author: WATSON, District Judge.

text:
    VAN SANT v. AMERICAN EXPRESS CO.
    No. 3441.
    District Court, E. D. Pennsylvania.
    July 20, 1945.
    T. Edward O’Connell and Thomas D. McBride, both of Philadelphia, Pa., for plaintiff.
    Robert T. McCracken, C. Russell Phillips, and Richard E. McDevitt, all of Philadelphia, Pa., for defendant.
   WATSON, District Judge.

This is a suit for damages resulting from an alleged willful, unjust and malicious prosecution and imprisonment of the plaintiff by the defendant. The case was tried before the court and a jury. After both parties had rested, and after hearing arguments of counsel on both sides, the court granted the defendant’s point for binding instructions, and instructed the jury to find a verdict for the defendant. The case is now before the court on a motion by the plaintiff for a new trial.

The burden was upon the plaintiff to show want of probable cause for the criminal proceedings. If any criminal proceedings were instituted by the defendant they were instituted on March 12, 1941, when the Philadelphia representative of the defendant suggested that a warrant be issued for the arrest of the plaintiff and a warrant was sworn out by Detective Galen of the Philadelphia police.

It appears from the evidence that on January 2, 1941, a pad of American Express Company money orders was stolen from the Western Union Telegraph Office in Columbus, Ohio, all of them alike except that they were serially numbered. During the ensuing weeks nearly all of these money orders appeared endorsed with the same signature, Reída Hardman, and in the same amount — $45. The defendant was informed by several persons, among them the Pittsburgh police, that a number of the money orders had appeared. The defendant was further informed by letter from the Pittsburgh police that Edna Frances Van Sant, the plaintiff here, was identified from her photograph by seven shop girls who had accepted the fraudulent money orders. This letter, including the picture so identified, was sent to the defendant under date of January 30, 1941. The defendant was further informed that on February 6, 1941, the Allegheny County Grand Jury returned a true bill against Frances Van Sant as the person who passed one of the money orders there. As to this proceeding in Allegheny County there is no evidence to show an abuse by the defendant of the plaintiff’s rights, or any action at all by the defendant.

After receiving the above mentioned letter of January 30, 1941, from Inspector Monaghan of Pittsburgh advising the defendant that seven people had identified the picture of Edna Van Sant, the defendant received another letter from the same source, about the eighth of February, 1941, advising it that the photograph of the plaintiff had been “positively identified as the woman who passed the money orders” in Upper Darby, Pennsylvania. About February 10, 1941, a letter was received by the defendant from the Metropolitan Police Department of the District of Columbia stating that plaintiff’s husband was arrested on a charge of passing a forged check. Following a suggestion contained in the letter, James J. Bulger, Inspector of defendant company, communicated with the sheriff of Frederick County, Maryland, requesting specimens of handwriting of the plaintiff. Bulger received information about the charge against plaintiff’s husband and was told that though plaintiff was “apprehended” with her husband, “since there were no charges against her she was released immediately.” Shortly after this letter was received, defendant received a telegram from the sheriff of Frederick County informing it of plaintiff’s address in Baltimore.

On March 12, 1941, a warrant was sworn out for the arrest of the plaintiff by Detective Galen of the Philadelphia police at the order of Lieutenant Murphy on information received. On March 13, 1941, Bulger came to Philadelphia and he accompanied Detective Galen and a police woman of the Philadelphia police to Baltimore, in which city the plaintiff had been taken into custody by the authorities. Bulger, Galen, the policewoman, and the plaintiff all stopped at plaintiff’s apartment to enable the plaintiff to pack her things and then left for Philadelphia, plaintiff having waived extradition. All fares for the trip were paid for by the defendant. Plaintiff was held at City Hall, and the following day, March 14, 1941, seven to ten people who had accepted the forged money orders were present at the request of the police. Of the seven or ten there were four who identified the plaintiff as the person who had passed the money orders.

With the foregoing evidence before the court, which was uncontradicted, the court, in directing the jury to render a verdict for the defendant, made the following statement to the jury:

“This Defendant had been reliably informed, which information was uncontra-dicted :
“1. That .photographs of Frances Van Sant had been identified in January, 1941 by seven victims who cashed money orders, as being photographs of the person who passed the money orders, and that a warrant had been issued in Pittsburgh for her arrest. All of this was before the prosecution was started by this Defendant.
“2. That Frances Van Sant was identified from her photograph in Upper Darby, Pennsylvania, in February, 1941, as the woman who passed some of the American Express Company money orders of the same series a'nd book as those passed in Pittsburgh.
“3. That, on February 6, 1941, a grand jury, at Pittsburgh, indicted Frances Van Sant for forgery of American Express money orders of the same series and book; and
“4. That Frances Van Sant and William Van Sant were arrested on October 29, 1940, in the District of Columbia, on a fugitive warrant. William Van Sant was charged with passing a United States Traveler’s check in the amount of $20. on the Exchange National Bank of New York, a non-existing bank.
“All of that information was before this Defendant before any prosecution was started; and, of course, the question is whether that alone does not establish probable cause; and, is there anything in the case which could possibly convince you or convince anyone that this plaintiff has shown that there was a lack of probable cause ?
“Therefore, under the law, there is no need for a finding by you as to the facts upon which the existence of probable cause is to be based; and it is the sole function of the trial judge to make this determination.
“That the plaintiff did not meet the bur-dent which was upon her to show want of probable cause for the criminal proceedings, I have no doubt; and further, I am of the opinion that, under the evidence, the Defendant did have probable cause for initiating these proceedings.
“If Frances Van Sant was innocent of the crimes with which she was charged, it is, to say the least, most unfortunate, and she has the sympathy of all right-thinking people. However, that is not the question here. The sole question at this time is whether or not the plaintiff showed by the evidence a lack of probable cause on the part of the defendant for instituting the criminal proceedings.
“As I have said, I have no doubt but that the plaintiff did fail to meet that burden. Therefore, I have but one choice. I am convinced that, for the reasons stated, and for other reasons, the evidence in this case will not support a verdict for the plaintiff, and that therefore it is my duty to direct you to render a verdict for the defendant; and you are now so directed.”

The Court now feels that there was no error committed in directing the verdict for the defendant. Throughout the trial the court had before it the case of Campbell v. Yellow Cab Co., 3 Cir., 137 F.2d 918, where in the opinion by Maris, Circuit Judge, the questions of law involved in the present case are fully discussed.

' The Campbell v. Yellow Cab Company case was a suit to recover damages for malicious prosecution and false imprisonment. Judgment for plaintiff was reversed. The facts in my opinion presented considerably less basis for probable cause than in the case at bar.

On August 24, 1940, two men held up a taxicab owned by defendant and operated by its employee, Berry. Berry, in accordance with defendant’s rules, paid over to defendant the amount of stolen fares and meter charges. He gave a description to the police, estimating the robber’s age, height and weight, although he did not, at any time, see the taller of the robbers full face. On October 19, 1940, the police took the plaintiff into custody on suspicion. Berry went to the police station and identified the plaintiff. The following morning at the magistrate’s court Berry once again identified him. According to plaintiff’s testimony he was held for further hearing in response to a specific request by Hardy, defendant’s investigator.

At the second hearing none of defendant’s employees actively participated, but plaintiff was held without bail for court. On November 6, 1940, two other men confessed to the robbery and were convicted. At plaintiff’s trial, November 12, 1940, Berry testified that he was mistaken in his identification and plaintiff was discharged. Judge Maris, in his opinion in 137 F.2d at page 922, stated:

