text:
    NILES et al. v. LUTTRELL et al.
    No. 125.
    District Court, W. D. Kentucky, Bowling Green.
    July 12, 1945.

      Norton L. Goldsmith, and E. J. Wells, both of Louisville, Ky., for plaintiffs.
    Laurence B. Finn, of Bowling Green, Ky., and J. G. Smith, of Albany, Ky., for defendants.
   SWINFORD, District Judge.

This is an action to enjoin a trespass.

On October 15, 1940, R. I. Luttrell and Clora Luttrell executed a writing, whereby they leased the oil and gas rights in their farm containing 450 acres to C. F. Lowther. The lease was shortly thereafter assigned and transferred to the plaintiffs.

The lease contained the following provision : “And further, to locate and commence a well on said premises within 30 days from the date hereof, or pay at the rate of 25 cents per acre annually, payable quarterly in advance, for each additional three months such location and commencement is delayed from time above mentioned for the location and commencement of such well until a well is commenced or this lease surrendered. Such payment shall be made direct to the Lessor or by check mailed to R. I. Luttrell at Seventy-Six P. O. Clinton County, Kentucky. The drilling of a non-productive well shall be accepted by the Lessor in lieu of delay rental for a period of one year from the date of its completion, at the expiration of which time the Lessee shall commence another well or resume the payment of delay rental. And the drilling of a second well, productive or otherwise, shall be full consideration to the Lessor for the grant hereby made to Lessee with exclusive right to drill one or more additional wells on the premises during the term of this lease.”

On December 28, 1940, the plaintiffs moved machinery upon the leasehold and in the early part of January, 1941, began to drill an oil well. This was the only well drilled upon the leasehold and will be referred to as “Luttrel No. 1”. The well was dug to a depth of 815 feet, without striking oil in commercial quantities. On May 25, 1941, the drilling ceased and the well was never sunk to any greater depth than 815 feet. On June 4, in an effort to bring the well into production, it was shot three times with nitroglycerin but without satisfactory results. Later on in the summer of 1941, August or September, the well was acidized. Notwithstanding these efforts on the part of the plaintiffs, the well did not produce oil in paying or commercial quantities. In fact, throughout the whole time covered by the record in this case, that is from May 1941, until the latter part of 1943 or early part of 1944, the oil produced only netted in royalties the sum of $8. Throughout this period the plaintiffs, at intervals, attempted to bring the well into production by various methods and employed one Parker, who testifies that he continued to attempt to pump oil until the last of 1943 or the first part of 1944.

R. I. Luttrell died on September 3, 1942. The date of the death of C. F. Lowther is not clear from the record but it is stated by one of the witnesses that he died sometime shortly after May 26, 1942. Another witness states that he died in 1941. The date of his death, however, is not important to the determination of any question raised in this law suit.

The defendant, Clora Luttrell, who was the wife of R. I. Luttrell, is now the owner of the property on which the lease was given. On April 3, 1944, she leased to her codefendant, S. B. Jarvis, all of the oil and mineral rights in the property. This action is to enjoin the defendants from interfering with the plaintiffs in the enjoyment of their property rights under the lease of October 15, 1940.

The first thing to be considered and determined is when was Luttrell No. 1 completed within the meaning of the law. On this question I must conclude that Luttrell No. 1 was completed after it had been acidized without results. The exact date of this is not definite from the proof but it may be fixed as of sometime in August or September of 1941. This is the closest date I can fix from the rather vague testimony of the plaintiffs. If September is established as the date of the completion, then it was the duty of the plaintiffs under the terms, of the lease to either pay the rental of 25 cents per acre, in advance, or to begin the drilling of a second well within twelve months after September, 1941. It is agreed that no rental was paid and that no second well was ever drilled.

In determining that the well was completed in September, 1941, I believe that I have given a reasonable interpretation to the facts as developed. Most of these facts are undisputed. The well had been sunk to a depth of 815 feet, through the upper Sunnybrook and lower Sunnybrook sand and into the pencil cave sand. It had been shot with nitroglycerin and had been acidized with what was thought to be approved chemicals and with the proper processes. Pumping had been applied and so far as the record discloses the plaintiffs had done everything known to the art to bring the well into production. None of these conventional methods were successful. While there may be a difference of opinion as to the best methods to be employed, under the circumstances prevailing in this particular well, as is indicated by the testimony of the defendant, Jarvis, the plaintiffs certainly did what, in their judgment, experience and under the advice of others experienced in the business, they deemed proper and sufficient.

Nevertheless I must conclude from all the evidence that after August, 1941, Luttrell No. 1 had reached the experimental stage and could not be considered a producing well, within the meaning of the terms of the lease. It is true that the plaintiffs continued to make efforts to bring this well into production until December, 1943, and apparently tried almost everything and anything that was suggested to them. It is also true that, according to the testimony of some of the witnesses, the well may yet be made productive but after August, 1941, when the drilling through the upper and lower Sunnybrook sands and through the pencil cave strata had been completed without satisfactory results, it would be extreme to hold that this well did not present a dry hole, within the understanding of the parties and the meaning of the lease at the time it was executed. It was the duty of the plaintiffs, under the terms of the lease and such reasonable implications as the law permits to be drawn from the terms of the lease, to prosecute the operation of this venture to recover oil on the defendants’ premises, diligently and prudently. The real purpose of the lease and the interests of both the lessors and lessees was to recover oil in paying quantities. The mere formality of drilling a well and the interest aroused in the minds of the parties in this operation meant nothing unless oil was recovered. The plaintiffs could have extended the terms of their lease by paying the relatively nominal sum as rental. Instead of that they continued to dillydally with this dry hole. The smallness of the rental indicates that the lessors looked for their consideration for the lease to the early development of the leasehold and the production of oil. This is a circumstance to be considered in determining the implied conditions of the lease and what was in the minds of the parties at the time of its execution. Benedum-Trees Oil Co. v. Davis et al., 6 Cir., 107 F.2d 981.

In the leading case of Warfield Natural Gas Co. v. Allen et al., 248 Ky. 646, 59 S.W.2d 534, 536, 91 A.L.R. 890, the court, in this connection, made the following pertinent statement and cites authorities directly on the question of the relative responsibilities of the parties:

“It is a familiar principle in the law of contracts that, in the absence of specification of duties and obligations intended to be assumed, the law will imply an agreement to do and perform those things that according to reason and justice the parties should do in order to carry out the purpose for which the contract was made. Humphreys v. Central Kentucky Natural Gas Company, 190 Ky. 733, 229 S.W. 117, 21 A.L.R. 664. Though not expressed in the instrument, the law wrote into it as by implication certain covenants in order to manifest the purpose of the parties. They are just as effectual and binding as if specified. Among them is the obligation that the lessee would test and develop the property in good faith, and with reasonable diligence, to obtain production, and that it would prosecute operations diligently. and prudently. Willis’ Thornton on Oil and Gas, § 503, 40 C.J. 1064; Flanigan v. Stern, 204 Ky. 814, 265 S.W. 324; Union Gas & Oil Co. v. Diles, 200 Ky. 188, 254 S.W. 205; Bay State Petroleum Company v. Penn Lubricating Company, 121 Ky. 637, 87 S.W. 1102; Dinsmoor v. Combs, 177 Ky. 740, 198 S.W. 58, 59. These implied obligations include that of exercising good faith and the sound discretion of a prudent operator to drill to a depth that is reasonably necessary to test the land. Texas & Pacific Coal & Oil Co. v. Stuard, Tex.Civ.App., 269 S.W. 482; Kies v. Williams, 190 Ky. 596, 228 S.W. 40; Bradshaw v. Hurt, 198 Ky. 38, 247 S.W. 1113; Sugg v. Williams, 191 Ky. 188, 229 S.W. 72.
“This broad implied provision or covenant contemplates that, if oil is discovered in paying quantities, or it reasonably appears to be there in paying quantities, the lessee will proceed with the operations and development so as to obtain full production in order that the lessor may receive his royalty. It likewise contemplates that the lessee will protect the premises against loss or drainage of the oil. Lawrence Oil Corporation v. Metcalfe, 241 Ky. 353, 43 S.W.2d 986.
“The reasonableness of the diligence and course of conduct with respect to the extent of the prosecution of the operations is to be measured by what would be done under the same or similar circumstances by operators of ordinary prudence and diligence having regard for the common rights and mutual advantages of both parties to the contract and not of the lessee or operator alone. Willis’ Thornton on Oil & Gas, § 167; Rains v. Kentucky Oil Company, 200 Ky. 480, 255 S.W. 121; Austin v. Ohio Fuel Oil Company, 218 Ky. 310, 291 S.W. 386; Lawrence Oil Corporation v. Metcalfe, supra; Becker v. Submarine Oil Company, 55 Cal.App. 698, 204 P. 245; Strange v. Hicks, 78 Okl. 1, 188 P. 347; Jacob v. Stephenson, Tex. Civ. App., 254 S.W. 1117; R. E. Taylor Syndicate v. James, Tex.Civ.App., 243 S.W. 1105; Prince v. Standard Oil Company, 147 La. 283, 84 So. 657; Goodwin v. Standard Oil Company, 8 Cir., 290 F. 92; Jennings v. Southern Carbon Company, 73 W.Va. 215, 80 S.E. 368.”

The good faith of the plaintiffs cannot be questioned from the proof offered by this record. They were undoubtedly in the best of faith. The plain facts are that they were engaged in a business, technical in its nature and in a highly competitive field, about which they knew little or nothing. The rule drawn from Warfield Natural Gas Company v. Allen et al., supra, recognizes not only good faith but “the sound discretion of a prudent operator.”

