author: BORAH, District Judge.

text:
    UNITED STATES v. FIFTY-TWO CASES, MORE OR LESS, OF DISTILLED SPIRITS et al.
    No. 388 Miscellaneous.
    District Court, E. D. Louisiana.
    Oct. 17, 1945.
    Herbert W. Christenberry, U. S. Atty., and N. E. Simoneaux, Asst. U. S. Atty., both of New Orleans, La., for libelant.
    John D., M. A. & Edwin H. Grace, of 'New Orleans, La., for claimant and respondent.
   BORAH, District Judge.

On June 2, 1944, J. P. Carter, G. W. Curtis, and Eric H. Kitchens, officers of the Alcohol Tax Unit, Internal Revenue Service, visited a farm owned by the father of R. A. Kent, the claimant herein, near Tangipahoa, Louisiana, for the purpose of questioning the claimant regarding sales of liquor in wholesale quantities believed to have been made by him without the payment of a tax. While at the farm, the officers noticed a truck containing bottles of liquor. They seized the truck with its contents, arrested Kent, and took him to Jackson, Mississippi. The instant libel for the condemnation and forfeitures of the spirits and the truck was filed in this Court on August 24, 1944.

When first questioned Kent denied that the truck and the liquor belonged to him, but later admitted ownership. He said that he already would have been in Jackson and would have “sold the stuff” if he had not stopped at his father’s home overnight. During his conversation with the officers at the farm, Kent stated that he intended to sell the liquor to anyone in Jackson “wholesale or retail, whichever way he could get the most money for it.” Later, however, while he was being taken to Jackson, he told the three officers that he had intended to take the liquor to the Spot Cafe, in East Jackson, Rankin County, Mississippi.

Whether or not Kent intended to sell the liquor at the Spot is important in this case, since the Spot was the only place in Mississippi where he was legally entitled to engage in business as a retail liquor dealer. His permit to engage in such business there expired on June 30, 1944, or exact ly four weeks after the seizure. He held no retail license for any place in Louisiana and no wholesale liquor dealer’s license either for Mississippi or Louisiana during the year 1944. In other words, if Kent was transporting the liquor in question to the Spot for retail purposes, he was not violating the law. If however he intended to sell the liquor anywhere else in Mississippi or anywhere at all in Louisiana, either wholesale or retail, he was disregarding the provisions of 26 U.S.C.A.Int. Rev.Code, § 3116, which reads in part as follows:

“It shall be unlawful to have or possess any liquor or property intended for use in violating the provisions of this part (relating to industrial alcohol), or the internal-revenue laws, or regulations prescribed under such part or laws, or which has been so used, and no property rights shall exist in any such liquor or property. * * * »

The question of Kent’s intent, therefore, is crucial in the instant case.

It is clear that Kent did not retail liquor at the Spot from June 3, 1944 — the day after the seizure — until March, 1945, for during that period the Spot bar room was operated by L. N. Lackey and Ben Peirce.

Yet there is documentary evidence that on June 22, 26 and 27, in 1944, the Manhattan Distributing Company of New Orleans invoiced to Kent at his Jackson address 50, 45 and 48 cases of whiskey, respectively. The inference is inescapable that Kent disposed of these liquors at retail in some place in Mississippi other than at the Spot which was the only establishment at which he was legally entitled to retail liquor during the month of June, 1944. After June 30, Kent had no permit to retail or wholesale liquor anywhere in Mississippi.

Then there is the testimony of A. L. Clark, a retail liquor dealer of Jackson, who stated that in April, 1944, Kent delivered twenty cases of whiskey to him at Clark’s place north of the city. In a deposition, Clark had said that he did not purchase the liquor from Kent, but that he gave Kent the money in advance and the' latter purchased it for him in Louisiana and charged him for delivery, “at so much per case.” In his subsequent testimony in open court, however, Clark said that he purchased the liquor from Kent and he was sure that he did not pay Kent any money in advance.

There is evidence of other illegal wholesale liquor transactions by Kent. On May 26, 1943, he signed an affidavit jointly with Eugene Seaney, owner of the Spot building in Jackson, to the effect that he and Seaney had formed a partnership on January 1,. 1943, for the purpose of transporting distilled spirits and wines from various wholesale liquor dealers to various retail liquor dealers. According to the affidavit they received actual and constructive title to the liquors when they were paid for and in case of a wreck, destruction or loss of the liquors it would have been their loss, since it was their money invested and they were to receive no money unless the liquors were delivered.

The testimony of Eugene Fly, Collector of Internal Revenue for the District of Mississippi, shows that wholesale and retail liquor dealer’s stamps were issued to Kent and Seaney in June, 1943. There is no record of any stamps being issued to that partnership prior thereto, yet their affidavit sets forth many purchases and transportations of liquors to Jackson and •East Jackson retail dealers during January and February of 1943.

