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Bowles v. Cudahy Packing Co.

decided.: March 29, 1946.

BOWLES
v.
CUDAHY PACKING CO. (TWO CASES).



Author: Mclaughlin

Before BIGGS, GOODRICH and McLAUGHLIN, Circuit Judges.

McLAUGHLIN, Circuit Judge.

These cases arise under Section 205(a) of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, ยง 925(a). They involve similar facts and were tried together. Their purpose was to restrain appellant from violating Revised Maximum Price Regulation No. 289 (9 F.R. 5140). They resulted in an injunction against the appellant in both cases. The defendant contends that the findings of fact were inadequate; that the Trial Judge issued the injunction as of course and that the issuance of the latter was an abuse of discretion on the part of the Court.

Regulation No. 289 comes under Section 2(a) of the Price Control Act and establishes maximum prices for dairy products. We are concerned with that part of it (Section 1351.1506) providing that the price limitations created by it shall not be evaded "either by direct or indirect methods, in connection with an offer, solicitation, agreement, sale delivery, purchase or receipt of or relating to any of the listed dairy products, alone or in conjunction with any commodity - by tying-agreement or other trade understanding, or otherwise." "Tying-agreement" as interpreted by the Administrator (OPA Service p. 2.812) is: "* * * any arrangement by which the seller conditions the sale of a commodity in any manner upon the purchase by the buyer upon any commodity."

Regarding this section the Court said in United States v. Armour & Co., D.C., 50 F.Supp. 347 at page 349: "In order words, the purchaser, in order to obtain butter, must purchaser another commodity whether or not he wants such other commodity, or has any use for it. The other commodity may be useless, and hence worthless to him. Consequently, the amount which he pays for the tied-in commodity would, in effect, be paid in order to obtain the butter. The result is that he is in fact paying a price higher than the established price for the butter. In my opinion, the Administrator intended, by the sections referred to above forbidding evasion, to prevent this type or similar types, of schemes. If the defendants and others are allowed to evade the Act by this type of agreement, the purpose of the Act to stabilize prices and thus to prevent inflation would be circumvented. If a dealer controlled a scarce commodity, he would be able by means of such a tying agreement to unload a plentiful and unwanted commodity on the market. The result would be a severe blow to the whole structure built up to prevent such practices, and their resultant evils."

As to the construction of his Regulations by the Administrator the Supreme Court said in Bowles v. Seminole Rock Co., 325 U.S. 410 at 414, 65 S. Ct. 1215, 1217: "But the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation."

The Administrator's complaints state that the appellant is a Maine corporation licensed to do business in Pennsylvania and registered as a wholesale distributor of food under OPA Ration Order No. 16, Section 5.2. In No. 8882 it is alleged that the defendant from December 30, 1942 to the date of the complaint has been engaged in the business of selling at wholesale, dairy products as Charleroi, Pennsylvania. In No. 8888 there is the same allegation with reference to defendant's place of business at New Castle, Pennsylvania. In No. 8882 it is asserted that on December 30, 1943 and "on numerous days and times thereafter, does now, and unless restrained, will, in the future, sell and deliver dairy products, over and above and maximum prices as established by the aforesaid regulations." The charge is identical in No. 8888 except that the starting date of the asserted violations is November 15, 1943 (amended at the trial to September 16, 1943).

The specific offenses charged are tying-agreements of the sale of butter with eggs. An injunction was prayed for in each suit. The answers admit the jurisdictional paragraphs of the complaints and the business of the defendant. They deny the charges and as affirmative defenses say that the defendant has made earnest and sincere efforts to comply with the Price Control Act and its Regulations and that if there have been any violations they have occurred without the defendant's knowledge and contrary to its instructions.

There was evidence in both cases by customers of the appellant that the latter had sold them butter at the ceiling price but only on condition that they also purchase eggs for which they had no need and in more than one instance were forced to sell at a loss. Several witnesses testified along this general line in No. 8882, but in No. 8888 there was only one such witness. In No. 8882, Matthew Zaucha, a grocery and meat dealer of Charleroi, who had been trading with the defendant for five years, said that in January 1944 he was told by an identified representative of the defendant "that the customers who buy the eggs will get the butter." John Catrino, another customer of the defendant, said that in connection with purchases by him on December 30, 1943 or January 14, 1944, the defendant's manager at Charleroi told him that in order to get butter he had to buy eggs. Adolph Bergstein's story was to the same effect. He had to sell the eggs received by him at a loss. Sam H. Harris and his father had been dealing with Cudahy for forty years. He told of transactions with the appellant's Charleroi manager in which "in order to get the butter I had to buy eggs." Sometimes he got the eggs without the butter. He "tried to get what we could out of them." (eggs). Mano Lichtenstein, buying from Cudahy for twenty-one years, in dealing with one of the appellant's employees at Charleroi, was told "If I want butter he has lots of eggs and I should buy eggs to get the butter." In No. 8888 Anthony Angelo was the sole customer witness testifying for the plaintiff. He has a grocery and meat market in New Castle. On September 16, 1943 a Cudahy salesman from its New Castle plant insisted that Angelo take eggs with the butter he desired saying, "Well, we have got to sell them, eggs and butter."

The defendant's witnesses denied any such compulsory tying-in of butter with eggs as asserted in the plaintiff's case. There was also evidence of efforts to comply with the regulations. Foran, manager at Charleroi for the defendant during part of the critical period, asked if he knew what a tying-in practice was, said "Not exactly. It has never been explained to me properly" and further, "We have never been informed either by the Cudahy Packing Company or the O.P.A. what a tie-in sale is." This particular kind of testimony was discounted by the Court as technical during the cross examination of Buckingham, another defense witness.

Judge Schoonmaker who sat below, has since died. He made findings of fact and conclusions of law in the two cases and filed opinions in both. The findings of fact showed the jurisdiction of the Court under Section 205(c) of the Emergency Price Control Act of 1942. They showed * * * that the Maximum Price Regulation No. 289 was in effect from December 30, 1942 to May 17, 1944 and thereafter as revised to date; that the defendant is a Maine corporation licensed to do business in Pennsylvania, registered as a wholesale distributor of food under OPA Ration Order No. 16, Section 5.2 and at all times from December 30, 1942 to date engaged in the business of selling at wholesale dairy products at Charleroi and at New Castle. The fourth finding of fact and the Court's conclusion of law which are identical in both matters read:

"4. Defendant has violated the Emergency Price Control Act of 1942, and the Regulations adopted thereunder in the sale of dairy products, in that it has accomplished tying-in the sale of butter with aggs by means of tying-in agreements, and will continue so to do unless restrained by this Court.

"Conclusions of Law.

"I. The plaintiff is entitled to an injunction as prayed for ...


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