There is little dispute as to the facts in this case and the application of the principle of law as the rule is laid down in Kentucky is not difficult. It is a common sense proposition. Common sense must certainly conclude that there was only a Lope for Luttrell No. 1 after September, 1941. Recent authorities on the rule applicable in this case may be found as follows: Wilson v. Wilson, 280 Ky. 461, 133 S.W.2d 722; Martin v. Graf et al., 289 Ky. 272, 158 S.W.2d 637; Durbin et al. v. Osborne et al., 292 Ky. 464, 166 S.W.2d 841; Cawood et al. v. Hall Land & Mining Co. et al., 293 Ky. 23, 168 S.W.2d 366; Sauder v. Mid-Continent Petroleum Corp., 292 U.S. 272, 54 S.Ct. 671, 78 L.Ed. 1255, 93 A.L.R. 454.

The plaintiffs here take something of an inconsistent position. While they insist that Luttrell No. 1 was never completed and was not even completed at the time of the trial of this case, yet most of their proof is in explanation of or excuse why they did not begin to drill a second well on the leasehold. They say that they were prevented from going upon the leasehold by the actions of R. I. Luttrell, his wife, Clora Luttrell (present defendant), and their son, Ed Luttrell. It is true that they were enjoined in the state court from going upon the leasehold in November, 1941. This injunction proceeding, however, was dismissed in May, 1942, and there appears to be nothing that prevented them from drilling a second well after May 26, 1942, until the death of R. I. Luttrell in September, 1942. Apparently this period was clearly open to them, regardless of any circumstances that may have occurred after that. There was no objection from Mrs. Luttrell until November, 1942, and none from Ed Luttrell until March, 1944. The plaintiffs’ witness, Parker, testified that he continued to pump the well until December, 1943, but never got any oil. Mrs. Luttrell testified that in November, 1942, she asked Parker to stop work on the leasehold until the plaintiffs came down to discuss the matter with her, but she says that she never did anything at any time to hinder or stop the plaintiffs from operating on the lease. She says that none of the plaintiffs ever came to see her to discuss the matter with her.

At all of these times in the spring, summer, and fall of 1942 the plaintiffs were engaged in trying to bring into production two old wells on the adjoining tracts of land which are identified in the proof as the Morrison and Johnson wells, and had no intention of going back upon the Luttrell tract until the completion of the Morrison and Johnson enterprises. The reason for their delay in returning to the Luttrell lease for the purpose of drilling a second well, according to their testimony, is that they had obtained permission from R. I. Luttrell on May 26, 1942, to finish the Johnson and Morrison wells first.

One of the plaintiffs, Sydenstricker, gave the following testimony:

“A. Well we had gone down to look at the machine; and Dr. Niles couldn’t drive his car only so far, the roads were so bad, so we stayed in the car; and the rest of them went down to look at the machine. When they came back Mr. Lut-trell was with them and Mr. Luttrell came up to me and said, T would like to talk with you’, and I said, ‘all right, Mr. Lut-trell’. I called Mr. Lowther to come with me and we walked away from the others off to the side, and Mr. Luttrell said, he says to me, ‘Mr. Sydenstricker, I believe you will do what you agreed to do.’ And I said, ‘Yes, I will.’ Then he says, ‘Now what are you going to do about the well?’ ‘Well, Mr. Luttrell’, I says, ‘we have drilled a well on this land and I think Mr. Johnson should have a well, and after Mr. Johnson’s well is drilled I think Mr. Morrison should have a well.’ And we talked the matter over and he said, ‘That is all right.’ Then he said ‘Then will you drill a well for me?’ And I said, ‘Yes, we will.’ And we came to an agreement. And then I said, ‘Mr. Luttrell there is one thing I want you to do, and that is have that suit dismissed today.’ I said, ‘Will you do that?’ He said, ‘Yes’. Then he turned to Mr. Lowther and said, ‘Mr. Lowther, when you go in to town you have that suit taken care of.’
“Q. And that suit subsequently was dismissed? A. Yes.
“Q. And after having made or reached that understanding with Mr. Luttrell, first to drill a well on the Johnson land, and then one on the Morrison, and then a second well on the Luttrell lease, what was done about drilling wells on the Johnson and Morrison leases?. A. The first machine we bought, it took about three weeks to get that machine on the Johnson land; and by the time he got it there and got it set up and he got it on June 2d, and by the time he got it set up and started to drill it was on the 24th day of June.
“Mr. Finn: What year?
“Witness: 1942.
“Q. And was that well drilled on the Johnson lease? A. Yes.
“Q. And when was the Johnson well completed? A. About — sometime in September, I believe.
“Q. Well did you then move over on the Morrison land? A. Yes.
“Q. And did you drill a well on the Morrison land? A. Yes, sir.
“Q. And when was that completed? A. Late in the fall of 1942.
“Q. Well, what month? A. I think in November.
“Q. November 1942? A. Just offhand I would say November.”

This was in effect a waiver of the requirement that a second well be drilled within 12 months of the completion of Luttrell No. 1 and a waiver of the payment of the rental as required by the lease.

If this evidence is competent, the plaintiffs’ case will succeed. If it is incompetent, the relief asked must be denied and the complaint dismissed.

There is thus squarely presented a construction of Section 606, subsection 2 of the Kentucky Civil Code of Practice.

This section provides that no person shall testify for himself concerning any verbal statement of or any transaction with or any act done by one who is dead when the testimony is offered, except in actions for personal injury, death or damage to property by negligence or tortious acts. The words, “and except ‘in actions impersonal injury, death or damage to property by negligence or tortious acts,’ ” were added to subsection 2 of section 605 by an Amendment in 1932, Acts 1932, c. 59. If it can be said that the gravamen of the instant case is the trespass or tort, then this statement of the deceased Luttrell, as testified to by the witness, Sydenstricker would be competent. If the gravaman of the instant case is the contract or lease on which the plaintiffs must necessarily rely, then the evidence is not competent.

In the case of Browns, Bell & Cowgill v. Soper et al., 287 Ky. 17, 152 S.W.2d 278, 134 A.L.R. 1385, in referring to the case of Warfield Natural Gas Co. v. Clark’s Adm’x, 257 Ky. 724, 79 S.W.2d 21, 97 A.L.R. 971, the court said if the grava-man of the action was the alleged tortious and negligent acts of the defendant the exception contained in subsection 2 applied, and that being true, the converse must also be true that where the grava-man of the offense is not a negligent or tortious act, the exception has no application. Gravaman is defined by Webster as the substantial cause of an action at law. Certainly the substantial cause of the action in the case at bar is the claim of the plaintiffs to their leasehold for the mineral rights by reason of the contract or lease on which they must assert their rights.

I cannot agree with the contention of counsel for the plaintiff that this action sounds in tort rather than in contract. While it is true that the action itself is to enjoin a trespass upon the alleged property rights of the plaintiffs, the basis of the claim to these property rights is the contract or lease on whose terms and conditions the plaintiffs must rely to sustain their claim to the alleged trespass. I do not believe upon reason or principle or any of the authorities which I have examined that it was the intention of the Legislature, by the amendment, to permit such evidence on actions such as this, where recovery must rest upon a contractual relationship between the parties, and I do not believe that such implication can be read into the opinion of Warfield Natural Gas Co. v. Clark’s Adm’x, supra.

Such a construction would defeat the whole purpose of the original code provision. The question presented is whether or not the terms of the contract were waived, modified, or changed by Luttrell. Certainly his own statements in that connection would go directly to the contract and the attitude of the parties in complying with its terms. Statements made in contract actions are held to be incompetent because the deceased is not present to refute or rebut them. Luttrell’s statement waiving certain requirements of the lease had nothing to do with the alleged trespass of Mrs. Luttrell and Jarvis, which took place long after his death. His statement dealt solely with the contract. It would seem to be an extremely forced conclusion to say that his statement pertained to the trespass rather than to the contract.

Competency of such evidence is not to be determined on the basis of the kind and character of relief sought but rather upon what the statement itself pertained to. If the question is approached from this angle it eliminates the confusion which seems to be springing up in connection with the construction of this code provision as amended. If the statement was made in connection with a wrongful act and addressed itself to some phase of tort, it seemingly is competent. If it addressed itself to the contract, to a construction of or a waiver or a consideration of its terms, the exception created by the amendment does not apply and the statement is incompetent.

To base the competency or incompetency of such evidence upon the form of action or nature of the relief sought would place within the power of the plaintiff the right to determine, at the time he prepared his complaint, whether certain evidence should or should not be admitted.

I have carefully examined all of the cases cited by plaintiffs’ counsel and some others which I have found on the construction of this amendment. I find that all of these cases in which such evidence is admitted are actions for personal injury or wrongful death. In Warfield Natural Gas Co. v. Clark’s Adm’x, supra, which is the principal case on which plaintiffs’ counsel relies, the plaintiff had sued for death of her decedent because the defendant, the Gas Company, had wrongfully turned off the gas in violation of the terms of its contract as construed by the court and which resulted in the death of her decedent from the disease of pneumonia. While there was a contract between the Gas Company and its consumer to leave the gas on so long as the gas bill was paid, the gravaman of the action is tort rather than breach of contract. In other words it was an action for death by wrongful act, which could have been had even though there had been no contract.

Colston’s Adm’r v. Cincinnati, N. O. & T. P. R. Co., 253 Ky. 512, 69 S.W.2d 1072, was an action growing out of the killing of plaintiff’s decedent at a crossing of a public highway. The engineer was permitted to testify without objection concerning a transaction which he had with the decedent. There is no discussion of the code provision in the opinion, but it merely quotes the part added by the amendment and says that the evidence is competent since the engineer was himself a party defendant and the action was one for wrongful death.

Kinsella et al. v. Meyer’s Adm’r, 267 Ky. 508, 102 S.W.2d 1117, was a death case where a policeman at Covington ran into and killed plaintiff’s decedent. The defendant carried the deceased immediately after the accident, and before his death, to the hospital and was permitted to testify that after reaching the hospital the deceased stated to him that the accident was his own fault.

Hughes v. Bates, Adm’r, 278 Ky. 592, 129 S.W.2d 138, was an action for wrongful death. I am unable to see where any of the language in that opinion could have any possible application to this case.