That Kent and Seaney realized that their activities early in 1943 were illegal is indicated by the following paragraph of their affidavit:

“We were operating this business, Dick Kent and myself, thinking that the requirements of the laws and regulations were being complied with in every respect, and there was no intention to incur liability as wholesale and retail liquor dealers. The fact that such liability has been incurred is due to ignorance.” (Emphasis supplied)

Ignorance of the law excuses no one particularly in a civil proceeding in rem.

It is a principle well recognized in law that similar acts may be shown to ascertain the intent with which the act in question was committed. It is likewise well settled that the similar acts may have been performed subsequently as well as prior to the act that forms the subject-matter of the litigation. This latter principle has been recognized in seizure proceedings.

In Wood v. United States, 16 Pet. 342, 41 U.S. 342, 361, 362, 10 L.Ed. 987, the United States filed an information of for-íeiture alleging that twenty-two pieces of cloth were not invoiced according to their actual cost at the port of exportation, with design to evade the duties thereon. One of the questions before the Supreme Court was whether there was error in the admission of the evidence of fraud deducible from the other invoices offered in the case. On this point, Mr. Justice Story said:

“Indeed, it is admitted by the counsel for the plaintiff in error, in the case before us, that it is a general principle of law, that whenever a fraudulent intention is to be established, collateral facts tending to show such intention are admissible proof. But the objections taken are, * * * secondly, that the proof related to importations after, as well as before, the particular importation in question. We do not think either of these objections maintainable. * * * The other objection has as little foundation; for fraud in the first importation may be as fairly deducible from other subsequent fraudulent importations by the same party, as fraud would be, in the last importa-Hon, from prior fraudulent importations. In each case, the quo animo is in question, and the presumption of fraudulent intention may equally arise and equally prevail.” (Emplasis supplied.)

See also State v. Simons, N.C., 100 S.E. 239, 240; and Smith v. State, Ala., 7 So. 52, 53.

Finally, it will be remembered that the seizing officers testified that Kent told them he intended to sell the liquor to anyone in Jackson, wholesale or retail, whichever way .he could get the most money for it.

But were the statements attributed to Kent by the three officers untrue, or were the inferences drawn from his previous illegal sales unwarranted, one man and one man alone is in the best position to make the necessary denials. That man is Kent himself. He best of all knows what he told the officers. He more than any other human being in the world knows what plans for the disposition of the liquor he was harboring on June 2, 1944, when the liquor was seized. Yet Kent has seen fit to remain silent throughout these proceedings, although he has intimate knowledge regarding the controverted issue of intent. The Court is not willing to ignore this significant silence.

In One 1941 Ford % Ton Pickup A. Truck, etc., v. United States, 6 Cir., 140 F.2d 255, 257, the Court said:

“But claimant’s difficulty is that he wholly failed to prove the second requirement, to wit, that he had no knowledge or reason to believe that the truck was being used in violation of the laws of the United States. This pertinent and controlling evidence was within the knowledge of the claimant and he declined to testify. In Kirby v. Tallmadge, 160 U.S. 379, 16 S.Ct. 349, 351, 40 L.Ed. 463, the court approved the following quotation from Starkie on Evidence, Vol. I, page 54, to wit: ‘The conduct of the party in omitting to produce that evidence in elucidation of the subject-matter in dispute, which is within his power, and which rests peculiarly within his own knowledge, frequently affords occasion for presumptions against him, since it raises strong suspicion that such evidence, if adduced, would operate to his prejudice’.”

See also One Buick Automobile v. United States, 8 Cir., 275 F. 809, 810, 811.

After a careful consideration of the evidence this Court is convinced that Kent was ready to sell the liquor to the highest bidder, and was not concerned with the niceties in distinction between a wholesaler and a retailer, or between a seller and a transporter. Neither did he seem much concerned with the Federal requirement that retail and wholesale liquor dealers should possess permits and special tax stamps in order to ply their trade.

A decree may accordingly be entered condemning the distilled spirits and the Ford truck as forfeited to the United States. "


source: Caselaw Access Project

license: Public Domain

text:
    TEXAS & P. RY. CO. v. MENGEL CO.
    No. 560.
    District Court, E. D. Louisiana, New Orleans Division.
    Oct. 17, 1945.
    Phelps, Dunbar, Marks & Claverie, of New Orleans, La., for plaintiff.
    Curtis, Hall & Foster, of New Orleans, La., and Charles G. Middleton, of Louisville, Ky., for defendant.
   BORAH, District Judge.

Declaring upon a written contract of lease dated November 26, 1929, The Texas & Pacific Railway Company brought this action against the Mengel Company to recover rent in the sum of $42,822.58 for the period August 15, 1941, through March 10, 1945. The Mengel Company has answered and as a defense alleges that it canceled the lease on August 31, 1941, as it had a right to do, and that it paid all rent due up to and including August 15, 1941, and thereafter tendered plaintiff the sum of $548.39 to cover rent from August 15, 1941, to August 31, 1941, which tender plaintiff refused. The issues are thus confined within narrow limits.