“Where there is no conflict in the testimony as to the circumstances under which the deferidant acted in initiating the proceedings, or the circumstances are admitted by the parties or the evidence is clear and uncontradicted, there is no need for a finding of the jury as to the facts upon which the existence or nonexistence of probable cause is to be based. In such case it is the sole function of the trial judge to make this determination. Restatement of Torts, § 673, Comment g. This is clearly the law of Pennsylvania. In Robitzek v. Daum, 1908, 220 Pa. 61, at page 64, 69 A. 96, the court said: ‘What is probable cause and whether it exists under an admitted or clearly established state of facts, is a question of law for the court.’ In Taylor v. American I. Shipbuilding Corp., 1922, 275 Pa. 229, at page 231, 119 A. 130, it is said: ‘It is exclusively for the jury to pass on testimony, but the court must say, as a matter of law, whether the facts proven show probable cause. Generally it is a mixed question of law and fact, and, where the facts are in dispute, they must be submitted to the jury, who should be instructed as to what facts constitute probable cause. But, if all the admitted facts, and. the reasonable inferences therefrom, amount to probable cause, the court must so declare and direct a verdict for defendant. * * * ’ In Taubman v. Schulte, 1931, 302 Pa. 170, 172, 153 A. 150, 151, the court said: ‘Where, however, plaintiff’s own testimony shows the existence of probable cause, this burden is lifted from defendant (Bernar v. Dunlap, 94 Pa. 329, 331; Cooper v. Wm. R. Hart & Co., 147 Pa. 594, 598, 23 A. 833; Taylor v. American International Shipbuilding Corp., 275 Pa. 229, 231, 119 A. 130), and it becomes the duty of the court to enter a nonsuit or to direct a verdict for defendant (Boyd v. Kerr, 216 Pa. 259, 65 A. 674).’
“That part of the evidence in the case before us which has any relevancy to the issue of probable cause is undisputed. As we have indicated, where the evidence is uncontroverted the question whether the defendant acted without probable cause is for the trial judge and not for the jury. Consequently the trial judge erred in submitting that question to the jury. The error would have been harmless, however, if the jury’s finding that the defendant acted without probable cause was the finding which the trial judge should have made from the evidence. We shall, therefore, examine the evidence to determine whether it justifies a finding that Hardy acted without probable cause. The evidence is to the effect that when Hardy requested that the plaintiff be held he did so in reliance upon a positive identification by his fellow employee Berry, the only eye witness to the holdup. This was done in a proceeding before a magistrate at which Berry was a witness. That is all we have in the record upon this point. Bearing in mind that the burden of showing want of probable cause was upon the plaintiff, we have the narrow question whether establishment of the fact that Hardy furthered the prosecution of the plaintiff under these circumstances meets this burden.
“The law of Pennsylvania is that ‘Representations of others may be sufficient foundation for it (probable cause), especially if made by those who have had opportunities for knowledge.’ Taylor v. American I. Shipbuilding Corp., 1922, 275 Pa. 229, 231, 119 A. 130; Bernar v. Dunlap, 1880, 94 Pa. 329. Compare Bunting v. Goldstein, 1925, 283 Pa. 356, 129 A. 99; Smith v. Ege, 1866, 52 Pa. 419. The decision in Bernar v. Dunlap, supra, seems very close to the facts of the instant case. In an action for malicious prosecution, the trial judge had non-suited the plaintiff and he appealed. In affirming the judgment below the court in its per curiam opinion said: ‘The express and distinct statement of Curtis * * * gave probable cause. Nothing is shown proving that the statement was not honestly made by Curtis, and in entire good faith believed by the defendant.’ This is a direct ruling by the Pennsylvania Supreme Court that a plaintiff in a malicious prosecution suit growing out of a situation analogous to the present one is not entitled to recover if he fails to show that the witness upon whom the defendant relied in instituting the prosecution was not acting honestly and that the defendant did not in good faith believe his identification. As we have already pointed out, there was no evidence in the present case from which the jury might have inferred that Berry was not honest in his identification or that Hardy did not accept that identification in good faith.
“It is argued that it must be held as a matter of law that Berry’s opportunity for knowledge under the circumstances here present was not sufficient to enable him in good faith to make any identification of the robbers and that since Hardy must have known this he must be held to have acted without probable cause. As we have already indicated, the plaintiff failed to sustain the burden of showing how much Hardy knew of Berry’s means of knowledge. Unless he did have knowledge of the circumstances it would not affect the reasonableness of his reliance upon Berry’s identification. ‘Where the accuser bases his charge upon a third person’s identification of the accused, it is immaterial that the informant acted unreasonably in making the identification.’ Restatement of Torts, § 662, Comment g. •H ^
“We conclude that there was no evidence in this case from which a fact situation might be found which would justify a ruling by the court that Hardy acted without probable cause. It should be remembered that the interests of society require that a citizen who performs his duty in assisting the public authorities to apprehend and prosecute criminals shall not be penalized for a mere error in so doing. As was said in Gilliford v. Windel, 1884, 108 Pa. 142, 145, ‘As it is the duty of every citizen to aid in enforcing the criminal laws of the state against those by whom they are wilfully disobeyed, so is it the business of our courts of justice to see that the person thus undertaking to vindicate the law shall not suffer in consequence of such an attempt, even though it may have proved abortive.’ See also introductory note to Chapter 29 — Wrongful Prosecution of Criminal Proceedings — of the Restatement of Torts.”

It should be observed that in Campbell v. Yellow Cab Co., supra, the uncontro-verted evidence was to the effect that when Hardy requested that the plaintiff be held he did so in reliance upon a positive identification by his fellow employee, and that is all. In the instant case, the uncontro-verted evidence is to the effect that the representative of the defendant, when he requested that the plaintiff be held had been informed by the police of Pittsburgh that Edna Frances Van Sant, the plaintiff here, had been identified from her photograph by seven shop girls who had accepted the fraudulent money orders, that he had also been informed that on February 6, 1941, the Allegheny County Grand Jury returned a true bill against Frances Van Sant as the person who passed one of the stolen money orders there, that he had also been informed by letter received from Inspector Monahan of Pittsburgh that the photograph of the plaintiff had been positively identified as that of the woman who passed some of the stolen money orders in Upper Darby, Pennsylvania, and that he had also been informed by a letter which he received from the Metropolitan Police Department of the District of Columbia that the plaintiff’s husband had been arrested and charged with passing a forged check. It must be clear, therefore, that the facts shown by the evidence in the instant case present a stronger case for a directed verdict for the defendant than the facts shown by the evidence in the Campbell case.

I have quoted much of the language in the well reasoned opinion by Judge Maris for the reason that the important questions of law which have arisen in the instant case are clearly and ably discussed in that opinion.

I can reach no other conclusion than that the action of the trial court in directing the verdict for the defendant was proper, and that a refusal to do so when requested would have been error.

The motion of the plaintiff for a new trial is denied and a new trial is refused.


source: Caselaw Access Project

author: KNIGHT, District Judge.

license: Public Domain

text:
    COMMANDER-LARABEE MILLING CO. v. MANUFACTURERS & TRADERS TRUST CO.
    Civil Action No. 2139.
    District Court, W. D. New York.
    June 12, 1945.

      Saperston, McNaughtan & Saperston, of Buffalo, N. Y. (Richard H. Wile, of Buffalo, N. Y., of counsel), for plaintiff.
    Babcock, Newbury & Russ, of Buffalo, N. Y. (Hugh McM. Russ, of Buffalo, N. Y., of counsel), for defendant.
   KNIGHT, District Judge.

This action is brought to recover the amount of numerous checks properly drawn by plaintiff, but upon which the payee’s endorsement was forged. We have previously considered this matter to some extent, and on April 9, 1945, we ordered plaintiff to serve a bill of particulars. 4 F.R.D. 296.

Defendant now moves under Rules 12(b) and (f), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, on the complaint and the bill of particulars for an order dismissing and striking out that portion of the complaint seeking to charge the defendant with liability for payment of the plaintiff’s checks on which the endorsement of the payee was forged and which were issued by plaintiff (1) on and between March 13, 1941, and June 30, 1942, and (2) on such checks issued prior to March 13, 1941, because no cause of action is stated as to the forgeries within those periods covered and therefore they were irrelevant, immaterial and impertinent.

Defendant’s motion is based on Section 43 of the Negotiable Instrument Law of the State of New York (c. 87 of the Laws of 1941, Consol.Laws N.Y. c. 38), which reads:

“No national bank or banking organization as defined in the banking law shall be liable to a depositor for the payment by it of a check bearing a forged or unauthorized endorsement unless, within two years after the return to the depositor of the voucher of such payment, such depositor shall notify the bank that the check so paid bore such forged or unauthorized endorsement. § 2. This act shall take effect immediately.”

The provisions of section 43 are not contained in the Uniform Negotiable Instruments Act, 5 Uniform Laws Annotated. Plaintiff first notified defendant of the alleged forgeries on July 7, 1944. The statute exonerates defendant from liability for any forged checks issued between March 13, 1941, and June 30, 1942, because the check vouchers admittedly had been in plaintiff’s hands more than two years without any notification to defendant, as required by Section 43. Plaintiff in its brief concedes this portion of the motion, and as to this the motion is granted. (2) As to the second part of the motion, defendant claims exoneration because plaintiff received and held these check vouchers more than two years after the enactment of section 43, effective March 13, 1941, before notifying defendant that the payee’s endorsement was forged. The sole issue is whether or not section 43 has any effect upon forged endorsements made prior to its effective date. Plaintiff claims to have a vested right to have a six year period in which to discover the forgeries, and that section 43 is prospective and not retrospective. The six year period of limitations was the only bar prior to the enactment of section 43. Defendant asserts that the section is analogous to a statute of limitation; that it relates only to a form of procedure or a mode of attaining rights; does not affect vested rights and that it was well within the power of the lawmaking body to limit the time for giving notice.

Under federal or state law the rule is that the lawmaking body body may change laws relating to limitation of actions in pending cases. 1 McKinney’s Consolidated Laws (N.Y.) Statutes, Section 59; Rexford v. Knight, 11 N.Y. 308; Lang v. Lutz, 180 N.Y. 254, 73 N.E. 24; Terry v. Anderson, 95 U.S. 628, 24 L.Ed. 365; Lamb v. Powder River Live Stock Co., 8 Cir., 132 F. 434, 67 L.R.A. 558; Gilbert v. Ackerman, 159 N.Y. 118, 53 N.E. 753, 45 L.R.A. 118; People v. Wendel, 217 N.Y. 260, 111 N.E. 846, Ann.Cas.1916B, 701. But all statutes must be construed' as prospective unless the language of the act clearly indicates the intent that it be retrospective, and vested rights cannot be taken away.

“As a general rule a construction of a statute which will give it a retroactive operation is not favored by the courts. Thus it is said that all statutes are presumed to furnish a rule for future action only, and a law will not receive a retroactive construction unless its language, either expressly or by necessary implication, requires that it be so construed.” McKinney’s, supra, Sec. 51. The Rules of Statutory Construction as to retroactive operation of statutes are set forth in Sections 51-61, and they are construed by the numerous cases cited under these sections.

“A retroactive law is invalid when it is retrospective and attempts to take away or impair rights vested under existing laws * * * or when it creates a new obligation or attaches a new disability to transactions already past.” Railroad Co-op. Building & Loan Ass’n v. Boston Building Estates, 149 Misc. 349, 267 N.Y.S. 204, 206; Neild v. District of Columbia, 71 App.D.C. 306, 110 F.2d 246. The rule in the federal courts is definitely stated in United States F. & G. Co. v. United States, 209 U.S. 306, 28 S.Ct. 537, 539, 52 L.Ed. 804, as follows: “The presumption is very strong that a statute was not meant to act retrospectively, and it ought never to receive such a construction if it is susceptible of any other. It ought not to receive such a construction unless the words used are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied.” And again, in United States ex rel. Feuer v. Day, 2 Cir., 42 P.2d 127, 128: “The courts refuse to give to statutes a retrospective operation whereby rights previously vested are injuriously affected unless compelled to do so by. language which clearly requires it.” Society for the Propagation of the Gospel v. Wheeler et al., Fed.Cas.No.13,156, defines as retroactive a statute which attached a new disability in respect to “transactions * * * past * * It seems to me that the applicable rule is that stated in 14 A.L.R. page 710 (relating to an analogous statute) as: “As a general rule a statute requiring a condition precedent to an action against a municipality for personal injury that a notice shall be given of the accident and a claim made by reason thereof within a limited time is not retroactive, and does not apply where the accident happened before the statute took affect.” Numerous cases supporting this statement are.there cited.