The same is true of Melton’s Adm’x v. Robinson et al. (Day’s Adm’r v. Robinson) 270 Ky. 621, 110 S.W.2d 428, which was an action for damages for death from shooting.

All of these cases were for the recovery of damages for tortious acts or negligence. The nature of the remedy in the case at bar is more nearly akin to the common law action for replevin or ejectment or to the statutory remedy of claim and delivery. The actions for ejectment and replevin were in rem proceedings and yet they charged a trespass for which damages were recoverable.

The case of Williams et al. v. Waddell et al., 285 Ky. 416, 148 S.W.2d 298, was an ejectment action and it was held that the plaintiff could not testify as to statements made to him by his deceased father as to the true location of the boundary line of the property in controversy.

The Kentucky Court of Appeals has repeatedly held that the action for claim and delivery under our statute is but a substitute for the ancient common law action of replevin and that it is an action both in rem and in personam, in which the essential facts necessary to support the action were that a plaintiff must allege and show a general or special ownership in the. property. Halcomb v. Phipps, 194 Ky. 648, 240 S.W. 363; Stimson’s Ex’r v. Tharp, 284 Ky. 389, 144 S.W.2d 1031; Farmers & Depositors Bank v. Taylor, 290 Ky. 774, 162 S.W.2d 764.

Throughout the consideration of this case we must bear in mind the difference between the gravaman of the action and the nature of the remedy. Where the plaintiff seeks redress by an action in ejectment, replevin, or for claim and delivery, he is charging a trespass on his property which he holds or asserts title to under a contract.

The case of Slack v. Bryan, 299 Ky. 132, 184 S.W.2d 873, decided January 12, 1945, was a claim and delivery proceeding in which the plaintiff sought to recover the possession of certain personal property in which he alleged ownership. The property in question was a valuable diamond in the possession of his sister, who claimed to have inherited it from their mother. The plaintiff was barred from testifying as to any conversations or trans-, actions with his deceased parents relative to his ownership of the stone. This case more nearly presents the question that is here for determination than any other my research has disclosed. The plaintiff in Slack v. Bryan was asserting ownership by reason of a gift of the diamond and the fact that he had loaned it to his mother and father. He was asking to recover possession of it by a claim and delivery proceeding which charged a trespass by his mother and sister who had and were asserting ownership in the property.

I must conclude that all the transactions and conversations, both those which are quoted in this opinion and other instances which appear in the record (on all of which ruling was reserved until final submission), had with R. I. Luttrell are incompetent as evidence to be considered in this case.

In consequence of this ruling the plaintiffs’ complaint should be dismissed.

Findings of fact, conclusions of law, and judgment are this day filed.


source: Caselaw Access Project

author: BARD, District Judge.

license: Public Domain

text:
    BOWLES, Price Adm’r, OPA, v. VILLARI et al.
    No. 4531.
    District Court, E. D. Pennsylvania.
    July 11, 1945.

      Walter N. Moldawer, Erwin Lodge, and Robert J. Callaghan, all of Philadelphia, Pa., for plaintiff.
    C. Brewster Rhoads and C. Russell Phillips (of Montgomery, McCracken, Walker & Rhoads), both of Philadelphia, Pa., for Moore Street Cooperative Ass’n.
    Frank F. Truscott and George D. Kline, both of Philadelphia, Pa., for Villaris and Moore Street Cooperative Ass’n.
   BARD, District Judge.

This is an action brought by Chester Bowles, Price Administrator, Office of Price Administration, (1) to enjoin violations of Section 4(a) of the Emergency Price Control Act of 1942 as amended and of Revised Maximum Price Regulation No. 169, “Beef and Veal Carcasses and Wholesale Cuts”, 7 F.R. 10381, issued under the Act; and (2) to recover treble damages on behalf of the United States of America. Jurisdiction is conferred upon this Court by Section 205(c) of the Act, 50 U.S.C.A.Appendix § 925(c).

I make the following special

Findings of Fact.

1. Defendants Samuel Villari, Peter Vil-lari and John Villari are, and since December 14, 1939, have been, engaged in the slaughtering business as copartners trading as S. Villari and Sons. The partnership owns and operates a slaughtering plant and abattoir at 220-230 Moore Street, Philadelphia, Pennsylvania.

2. Defendant Moore Street Retail Meat Cooperative Association is, and has been since July 5, 1944, a corporation organized and existing by virtue of the laws of the State af Pennsylvania. The office and principal place of business is at 220-230 Moore Street, Philadelphia, Pennsylvania, the identical office and plant used by the Vil-laris. The cooperative is engaged in the business of buying, selling, slaughtering and dealing in animals, meats and provisions.

3. Defendants Emerson V. Wilson, George Braun and Morris Kanefsky are respectively the President, Secretary and Treasurer of Moore Street Retail Meat Cooperative Association.

4. Pursuant to the provisions of Section 2(a) of the Emergency Price Control Act of 1942 as amended, 50 U.S.C.A.Appendix § 902(a), the Price Administrator issued Revised Maximum Price Regulation No. 169, 7 F.R. 10381, effective December 16, 1942, which Regulation, as amended, has been at all times until the date hereof in full force and effect. This regulation establishes maximum prices for the sale, purchase, delivery or receipt of beef and veal carcasses and wholesale cuts and prohibits violation of the price ceiling by direct or indirect evasive methods.

5. For some time prior to June, 1944, S. Villari & Sons contended they were unable to operate profitably due to the insufficient margin between the ceiling price for dressed meat established by Revised Maximum Price Regulation No. 169 and the rising price of livestock.

6. During the early part of June, 1944, Samuel Villari consulted his attorney, Arthur E. Dennis, Esquire, to discuss the possibility of evolving a plan whereby the Vil-laris could operate their business at a profit.

7. Mr. Dennis suggested to Samuel Vil-lari that a cooperative association composed of S. Villari & Sons’ customers be organized for the purpose of operating a slaughtering business; that the cooperative association buy or lease the Villaris’ plant and equipment and employ Villari and his sons to manage and operate the slaughtering business for the cooperative association. Pursuant to the plan suggested by Dennis, on June 27, 1944, a letter was sent by Villari to his customers inviting them to attend a meeting at Dennis’ office to discuss “ways and means of remaining legally and profitably in business.”

8. On June 29, 1944, the meeting was hdd at the office of Mr. Dennis. There were present at this meeting defendants Samuel Villari, John Villari and Peter Villa-ri ; defendants Emerson V. Wilson, George Braun and Morris Kanefsky; Arthur E. Dennis, Esquire; Sidney Berg, Esquire, an associate of Mr. Dennis as counsel in other retail meat cooperative associations; William H. Sherry, accountant for S. Villari & Sons; and about sixty retail meat dealers who were either customers of the Vil-laris or were retailers known to Mr. Dennis and invited to the meeting by him.

9. Samuel Villari spoke to the assemblage and told them he would be forced to close his business because he could no longer operate profitably. Mr. Dennis advised the retail meat dealers that, unless they organized a cooperative association, rented the Villari plant and employed the Villaris to operate the establishment, Villari would close his establishment and the supply of meat they were presently receiving from S. Villari & Sons would be ended.

10. Mr. Dennis then outlined the general plan of the proposed cooperative association : That Villari would lease his slaughter house and equipment to the association for $450 per week; that Samuel Villari would accept $150 per week as salary; that Peter Villari and John Villari would each accept $75 per week as salary; that the Villaris would manage and operate the slaughtering plant; that the Villaris would purchase live cattle, kill the cattle, and dress the beef in the same manner in which S. Villari & Sons had heretofore conducted its business but under the supervision and direction of the cooperative association; that Villari reserved the right to slaughter for himself in the conduct of his own business; that the lease and the contract of employment would be terminable at the option of either party upon fifteen days’ notice.

11. Mr. Dennis then informed the assemblage that under government regulations Villari could not slaughter more than fifty-one army style cattle each week; that Villari had agreed to slaughter the fifty-one head of army style cattle per week, together with some inferior grades of cattle, calves, and lambs, totalling a minimum of 50,000 pounds of dressed meat weekly; that this limited supply of dressed beef would have to be distributed among the members of the cooperative in proportion to their needs; that members of the cooperative would be preferred over non-members in the distribution of meat and only after the requirements of members were filled then the excess, if any, could be sold to non-member retailers.

12. The retailers were also informed by Mr. Dennis that the margin between the price of live cattle and the price ceiling for dressed meats was so small that the cooperative could be expected to lose money; that economies might be effected by efficient operation, by not providing delivery service, and by changing the types and grades of animals to be slaughtered; that the cooperative should be able to realize a profit in the future if the government revised its price regulations; that the statute under which the cooperative was to be incorporated limited the subscription of members to a maximum of $1,000; and that, therefore, the members would be called upon to make additional investments from time to time since the original capital investment would be insufficient to operate the business over a long period.

13. At the suggestion of Mr. Dennis, Sidney Berg, Esquire, was engaged to represent the retailers and to draw up the necessary organization papers and agreements with the Villaris. On the basis of the plan of operation proposed by Dennis and the statement by Villari that he was about to go out of business (as outlined in paragraphs 9, 10, 11 and 12, supra), the retailers proceeded to subscribe to shares of stock. The individual subscriptions were for $250, $500, $750 and $1,000, or 10, 20, 30 and 40 share lots at $25 per share, and the total subscription, including a few subscriptions made after the meeting but before incorporation amounted to $27,750 apportioned among seventy-two members. When the retailers present at the meeting had subscribed, the names of the subscribers were read from a list together with the number of shares each had purchased and the average number of sides of beef to which each subscriber would be entitled to receive each week conditioned on the availability of cattle. The relationship between the number of sides of beef per weekend the number of shares subscribed was approximately one side of beef per week for every ten shares ($250).

14. At the conclusion of the meeting on June 29, 1944, the subscribers elected officers and directors, and instructed Berg to incorporate the cooperative and do whatever legal work was necessary to commence operation of the slaughtering business.