The case was tried by the court without a jury on stipulations of fact and the testimony of witnesses introduced by the plaintiff.

The material facts are these:

On March 11, 1920, the receivers of the Texas & Pacific Railway Company leased to the J. S. Otis Mahogany Company, Inc., certain property in the City of New Orleans described as follows: “That parcel of ground in the sixth municipal district of the City of New Orleans, bounded by Tchoupi-toulas Street; Henry Clay Avenue; the Mississippi River and Audubon Park, excepting only the Railroad right of way of the Public Belt and Illinois Central Railroads, and including such rights to the bat-ture or accessions in front of the property and extending to the Mississippi River as the lessor may have.”

This lease was for a term of ten years at $4,000 per annum, and among its provisions contained an option in favor of the lessee for renewal for fifteen years at $12,-000 per annum. The lease contained a cancellation privilege reading as follows: “(8) The lessee reserves the right to cancel the lease at any time during its existence by giving the lessor twelve months’ notice in writing of the lessee’s intention so to do. This provision and right to cancel applies only in the event of interference by the Federal, State, or Municipal Governments, or any Board or political sub-division thereof, with the free and full use of the property by the lessee hereunder.”

On August 19, 1922, this lease was, with the consent of the plaintiff’s receivers, assigned by the Otis Company to the defendant. The defendant entered into possession of the premises and remained.in continuous possession thereof until shortly prior to August 31, 1941, at which time it removed from the premises and thereafter exercised none of the rights of a lessee thereof. The defendant’s business, like Otis Company’s, was that of a manufacturer of mahogany lumber, logs being unloaded from ships in the Mississippi River on which the leased premises front and being then transported across the batture to the defendant’s plant, where the logs were converted into lumber. The railroad tracks of the New Orleans Public Belt Railroad and of the Illinois Central Railroad separate the defendant’s plant from the batture.

On March 13, 1924, the defendant entered into a contract with the Public Belt Railroad Commission of the City of New Orleans whereby the latter permitted the former to build and operate a crossing, with the trackage of the Public Belt in front of the defendant’s plant. It was mutually understood and agreed that the crossing was to be constructed at defendant’s expense, in accordance with the requirements of the Public Belt and that any expense for the maintenance or the renewal of the crossing was to be borne by the defendant. In this contract the Public Belt reserved the right to cancel the agreement on ninety days’ notice in the event that a change or extension of existing facilities of the Belt Railroad should make necessary, in its judgment, the elimination of the authorized grade crossing.

Shortly after the date of this contract the defendant constructed the tramway. The tracks ran from the defendant’s plant site across the railway tracks and the levee and down into the waters of the river. The method of operation was as follows: A car was used and operated on the tramway with a cable attached as a means of transporting the mahogany logs from the Mississippi River across the batture and across the tracks of the New Orleans Public Belt Railroad and the Illinois Central Railroad to the defendant’s plant. The car was run down the tramway into the river, the logs floated onto the car and the car was pulled to the crown of the levee by means of a cable and ran the rest of the distance to the mill by force of gravity.

On November 26, 1929, after an exchange of correspondence in relation to certain changes and additions to the terms of the existing lease, the plaintiff and the defendant entered into a lease of the afore-de-scribed property for fifteen years beginning March 11, 1930, at a rental of $12,000 per annum payable monthly in advance. This lease provided that the premises were to. “be used only as a site for conducting the present business of the lessee”. This quoted phrase appears in the earlier lease save for the word “present”.

Section 7 of the new lease, like section 8 of the lease of 1920, gave the lessee the right to cancel under certain conditions. The language wherein the new section 7 differed from the old section 8 is indicated below by italics : “(7) The Lessee reserves the right to cancel the lease at any time during its existence by giving to the Lessor twelve months notice in writing of the Lessee’s intention so to do. This provision and right to cancel applies only in the event of interference by the Federal, State or Municipal Governments, or any Board or political subdivision thereof, or by forces of nature, with the free and full use of the property including the use of the river and its banks by the Lessee hereunder.”

At the time of the execution of the foregoing lease the defendant was actually operating the tramway across the tracks of the Public Belt, which fact was known to, the plaintiff.

On July 25, 1940, the Public Belt Railroad Commission gave Mengel Company-notice of cancellation, pursuant to Article 5 of the agreement of March 13, 1924, which notice read as follows: “Under date of March 13, 1924, the Public Belt Railroad Commission for the City of New Orleans and your company entered into a written agreement whereby the right and privilege was granted by the Public Belt Railroad Commission for you to construct over the railroad tracks of the Belt a tramway-track from in front of your plant to the Levee of the Mississippi River. At the request of your Mr. Vernon Davis this tram crossing was removed on June 3, 1940. As it is the intention of the Public Belt Railroad Commission to completely cancel the agreement be*""' .n it and your company dated March 13, 1924, this letter is written to you in compliance with the fifth article of said agreement, as written notice of the cancellation of this agreement.”