The only case interpreting Section 43 of the Negotiable Instruments Law is Bloch v. Schwartz, 266 App.Div. 188, 41 N.Y.S.2d 837, 839. While in that case the demand for payment was made a little less than five months after Section 43 became law, but more than two years had passed since the return of the vouchers involved, the language of the court is most significant. The court clearly construes the statute as one of substantive law, and not as one to be taken retroactively. Stated the court: “The present statute does not in terms establish a statute of limitations.- * * * In other words, it creates a condition to a claim of ultimate liability.” In Shattuck v. Guardian Trust Co., 204 N.Y. 200, 97 N.E. 517, 520, where the corresponding Section 326 of the Negotiable Instruments Law was considered, the court said: “We regard this as one of those general statutes which promulgate rules of substantive law * * *” Vide also: Pratt v. Union National Bank, 79 N.J.L. 117, 75 A. 313.

Section 43 does not by any expression make its application retroactive. No intent that it be retroactive can be clearly drawn from the language of the section. The statute creates a rule of substantive law. It is not a limitation statute nor is it to be construed as analogous to one, in so far as it affects vested rights of the plaintiff.

In accord with the foregoing it must be held that the defendant’s motion as to checks prior to March 13, 1941, must be denied.


author: KALODNER, District Judge.

text:
    UNITED STATES v. PASCUZZO.
    No. 4540.
    District Court, E. D. Pennsylvania.
    June 22, 1945.
    James P. McCormick, Asst. U. S. Atty., of Philadelphia, Pa., for the Government.
    Harry Shapiro, of Philadelphia, Pa., for defendant.
   KALODNER, District Judge.

This is an action brought to enforce liabilities and duties created by and to prevent and restrain violations of the Act of Congress of June 28, 1940, 54 Stat. 676, entitled “An Act to expedite national defense, and for other purposes”, as amended by the Act of Congress of May 31, 1941, Public Law No. 89, 77th Congress, herein referred to as the National Defense Act, and by the Act of Congress of March 27, 1942, Public Law No. 507, 77th Congress, Second War Powers Act, 1942, 50 U.S.C.A.Appendix, § 1151 et seq., and Regulations and Orders issued thereunder as hereinafter more fully set forth. The jurisdiction of this Court is based upon Sec. 24(1) of the Judicial Code, Sec. 41(1), Title 28 U.S.C.A., and the Act of Congress of March 27, 1942, described above.

The Court has jurisdiction of all parties and the subject matter.

The sole question for determination presented by the plaintiff’s motion for a preliminary injunction is whether defendant made alterations and repairs to his building at 4728 Frankford Avenue, Philadelphia, Pennsylvania, in violation of the War Production Board’s Conservation Order L — 41 issued and effective April 9, 1942 (7 F.R. 2730), as amended.

Conservation Order L — 41, as amended, provides, inter alia, that no person shall do-any construction as provided in the said Order as amended, which has not been permitted by the War Production Board unless-it is of the kind described in Par. (C) or (D) of the said Order.

Conservation Order L — 41 as amended, was effective on July 11, 1944, and at alL times set forth in the bill of complaint.

Testimony was taken by this Court on the-motion for a preliminary injunction on March 20, 1945, and the matter became ripe for consideration with the filing of the-Requests for Findings of Fact and Conclusions of Law on June 8, 1945.

Upon consideration of the pleadings and testimony, arguments of counsel and the Requests, I make the following

Findings of Fact

1. On July 11, 1944, the defendant, pursuant to the provisions of Conservation Order L — 41, filed an application with the-War Production Board on Form W.P.B„ 617, for permission to make alterations and repairs to his restaurant at 4728 Frankford Avenue, Philadelphia, at an estimated cost of $2,000.

2. On July 12, 1944, pursuant to the application of the defendant, the War Production Board issued its authorization to the-defendant, authorizing him to make, and have made, alterations and repairs to his-restaurant at 4728 Frankford Avenue,. Philadelphia, at an estimated cost of $2,000, and the said War Production Board did authorize the use of Preference Rating" AA-3, for the purpose of enabling defendant to obtain the materials necessary for the completion of the alterations and repairs, aforesaid, the said authorization for the use-of Preference Rating AA-3 to expire on, September 12, 1944.

3. The defendant, Peter Pascuzzo, on; October 1, 1944, and on sundry dates subsequent thereto, made alterations, changes, and repairs to premises 4728 Frankford Avenue, Philadelphia, at a cost in excess of $10,000.

4. The defendant, Peter Pascuzzo, never requested an authorization of the War Production Board to authorize expenditures iik excess of $2,000, for alterations, repairs,. and changes to premises 4728 Frankford Avenue, Philadelphia.

5. The construction, alterations and repairs made by the defendant to premises 4728 Frankford Avenue, Philadelphia on and subsequent to October, 1944, consisted ■of excavations, laying concrete floors, general masonry, plumbing installations, heating system installations, building and erecting partitions, plastering work and other alterations and repairs.

6. The defendant, Peter Pascuzzo, was on the date this- cause came on for a hearing, to wit: March 20, 1945, continuing to make alterations, repairs and changes to his building at 4728 Frankford Avenue, Philadelphia, without authorization from the War Production Board so to do.

7. No inspection of the premises referred to in the complaint was made by the plaintiff or any agency, representative, employee, or any employee of any agency or representative from October, 1944, to March, 1945.

8. An ex parte injunction was granted in this case on the 14th day of March, 1945, and has continued in effect to the present date. Defendant discontinued work in obedience to the provisions of such ex parte injunction.

Discussion

The testimony in this case clearly established that the alterations, repairs and changes made by the defendant to his building at 4728 Frankford Avenue, Philadelphia, are in violation of War Production Board Conservation Order L — 41 and its amendments. Under the circumstances the Court has no alternative but to grant the motion for a preliminary injunction as sought by the plaintiff. Accordingly, I state the following

Conclusions of Law

1. The defendant has made alterations, repairs and changes to his building at 4728 Frankford Avenue, Philadelphia, in violation of War Production Board Conservation Order L — 41 and its amendments, and completion of said alterations, repairs and changes could only be accomplished in violation of said Order L — 41 and its amendments.

The motion for the preliminary injunction is granted.

An order may be submitted in accordance with this opinion.


author: PETERS, District Judge.

text:
    WALLING, Adm’r, Wage and Hour Division, U. S. Dept. of Labor, v. PORTLAND TERMINAL CO.
    No. 230—Civil.
    District Court, D. Maine, S. D.
    June 18, 1945.
    George W. Jansen, Supervising Atty., Office of Solicitor, Dept. of Labor, of Washington, D. C., and Harry A. Tuell, Dept. of Labor, of Boston, Mass., for plaintiff.
    Leonard A. Pierce and Cook, Hutchinson, Pierce & Connell, all of Portland, Me., for defendant.
   PETERS, District Judge.

In this action the plaintiff seeks to have the defendant enjoined from violating the sections of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., relating to the payment of minimum wages and the keeping of records. Sections 15(a) (2) and 15(a) (5).

The defendant denies the applicability of the statute in the situation disclosed. The principal question raised involves the employment status of certain applicants for positions who are being trained by the defendant preparatory to regular employment as trainmen, in case they qualify. If, on the evidence, they should not he considered as employees, as the term is used in the Act, the plaintiff is not entitled to the injunctive relief asked for.

Findings of Fact

The defendant is a common carrier by railroad employing yard crews in the operation of its terminal facilities at Portland. Applicants for such positions have to be taught how to do the work. They are called “trainees” or “learners.” If accepted as such, a trainee is turned over to a yard crew for practical instruction, which is given by affording an opportunity for observation of the routine activities and gradually permitting him to do the actual work under supervision. This is of no immediate advantage to the Railroad however, as the trainee does not displace. any member of the regular crew at the time. Rather, it is a disadvantage, because a novice undertakes the work to get experience while a trainman stands by watching him, and the operation is apt to be impeded rather than expedited. If the trainee finishes training and is certified as fit for a position as trainman his name goes “on the board,” as ready for work, and he receives an allowance of $4 a day for his training period based on an eight-hour day. If he does not finish training or is not certified as competent he receives nothing. Thus the Railroad obtains a pool of qualified workmen to draw upon and the worker is in line for a job.

Inexperienced applicants for employment are informed before entering upon the training period that they will receive the allowance only if they “stay and go to work”. That is, if they complete the training period and are certified as qualified for employment.

The length of the training period, if completed, depends upon the aptitude of the learner for the work, the average being seven or eight days. When the applicant files his written application for employment he states: “It is agreed by me to serve for at least two weeks under the instructions of a'conductor for the purpose of learning the duties and qualifying for such position, employment to be subject of (sic) passing required examinations on the operating rules, the working rules and regulations as from time to time applied, and the approval of the designated officer.”

The learners are not required to serve the whole two weeks if they can qualify sooner. As a matter of practice the period of training depends upon the capacity and aptitude of the individual trainee.

While training, the learner is expected to be present with the crew to which he has been assigned during working hours, but he is not subject to the rules or discipline applicable to an employee and is not considered such.