15. Mr. Berg, with the assistance of Mr. Dennis, counsel for Villari, prepared Articles of Association for the Moore Street Retail Meat Cooperative Association which were submitted to and approved by the Secretary of State of Pennsylvania on July 5, 1944.

16. On July 10, 1944, a committee authorized by the Board of Directors met with Dennis, Berg and Sherry and resolved that a lease and contract of employment be consummated with the Villaris on the terms outlined by Mr. Dennis at the meeting of June 29, 1944 (Par. 10). The Committee prepared a written lease and a written contract of employment between Samuel Villari and the Moore Street Retail Meat Cooperative Association dated July 17, 1944, for the term of one year, termin-, able at the will of either party upon fifteen days’ notice and with a provision that termination of the employment contract automatically terminated the lease. These agreements were approved by the Board of Directors, but were never signed by Vil-lari nor did the Board of Directors ever insist upon execution.

17. On or about July 15, 1944, the cooperative association commenced business operations under the management of Samuel Villari assisted by Peter Villari and John Villari. Supervision of the cooperative was nominally in the Board of Directors, but that supervision was in fact only perfunctory, the only actual evidence of control being a suggestion to Villari that he slaughter a lower grade of cattle to reduce operating losses.

18. The members of the cooperative purchased and received dressed meats from the cooperative in proportion to the amount which each had invested. The stockholders received an average of one side of army style beef weekly for each ten shares purchased and, in addition, small quantities of veal and lamb. Actually the weekly purchases of each stockholder varied from week to week, depending on the number of cattle slaughtered by Villari and the availability of the grade of beef required by the particular member. Because the cooperative was unable to supply the grade of meat desired, certain members purchased an average amount of beef less than the proportion of their investment.

19. The Board of Directors appointed Jacob Miller and Alphonse Cerceo, members of the cooperative, to audit the accounts of the stockholders’ purchases of meats to determine whether certain members had received meat in excess of their proportionate investment in the cooperative. The audit showed that many of the members had received an excessive share of meat and, as a result of the audit, twenty-nine stockholders purchased additional shares.

20. On August 30, 1944, William H. Sherry, accountant for the cooperative, presented a financial report for the first six weeks of operation to the officers and directors. The financial report showed a net operating loss of $20,639.14 on a total capital investment of $27,750.

21. On the following day the cooperative called a meeting of the members to be held at the office of Dennis on September 7, 1944. Dennis, Berg, Sherry, Samuel Vil-lari, Peter Villari, John Villari, and about sixty stockholders attended the meeting. Dennis told the members that the cooperative lacked ready cash but had sufficient assets, and that it was the suggestion of the directors that the shareholders make loans to the cooperative in an amount equal to their initial investments. Most of the stockholders either pledged themselves to loan the money or actually made the loan at the meeting. No security or evidence of indebtedness was given to the members by the cooperative association for the money loaned.

22. On October 3, 1944, a financial report covering the five week period from August 26, 1944, to September 30, 1944, was presented to the Board of Directors and to a meeting of the shareholders held later on the same day at Mr. Berg’s office. This report showed that the cooperative had suffered a net operating loss of $10,-310.76 for the five week period and a total net operating loss since the commencing of business aggregating $30,949.90. Since the paid in capital was only $27,750, the operating losses had more than exhausted the capital investment in eleven weeks of operation.

23. Berg and Dennis told the shareholders that unless the members bought additional shares of stock and invested fresh capital, the cooperative would cease business and their supply of meat through the Villari packing plant would be stopped; and that those who had loaned money to the cooperative could apply the loan to the purchase of new shares.

24. Most of the- members subscribed to shares in an amount at least equal to their original subscription. The total capital invested by shareholders now aggregated $66,125.

25. Some members who did not purchase additional shares of stock were made to understand that they no longer were to participate as members of the cooperative. They did not receive notices of subsequent meetings, nor did they purchase or receive any more sides of beef after the meeting, although some did purchase small quantities of meat products.

26. The financial report on November 1, 1944, covering a four week period from September 30, 1944, to October 28, 1944, showed a net operating loss by the cooperative of $7,694.97 and a total net operating loss since the commencement of business of $38,644.87.

27. During the five week period from October 28, 1944, to December 3, 1944, the cooperative incurred an additional net operating loss of $9,462.89 and a total net operating loss since the commencement of business of $48,107.76.

28. During the month of December, 1944, the net operating loss of the cooperative was $12,482.38 and the total net operating loss since the commencement of business was $60,590.14 on a total capital investment of $66,125.

29. On January 3, 1945, another general meeting of shareholders was held at the office of Mr. Dennis, at which there were present Dennis, Berg, Sherry, Samuel Vil-lari, Peter Villari, John Villari, and most of the stockholders. Dennis explained the financial status of the cooperative and told them that unless more stock was purchased and additional capital provided by the members the cooperative would cease business and their supply of meat through the Vil-lari slaughter house would end. The stockholders subscribed to an additional amount of stock at the meeting and within a short period thereafter, making a total investment since the organization of the cooperative of $102.725.

30. The stockholders who did not subscribe to stock at the meeting of January 3, 1945, did not receive meat thereafter except in isolated instances and in small amounts.

31. The financial report submitted on February 12, 1945, showed a net operating loss to the cooperative between January 1, 1945, and January 27, 1945, of $6,024.91 and a total net operating loss since the commencement of business of $66,615.05.

32. All the livestock processed and sold to {he members of the cooperative were purchased in the name of the Moore Street Retail Meat Cooperative Association by the Villaris, as employees and agents, with funds belonging to the cooperative.

33. The sales of dressed meat to the members were made by the Moore Street Retail Meat Cooperative Association and not the Villaris, individually, or S. Villari & Sons. All individual sales of meat to the members of the cooperative were invoiced and paid for at ceiling prices established by Revised Maximum Price Regulation No. 169.

34. Throughout the entire period of operation from July 15, 1944, to March 6, 1945, the date this action was brought, the cooperative made an aggregate payment of rent of $14,850 to Samuel Villari and an aggregate payment of salary to Samuel Villari of $4,950, to Peter Villari an aggregate payment of salary of $2,475, and an aggregate payment of salary to John Villari of $2,475.

35. The members of the cooperative subscribed to the stock of the cooperative association and reinvested capital in a cooperative which was operating at a loss solely for the purpose of obtaining a steady supply of meat not available in normal channels of business. The subscriptions were not made as long term investments to obtain future business profits.

36. The Moore Street Retail Meat Cooperative Association, in fact, was organized by Samuel Villari and his representatives for the purpose of selling dressed meats to his customers and other cooperative members in such manner as to obtain from them the entire cost of operation of Villari’s slaughtering business including the cost of livestock, and to obtain a net return to himself and his sons, Peter Villari and John Villari, in an amount fixed by him, notwithstanding that the amounts paid by the members in the form of stock subscriptions were in fact paid as consideration for a supply of meat and were a part of the purchase price of the dressed meat in addition to the lawful ceiling price indicated on the invoices, and that the consideration paid for the meat in the form of stock subscription and invoice charges exceeded the maximum prices established by Revised Maximum Price Regulation No. 169.

Discussion.

Defendants Samuel Villari, Peter Villari and John Villari have successfully operated a slaughtering business under the trade name of S. Villari & Sons for a number of years. Under authority of the Emergency Price Control Act of 1942, the Price Administrator issued, on December 10, 1942, Revised Maximum Price Regulation No. 169 establishing maximum prices for beef and veal carcasses and wholesale cuts.

The rising cost of livestock gradually reduced the margin between the cost of livestock and the ceiling prices of dressed meat until the Villaris contended that they could no longer operate at a profit and were, in fact, they maintained, faced with the possibility of paying a higher price for livestock than they could charge their customers for the processed carcasses. Upon advice of counsel, the Villaris met with their customers and other retailers and informed the retailers that they intended to cease operation and that supply of meat from the Villari plant would end. The retailers adopted a solution offered by Vil-lari’s counsel and organized a cooperative association to process meats and sell the meats to the members of the cooperative at ceiling prices, renting the plant and facilities of S. Villari & Sons and employing Samuel, Peter and John Villari to operate the slaughtering business.

The cooperative suffered continuous operating losses due to the high price of livestock and to the rent and salaries paid to the Villaris. The steady losses exhausted the paid-in capital and, on two occasions, the retailers had to purchase shares and invest new capital in the cooperative to insure a further supply of meat.

The Price Administrator contends that the purchase of shares in the cooperative association and the arrangement between the members of the cooperative, the cooperative, and the Villaris is tantamount to payment of additional consideration to the Villaris in excess of ceiling prices to obtain a supply of meat and is, therefore, an evasion of Revised Maximum Price Regulation No. 169. The Administrator seeks to enjoin further violation and asks that judgment be granted in favor of the Price Administrator on behalf of the United States of America against Samuel Villari, Peter Villari, John Villari, the Moore Street Retail Meat Cooperative Association and the officers of the cooperative for treble the amount of overcharge.

There were two facts repeatedly appearing throughout the testimony: First, that under existing governmental regulations neither the Villaris nor the cooperative could operate the slaughtering business at a profit; second, that the motive and purpose of the retailers for investing and reinvesting capital in a cooperative which they knew to be a losing business operation was to obtain a supply of meat in the midst of a national meat shortage.

Believing they could no longer continue to conduct their business in the manner in which the slaughtering plant had operated for many years, the Villaris readily adopted a plan suggested by their counsel which would enable them to evade the disastrous effect of the Price Regulation. Instead of operating without profit or even at a loss, the Villaris were now assured of a weekly income of $750 for their personal services and for the use of the facilities which they owned. The losses caused by the abnormally high price of livestock which the Villaris had heretofore assumed were now to be subsidized by the cooperative and its members. The plan was equally attractive to the retailers. In return for the stock subscriptions which they knew would be expended and exhausted to pay the high prices demanded for livestock and to pay the weekly stipend to the Villaris, the retailers were assured of a weekly meat supply at a time when the meat supply from other slaughterers and packers was reduced to a minimum by the general meat shortage. Clearly, neither the Villaris nor • the retailers expected the cooperative to be an extended business venture resulting in eventual profit after a period of heavy investment and sustained losses. This is made clear upon examination of the lease and the employment contracts. The agreements were terminable upon fifteen days’ notice. Surely with this termination provision, no reasonable business man could expect Villari to continue to work for the cooperative if a future change in the regulations made the slaughtering business profitable again. It is not unfair, it seems to me, to conclude that the parties intended the cooperative to exist only so long as slaughtering had to be conducted at a loss and, just as soon as profit returned to the slaughtering business the agreements would be terminated and the cooperative venture would be at an end.

