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Rauer v. Wexler

decided.: April 21, 1948.

RAUER ET AL.
v.
WEXLER ET AL. MULLIN ET AL. V. SAME.



Author: Mclaughlin

Before McLAUGHLIN, O'CONNELL, and KALODNER, Circuit Judges.

McLAUGHLIN, Circuit Judge.

These appeals involve two suits by tenants against a landlord under the Emergency Price Control Act as amended*fn1 for alleged violation of the Rent Regulation for Housing as amended.*fn2 The only real question in the cases is whether the one year limitation provision of the Price Control Act*fn3 runs from the date of the landlord's failure to obey the readjusting rent reduction order or from the dates when the rent was collected. The lower Court held that the limitation period began from the dates of payment of the rentals. Plaintiffs appeal from the consequent judgments.

Admittedly appellees' housing accommodations are under the Rent Regulations which became effective July 1, 1942, and which established March 1, 1942, as the maximum rent date. On January 27, 1943, appellees rented one of their apartments to appellant Rauer. On September 20, 1943, they rented another apartment to appellants Mullin and Childers. Both rentals were for one year and at a rate of $50 a month. The rentals of those apartments were not registered within thirty days of renting as required by Section 4(e)*fn4 and Section 7 of the Regulation.*fn5 After the Area Rent Director learned of this, having given proper notice to the landlord under Section 5(e)(1) of the Regulation, and having considered the matter, he issued orders reducing the Rauer and Mullin rents to $37.50 a month "effective October 1, 1943." Those orders, dated December 28, 1944, provided that all excess rent since October 1, 1943, "is subject to refund to the tenant." There was further notice in the order that upon failure to refund the excess rent within thirty days from the date of the order the excess payments would be considered an overcharge within 205(e) of the Price Control Act, subjecting the landlord to a damage action in accordance with that section. Appellees refused to comply with the refund order and separate actions were started against them by appellants. Rauer alleged occupancy from January 27, 1943, until December 28, 1944, at a $50 a month rental. He asked for a refund of the overcharges of $12.50 a month amounting to $187.50 and for statutory damages under Section 205(e). The Mullins' claim was for overcharges from September 20, 1943, to April 17, 1944, and for statutory damages.

The lower Court holding that the statute of limitations ran from the time the rent was collected awarded Rauer $50 representing double the amount of the two monthly overcharges which were not barred by the statute under the court's interpretation thereof. In the Mullins" suit the holding was that the entire claim was barred by the statute.

The exact point in controversy has now been decided by the United States Supreme Court in Woods v. Stone, 68 S. Ct. 624. In that case, as here, the question was, "When do excessive collections by the landlord begin to enjoy the shelter of the statute of limitations?" The landlord there, like the landlord in the matter before us, contended that the statute ran from the date of each collection of rental. The Court by Mr. Justice Jackson held at page 626 of 68 S. Ct.:

"We cannot sustain his contention. The statute and regulations made his rentals tentative but not unlawful. Until the contingency of readjustment occurred, the tenant could have had no cause of action for recovery of any part of the rental exacted by the landlord. The cause of action now does not rest upon, and hence cannot date from, mere collection. The duty to refund was created and measured by the refund order and was not breached until that order was disobeyed. It would be unusual, to say the least, if a statutory scheme were to be construed to include a period during which an action could not be commenced as a part of the time within which it would become barred. United States v. Wurts, 303 U.S. 414, 58 S. Ct. 637, 82 L. Ed. 932. We think no such result was expressed or intended. It was from the violation which occurred when the order was not obeyed within the required time that the statute of limitations commenced to run."

Regarding the objection that the refund order applies to the landlord retroactively, the Court found the suggestion without merit, saying at page 627 of 68 S. Ct.:

"This is not the case of a new law reaching backwards to make payments illegal that were free of infirmity when made. By legislation and regulation in force before the collections were made, the landlord's own default in registering had rendered these payments conditional, subject to revision and to refund. Readjustment under these conditions cannot be said to be retroactive law making."

The holding of the Supreme Court in the Woods opinion is dispositive of the issue before us and contrary to the decision of the court below. The judgments of the District Court will be reversed and the cause remanded ...


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