Prior to October 1, 1943, the persons in training received no allowance, regardless of whether they were accepted for employment; serving without compensation for the purpose of learning the business.

On October 1, 1943, the defendant and the Brotherhood of Railroad Trainmen changed the previous custom by a letter directed to the Chairman of. the Brotherhood of Railroad Trainmen reading as follows :

“Effective October 1, 1943 and for the duration of the present Emergency, Student Brakemen, Road or Yard, will be made an allowance of $4.00 per day, for each calendar day, with a maximum number of ten days, irrespective of the hours devoted or the miles made on any day, the Student to devote not less than eight (8) hours each day to the service.
“Payment to be made if and when the Student has qualified, is accepted for and takes employment.
“If this arrangement meets with your approval, will you please so acknowledge on the second copy of this letter, which is attached.”

There is no evidence as to what the practice regarding compensation will be at the end of the war. The defendant appears to be under no obligation by virtue of any agreement to continue it beyond that point.

Other than above mentioned the defendant does not pay learners the minimum wage provided by Sec. 6 of the Act nor does it maintain records of the kind required by Sec. 11(c) covering the trainees.

Conclusion of Law

For the purpose of decision it may be assumed that after the war defendant will revert to its former practice of paying trainees nothing for the training period and that it will continue as at present to pay nothing to those who do not complete the training.

On the issue presented the facts in the case do not differ in any material respect from those set forth in Walling v. Jacksonville Terminal Co., 55 F.Supp. 302, affirmed on appeal by the Circuit Court of appeals in the Fifth Circuit April 23, 1945, 148 F.2d 768, and I follow that case and the reasoning of both courts in concluding that the trainee is not an employee under the commonly accepted meaning of the term nor as the term is used in the Act, it not being its purpose to create new wage liabilities, but where a wage liability exists, to measure it by the standards fixed by law.

I see no object in repeating or paraphrasing the reasoning in the above case, nor in Walling v. Nashville, C. & St. L. Ry., 60 F.Supp. 1004, decided the same way by the district court in the middle district of Tennessee; but, finding no violation of law and no reason to apprehend any, I conclude that the bill should be dismissed. Judgment will be entered accordingly.


author: DUNCAN, District Judge.

text:
    In re MISSISSIPPI VALLEY IRON CO.
    No. 10142.
    District Court, E. D. Missouri, E. D.
    July 14, 1945.
    Harry S. Gleick, of Gleick & Strauss, all of St. Louis, Mo., for trustee Fred J. Lauchli.
    Nagel, Kirby, Orwick & Shapley and Hord W. Hardin, by Frank H. Fisse, all of St. Louis, Mo., for Mississippi Valley Iron Co.
    Frank H. Fisse and Daniel Noyes Kirby, both of St. Louis, Mo., for executors of Edward F. Goltra estate.
    Emmet T. Carter, of St. Louis, Mo., for Board of Education of City of St. Louis.
   DUNCAN, District Judge.

The question for determination is the correctness of the Referee’s order of June 19, 1944, which, among other things, enjoined Kate B. Goltra and E. Field Goltra, Jr., executors of the will of Edward F. Goltra, deceased, and the Board of Education of the City of St. Louis, until further order of the court, from instituting or prosecuting any proceeding before the requisitioning branch of the War Production Board, or any other agency of the United States, or the courts of the United States, except before the United States District Court at St. Louis, and from further prosecuting the proceedings which have heretofore been instituted in the United States Court of Claims.

The essential facts are not in dispute and may be briefly stated. The facts are fully set out in a Memorandum Opinion filed December 11, 1944, in respect of another phase of these proceedings, In re Mississippi Valley Iron Company, D.C., 58 F.Supp. 222.

Pursuant to the Act of October 16, 1941, C. 445, 55 Stat. 742, 50 U.S.C.A. Appendix, § 721 the President of the United States determined that: “One Gantry crane type Heyl & Patterson ore-handling bridge, 320 foot span, capacity 10 tons, together with all present attachments and appurtenances” located in the City of St. Louis, and in the possession of the trustee in bankruptcy of the estate of the Mississippi Valley Iron Company, bankrupt, was necessary for military purposes, and on September 6, 1943, through the Metals Reserve Company, requisitioned said ore-handling bridge and delivered the possession thereof to the Wheeling Steel Corporation.

Prior to the requisitioning of the ore-handling bridge, the Mississippi Valley Iron Company had been adjudged a bankrupt, and a trustee had been duly appointed and qualified, and had taken possession of all of the property of the bankrupt.

Subsequent to the bankruptcy of the Mississippi Valley Iron Company, and pursuant to authority granted by the Probate Court of the City of St. Louis, the executors of the estate of Edward F. Goltra, deceased, filed with the Referee in Bankruptcy, a claim alleging that it was the owner of and entitled to the possession of the said ore-handling bridge.

Likewise the Board of Education of the City of St.Louis, pursuant to authority granted by its Board of Directors, filed its claim with the Referee in Bankruptcy, alleging that the said ore-handling bridge was the property of the Board of Education, and that it was entitled to the possession thereof.

At the time of the filing of the petition in bankruptcy, and of the appointment of the trustee, the ore-handling bridge was located on the premises occupied by the bankrupt, and was taken possession of by the trustee along with other property belonging to the bankrupt.

At the time of the requisitioning, the claims of the respective parties to the ownership of said bridge had not been determined by the Referee in Bankruptcy. For a considerable period of time prior to the requisitioning of the bridge by the Government, the respective claimants had been negotiating with the Requisitioning Agency for the sale thereof, without resorting to the process of requisitioning and all of the claimants had submitted to the Requisitioning Agency their signed offer to sell said bridge for the sum of $100,000.

It was, however, determined by the Requisitioning Agency, that because of some adverse claim to the ownership of the bridge, which it suspected might be made by the War Department, it was not advisable to acquire said bridge by purchase, and consequently the requisitioning notice was served and the property taken under the War Powers Act aforesaid.

Upon the service of notice of requisition, the then trustee in bankruptcy, now deceased, sought and obtained from the Referee in Bankruptcy, a restraining order restraining the Wheeling Steel Corporation, for whom the bridge had been requisitioned by the Metals Reserve Company, the Requisitioning Agency, from dismantling or removing the same. Later the restraining order was dissolved by the referee, and the bridge was dismantled and taken away by the Wheeling Steel Corporation.

Thereafter the War Production Board sent notices to the respective claimants to file their claims for compensation with the Requisitioning Agency, and pursuant to such notices, each of the claimants — the trustee, the Goltra estate and the Board of Education of the City of St. Louis— filed claims in the sum of $100,000.00, each claimant alleging that it was the owner of said property and entitled to compensation therefor. The claim made by each claimant was in the exact amount which had been agreed to as the reasonable value of the property in their negotiations for its sale to the United States.

Upon receipt of the various claims to ownership, the War Production Board pursuant to Regulation 902.1 dated September 27, 1943, paragraph (e), determined that the award could not be safely paid to any of the claimants because of the diversity of claims, and it made a preliminary determination of the fair and just compensation for the property, and fixed the amount thereof at $100,000 — the amount claimed by each of the claimants.

The Chairman of the War Production Board authorized the Requisitioning Agency to set aside and retain the amount o.f compensation so awarded until the person or persons entitled thereto should be established. The award was made to “persons unknown.”

On January 2, 1944, and subsequent to the sending of notices to claimants, and prior to the preliminary determination of the fair and just compensation for the equipment taken, the estate of Edward F. Goltra, deceased, filed suit against the United States in the Court of Claims, alleging that it was the sole owner of the property and entitled to compensation therefor, and that the value thereof was $100,000 which was the amount agreed upon in the proposed stipulation signed by all of the parties prior to the requisitioning of the bridge, and the amount set out in the proof of claim filed with the War Production Board by the Goltra estate.

On February 5, 1944, the War Production Board determined that because of the filing of the suit in the Court of Claims, the amount awarded could not be paid until the litigation was disposed of.

Following this action by the War Production Board, the trustee sought and obtained the restraining order from the Referee as heretofore set out.

The Goltra estate contends that jurisdiction is conferred upon the Court of Claims not only by the Requisitioning Act, supra, but also by Title 28 U.S.C.A. § 250 (1) and that it has a right to maintain and prosecute its suit in that court. The Requisitioning Act, supra, provides:

“The President shall determine the amount of the fair and just compensation to be paid for any property requisitioned and taken over pursuant to this Act and the fair value of any property returned under section 2 of this Act * * * but each such determination shall be made as of the time it is requisitioned or returned, as the case may be, in accordance with the provision for just compensation in the fifth amendment to the Constitution of the United States. If, upon any such requisition of property, the person entitled to receive the amount so determined by the President as the fair and just compensation for the property is unwilling to accept the same as full and complete compensation for such property he shall be paid 50 per centum of such amount and shall be entitled to sue the United States in the Court of Claims or in any district court of the United States in the manner provided by sections 24 (20) and 145 of the Judicial Code (U.S.C., 1934 ed., title 28, secs. 41 (20) and 250) for an additional amount which, when added to the amount so paid to him, he considers to be fair and just compensation for such property.”

Title 28 U.S.C.A. § 250 (1) provides:

“The Court of Claims shall have jurisdiction to hear and determine the following matters: * * * All claims..(except for pensions) founded upon the Constitution of the United States or any law of Congress * * *.” (Emphasis supplied).

The regulation of the War Production Board1 with respect to requisition issued September 27, 1943, goes a bit farther than the provision of the statute and provides that if the Requisitioning Authority determines that compensation cannot safely be paid to any claimant, the Requisitioning Authority may make an award of compensation and the amount of the award shall be set aside and retained until the person or persons entitled to receive the same shall be established. (Emphasis supplied.)