In response to this notice the defendant wrote the Public Belt on August 15, 1940, pointing out that the cancellation of the contract would seriously hinder and interfere with its utilization of the plant site during the remainder of the term of its lease, and requesting that the Public Belt reconsider and withdraw the notification quoted above. Under date of August 27, 1940, the Public Belt replied to the defendant’s request in a letter reading in part as follows:

“ * * * Your request that cancellation of contract of March 13, 1924 be postponed until the expiration of your lease, is noted.
“I assume, however, that you are not in possession of all of the facts in the case. When this contract was executed the main lines of the Public Belt Railroad that were crossed by your tram track were relatively unimportant. Since that time, however, the Mississippi River Bridge has been built and is used by the Southern Pacific RR. for the movement of its freight traffic to and from New Orleans. We are about to enter into a contract with the Texas & Pacific RR. whereby its passenger and freight business will enter and leave New Orleans via the Mississippi River Bridge. All of this traffic must pass over the main tracks crossed by your tram.
“Prior to tile beginning by the TP-MP Railroad use of the bridge, it will be necessary to interlock the entire line for the protection of passenger service, consequently a heavy expense will be entailed by the Men-gel Company (approximately $15,000.00) for interlocking the tram track crossings, unless the contract is cancelled.
* * * * * *
“I think therefore, that I was fully justified in the notice of cancellation contained in my letter of July 25th.”

Under date of August 29, 1940, the defendant addressed a letter to the plaintiff as follows:

“You are familiar with our tramway track which crosses the track of New Orleans Public Belt Railroad in front of the property at Exposition Boulevard and Tchoupitoulas Street, New Orleans, Louisiana which we lease from you under an agreement dated November 26, 1929.
“New Orleans Public Belt Railroad Commission has given us notice of cancellation of the agreement under which this tramway track was constructed, operated and maintained. We understand that our agreement with the Public Belt Railroad Commission is being cancelled because Texas and Pacific Railway Company is going to operate freight and passenger trains over Public Belt tracks which are crossed by our tramway track.
“The cancellation by the New Orleans Public Belt Railroad Commission of our right to maintain, use and operate this tramway track is an interference with the free and full use of the property, including the use of the Mississippi River and its banks, leased by us from you under the agreement of November 26, 1929 within the meaning of Section 7 thereof.
“The Mengel Company hereby avails itself of the privilege of cancellation provided for in Section 7 of the said agreement dated November 26, 1929 and pursuant to said section hereby gives you twelve months notice of its intention and desire to cancel said lease, said notice to be effective August 31, 1940 and said lease to terminate, be cancelled and be of no further force and effect after August 31, 1941.”

On September 6, 1940, plaintiff, through its president, replied as follows:

“I acknowledge receipt of your letter of August 29, 1940, addressed to The Texas and Pacific Railway Company, in which you undertake to give twelve months’ notice of your intention and desire to cancel the lease agreement of November 26, 1929, covering certain property in New Orleans. You state that the cancellation by the New Orleans Public Belt Railroad Commission of your right to maintain, use and operate a certain tramway track is an interference with your free and full use of the leased property within the meaning of Section 7 of the agreement of November 26, 1929.
“I do not agree with your position, and therefore, cannot accept your letter of August 29th as effective notice of your intention to cancel your lease agreement with The Texas and Pacific Railway Company.”

The Mengel Company paid all rent due in accordance with the terms of the lease up to and including August 14, 1941, and on August 12, 1941, forwarded its check for $548.39 to the plaintiff to cover rent from August 15, 1941, to and including August 31, 1941, which according to the letter of transmittal was in full, complete and final settlement of the Mengel Company’s entire obligation under the lease agreement. The check for $548.39 was promptly returned. In the letter of transmittal plaintiff reiterated its contention that the defendant’s letter of August 29, 1940, was not an effective notice of defendant’s intention to cancel the lease agreement and demanded a check for $1,000 covering rental for the period August 15, 1941, to September 15, 1941, in accordance with the lease contract. This demand was refused by the defendant in a letter dated August 19,1941.

From the date the defendant took over the Otis Company lease by assignment dated August 19, 1922, to the date, shortly after March 13, 1924, when the tramway was built across the Public Belt and the Illinois Central Railroad tracks, the defendant, as the Otis Company had done, drayed the mahogany logs which had been unloaded from ships in the river across the batture to the defendant’s plant, where such logs were manufactured into lumber. The defendant company has drayed no logs since 1924.

The defendant removed all of its property and effects from the leased premises prior to August 31, 1941, having previously notified the plaintiff, in its letter of August 12, 1941, above quoted, that it would do so, and the defendant has not since occupied the premises or exercised any rights of the lessee thereof.