The retailers were expected to subscribe for stock in' accordance with their needs or requirements, the small retailers in smaller amounts and the large retailers in larger amounts. The meat was to be distributed in the same manner, the larger dealers to receive a larger amount and the smaller dealers to receive a smaller amount in proportion to the.ir needs. The conclusion is inevitable that it was the understanding of the parties that the stockholders would receive meats in proportion to their subscription. It is true that Mr. Dennis testified that there was no relationship between the stock subscriptions and the poundage of meat supplied to the subscribers. He further testified however: “There was, however, a reasonable relationship between the sides (of beef) as such and the stock, in that the smaller subscribers would get less of the Army style meat of the fifty-one that we had to allocate and the larger subscribers would get more than the smaller subscribers of the Army style meat.” In other words, the subscription was nothing more than a ticket permitting the owner to receive a portion of the fifty-one army style cattle slaughtered each week and the amount of meat received was determined by the amount paid for the ticket. Several subscribers unequivocally testified that they were informed at the organization meeting they would be permitted to purchase an average of one side of beef for each ten shares of stock purchased. Other members testified that, although no specific allotment of meat had been promised, the amount of their subscription and the proportion of meat they were to receive was directly related to the size of their business and their probable needs. When the cooperative began operation, the planned allotment was carried out with but a few minor discrepancies. When an audit of the accounts revealed that some of the members had received more than their allotted share in proportion to their investment, these members were required to purchase additional shares of stock. Again, when the original capital investment was exhausted and it became necessary to subscribe new capital, those who refused to invest more money were no longer considered members of the cooperative and no longer received meat except for isolated instances in small amounts, although these stockholders still owned their original shares which were now worthless to them as a means of obtaining meat. The money paid into the cooperative as a stock subscription was, in fact, paid as consideration for an allotment of dressed meat and was just as much a part of the purchase price of the meat as was the amount indicated on the invoices which was paid at the time of purchase and receipt. Since the dressed meat was invoiced at ceiling prices, the stock subscription, paid as additional consideration for the meat, was in excess of the established maximum prices and constituted violations of the Act.

Defendants urge that the Administrator’s case is based on a charge of fraud and bad faith and is further based on the contention that the cooperative association was a fictitious device to evade the price regulations. Defendants argue that the testimony does not support these contentions. Clearly the retailers were not defrauded or deceived by the Villaris. During the entire period between the organization meeting on June 29, 1944, and March, 1945, the retailers were fully cognizant of all the facts. They knew that Villari was about to close his slaughtering establishment, that they would be without meat, that formation of a cooperative would enable them to obtain meat, that the cooperative would be unprofitable, that the cooperative did, in fact, lose money throughout its operation, and that there probably would be no opportunity to recover their investment. It is also true that the cooperative was regularly and legally organized by the retailers under Pennsylvania law. But the record discloses that the motivating purpose of this cooperative was to obtain a supply of meat for its members from Villari despite a general meat shortage, to the exclusion of non-members, and to attain that result the retailers knew that they would have to assure the Villaris of a fixed weekly income so that the Villaris would continue to keep their slaughtering plant in operation. Villari testified that he could not operate the slaughtering plant at a profit when it sold dressed meat at ceiling prices under the existing price regulation. But upon organization of the cooperative, the Vil-laris obtained a total income of $750 per week even though the members of the cooperative purchased meat from the cooperative at the same price S. Villari & Sons had previously sold meat. Stripping the relationship of the cooperative and the Villaris to its essence, there can be no escape from the fact that before the organization of the cooperative, Villari testified he was prevented from obtaining a reasonable income from the slaughtering plant, but that after the cooperative-Villari relationship was established the Villaris obtained an income of $750 per week despite the fact that the cooperative sold the meat for the same prices to substantially the same customers. This result was achieved only because the retailers were willing to absorb the losses necessitated by the price regulation and to guarantee a weekly profit to the Villaris out of the capital invested in the cooperative. Clearly, there would be a direct violation of the Act if the Villari customers had subsidized S. Villari & Sons to guarantee a weekly profit, and it is no less a violation to attempt the same result through the cooperative association. The conclusion cannot be otherwise merely because the stockholders were not defrauded and because the cooperative was organized in a legal manner, openly and publicly. There is no “legal” method of evading the Price Control Act.

In enacting the Emergency Price Control Act of 1942, the Congress declared its purpose to be stabilization of prices to prevent wartime inflation by maintaining existing price levels. To carry out this policy, the Congress delegated to the Price Administrator the power to establish price ceilings for commodities. In the exercise of the price fixing power, the Price Administrator has established a maximum price for wholesale meat which, it may well be, is so low that Villari and other independent slaughterers similarly situated are unable to operate at a profit. It is not the province of this Court to comment on the wisdom of this price fixing policy, but rather it is the duty of this Court to determine whether there has been any violation of the regulations established within the judgment of those to whom the Congress has delegated this power. Similarly it is the duty of the Villaris to abide by the price regulations applicable to their business endeavors. If the Price Administrator has erred, the remedy of the defendants is not evasion of the price regulations. The Congress has provided a remedy for them by the establishment of the Emergency Court of Appeals, to which tribunal they can appeal for relief from any unjust prices fixed by the Price Administrator. The relationship between the Moore Street Retail Meat Cooperative Association and the Villaris was established to assure the Villaris a fixed weekly profit at the expense of their customers so that the Villaris would continue to operate their plant in the very face of a price regulation fixing a maximum consideration to be paid by Villaris’s customers. This arrangement is clearly an evasion of the Act and must be enjoined by this Court.

The Administrator also seeks damages of $308,175, treble the amount of the stock subscriptions made by the members of the cooperative. Since the stock subscriptions were, in fact, part of the consideration for the purchase of meat by the members from the cooperative, and since the members paid the actual ceiling price to the cooperative for each individual sale of meat, plaintiff contends that the consideration in excess of ceiling prices received by the cooperative during the entire period of operation was the total amount of the stock subscriptions.

The overcharge was paid directly to the cooperative, but a portion of this overcharge reached the Villaris in the form of rent and salary. Although the cooperative was organized by the retailers, and although the Villaris were not stockholders, officers or directors of the association, the cooperative was in fact under the domination and influence of the Villaris. The Villaris were essential to the effectiveness of the cooperative association. Only so long as the Villaris consented to be bound by the lease and contract of employment and performed their duties thereunder could the cooperative engage in the intended business operation. The Villaris used this dependence of the cooperative upon them to influence and dominate the organization. The Villaris were present at the meetings of October 3, 1944, and January 3, 1945, at which the cooperative was recapitalized. It was Sam Villari or his attorney, Mr. Dennis, who told the members that unless more capital was invested that the cooperative must cease business. In other words, unless more capital was provided to pay for livestock and to pay rent and salaries to the Villaris, the Villaris would consider the contracts at an end and would no longer slaughter meat for the cooperative. It is apparent that the Villaris used the cooperative as a conduit to carry a flow of $750 each week to themselves from the overcharges paid by the stockholders. The receipt of this money was- a part of an evasive practice, to which the Villaris were parties, designed to circumvent the provisions of the price regulation. The Villaris must be held liable in damages for that portion of the overcharge which they received as parties to a relationship which evaded the price regulation.

Defendants Wilson, Braun and Kanefsky, officers of the cooperative, held only nominal positions and took no active part in the organization or operation of the cooperative. Since they were not active participants in the cooperative-Villari relationship, no judgment for damages or injunction should be entered against them.

Section 205(e) of the Emergency Price Control Act provides for the assessment of damages not exceeding three times the amount of the overcharge in the discretion of the Court. Mr. Dennis, counsel', for Samuel Villari, consulted several government departments, including the War Food Administration, the Small Business Bureau of the Anti-Trust Division of the Department of Justice, and the local office of the Office of Price Administration, and made full disclosure of the contemplated organization of the cooperative. After these consultations, it was the considered opinion of Mr. Dennis that the proposed plan would not violate the price regulations. The cooperative was legally organized according to the laws of the State of Pennsylvania. The members, who were also the customers of the cooperative, were fully informed at all times of all relevant facts concerning the financial position and' prospectus of the cooperative. Because of these mitigating factors, defendants should be liable in damages only for the amount of the overcharge and not for treble damages. Accordingly, judgment may be entered in the following manner: (1) Against Samuel Villari and Moore Street Retail Meat Cooperative Association for $19,800,“ (2) against Peter Villari and Moore Street Retail Meat Cooperative Association for $2,475; (3) against John Villari and Moore Street Retail Meat Cooperative Association, for $2,475; (4) against Moore Street Retail Meat Cooperative Association for $77,-975.

The opinion is limited to the facts of this, case. I do not hold that cooperative associations which are organized in good faith,, which do not limit the amount of merchandise which a stockholder may purchase-from the cooperative to an amount proportionate to his investment, and which do not-condition the purchase of merchandise on the sale of stock in the association evade-the Price Control Act merely because the-cooperatives may suffer losses and these-losses may require the investment of additional capital by its members.

Conclusions of Law.

1. This Court has jurisdiction of this action brought by the Administrator oí the Office of Price Administration pursuant to Section 205(a) (e) of the Emergency Price Control Act of 1942 as amended, to enjoin acts and practices of defendants constituting violations of Section 4(a) of the Act, and of Revised Maximum Price Regulation No. 169, “Beef and Veal Carcasses and Wholesale Cuts”, 7 F.R. 10381, as amended, and for treble damages on behalf of the United States of America.