The Goltra estate also contends that the requisitioning of the bridge by the Government completely destroyed any title which the trustee had in said property, and started a new chain of title, and that all the rights of the parties respecting such property or the proceeds derived therefrom, are controlled by the provisions of the Requisitioning Act.

The Trustee apparently does not dispute this contention in so far as requisitioning the property itself is concerned, and admits that immediately upon the taking by the United States, the trustee lost all rights with respect to the specific property, but he insists that the amount to be paid for its taking should be paid to him and held by him in lieu of the property taken from his possession, and that the right to the ultimate ownership of such fund should be determined by the Bankruptcy Court, just as though the property had been disposed of at private sale, or any other sort of procedure, or if the property had been sold to the United States under the proposed stipulation of the claimants, prior to the date of requisitioning.

I agree with the contention of the trustee. Under the Act authorizing the requisitioning of the property, the trustee did not have a right to question the actions of the President in his determination to take the property. In re Spier Aircraft Corp., 3 Cir., 137 F.2d 736; In re Mississippi Valley Iron Co., D.C., 58 F.Supp. 222.

I am unable to find anything in the Act which attempts to change existing law with respect to the administration of bankrupt estates, or to divest that court of its jurisdiction to determine the ownership of the amount awarded for the taking of property. There is nothing in the statute which indicates that it was the intention of the Congress to give to the Requisitioning Agency or to the Court of Claims, jurisdiction to determine the ownership as between claimants to property in a bankruptcy proceeding.

The Court of Qaims is a court of limited jurisdiction, and has only such jurisdiction as is conferred upon it by the Acts of Congress. Thurston v. United States, 232 U.S. 469, 34 S.Ct. 394, 58 L.Ed. 688.

As stated earlier in this Memorandum, the taking of the property by the Government under the Requisitioning Act — even if the Act were silent as to the right to proceed in the Court of Claims — would confer jurisdiction upon the Court of Qaims to render a money judgment against the United States if it refused to pay for the property which it had taken, or if a dispute as to its value had arisen, but the Act prescribing the conditions under which property may be requisitioned, also defines the person to whom compensation should be paid, and clearly sets out under what conditions the Court of Claims may entertain jurisdiction, i. e., where the Requisitioning Agency, and' the person entitled to the compensation cannot agree as to the amount to be awarded, then 50% of the amount of the award made by the Requisitioning Agency should be paid to the person entitled to it and a suit brought in the Court of Claims, or in the District Court of the United States, for the difference between the amount paid to the claimant, and the amount which the claimant believes to be reasonable.

There is nothing in the Act anywhere indicating that it was the intention of Congress to broaden the jurisdiction of the Court of Qaims so that it may determine the sole question of to whom an award, undisputed as to amount, should be paid. If the Court of Claims has jurisdiction and possession of a fund in a case in which it has rendered judgment against the Government, it may cause to be brought before it all interested parties for the purpose of determining to whom the fund should be paid. Brewer and Jones v. United States, 56 Ct.Cl. 81.

But we do not have that situation in this case. Here, if the matter proceeds before the Court of Claims, as the Goltra estate attempts to have it proceed, the other claimants, the trustee in bankruptcy and the Board of Education of the City of St. Louis would be required to intervene, and the sole question for determination by the Court of Claims would be, not the liability of the United States, which is admitted and confessed, but who, among the claimants, is entitled to the award. That is a question for determination by some tribunal other than the Court of Claims.

In Volk, Trustee in Bankruptcy, etc., v. United States, 55 Ct.Cl. 87, the trustee in bankruptcy instituted suit in the Court of Claims to recover for the use of certain property by the Government, belonging to the bankrupt. A mortgagee likewise claimed the property. The Court of Claims stated:

“Whether the alleged mortgagees or the trustee in bankruptcy is entitled to this amount this court is without jurisdiction to determine.
“An order will be entered suspending judgment on this phase of the case until the fact as to which of the parties should have judgment has been properly settled.”

I find no convincing authority for the contention that there has been any new chain of title in so far as the trustee in bankruptcy is concerned, with respect to the right of the bankruptcy court to determine the ownership of the award for the property taken from his possession.. Prior to the requisitioning of the property, each of the claimants had filed a claim with the Referee and sought a decision of the bankruptcy court as to the ownership of the property.

“Bankruptcy courts have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession. And the test of this jurisdiction is not title in but possession by the bankrupt at the time of the filing of the petition in bankruptcy.” Thompson v. Magnolia Petroleum Co., 309 U.S. 478, loc. cit. 481, 60 S.Ct. 628, loc.cit. 630, 84 L.Ed. 876.

When the property was taken from the possession of the trustee by due process of law, as trustee he was entitled to have that which represented what had been taken from him. That is, the award, to be held by him, for such disposition as a court of competent jurisdiction might make. In this instance, the bankruptcy court, which had already acquired jurisdiction.

Of course, it is not for this court in this case to determine what the War Production Board, the Requisitioning Authority, should have done under its regulation with respect to a determination of the person or persons entitled to receive the compensation. It would seem, in view of the established principles of law respecting the administration of bankrupt estates, that the Requisitioning Agency should have paid the amount of the award, which was not in dispute, to the trustee in bankruptcy (an arm of the Court) from whose possession the property had been taken.

The Agency’s regulations with respect to paying awards seem to have been promulgated, construed and complied with without regard to distinction between property taken from an individual or corporation, and of property in custodia legis, such as a trustee in bankruptcy, who is an arm of the court. However, in view of the filing of the suit in the Court of Claims by one of the claimants, it is not difficult to understand why the Agency should hold the fund until the person entitled to the compensation should be determined by the proper tribunal.

Undoubtedly the War Production Board would have paid the award into the bankruptcy court for the benefit of whomever the legal owner was finally determined to-be, had it not been for the suit filed in the Court of Claims.

Prior to the requisitioning, the parties had sought the jurisdiction of the-bankruptcy court to determine the question of ownership to the specific property. They had filed their claims in that court. Therefore, it cannot be denied that the bankruptcy court had jurisdiction to determine those claims with respect to the specific property. I see no reason why the general rule that a court of concurrent jurisdiction first obtaining jurisdiction over the property may not proceed to a final judgment in the matter of establishing liens, etc., does not apply in this case. Swift v. Black Panther Oil & Gas Co., 8 Cir., 244 F. 20; Doyne v. Saettele et al., 8 Cir., 112 F.2d 155.

Even if we admit arguendo that the Court of Claims has jurisdiction not only of this class of cases, but of this case, under the reasoning in this Memorandum, the bankruptcy court would have concurrent jurisdiction, and having first acquired jurisdiction of the parties and of the subject matter, i. e., the claims of the parties to the ownership of the property, then the rule above quoted would apply. Hargadine-McKittrick D. G. Co., v. Hudson et al., 8 Cir., 122 F. 232-234; Davis v. Victoria Land & Loan Co., Tex.Civ.App., 90 S.W. 2d 300; Trinity Universal Ins. Co. v. Farmers State Bank, Ky., 187 S.W.2d 793.

Of course, the Goltra estate contends that the bankruptcy court lost its jurisdiction to proceed further with respect to the claims of the respective parties when the United States took the specific property, which was the subject of the claims filed with the referee, and that the bankruptcy court does not now have the power to determine who is entitled to the proceeds of what may, for practical purposes, be termed a “forced sale” of the property.

If the taking of the specific property divested the bankruptcy court of all jurisdiction to determine the rights of the claimants to the amount to be paid by the Government as the agreed value of the property, taken, then, of course, regardless of any other fact, the bankruptcy court had no power to issue the restraining order.

The Requisitioning Agency did not take possession of the property from the trustee because of any defect in the trustee’s right to possession. It was taken under the authority conferred by the Act for the absolute taking of property for public purposes, and when the United States took the property from the trustee under those conditions, there should have been no question as to whom the compensation therefor should have been paid. It should have been paid to the trustee in bankruptcy, from whom the property was taken.

There was no question as to the value of the property which would bring the question within the provisions of the statute conferring jurisdiction on the Court of Claims. Had the award been paid to the trustee, from whom the property was takeri, then the court vested with jurisdiction to determine the rights between creditors or claimants, and the trustee, would have determined in an orderly manner who was entitled to the fund.

The record in this case indicates that the United States stands ready and willing to pay the amount of the award to the person entitled to the compensation.

I do not believe that the bankruptcy court lost any of the rights it had to determine the question of ownership because of the taking of the specific property. That being true, the bankruptcy court then had a right to issue the restraining order to protect its jurisdiction.

Therefore, the Referee’s order of June 19, 1944, enjoining Kate B. Goltra and E. Field Goltra, Jr., executors of the will of Edward F. Goltra, deceased, and the Board of. Education of the City of St. Louis, until further order of the court, from instituting or prosecuting any proceeding before the requisitioning branch of the War Production Board, or any other agency of the United States, or the courts of the United States, except before the United States District Court at St. Louis, and from further prosecuting the proceedings which have heretofore been instituted in the United States Court of Claims, is found to be correct, and is hereby sustained. Ordered accordingly.

       “No payment shall be made to any claimant until he has presented such proof of his title as the Requisitioning Authority may require and the Requisi- . tioning Authority has determined that compensation or any part thereof may be safely paid to him. If the Requisitioning Authority determines that compensation cannot safely be paid to any claimant, the Requisitioning Authority shall make an award of compensation and the amount of the award shall be set aside and retained, or the proper appropriation charged therefor, until the person or persons entitled to receive the same shall be established. If the Requisitioning Authority determines that compensation can safely be paid to any claimant, it shall make an award of compensation and- shall pay to the person or persons entitled thereto the amount of such award or, if such person or persons are unwilling to accept such compensation, shall pay 50 percentum of such amount in accordance with the Act of October 10, 1040, as amended [50 TJ.S.C.A.Appendix, § 711 et seq.], or the Act of October 16, 1041, as amended, whichever shall be applicable.”


author: WELSH, District Judge.

text:
    In re N. H. DEVELOPMENT CO.
    No. 10414.
    District Court, N. D. California, N. D.
    June 27, 1945.