At no time during the period beginning with its lease of said property to the Otis. Company and through March 10, 1945, did plaintiff exercise any rights of ownership over the leased premises.

On June 3, 1940, the tramway crossings over the tracks of the Public Belt were removed by the Public Belt. The tramway crossings over the tracks of the Illinois Central Railroad Company were removed in January, 1940, but the agreement under which the defendant crossed the Illinois Central tracks with its tramway remained in effect. The tramway crossings over both the Illinois Central tracks and over the Public Belt tracks were several times removed and then replaced.

The defendant received its last shipment of mahogany logs on October 24, 1939.

By stipulations, there have been annexed to the record a number of documents, including letters and telegrams dealing with efforts by the defendant to purchase the leased property, with negotiations in 1929 looking to the renewal of the lease and with efforts made by the defendant between the years 1933 and 1940 to obtain either a reduction of the rental or a cancellation of the lease.

There is also testimony regarding the cost of interlocking or overpassing the tramway crossing, of signaling, derailing and the like. There is also testimony regarding the question of whether or not there was an unequivocal cancellation of the Public Belt crossing permit referred to above. In the court’s view of this case, as will be explained hereafter, none of this material is of sufficient importance to warrant its being summarized in this opinion.

The rights of the parties are measured by the terms of the lease of November 26, 1929, and the court must ascertain its true meaning. When, as here, the language is clear and explicit the court must ascertain the intent of the parties from the language used. The whole of the instrument must be read together and the whole of it must be looked at to determine the effect of each part.

The present controversy turns on the effect which should be given to the particular language in section 7, supra, of the aforementioned lease. It will be remembered that section 7 contains an express recognition of lessee’s right to cancel the lease “in the event of interference by the Federal, State, or Municipal Governments, or any Board or political subdivision thereof, or by forces of nature, with the free and full use of the property including the use of the river and its banks by the Lessee hereunder”. The words “including the use of the river and its banks” are not to be found in corresponding section 8 of the lease of 1920 and it must be assumed that they were added to the later lease for a purpose. That purpose is not hard to find.

At the time of the execution of the lease of November 26, 1929, and indeed for five years prior thereto, defendant had an agreement with the Public Belt under the terms of which it acquired the right to operate a tram track crossing over the Belt tracks. This crossing was a vital part of defendant’s operation and plaintiff knew of it when it made its lease to defendant in November, 1929. The right to use the Public Belt tracks was necessarily in the minds of both parties, because without it, defendant’s lease would have been of little or no value. If we assume, as we must, that the lease of November, 1929, was made with reference to the state of things existing at the time it was made, it is quite easy to understand that any prudent business man would want to safeguard himself from loss occasioned by the withdrawal of such a permit by providing for the cancellation of the lease in the event that such withdrawal occurred.

One of the four stipulations forming part of the pre-trial order sets forth the correspondence which passed between the parties prior to the signing of the new lease of November 26, 1929. This stipulation was received in evidence subject to the objection of defendant’s counsel, which was in substance that all matters of negotiation antecedent to and dehors the writing were merged in the instrument and should be excluded. For the reason which counsel gave, and because the contract of lease is plain and requires no reference to extraneous matters to determine its meaning, the court now concludes that this correspondence should have been excluded.

But assuming that plaintiff is right and that the meaning of the contract is not clear and that a reference to the surrounding circumstances should be allowed for an explanation of the terms used, it does not follow that plaintiff’s position will be improved. Plaintiff would have the court hold that the added words of section 7 were designed merely to provide for the contingency “that perhaps at some future time it would no longer be feasible, economically, to control the depth of the water through dredging operations, and further that, there might be danger that the United States Engineers would not permit the Mengel Company going further out into the river”. Unquestionably, the action “by forces of nature” was one of the possibilities that the parties had in mind, and the section so recites. But it was not the only possibility, else why does the lease clearly specify that the envisaged interference was that of the federal, state or municipal governments? Piad interference only by the United States Engineers been feared by the lessee, the inclusion of municipal government would have been purposeless. And the words “or any Board thereof” precisely classify the New Orleans Public Belt Railroad Commission, for it is a board of a municipal government.

It is seemingly clear that the Public Belt did unequivocally cancel defendant’s permit to use the crossing without any alternative whatsoever. But conceding for the sake of argument that the defendant was given the alternative of having its permit canceled or of spending $15,000 for interlocking the crossing, it by no means follows that plaintiff’s position is strengthened. “Interference” by the Public Belt was not restricted to cancellation of the permit, and it could be accomplished with equal effectiveness by laying down expensive conditions to the continuance of the permit.

Where, as here, the absolute right of cancellation exists under certain conditions, the party enjoying that right, as docs the defendant in this case, cannot be required to expend money in order to avoid the necessity of cancellation when those conditions are present. Indeed, it would be a contradiction in terms to grant an absolute right under certain conditions and then, when those conditions arose, to compel the party possessing that right to pay toll in order to avoid the necessity of exercising it.