2. This Court has jurisdiction over the defendants.

3. At various times since July 15, 1944, and until the date of these proceedings, defendants Samuel Villari, Peter Villari, John Villari, individually and as copartners trading as S. Villari & Sons, and defendant Moore Street Retail Meat Cooperative Association have engaged in acts and practices which constitute violations of Section 4(a) of the Emergency Price Control Act of 1942 as amended,

(a) By evading and attempting to evade the price limitations set forth in Revised Maximum Price Regulation No. 169 in connection with the offer, solicitation, agreement, sale and delivery of and relating to beef and veal, by way of a charge for shares of capital stock sold by defendants Samuel Villari, Peter Villari, John Villari, individually and as copartners trading as S. Villari & Sons, and defendant Moore Street Retail Meat Cooperative Association to their retailer customers as a condition and prerequisite to the purchase by them from defendants of beef and veal, thereby violating Section 1364.406(á) of said Regulation; and

(b) By selling and delivering beef and veal carcasses and wholesale cuts to retail establishments not wholly owned or operated by defendants Samuel Villari, Peter Villari, John Villari, individually and as copartners trading as S. Villari & Sons, and defendant Moore Street Retail Meat Cooperative Association under an arrangement and device whereby defendants received for the beef and veal a greater realization than they would be entitled to receive under said Revised Maximum Price Regulation No. 169 for the sale of such beef or veal to retailers, thereby violating Section 1364.406(c) of the Regulation.

4. An injunction should issue enjoining the defendants Samuel Villari, Peter Vil-lari, John Villari, individually and as co-partners trading as S. Villari & Sons, and Moore Street Retail Meat Cooperative Association, their officers, directors, servants, agents, employees and attorneys and all persons in active concert or participation with any of them, jointly and severally, from:

(a) Selling or delivering any beef or veal carcasses or wholesale cuts, at higher prices than the maximum prices permitted by Revised Maximum Price Regulation No. 169, as heretofore or hereafter amended, or any other regulation issued by the Office of Price Administration pursuant to the Emergency Price Control Act of 1942 as amended, establishing maximum prices for the commodities; and

(b) Selling or delivering beef or veal carcasses or wholesale cuts to retail establishments not wholly owned and operated by defendants, under any arrangement, transaction or device whereby defendants receive for the beef or veal a greater realization than they would be entitled to receive under Revised Maximum Price Regulation No. 169, as heretofore or hereafter amended, for the sale of beef or veal to the retailer; and

(c) Demanding, charging or receiving any moneys for the purchase of stock or otherwise, as a condition to the sale or delivery of beef or veal carcasses or wholesale cuts; and

(d) Selling or delivering beef or veal to the stock purchasers and stockholders of defendant Moore Street Retail Meat Cooperative Association as such, or selling or delivering beef or veal pursuant to any agreement whereby the purchasers are or have been required to pay more than the maximum prices set forth in Revised Maximum Price Regulation No. 169, as heretofore or hereafter amended; and

(e) Doing or omitting to do any other act in violation of said Revised Maximum Price Regulation No. 169, as heretofore or hereafter amended, or any other regulation issued pursuant to the Emergency Price Control Act of 1942 as amended, establishing maximum prices for beef and veal carcasses and wholesale cuts; and

(f) Offering, soliciting, attempting or agreeing to do any of the foregoing;

And restraining the defendant Moore Street Retail Meat Cooperative Association, its officers, directors, servants, agents, employees and attorneys, from paying to the defendants Samuel Villari, Peter Vil-lari or John Villari, individually or as co-partners, trading as S. Villari & Sons, or their servants, agents, employees or attorneys, and the latter from receiving or demanding of the former any moneys for services, management fees, rentals, or otherwise, except for the sale and delivery of livestock and meats, and then only the maximum legal prices thereof.

5. Judgment may be entered in favor of plaintiff, on behalf of the United States, against Samuel Villari and Moore Street Retail Meat Cooperative Association in the amount of $19,800.

6. Judgment may be entered in favor of plaintiff, on behalf of the United States, against Peter Villari and Moore Street Retail Meat Cooperative Association in the amount of $2,475.

7. Judgment may be entered in favor of plaintiff, on behalf of the United States, against John Villari and Moore Street Retail Meat Cooperative Association in the amount of $2,475.

8. Judgment may be entered in favor of plaintiff, on behalf of the United States, against Moore Street Retail Meat Cooperative Association in the amount of $77,975.

       56 Stat 23, 765, 57 Stat 566, 50 U. S.O.A.Appendix § 904(a).

       56 Stat. 33 as amended June 30, 1944, 58 Stat. 640, 50 U.S.C.A.Appendix § 925(e): “* * * the seller shall be liable for reasonable attorney’s fees and costs as determined by the court, plus whichever of the following sums is the greater: (1) Such amount not more than three times the amount of the overcharge, or the overcharges upon which the action is based as the court in its discretion may determine * * * Provided, however, That such amount shall be the amount of the overcharge * * * if the defendant proves that the violation of the regulation, order, or price schedule in question was neither wilful nor the result of failure to take practicable precaution against the occurrence of the violation.”


author: DUFFY, District Judge.

text:
    BOWLES, Adm’r, Office of Price Administration, v. PASSINI et al.
    Civil Action No. 1361.
    District Court, E. D. Wisconsin.
    July 19, 1945.
    John J. Burke and Lee K. Beznor, both of Milwaukee, Wis., for plaintiff.
    Harte & Natanson, of New York City (by Stanley J. Harte, of New York City), for defendants.
    Bassuener, Humke & Poole, of Sheboygan, Wis., guardian ad litem for Addilio and Elizabeth Passini.
   DUFFY, District Judge.

The Price Administrator brings this action, pursuant to Sec. 205(e) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix, § 925(e), to recover treble damages for alleged overceil-ing sales of domestic Italian cheese subsequent to .January 13, 1943. The sales in question are claimed to be violative of MPR 280, as amended, which as originally promulgated was effective December 5, 1942. Provisions of the regulation in so far as applicable read:

“Sec. 1351.803. Maximum Prices, (a) The seller’s maximum price for any listed food product shall be the highest price charged by the seller during the period September 28, 1942, to October 2, 1942, inclusive, for the same listed food product; * * *
“Sec. 1351.816. Definitions, (a) When used in this Maximum Price Regulation No. 280, the term:
******
“(2) ‘Highest price charged during the base period’ means the highest price which the seller * * * charged for a listed food product delivered by him during the period from September 28, 1942, to October 2, 1942, inclusive, to a purchaser of the same class, * * *
“(3) ‘Purchaser of the same class’ refers to the practice followed by the seller in the ninety-day period preceding October 2, 1942, in setting different prices for sales to different purchasers (for example, but not limited to, manufacturer, wholesaler, jobber, retailer, government agency, public institutions, individual consumer, or any ordinarily recognized subgroup or combination of the foregoing) or for purchasers located in different areas or for different quantities or under different conditions of sale.”

Through OPA adjustments the prices on domestic Italian cheese as above limited were later increased, that is, rolled forward, after February 10, 1943.

The defendants, a family consisting of father, mother, and three children, operate a small cheese factory at Mitchell, Wisconsin, a community near Plymouth. The business was founded by the father and mother about twenty years ago and has been confined to the manufacture and sale of Italian type cheese. As the children grew up and were able to work they were taken into the business. The family make their home in part of the factory building.

This family of Italian immigrants has managed to slowly expand and develop their business. Their success appears to have come from the practice of thrift and fair dealing, attended with the marketing of a good product. Most of their dealings were with wholesalers. Their prices were in line with those of competitors. No sug-gestión has been ventured that the defendants ever engaged in so-called black market operations. Even to this day the elder Passini, independent of any price list, fixes the price involved in every sale and otherwise gives each transaction personal attention.

While the defendants manufacture and sell several types of domestic Italian cheese, sales with respect to only two types, Asiago and Provolone cheeses, are involved. The issues to be determined relate to sales of Provolone. As sold this type consists of several sizes and weights: Salam, 12 lbs.; Provolone, 10 lbs.; Provolette, 5 lbs.; Provolencina, 3 lbs.; Midget, 1 lb. In any given sale all these sizes appear to have been sold generally at a uniform price per pound.

The question for determination is whether the defendants followed the “practice” of setting different prices per pound to different purchasers of Provolone cheese in the 90 day period preceding October 2, 1942. The burden of proof to establish such practice is upon the plaintiff. If defendants had no such practice, then the permissible maximum price for any of defendants’ products is the highest price charged for its sale and delivery to any of their purchasers during the base period, September 28, 1942, to October 2, 1942, plus later OPA adjustments.

According to both judicial and administrative interpretation, classes of customers exist within the meaning of the regulation if in the 90 day period preceding October 2, 1942, the defendants regularly charged certain customers certain prices and other customers higher prices. Rainbow Dyeing and Cleaning Co., Inc. v. Bowles, App.D.C., 150 F.2d 273. Plaintiff contends that defendants’ invoices covering the period in question disclose that on sales of Provolone cheese defendants regularly charged certain customers certain prices and other customers other prices. Indeed, plaintiff asserts that the invoices indicate defendants had four or five classes of customers.

It is my judgment and opinion that the invoices for the period in question show no regularity of prices to any purchaser or to any group of purchasers regardless of volume of sales, and reveal instead a total lack of any pricing “practice” or pattern. Apparently the prices were fixed at will by the elder Passini, on an unpredictable basis, and even though they seem to have been inconsistent at times, his determination of the price was final.

During said base period and for more than a year prior thereto conditions in the domestic Italian cheese industry were such that it was unnecessary and unwise for defendants to have sold their products to classes of purchasers. When Italy entered World War II as a belligerent, our importations of cheese from that country were cut off. Previous thereto we had imported as high as 30,000,000 pounds per year. The disappearance of the imported article from the market caused a greatly increased demand for domestic Italian cheese such as manufactured by the defendants. Other difficulties beset all makers of cheese after the entry of the United States into the conflict, and the situation became such that manufacturers of domestic Italian cheese did not need to look for buyers, for they were being importuned on all sides to sell, and had more orders than they could possibly fill. Thus, large orders were of no advantage to the defendants. In short, such conditions did not lend themselves to the practice of having classes of purchasers, and it is not surprising that the defendants had none.