      Charles A. Christin, of San Francisco, Cal., and Joseph D. Taylor, of Los Angeles, Cal., for N. H. Development Co., debtor.
    G. D. Schilling and S. J. Tosi, both of San Francisco, Cal., for Bank of America National Trust & Savings Ass’n, creditor.
   WELSH, District Judge.

N. H. Development Company, a Corporation, hereinafter called the “Company,” filed its petition herein under Section 75 of the Bankruptcy Act 11 U.S.C.A. § 203, on the 16th day of June, 1943. Listed as an asset in its schedules was real property in the County of Butte, State of California, consisting of approximately 130 acres. Said property was known as the Rancho Golden Grove, which will be referred to hereinafter as the “Ranch.”

Said petition was executed on behalf of said Company by Noel Newton as President and as Attorney in Fact for John R. Newton, Secretary.

Bank of America National Trust and Savings Association, hereinafter referred to as the “Bank”, filed a petition for dismissal of the above entitled proceeding on the 9th day of October, 1943. It alleged that it is the holder of a first deed of trust on the Ranch. It refers to an Operating Agreement executed by said Company under date of October 5, 1940, whereby it was requested to take over the supervision and management of said Ranch.

Said petition raised the issue that neither Robert W. Hodgson, Jr. (one of the incor-porators of said Company), nor Noel Newton is a farmer as defined by Section 75 of the Bankruptcy Act; that the Company is not a farming corporation and that the stock therein is not owned by farmers as defined by subsection r of Section 75 at paragraph (4) of subsection s of Section 75.

Said petition was referred to the Conciliation Commissioner for Butte County for hearing. Coyle E. Bybee, as such Commissioner, filed a report herein on the 23rd day of September, 1943, wherein he found:

“While it is true that Noel Newton occupied the dwelling on the property and raised garden produce and berries for his own use, the evidence does not show that he was carrying on any farming operations or had any farm income after said date.
“Hodgson himself was not a farmer at any time and apparently had no specific occupation. Neither of these persons can be classed as being a farmer on June 16, 1943, as defined by Section 75 sub. r of the National Bankruptcy Act.”

Said Commissioner recommended that the petition of the Bank for dismissal of the above entitled proceeding be granted.

Objections and exceptions were filed by the debtor on November 17, 1943. Various continuances were had at the request of the parties, testimony was taken by the above entitled court, and the matter submitted on briefs.

Two inter-related questions are presented: (1) Is the Company a farming corporation as defined by Section 75, and (2) was Noel Newton a farmer on the date of filing the petition?

Section 75, subdivision s, paragraph (4), of the Bankruptcy Act provides: “The provisions of this Act shall be held to apply also to * * * farming corporations where at least 75 per centum of the stock is owned by actual farmers * *

The burden of proving that it was a farming corporation was on the Company.

“Appellee’s petition alleged that appellant was not a farming corporation, and that, therefore, the court had no jurisdiction. * * * Hence the burden of proving this alleged fact rested on appellant.” McLaughlin Land & Livestock Co. v. Bank of America, 9 Cir., 122 F.2d 193, 194.

The Articles of Incorporation of the Company do not include the usual general purposes clauses used in incorporating companies whose business is principally farming. They do, however, include: “* * * c * =3 * operate and work * * * and generally to deal in real estate, buildings and improvements.” The Commissioner concluded that farming was embraced within this language.

Mr. Newton testified at the hearing before the Commissioner that no stock was ever issued by the corporation; “It was not issued at all. At that time Mr. Hodgson and I owned the ranch in equal shares, and we just run it under an agreement.”

Not to foreclose the debtor on this ground alone, it will be assumed that Newton acquired a substantial interest in the Company. Even then, can the Company qualify under the provisions of Section 75?

Mr. Hodgson was admittedly not a farmer. Newton’s testimony on this was:

“Q. And Mr. Hodgson was not a farmer ? A. That is right.”

Subsection r of Section 75 defines a farmer: “includes not only an individual who is primarily bona fide personally engaged in producing products of the soil, but also any individual who is primarily bona fide personally engaged in dairy farming, * * * 'or the principal part of whose income is derived from any one or more of the foregoing operations * *

No claim is made that the principal part of Newton’s income was derived from farming operations.

Was he “primarily bona fide personally engaged in producing products of the soil” ?

Testimony showed that his activities were primarily in fields other than “producing products of the soil.” In 1914 he engaged in the occupation of a building contractor for one and one-half years. Thereafter his principal occupation was “buying, operating, developing and selling real estate.” His application for a real estate license filed July 31, 1937, specified that he had twenty-four years’ experience in this line.

While in Buenos Aires, he carried on correspondence with Henry Meiser former owner of Rancho Golden Grove. He stated therein that he was interested in land promotion deals, and that “opportunity ads” in newspapers were “right down my alley.”

It was through such an advertisement that Newton contacted Robert W. Hodgson, Jr. He obtained an option on the Ranch and negotiated an agreement for its purchase by Hodgson as trustee under the will of Olive M. Williams, deceased.

Newton himself testified that all he did while on the Ranch from June, 1939, to July, 1940, was some work in the vegetable garden.

He wrote Meiser on October 3, 1940, that he and Hodgson were then interested in a mining venture; that they were all through with the Ranch and that the partnership between them had terminated.

Floyd Humphrey, Manager of the Oro-ville Branch of the Bank of America, testified that the next time he saw Newton after the Authorization Agreement was executed was approximately, the middle of November, 1940, on which occasion Newton requested withholding filing notice of default, under the deed of trust, as he had a purchaser for the property.

Russell H. Pearce, Vice President of the Bank of America at San Francisco, testified that Newton made numerous requests of him for postponements.

At the hearing before the Commissioner, Newton testified at first that he had no occupation, but on further examination stated that he was interested in numerous mining deals and other business ventures. One of these had to do with a cotton mill in Orange County, and another covered the sale of a hair restorer.'

Examined as to what work he performed on the Ranch from the date of the Authorization Agreement, October 5, 1940, to the date of the filing of the petition under Section 75, June 16, 1943, he testified that he did no actual work on the Ranch. He admitted that he did not talk to any of the workmen on the place with the exception of John Cabral, the irrigator, to whom he talked in 1943.

He admitted that from October, 1940, to November, 1943, neither he nor the Company paid any of the operating expenses of the Ranch.

William H. Cooper, District Manager of California Lands, Inc., testified that he regularly inspected the Ranch from October, 1940, to December 6, 1943, on which last mentioned date he saw Newton on the property for the first time; that Newton, on said occasion, took a shotgun and shot a tire off a car belonging to California Lands.

The effect of the testimony at the Commissioner’s hearing and in this court is that Newton did not qualify as a farmer within the meaning of the word as used in Section 75 of the Bankruptcy Act. The expression “bona fide” is used twice in subsection r of said Section. Such use indicates the weight given by the legislative branch of the government to good faith as an element .in determining whether or not a person is to be regarded as a farmer. It does not appear that Newton was actually, in good faith, a farmer at the time he signed and verified the original petition of the company herein on June 14, 1943.

The words “primarily” and “personally” are also twice used in said sub-section in connection with the words “engaged in.” Newton appears to have been primarily, personally engaged in promotional aotivities. His initial connection with the Ranch was through Henry Meiser, the former owner, in 1936 when Newton sought to obtain a loan from him. After he brought Hodgson and Meiser together on a deal for the purchase of the Ranch, he continued to endeavor to adjust financial affairs in which Meiser, Hodgson and he were interested.

His living on the Ranch did not make him a farmer, for, as testified by the witness John Cabral, he did nothing with reference to actual ranch work. “Just as residence elsewhere than on the farm where his operations occur does not prevent one from being a farmer, so residence upon a farm — if residence there be conceded — does not make him a farmer.” In re Jordan, D.C., 48 F.Supp. 889, 891. Newton’s own testimony relative to working in the vegetaable garden could not be construed as farming in connection with the orange and olive groves on the Ranch.

“There is a duty in the courts to see that the provisions of the Bankruptcy Act are not abused and that its privileges are extended only to those who are within its contemplation. While it is true that a farmer may avail himself of the benefits contained within Section 75 of the Bankruptcy Act * * * that rule has no application where a subterfuge has been created by one not a farmer whose obvious purpose is to circumvent and evade the statutory essentials and thereby temporarily escape liability upon his obligations.” In re Christin, D.C., 50 F.Supp. 78 at page 81.

Records of the company were not available at any of the hearings. It was uncontradicted, however, that no corporate stock was ever issued. No showing was made as to what, if anything, became of the interests of the incorporators other than Newton and Hodgson. The Company, accordingly, failed to establish that “at least 75 per centum of the stock is owned by actual farmers.”

Evidence, in addition to that referred to above, goes to show that Newton was not a farmer within the meaning or intent of Section 75. His occupational activities, rather, had to do with various promotions, including the borrowing of money between deals. During the years immediately preceding the filing of the petition of the Company herein, he embarked on numerous ventures unrelated to farming.

It is therefore concluded that Noel Newton was not a farmer within the meaning of Section 75; and that the N. H. Development Company was not a farming corporation within such meaning. The recommendation of the Conciliation Commissioner was based on sufficient testimony, and is hereby approved.

It is further held that the evidence subsequently introduced in this court proved, even more conclusively, that the Company was not entitled to the benefits of the provisions of the Bankruptcy Act under which its petition herein was filed.