It is argued on behalf of plaintiff that the cancellation of defendant’s right to cross the Public Belt tracks was not an interference with the free and full use of the property leased; that whatever interference this brought about had to do not with the use of the leased premises but with the use of the Public Belt tracks. I cannot agree. The lease in clear and unequivocal language provides that defendant has a right to cancel in the event of interference “with the free and full use of the property including the use of the river and its banks by the Lessee hereunder”. The interference referred to is not, as plaintiff contends, an interference with the leased property, but is an interference with ilia free and full use of the leased property including the use of the river and its banks. This language does not require an actual interference with or encroachment on the property itself. It is the use of the property that was important and the use of the property without the right to cross the Public Belt tracks was of little value. When, therefore, the right to cross was taken away from defendant it was left with a piece of property upon which it could not practicably, if at all, conduct its present business. Nor could it by the terms of the lease employ the property in any other way. This action on the part of the Public Belt canceling the grade crossing permit was a direct interference with the defendant’s right to the full and free use of the property including the use of the river and its banks, and defendant therefore was within its reserved right in canceling its lease.

As will appear from the pleadings and the pre-trial order plaintiff’s suit is predicated on the sole ground that the defendant did not in compliance with its alleged obligations pay the rentals due under the contract for the period beginning August 15, 1941, through March 10, 1945, when the lease expired. Having held that the defendant in the exercise of its legal right did cancel the lease on August 31, 1941, and as the court is not concerned with defendant’s motive, there now remains for decision the final question as to whether the defendant did in compliance with law make a real tender of $548.39 which it admitted it owed to the plaintiff.

The stipulated facts in this case show that the plaintiff did not refuse the tender because of the manner in which it was made,'but because of the amount that was being offered on the theory that the lessee had the right to cancel the lease. A formal tender would have been a vain and useless thing and the Louisiana law does not require it. Louisiana Highway Commission v. Bullís, 197 La. 14, 18, 200 So. 805.

In the light of this decision and the views herein expressed it follows that plaintiff is entitled to recover the amount tendered and no more. The Clerk is accordingly directed to enter judgment in favor of plaintiff and against defendant in the amount of $548.39 without interest, and with costs in defendant’s favor.


author: CONGER, District Judge.

text:
    ULLO et al. v. SMITH et al.
    District Court, S. D. New York.
    Oct. 8, 1945.

      Aaron Benenson, of New York City (James L. Goldwater, of New York City, of counsel), for plaintiffs.
    George A. Brooks, of New York City (Kevin McInerney and Peter H. Kaminer, both of New York City, of counsel), for defendants.
   CONGER, District Judge.

Plaintiffs bring this action to recover unpaid overtime compensation and an additional equal amount as liquidated damages pursuant to Section 16(b) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b).

The case was tried to the Court without a jury.

Plaintiffs were employed in the buildings at 392 and 394 Fifth Avenue as maintenance men.

The defendant, John Thomas Smith, was the owner of the two buildings and the defendant, Vought, Campbell, Ward and Nich-olls, Inc., during all of the time for which extra compensation is herein asked for, had acted as the Agent for the owner of the buildings in the management and operation of the buildings, with authority to hire and discharge employees; to issue instructions to the employees so employed and to control, direct, and supervise the work of the employees in the buildings.

392 Fifth Avenue had eleven stories and a basement; 394 Fifth Avenue adjoining had four stories, and the two buildings were, for the purpose of this lawsuit and as a matter of fact, considered as one.

The first three floors of each building were open with no partition between. They had the same elevator service, common heating service and sprinkler system. The same employees cared for and looked after both buildings.

In the buildings were a number of tenants who were engaged in taking orders for and selling women’s garments, hats, quilting, needlework products, bedspreads, silverware, novelty jewelry, men’s hats, women’s wearing apparel and other accessories.

On the Fifth Avenue side of the building there had been during most of the time in question a retail store for the sale of women’s clothing and other accessories in connection therewith.

The plaintiffs were elevator men, porters, a handyman and a night watchman. They were known as the maintenance men for the building.

There were two sets of elevators in the buildings, one the freight elevator and the other the passenger elevator. It was the ■duty of some of these men to man the elevators. For instance, in the passenger elevator there would be taken up and down to the various offices and rooms the tenants, the employees of-the tenants, and business visitors to the tenants. In the freight elevators would be carried up the goods and merchandise delivered to the tenants and for the tenants and there would be carried ■ out goods and merchandise sent out by the various tenants to their customers. Some of these men, particularly the porters, cleaned up the premises of some of the tenants and in most cases took away from the tenants’ premises waste material, papers, etc. Some of these men also entered the tenants’ premises for the purpose of providing new electric bulbs, or for making very minor repairs. They also made minor repairs to and serviced the elevators, such as oiling, greasing and cleaning. They also cleaned the common stairways and halls used by the tenants as well as the common toilets used by the tenants.