As the defendants had no classes of customers during the designated 90 day period, their maximum price for Provolone cheese became the highest price charged for an actual delivery during the base period of September 28 to October 2, 1942, which was 310 a pound, plus OPA adjustments when and as they became effective.

On the whole record it is clear there were no sales of Provolone cheese at prices in excess of the maximum provided in MPR 280. '

As to the sales of Asiago, defendants stipulated at the pre-trial conference, “Defendants admit violations of approximately $1,300.00 in the sale of fresh Asiago.” Subsequent conferences were held and at the end of the trial it was stipulated that the Asiago violations amounted to $900 instead. Plaintiff now seeks judgment for $2,700 as treble damages, while defendants’ counsel who attended the pre-trial conference contends that he understood the stipulation there agreed to contemplated the entry of judgment -in the sum mentioned and that the later stipulation of $900 was, in effect, an amendment to the agreement for judgment. My understanding was that the stipulation merely fixed the amount of the excess beyond the maximum price involved in overceiling sales of Asiago cheese. The question therefore remains: Should there be an assessment of treble damages?

I find that the defendants acted in entire good faith. I believe they took reasonable precautions not to violate the regulation. In addition to communicating with OPA, they conferred with the field investigator sent out to examine their books and adopted his determination as to what the maximum price should be upon various kinds of cheese. They asked for and received permission to copy the schedule of maximum prices which he prepared from their books. This is not a case in which treble damages should be awarded.

The plaintiff may have judgment for $900 and costs. The attorneys for the defendants shall promptly prepare findings of fact, conclusions of law, and judgment, submitting same to the attorneys for the plaintiff prior to presentation to the court.

       For example, in five instances out of fifty sales of Midget in the 90 day period prescribed in the regulation, the defendants’ pricing was 1$ higher, representing under the evidence a quality differential. In these five instances (not in the other forty-five) Midget was expressly named in the covering invoices, so as to distinguish the superior grade or quality of such cheese. The propriety of such price differential is not questioned.


author: BLACK, District Judge.

text:
    In re NELLIES.
    No. 1244.
    District Court, W. D. Washington, N. D.
    June 28, 1945.

      George A. Custer, Supervising Conciliation Com’r, of Seattle, Wash., Uriah D. Gnagey, Conciliation Commissioner-Referee, of Bellingham, Wash., and McMicken, Rupp & Schweppe and Bernard Rei-ter, all of Seattle, Wash., for creditor.
   BLACK, District Judge.

This matter has come before the court upon the following:

(1) The report of the Conciliation Commissioner-Referee advising, in substance and effect, that the bankrupt has made the San Juan County Bank of Friday Harbor an escrow holder and has deposited with it the sum of thirty-seven hundred dollars, representing the appraised value of the real estate covered by the contract of sale between Katharine Woolston as seller and the said bankrupt as purchaser, with instructions to deliver the same to “Catharine Woolston upon her delivery to the Bank a proper conveyance to the Bankrupt together with title insurance, as provided in the contract of sale” and praying that the bankrupt be allowed to redeem such property for such amount;

(2) The request by the said seller for a sale at public auction of the said real property with right of the said seller to bid at such sale and with the right to said bankrupt to redeem therefrom within ninety (90) days from the date of any such sale; and

(3) The objections and exceptions of the said seller as a secured creditor and only creditor herein to the said report of the Conciliation Commissioner-Referee and particularly to that portion thereof requesting that said bankrupt be allowed to redeem the real property at the appraised value of $3700 as fixed by the court upon the ground that such would be contrary to such creditor’s rights under the Constitution of the United States and particularly the Fifth Amendment thereto.

11 U.S.C.A. § 203, sub. s(3), being applicable to this farmer-debtor proceeding, provides :

“(3) At the end of three years, or prior thereto, the 'debtor may pay into court the amount of the appraisal of the property of which he retains possession, including the amount of encumbrances on his exemptions, up to the amount of the appraisal, less the amount paid on principal: * . * * Provided that upon request in writing by any secured creditor or creditors, the court shall order the property upon which such secured creditors have a lien to be sold at public auction. The debtor shall have ninety days to redeem any property sold at such sale, by paying the amount for which any such property was sold, together with 5 per centum per annum interest, into court * * *. If, however, the debtor at any time fails to comply with the provisions of this section * * * within three years, the court may * * * order the property sold * *

The three-year period for redemption began on January 12, 1942.

It may be added that the personal property of the estate was appraised at $1455. Of such the Conciliation Commissioner-Referee set aside personal property of the value of $275 as exempt. This left the appraised value of the balance at $1180.

Since the bankrupt was placed in possession of the real property of the appraised value of $3700 and of personal property of an appraised value of $1180, exclusive of exemptions, or a total appraisal of $4880, it would seem that there is much force in the creditor’s contention that, in the words of the statute, “the debtor” should “pay into court the amount of the appraisal of the property of which he retains possession.”

In any event the debtor has not sought to redeem more than a portion of the property of which she retained possession. It is agreed that the court early in 1942 determined such real estate to have a value of $3700.

The statute is clear to the effect that in order to entitle the debtor to a redemption the debtor must “pay into court the amount of the appraisal.” If the debtor complies with the requirement of the statute “the court shall, by an order, turn over full possession and title of said property, free and clear of encumbrances to the debtor.” That is, under the statute the debtor pays the money into court and secures title by an order of the court. In the present instance the debtor has paid no money into court. The court is advised that she has arranged an outside escrow for an amount equal to an appraisal of a portion of the'property of which she retained possession. She asks not title through an order of the court but instead demands a conveyance directly from the secured creditor and also title insurance.

It is unnecessary in this instant case to determine whether or not under the statute the farmer-debtor would have a right to redeem the real property instead of all the property of which she retained possession. Inasmuch as the statute is to be liberally construed in favor of the farmer-debt- or the court is inclined to the opinion that the bankrupt could have redeemed the farm without redeeming the personalty. This, however, is merely an expression of inclination and is not a ruling as to the right of the farmer-debtor to redeem a portion instead of “the property.” In any event neither the letter nor the spirit of the law would justify this court in giving to this bankrupt the right to so materially amend the statute as to allow her to substitute “an escrow holder” for the court and to demand title insurance from the secured creditor rather than title through court order as specified by the statute. To permit this bankrupt to so substantially amend the statute would establish a precedent for increasing departures from the statute by subsequent farmer-debtors. Some later farmer-debtor instead of selecting a bank as escrow holder might designate some individual, contending that he should have as much right to designate his escrow holder as the instant bankrupt should to designate hers. In any event it is Congress rather than the bankrupt or this court which has the sole power to amend the statute. The present requirement that the money be paid into court is definite and positive.

No money having been paid into court and the farmer-debtor having demanded a conveyance of the real estate and title insurance from the creditor rather than by court order, this court must hold that the bankrupt is not entitled to the real property.

Therefore, the creditor is entitled to have a sale of such real property as prayed for with the right of bidding at such sale, all subject to the bankrupt’s right to redeem from such sale as specified in the statute.

The creditor has contended in connection with this matter that in the event the court should hold that the escrow of $3700 constituted a redemption of the real property that this sum should only apply on account of the creditor’s secured claim and that the personal property should be applied towards payment of the deficiency. In passing it may be said that from the files such deficiency would appear to be approximately five or six hundred dollars. The bankrupt on the contrary insists that the $3700 is a full discharge of the creditor’s claim, that the unpaid balance should be cancelled, and that the personalty should be set over to the bankrupt without regard to any deficiency.

If the court were upholding the validity of the bankrupt’s escrow certainly under the law and decisions applicable and in all fairness the sole creditor would be entitled to have the personal property sold under court order in order to pay any such deficiency.

Presentation, after notice, of order in conformity with the foregoing is requested.

Inasmuch as no written order by the court fixing the value of the real property at thirty-seven hundred ($3700) dollars in accordance with the court’s finding and determination is found on file it is appropriate that a separate nunc pro tunc order to such effect as of January 12, 1942, should also be formally entered.


author: LEDERLE, District Judge.

text:
    McMULLEN et al. v. HEAD et al.
    No. 3198.
    District Court, E. D. Michigan, S. D.
    July 6, 1945.
    Gray & Smith, E. J. Gray, all of Detroit, Mich., and B. E. Shlesinger, of Rochester, N.Y., for plaintiffs.
    Whittimore, Hulbert & Belknap, of Detroit, Mich., for defendants.
   LEDERLE, District Judge.

Findings of Fact

1. This is an action brought in accordance with the provisions of Section 4915 of the Revised Statutes of the United States, 35 U.S.C.A. § 63. On June 2, 1936, Frederick E. McMullen (hereinafter referred to as “McMullen”) filed an application for United States Letters Patent, Serial No. 83,118, for a method of cutting gears and a device for practicing the method disclosed. This application was assigned to plaintiff Gleason Works, a New York corporation. Ernest C. Head (hereinafter referred to as “Head”) filed an application for United States Letters Patent, Serial No. 66,672, in March, 1936, for a gear cutter, and assigned a half interest in this application to defendant Goddard & Goddard Company, Inc., a Michigan corporation. The subject matter of the two applications was similar in that the McMullen application disclosed a finish cutter and the Head application disclosed a roughing cutter.

2. On July 26, 1938, the Commissioner of Patents instituted interference proceedings No. 76,059, and after protracted hearings awarded priority of invention to Head. Thereafter Patent No. 2,270,003, including the counts in interference, was issued to Head and Goddard.

3. No appeal to the United States Court of Customs and Patent Appeals was taken, and this action was then filed in accordance with the provisions of the Statute.

