the
Supreme Court of the United States, of questions of the validity
of regulations issued under the Housing and Rent Act of 1947, as
amended, and that a protestant must exhaust his administrative
remedies by appeal to this court. Yakus v. U.S., 321 U.S. 414, 64
S.Ct. 660, 88 L.Ed. 834; Fast v. Di Salle, Em.App., 193 F.2d 181.
The courts of this circuit have uniformly declined to rule on
the validity of orders issued pursuant to the emergency
legislation. Illinois Packing Co. v. Reconstruction Finance
Corp., 7 Cir., 156 F.2d 875; Streck v. Fleming, D.C., 103 F. Supp. 1011.
In this case the plaintiff has not carried his protest to the
Emergency Court of Appeals, which has exclusive jurisdiction of
the question. This court is without power to upset the Area Rent
Director's order of July 15, 1952, upon any ground asserted here.
Accordingly, judgment will be entered for the defendants.
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