The period involved is from October 10, 1938, to April 17, 1942. It has been stipulated that these plaintiffs worked on the premises during the time mentioned in the complaint. The hours worked and the overtime they worked has also been stipulated, as well as the amount which would be due each of them if it be decreed here that they are entitled to a verdict. No issue has been raised in connection thereto except that the plaintiff, Charles Zator, claimed to have worked more overtime hours than had been stipulated. An attempt was made to prove this contention. However, I find that plaintiff has failed in that proof and that as far as he is concerned he is entitled to no more money if successful here than had been stipulated.

Plaintiffs contend, first, that a substantial number of the tenants of the building are engaged in interstate commerce; second, that a substantial number of the tenants in the building are engaged in the production of goods for commerce and that, therefore, by reason of the nature of their employment (and by reason of the nature of the work of the various tenants) these maintenance workers in the building come under the provisions of the Fair Labor Standards Act, and are entitled to the relief therein provided by reason of their unpaid overtime work.

I am satisfied that a substantial number of the tenants were engaged in interstate commerce. I am also satisfied that these plaintiffs by reason of their work were not so closely identified with the activities of these tenants that they might have the benefit of the provisions of the Fair Labor Standards Act. McLeod v. Threlkeld, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538; Stoike v. First Nat. Bank, 290 N.Y. 195, 48 N.E.2d 482.

I feel that the plaintiffs were not so closely related to the movement of the commerce as to be a part of it. I do feel, however, that they could recover if it be shown that a substantial number of the tenants in these buildings were engaged in the production of goods for commerce as defined by the provisions of the Fair Labor Standards Act.

That maintenance employees of a building in which the tenants are engaged in the manufacture of goods for interstate commerce are within the Act is too well established for dispute. Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L. Ed. 1638.

The issue, therefore, resolves itself to this: How many and what proportion of the tenants of this building are substantially engaged in the production of goods for interstate commerce ?

The burden of proof rests with these plaintiffs to show that a substantial number of the tenants were so engaged. The word “substantial” as here used has been interpreted to mean that at least 20 per cent of the building be occupied by tenants engaged in the production of goods for interstate commerce. Baldwin et al. v. Emigrant Industrial Savings Bank, 2 Cir., 150 F.2d 524; Gangi v. D. A. Schulte, Inc., 2 Cir., 150 F.2d 694.

The issue is complicated by the further problem as to just what constitutes “production,” as defined by the Act to include “handling, transporting or in any manner working on such goods, or in any process or occupation necessary to the production thereof.” This latter question presents a real problem and the real problem to be solved here.

I was rather of the opinion after the Circuit Court of Appeals of this Circuit had decided the Callus case (Callus v. 10 E. 40th Street Building, Inc., 2 Cir., 146 F.2d 438), the Borella case (Borella v. Borden Co., 2 Cir., 145 F.2d 63), and the Fleming case (Fleming v. Post, 2 Cir., 146 F.2d 441), that this question was no longer a problem but a mathematical computation, but the U. S. Supreme Court reversed in the Callus case (10 E. 40th Street Bldg. v. Callus, 65 S.Ct 1227), and on the same day affirmed the Borella case (Borden Co. v. Borella et al., 65 S.Ct. 1223), but in the opinion in the Callus case defined the limit to which it intended to go in the Borella case. Then again, the Circuit Court of Appeals of this Circuit in Baldwin v. Emigrant Industrial Savings Bank, supra, apparently in the light of the decision of the Supreme Court in the Callus case modified its holding in the Post case. The answer to the problem presented here is in the above decisions. Before discussing these decisions, it is apropos that the character of the activities of the various tenants in the building be set forth. The attorney for the plaintiffs in his brief has classified 15 of the tenants into four types as follows:

Class 1. Tenants engaged in manufacturing and assembling for commerce.

Class 2. Tenants engaged in handling and packing for commerce.

Class 3. Tenants who maintained manufacturers’ sales offices selling goods for commerce.

Class 4. Tenants who were manufacturers’ sales agents selling goods for commerce.

The building has 31 tenants. Plaintiffs have shown the business activities of 15 of them. These tenants occupied from 48 per cent of the rentable area of the building in 1938 to 54% per cent in 1942. As to the remaining tenants one may very well assume that they were not engaged either in interstate commerce or in the production of goods for interstate commerce.

The great majority of the 15 tenants are engaged in selling, having offices and showrooms.

Defendants’ attorney in his brief has divided these tenants in accord with their activities as follows:

A. Tenants having offices, showrooms- and storerooms where they carried a stock of finished goods on the premises which they received from manufacturers, unpacked and repacked and shipped.