It is hereby ordered that the above entitled proceeding be, and the same hereby is, dismissed.


author: FRANKLIN E. KENNAMER, District Judge.

text:
    STATE OF OKLAHOMA v. UNITED STATES CIVIL SERVICE COMMISSION.
    Civil Action No. 1279.
    District Court, N. D. Oklahoma.
    June 18, 1945.

      Randell S. Cobb, Atty. Gen., of Oklahoma, for the State of Oklahoma.
    Whit Y. Mauzy, U. S. Atty., of Tulsa, Okl., and Lawrence V. Meloy and Charles P. Crawley, Civil Service Commission, both of Washington, D. C., for United States Civil Service Commission.
   FRANKLIN E. KENNAMER, District Judge.

After the trial and argument and study of the briefs submitted as well as personal research, the Court makes and renders the following findings of fact and conclusions of law:

Findings of Fact

1. This is an action brought to review an order of the United States Civil Service Commission dated September 7, 1944, wherein the Commission, after a hearing, ordered the suspension from office of France Paris, a member of the Oklahoma Highway Commission, or in lieu thereof that certain federal funds be withheld from the State of Oklahoma upon its refusal to order such suspension. The basis for such order arises by virtue of 18 U.S.C.A. § 61, and succeeding sections, commonly known as the Hatch Act.

2. The proceedings for a review are admitted by the parties to be regular.

3. On or about January 14, 1943, France Paris was appointed by the Governor of the State of Oklahoma and he took the oath of office and assumed his duties as a member of the Oklahoma State Highway Commission. He has held and served in that office continuously since that time.

4. The .Oklahoma Highway Commission receives support from and is benefited in part by funds received from an agency of the federal government and did at all times involved herein.

5. Prior to becoming a member of the State Highway Commission, France Paris had been elected chairman of the State Central Committee of the Democratic Party of Oklahoma, which position was held by him upon becoming a member of the Highway Commission and was held continuously by him until he resigned on October 18, 1943, as chairman of the Central Committee of the State Democratic Party.

. 6. Just before January 14, 1943, there had been a general election held in the State of Oklahoma and the elected officials had taken office by that time. The State Democratic Headquarters of the State Central Committee were closed on January 4, 1943, by France Paris, but were later reopened during the year under the direct charge of the vice-chairman of that committee. During the year 1943, there was no state nor national election which concerned the Democratic State Central Committee and it was therefore a quiescent period for political activity. The principal activity of that committee consisted of staging a “Victory Dinner” in the Skirvin Hotel at Oklahoma City, Oklahoma, on June 14, 1943. This dinner was designed to provide the National Democratic Committee and the State Democratic Committee with funds to discharge a deficit incurred by their political activities and to provide funds for contemplated future activities. It also promoted the sale of war bonds and did result in the sale of approximately $14,500,000 in war bonds. The dinner netted the Democratic party, which was conceded to be a political party, approximately $30,000. The dinner was staged under the general supervision of the Governor of the state and the details were handled by a committee appointed by the Governor. W. G. Johnston was chairman of this committee. France Paris was an ex officio member of the committee and he advised with the Governor concerning the dinner and called the meeting to order and introduced the toastmaster, but he was not active in planning or arranging the dinner.

7. At no time before starting the proceedings before the Civil Service Commission did any representative of the Civil Service Commission advise either the State of Oklahoma or France Paris that holding the two offices simultaneously constituted a violation of the Hatch Act, and, upon learning that the enforcement branch of the Civil Service Commission contended the Hatch Act was being violated, France Paris resigned at once as chairman of the Central Committee of the State Democratic Party.

8. France Paris is not an attorney. At the hearing before the Civil Service Commission, his attorneys offered to show that prior to the time he became a member of the Oklahoma Highway Commission he consulted private counsel, as well as others, and was advised by them there would be no violation of the Hatch Act for him to serve in both capacities. That tender was refused by the Examiner upon the theory that it was not material. It is not shown by the record who the “others” consulted were, but in the arguments before this Court it was conceded by both sides that among those consulted were the Governor of the State of Oklahoma and the United States District Attorney for the Western District of Oklahoma. There was' no evidence indicating that he consulted with or sought the advice of the Civil Service Commission.

9. Prior to the effective date of Title 18 U.S.C.A. § 61Z, the Civil Service Commission had ruled that service on a political committee constitute^ a violation of the Hatch Act, and such ruling had appeared in a pamphlet published and circulated by the Commission.

Conclusions of Law

1. The Court has jurisdiction of the parties and the subject matter.

2. Title 18 U.S.C.A. § 61Z (§ 12) does not contravene or violate the Tenth Amendment to the Constitution of the United States. Stewart v. United States Civil Service Commission, D.C., 45 F.Supp. p. 697; United States v. Wurzbach, 280 U.S. 396, 50 S.Ct. 167, 74 L.Ed. 508.

3. Service as chairman of the Central Committee of the State Democratic Party while also serving as a member of the Oklahoma Highway Commission constitutes a violation of the Hatch Act.

4. The Court does not agree with the majority of the Civil Service Commission with respect to the punishment inflicted. The order, requiring the State of Oklahoma to remove Paris or the withholding of federal funds, by the majority of the Commission appears to be unduly harsh. But the violation having been established, the penalty to be invoked was within the discretion of the Commission. This Court is without power to substitute its judgment for that of the Commission.

5. The order of the majority of the Civil Service Commission is according to law and there are no disputed questions of fact for the Court to review since all the facts were stipulated.

6. That section of the Hatch Act dealing with review of orders of the Civil Service Commission to the effect that the review shall “Extend to questions of fact and questions of law” and that clause in the same section requiring the court to affirm the order or determination of the Commission if the same is “in accordance with law” when considered together gives the reviewing court no different or greater authority in reviewing findings of fact of the Civil Service Commission than that which reviewing courts have over findings of fact by administrative tribunals generally. Stewart v. United States Civil Service Commission, supra.

7. The Court concurs fully in the conclusions expressed by President Mitchell of the Civil Service Commission, beginning on page 18 of the transcript of the record, but because of the conclusions already stated the Court is powerless to change the order of the majority of the Commission.

8. The order of the majority of the Civil Service Commission under its docket number 122 and dated September 7, 1944, is therefore affirmed.

9. In accordance with the findings of fact and conclusions of law herein, the Clerk of the Court is ordered to enter judgment for the respondent denying the relief prayed for by the complainant, and the order of the Civil Service Commission is affirmed.


author: RIFKIND, District Judge.

text:
    BOWLES, Price Adm’r, Office of Price Administration, v. DAIRYMEN’S LEAGUE CO-OP. ASS’N et al.
    District Court, S. D. New York.
    June 22, 1945.

      Paul L. Ross, of New York City (Elliott Biskind, of New York City, of counsel), for plaintiff.
    Fennelly, Lowenstein, Engelhard & Pitcher, of New York City, for defendant Dairymen’s.
    Herman B. Zipser, of New York City, for defendant Caldwell.
    Harry L. Marcus, of Brooklyn, N. Y., for defendants Silvercrest Farms, Inc. and another.
   RIFKIND, District Judge.

Plaintiff, having commenced an action by a complaint alleging violations of Maximum Price Regulation 280 (7 F.R. 10144; 8 F.R. 16795; 9 F.R. 1622), and Regional Order G-l (9 F.R. 2714; 9 F.R. 3618; 9 F.R. 7590), and praying for injunctive relief against all the defendants and a judgment for treble damages against defendant Dairymen’s, now moves for an interlocutory injunction. Section 205(a), Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 925(a).

The commodity which is the subject of this suit is fluid milk. The commerce in this commodity is an arena in which many regulatory forces, federal, state and municipal, are in simultaneous operation. Of these, the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq., together with Order No. 27, issued thereunder, and the Emergency Price Control Act are the most pervasive. Dairymen’s buys its milk under the former and sells it under the latter. Each system of regulation is directed to its own principal object and it is important that the delicate balance among these contending forces shall not be upset.

The specific violations of Order G-l charged against the defendants are (1) that Dairymen’s has collected and that the other defendants have paid a price for fluid milk which included a factor for butterfat content of the milk in excess of the actual butterfat content of the milk sold; and (2) that Dairymen’s has collected and the other defendants have paid, as part of the price of the milk, a transportation charge in excess of the amount permitted by Order G-l.

The material facts are not in dispute. M. P. R. 280 went into effect by its terms on December 3, 1942. Among other food products, it regulated the sale of milk in bulk, at wholesale, by primary handlers to a named class of purchasers. Interhandler sales were not covered by the regulation. On August 19, 1943, the Price Administrator promulgated an amendment to M.P.R. 280 which became Section 1351.817a of that regulation. By that amendment the Administrator delegated to every Regional Administrator power to establish maximum prices for the sale of fluid milk first physically received from producers by handlers at a receiving station or processing plant within the region of the Regional Administrator. Such delegation of authority was permitted by Sections 201(b) and 201(d) of the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 921 (b, d).

Pursuant to the authority so conferred, the Regional Administrator of Region II (comprising New York, New Jersey Pennsylvania, Delaware, Maryland and District of Columbia) issued Order G-l, which by its terms became effective on February 16, 1944. By the terms of that order, the selling price of fluid milk in bulk sold by a “primary handler” to a “dealer” may not exceed, in the category of transactions involved in this suit, the following:

The primary handler’s “fluid milk cost,” plus 30^ per hundredweight, f.o.b. the primary handler’s receiving or processing plant plus a specified amount for delivery in cans if so delivered, plus a specified amount for pasteurization if pasteurized, plus a transportation charge where delivery is made to a place designated by the purchaser. Such transportation charge may not exceed the lowest of the following:

1. The lowest available common carrier rate.

2. The lowest available contract carrier rate.

3. When transportation is provided in trucks owned or controlled by the seller, the reasonable value of such transportation.