4. Originally there was only one count in interference which became claim 5 of the Head patent. From the outset McMul-len contended that the invention covered by this count (claim 5) was not disclosed in the Head application. This issue was raised by McMullen’s motion to dissolve the interference and was overruled by the Patent Office. Thereupon three additional counts were added which were allowed to Head as claims 9, 8 and 12, respectively, of the Head patent.

5. After the proceedings in this Court were commenced the Head patent was assigned to plaintiff Gleason Works. Plaintiffs notified the Commissioner of Patents that the Head patent and the McMullen application were owned by a common as-signee and the Commissioner was requested to participate in the trial of the case. The Court was also notified of the common ownership. The defendants gave notice that they would not participate in the trial of this action, and the plaintiffs proceeded to put in their proof ex parte.

6. The only issue involved is the right of Head to make the counts in interference herein involved. In addition to the Patent Office records and the exhibits, two witnesses were called by the plaintiffs. The method of cutting gears of the type involved in both the McMullen and Head applications consists of three steps after the forging is prepared for cutting. At the time the application was filed, and up to the date of this hearing, it was the practice to first rough-cut the gears. In this operation it was the practice to cut both sides of the gear teeth in one operation. After the gears are rough cut it was, and is, the practice to finish-cut the gears. Ordinarily this operation is, of necessity, confined to cutting one side of the tooth at a time. Both of these operations are performed before the gear is hardened. After the gears are hardened they are lapped. It is impractical to carry the lapping operation to the full depth of the teeth. This leaves a slight extension on the side of the gear tooth which is referred to in this record as “top line” interference.

Prior to the time that McMullen developed his invention it was necessary to remove this extension by a hand operation which was slow and expensive. The device disclosed by McMullen has gone into wide public use and has met with unusual commercial success.

The disclosure in the Head application was limited solely to a rough-cutting device, and it cannot be used as a finish cutter in the manner that the McMullen device is used. In his application Head suggested that his device could be used as a finish cutter, but did not explain how this can be done, and competent witnesses testified that it would be impossible to use the Head device for finishing. Devices constructed in - accordance with the teachings of the Head disclosure and the claims of the Head patent, other than the claims involved in these proceedings, never went into commercial use.

7. The McMullen application discloses two embodiments of a face mill gear cutter intended for finish cutting gear teeth after they have been rough-cut and before they are hardened and lapped. Both embodiments of McMullen’s cutter have side cutting edges of two different pressure angles. In one embodiment the side cutting edges of larger pressure angle are on certain of the blades of the cutter and each of the remaining blades has a corresponding side cutting edge of smaller pressure angle. In the other embodiment each blade of the cutter has a side cutting edge of large pressure angle and a side cutting edge of small pressure angle, the smaller pressure angle cutting edge being adjacent the tip of the blade. As distinguished from the Head patent, which in all embodiments has outside and inside cutting blades, the McMullen application in every embodiment discloses a cutter having either all outside cutting blades or all inside cutting blades, McMullen’s cutter being a pinion finishing cutter which only cuts on one side of the tooth space. This was a patentable invention disclosed by McMullen and not disclosed by Head.

Conclusions of Law

I. This is an action arising under the Patent Laws of the United States and this Court has jurisdiction. 28 U.S. C.A. § 41 (7); Schmertz Wire Glass Co. et al. v. Pittsburgh Plate-Glass Co., C.C.W.D. Pa., 168 F. 73; Schmertz Wire Glass Co. et al. v. Western Glass Co., C.C.N.D.Ill., E.D., 178 F. 973; Colman et al. v. Hathaway et al., D.C.Mass., 285 F. 602, 604; Westinghouse Electric & Mfg. Co. v. Radio Corporation of America, D.C.Del., 24 F.Supp. 933, 944; Bayer v. Rice, 64 App.D.C. 107, 75 F.2d 238, 241, 242.

II. The question in an interference proceedings of the right of a party to make the counts in issue based upon the disclosure of his application is one of fact. The evidence submitted establishes that the counts in issue are directed to a patentable invention, and is of a character sufficient to produce a clear conviction that the Patent Office was in error in holding that Head was entitled to make the counts in interference.

Judgment sustaining the complaint and an order authorizing the Commissioner of Patents to issue a patent to McMullen on his application containing the counts involved in Interference No. 76,059 is being entered simultaneously herewith.


author: MOORE, District Judge.

text:
    RIGNEY v. WILSON & CO., Inc.
    Civ. A. No. 152.
    District Court, S. D. West Virginia.
    July 11, 1945.
    Joseph M. Sanders, of Bluefield, W. Va., for plaintiff.
    George Richardson, Jr., of Bluefield, W. Va., for defendant.
   MOORE, District Judge.

Plaintiff brings this action against the defendant claiming compensation for overtime work under the provisions of the Fair Labor Standards Act, and seeking judgment for the amount found to be due him, plus an additional equal amount as liquidated damages, and a reasonable attorney’s fee as provided therein. 29 U.S. C.A. § 216.

Findings of Fact.

Plaintiff was employed by the defendant to work as a shipping clerk in defendant’s place of business at Northfork, West Virginia. His contract of employment provided for a salary of $32 per week. No regular number of hours of work per week was agreed upon, but plaintiff actually worked more than 40 hours each week beginning August 21, 1943, and ending September 30, 1944. The total number of hours worked by plaintiff in excess of 40 hours per week during his employment was 410% hours.

Defendant’s place of business at North-fork was divided into three departments, namely, shipping, salesmen and office. Plaintiff was first designated as shipping clerk, and later as manager of the shipping department. There were no subdivisions in the shipping department. The personnel of the shipping department in addition to Rigney comprised the following:

Clerk Ramsey
Chauffeur Smith
Chauffeur Terry
Lugger Robbins
Lugger Kemp
Lugger Packer
Lugger Alley
Egg candler Nowlin
Egg candler and lugger Wood

The clerk was not under Rigney’s supervision at all. The two chauffeurs were under his supervision only to a limited extent while they were actually loading their trucks. The egg candlers were under his supervision only in so far as their duties in furnishing eggs in sufficient quantity for shipments were concerned. The candling of eggs was not done under his direction. The only persons who were under the complete supervision of Rigney were the luggers. The luggers were the employees who did the manual labor in connection with defendant’s business of storing and shipping meats and kindred products.

Plaintiff customarily and regularly directed the work of the luggers in the shipping department. Plaintiff’s suggestions and recommendations as to the hiring or firing or other change of status of the luggers were given particular weight.

The only discretionary power exercised by plaintiff was occasional substitution of one kind of meat for another on customers’ orders. He did not exercise any discretion in connection with the rationing of meats or the general management of the shipping department. His whole employment was of a menial and routine character. He did not customarily and regularly exercise any discretionary powers.

Plaintiff spent more than 20 percent of his working time in helping to load and unload meats and other products, wrapping m.eats, cleaning up the premises, defrosting the refrigeration rooms, and other work of a similar kind as that performed by the luggers, although not doing exactly the same work which the luggers did.

Discussion.

It is clear to me that the purpose of the Fair Labor Standards Act in relation to overtime pay for non-exempt employees is to grant the right to overtime pay to that class of employees who come within the commonly understood designation of workers as distinguished from managers, superintendents, foremen or bosses. The basis on which defendant claims that plaintiff is exempt from provisions of the Act is that he was “employed in a bona fide executive * * * capacity.” 29 U.S.C.A. § 213(a). The regulation of the Administrator contains a comprehensive definition of such an employee as follows:

“Sec. 541.1. Executive. — The term ‘employee employed in a bona fide executive * * * capacity’ in section 13(a) (1) of the Act shall mean any employee
“(A) whose primary duty consists of the management of the establishment in which he is employed or of a customarily recognized department or subdivision thereof, and
“(B) who customarily and regularly directs the work of other employees therein, and
“(C) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight, and
“(D) who customarily and regularly exercises discretionary powers, and
“(E) who is compensated for his services on a salary basis at not less than $30 per week (exclusive of board, lodging, or other facilities), and
“(F) whose hours of work of the same nature as that performed by nonexempt employees do not exceed twenty per cent of the number of hours worked in the work-week by the nonexempt employees under his direction; provided that this subsection (F) shall not apply in the case of an employee who is in sole charge of an independent establishment or a physically separated branch establishment.”

It will be noted that an employee who fails to qualify under any one of the six paragraphs of the definition must be deemed to be a non-exempt employee to the same extent as one who meets none of the requirements of the definition.

Conclusions of Law.

“The Fair Labor Standards Act is remedial in its nature and should be liberally construed, and the exceptions to the coverage of the Act should be narrowly construed ” Fellabaum v. Swift & Co., D.C., 54 F.Supp. 353, 355.

The plaintiff’s employment was such as to bring him as a matter of law within Paragraphs “B,” “C” and “E” of the Administrator’s definition, but to exclude him from Paragraphs “A,” “D” and “F.”

An employee, the nature of whose employment is such as to exclude him from the scope of any one or more of the six paragraphs of the Administrator’s definition of employment in a bona fide executive capacity, is not exempt from the overtime pav provisions of the Fair Labor Standards Act. Such employee is entitled to overtime pay if he works more than 40 hours in any one week.

The rate of pay for overtime emolovment in cases where regular weekly hours are not fixed, but the employee works a fluctuating number of hours each week, is to be determined as follows: by dividing the weekly salary by the total number of hours worked in each separate week and using the figure so obtained as the hourly rate of pay for that week. The employee is then entitled to overtime pay at one-half the hourly rate for work in that week in excess of 40 hours.

Applying the foregoing method of calculation to a schedule of overtime hours, which is not set out here because of its complexity but which the parties have agreed is correct, the plaintiff is entitled in this action to recover the sum of $132.76 as unpaid overtime compensation, and an additional amount of $132.76 as liquidated damages.

Plaintiff is also entitled to a reasonable attorney’s fee, which is allowed in the sum of $150.

Plaintiff is also entitled to a judgment for costs.

An order may be submitted for entry carrying the foregoing into effect.