From the affidavits and arguments presented on the motion the following issues emerge:

1. Has the Order G-l been issued by an officer duly authorized by law to make such regulation; and has this suit been instituted by an officer authorized to prosecute such litigation? 2. Is Dairymen’s a primary handler as defined by the Order? 3. Is the method of doing business pursued by Dairymen’s permitted by the Order? 4. What is the meaning of “available” in the formula for determining transportation charges?

1. The challenge to the authority of the promulgating agency in issuing Order G-l and in instituting.this suit springs from Section 3(e) of the Emergency Price Control Act, as amended by the Stabilization Extension Act of 1944, 50 U.S.C.A.Appendix, § 903(e), which reads as follows:

“Notwithstanding any other provision of this or any other law, no action shall be taken under this Act by the Administrator or any other person with respect to any agricultural commodity without the prior approval of the Secretary of Agriculture; except that the Administrator may take such action as may be necessary under section 202 and section 205 to enforce compliance with any regulation, order, price schedule or other requirement with respect to an agricultural commodity which has been previously approved by the Secretary of Agriculture.”

The approval of the Secretary of Agriculture was given to M.P.R. 280; but the language of M.P.R. 280, (which deals with many food products) reporting such approval does not require the inference that the Administrator regarded the fluid milk here under discussion as an agricultural commodity.

It has been stipulated by plaintiff and defendant Dairymen’s that the approval of the Secretary of Agriculture has not been given to the mentioned amendment to M.P.R. 280 nor to Order G-l. It is the contention of the plaintiff that the milk here considered is not an agricultural commodity but a processed agricultural commodity and therefore not within the provisions of Section 3(e). It is not disputed between the parties that if the milk herein involved is a processed agricultural commodity the approval of the Secretary of Agriculture is not required. This agreement arises from the distinction drawn in the statute between agricultural commodities and commodities processed from any agricultural commodities, Sections 3(a), 3(c); and see, Bowles v. American Brewery, 4 Cir., 1945, 146 F.2d 842; Bowles v. Sunshine Packing Corp. of Pennsylvania, D.C.W.D.Pa.1945, 59 F.Supp. 164. The posture of the problem is, therefore, this: that the O. P. A. Administrator has classified milk received from producers at a receiving station or processing plant, where generally it is cooled for shipment, as not an agricultural commodity within the meaning of Section 3(e). Whether the Administrator is right in so doing is clearly a question of validity which, by Section 204, 50 U.S.C.A.Appendix, § 924, has been withdrawn from consideration by the district courts and vested exclusively in the Emergency Court of Appeals.

Defendant has submitted affidavits by persons apparently competent to express an opinion asserting that such fluid milk is not a processed agricultural commodity, whereas the plaintiff has submitted affidavits to substantiate its claim that it is. The very existence of this issue makes peculiarly relevant the proscription against the consideration of questions of validity. For manifestly, if the Administrator’s classification is wrong, then the amendment to M.P.R 280 and Order G-l have not been issued by an officer duly authorized to make such regulations and are invalid. Such a controversy is one with respect to validity; and the policy of the statute to centralize the disposition of such questions has been meticulously observed in the decisions which have construed Section 204 of the Act. Hence this case does not present for decision the intriguing question whether a district court may refuse to enforce a regulation “invalid on its face.” Bowles v. Willingham, 1944, 321 U.S. 503, 526, 64 S.Ct. 641, 88 L.Ed. 892 (concurring opinion of Rutledge, J.) ; Rottenberg v. United States, 1 Cir., 1943, 137 F.2d 850, 857; Brown v. W. T. Grant Co., D.C.S.D.N.Y.1943, 53 F.Supp. 182, 188; Thomas Paper Stock Co. v. Bowles, Em.App., 1945, 148 F.2d 831, 843.

The uniform lesson of the decisions construing Section 204 of the Act is to avoid carrying out exceptions to the policy of securing nationally uniform adjudication on the issue of validity and to confine such questions to the Emergency Court and to the Supreme Court. Yakus v. United States, 1944, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834; Bowles v. Willingham, supra; Cullen v. Bowles, 2 Cir., 1945, 148 F.2d 621; Rosenweig v. United States, 9 Cir., 1944, 144 F.2d 30; Bowles v. American Brewery, 4 Cir., 1945, 146 F.2d 842, 844.

It is undisputed that the institution of this suit has not been approved by the Secretary of Agriculture; but by the terms of Section 3(e) such approval, if required at all, is necessary only where required for the regulation.

The first question must, therefore, be decided against the defendants.

2. Dairymen’s is a primary handler as that term is defined in Order G-l. The definition reads:

“(2) Handler means any person who, on his own behalf or on behalf of another, purchases fluid milk from producers, associations of producers, or other handlers, and who sells such fluid milk at wholesale in bulk (other than in glass or paper containers), to any person, other than stores, hotels, restaurants and institutions * * * (ii) A ‘farmers’ cooperative’ is also a handler with respect to that fluid milk processed for it by operators of milk receiving or processing plants, and with respect to that fluid milk handled in physical facilities for receiving, processing, or distributing fluid milk which are owned or leased by the cooperative, which fluid milk is sold by it at wholesale in bulk (other than in glass or paper containers), to any person, other than stores, hotels, restaurants and institutions. (3) ‘Primary handler’ means a handler who purchases fluid milk from producers and resells such fluid milk in bulk to other handlers and dealers”.

That Dairymen’s, which is a farmers’ cooperative, is a purchaser from producers has been the position taken by Dairymen’s in its correspondence with" the O. P. A. in reference to M.P.R. 329. Although that position is now contested, there are logical reasons for treating it as fact. To reject that position now would mean that Dairymen’s activities were not covered by the Order, whereas the history of the regulation makes it clear that both Dairymen’s and plaintiff understood and intended that the Order should apply to its activities.

3. That Dairymen’s method of doing business is violative of the Order cannot be seriously questioned. Without going into the intricate details of milk pricing, it is sufficient for present purposes that Dairymen’s methods depart from the regulation in both of the challenged respects. In calculating the price which Dairymen’s must pay to producers under Marketing Order 27, a base price of $3.70 a hundredweight is applicable to milk with a 3.5% butterfat content. To that is added a premium of 40 for each 1/10 of 1% of butterfat in excess of 3.5%; and a deduction is made at the same rate for an equal percentage of deficiency. In determining its fluid milk costs for purposes of establishing a price to its customers, Dairymen’s does not use the actual butterfat content of each milk shipment. Instead it makes an annual estimate at the beginning of each year of the butterfat content of the milk it will supply. For the current year its estimate is 3.9%. It charges its customers accordingly. It claims in the aggregate it would receive more money from all its customers if it calculated the butterfat content for each shipment but that established trade practices and the convenience of its customers dictate the use of the estimate. That, however, is not the test prescribed by the Order. It is probable that some of its customers underpay, but some unquestionably overpay. The latter is prohibited by the Order.

Defendant also relies upon an amendment to G-l which reads:

“Where a primary handler co-mingles fluid milk purchased from more than one producer, the ‘primary handler’s fluid milk cost’ shall be the weighted average cost of all such milk so purchased.”

The terms of that amendment do not contemplate co-mingling by bookkeeping where in fact there has been no physical co-mingling in the milk shipped to an individual customer.

3. The same objection which affects the method of calculating “fluid milk cost” also impairs Dairymen’s method of calculating transportation charges. Instead of determining the actual transportation costs of each customer’s shipment, within the limitations of the Order, Dairymen’s uses a figure of 360 a hundredweight for all its customers in the City of New York, regardless of the point of origin of the milk. This figure, it is said, is based on the assumption that the milk is hauled a distance of 200 miles. The Order does not permit the addition of phantom transportation charges to one customer, even though the seller absorbs part of the transportation costs of another customer. Compare, Corn Products Refining Co. v. Federal Trade Commission, 65 S.Ct. 961.

4. A subsidiary question concerns the meaning of the word “available” in the transportation formula. It is the contention of the plaintiff that the term available in the phrase “lowest available common carrier rate” or “lowest available contract carrier rate” means the lowest rate available even though the means of transportation to which that rate is applicable is actually not available for use. In other yvords, if a common carrier rate between two points is published, then regardless of the fact that the service is for one reason or another not physically available, so that the shipper cannot possibly transport his milk by that means and he is obliged to use a contract carrier at a higher rate, he must nevertheless charge his customer the lower common carrier rate. This construction of the Order, it seems to me, is so violently at variance with its language and its manifest purpose that it cannot be entertained. If this construction were adopted, the comparison directed to be made by the Order would be a comparison between the rate on a hypothetical means of transportation, and an actual means of transportation; whereas, the regulation in so many words prescribes a comparison of rates on available means of transportation. I am not unmindful of the rule that in the interpretation of an administrative regulation the court must necessarily look to the administrative construction “if the meaning of the words used is in doubt”, Bowles v. Seminole Rock and Sand Co., 65 S.Ct. 1215. Here I see no room for doubt. Moreover, I have not been presented with any official interpretation by the Administrator which supports the strange construction advanced upon this hearing.

The Administrator’s delay in acting on Dairymen’s protest does not justify denial of an interlocutory injunction. The policy of the statute is that obedience to the regulation is exacted before its validity is adjudicated because delay would be fatal to the Congressional purpose, Brown v. W. T. Grant Co., supra.

The motion is granted. Settle findings and order on three days’ notice.

       Agriculture and Markets Law, McKinney’s Consol.Laws, c. 69 Book 2-B, Article 4.

       The relevant language of M.P.R. 280 is as follows: “Therefore, with the coneurrence of the Secretary of Agriculture with, respect to agricultural commodities and under the authority vested in the Price Administrator * * * Maximum Price Regulation No. 280 is hereby issued”.