B. Tenants having offices and showrooms where they sold goods by samples but carried no stock.

One other group of 3 tenants whose activities do not fall in either of the other two-groups.

I think these classifications substantially describe the activities of these 15 tenants.. However, for the purpose of passing on the-activities of these tenants and for the purpose of applying the yardstick of the law as contained in the foregoing decisions, I shall, use the classifications put forth by the plaintiffs.

It seems to me that there can be no-question but that under the decision of the Supreme Court in the Callus case, the tenants in Classes 3 and 4 may not be said to-be engaged in the production of goods for commerce. In the Circuit Court of Appeals it was held expressly to the contrary. While the opinion of the Supreme Court does not specifically enumerate the activities of the tenants in the Callus case, it does specifically refer to “sales agencies.” It is perfectly clear that by its decision in the Callus case,, the Supreme Court held that tenants whose activities are those as described in Classes 3 and 4 are not producing goods and that maintenance employees of a building housing such tenants may not take advantage of the Act by reason of such activities. Neither may they do so by reason of the ruling in the Borella case, supra. In the Borella case the maintenance employees of a building owned by the Borden Company were held to be so entitled because the Borden Company was engaged in the production of goods in interstate commerce, although not in the building in question but in various plants throughout the United States and Canada.

In the decision in the Callus case, it is perfectly plain that the rule in the Borella case did not apply to maintenance employees of a building renting space to tenants for offices, etc. The court passed on this specifically. I quote [65 S.Ct. 1229] :

“Mere separation of an occupation from the physical process of production does not preclude application of the Fair Labor Standards Act. But remoteness of a particular occupation from the physical process is a relevant factor in drawing the line. Running an office building as an entirely independent enterprise is too many steps removed from the physical process of the production of goods.”

The business activities of the tenants in Class 2 present a serious problem. I have carefully read the three decisions in the Callus case. Starting with the opinion of the Judge in the District Court. A close study of these decisions indicate that none of the tenants who had sales offices and showrooms “handled” any of the goods. That is not true of the tenants in Class 2. The tenants here not only took orders for goods but handled them; unpacked and packed them for shipment.

I am not too sure that the Supreme Court intended to make any distinction between these two types of sales businesses. However, we do have an expression of opinion on this point by the Circuit Court of Appeals of this Circuit in two cases to which I now refer. In Fleming v. Post, supra, the court said [146 F.2d 443]:

“* * * And during the entire period in question, one-third of the building was rented by tenants whose business consisted of receiving goods from outside the state and shipping goods outside the state. This business would clearly seem to come within the Act’s definition of ‘production’ which includes ‘handling.’ ” The court then cited its own decision in the Callus case.

The Post case was decided prior to the decision of the Callus case by the Supreme Court. After the decision of the Supreme Court in the Callus case and after its decision in the Western Union case (Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, 65 S.Ct. 335), it had before it the Baldwin case. In that case the court modified its previous ruling in the Post case, or at least set forth the limits which it felt it should go in the light of the Callus and the Western Union case. The point is so important and determinative of the status of the tenants in Class 2 in this case that I quote from that decision [150 F.2d 526] :

“* * * In addition to these concerns which clearly manufacture goods on the premises” (publicity and advertising concerns — all operations performed on the premises), “a number of manufacturers occupy 14,444 square feet of the available space as showrooms and storerooms. These manufacturers for the most part give their work out to contractors, frequently located outside the state, and receive some of the finished products at the premises, where they repack them or at least put new addresses on old packages, in order to ship them to customers, of whom a substantial number are located outside the state. This work done on the premises clearly constitutes production within the meaning of the Act. For under § 3(j), 29 U.S.C.A. § 203 (j), ‘handling’ of goods is sufficient to require the employee’s classification as one ‘engaged in the production of goods.’ True, in Western Union Telegraph Co. v. Len-root, 323 U.S. 490, 503, 65 S.Ct. 335, 342, this broad statutory language of section 3 (j) was interpreted not to include the handling of goods for the mere purpose of furthering their interstate transit. But the court went on to say, ‘One who packages a product, or bottles a liquid, or labels, or performs any number of tasks incidental to preparing for shipment’ is definitely within the scope of the section. Hence it seems that if an employee handles goods merely for a distributor or transporter, he is not engaged in production; but if he does so for a manufacturer, he is engaged in production. At least those who further the manufacturing process by direct work upon the goods, even to the point of preparation for shipment, are so engaged.”

With this case in mind I have checked over the tenants in Class 2. I have concluded that Goldmark Hosiery (Rein-gold Hosiery Company) is a distributor and, therefore, is not engaged in production. This concern has no manufacturing plant and is not connected with one. It buys goods from several manufacturers and then sells the goods to the wholesale trade.

Leseo, Ltd. This tenant should be classified as a manufacturer. It dealt in ladies’ handbags and leather novelties. To a substantial amount its goods were made for it by contractors in accordance with specifications and sketches submitted to the contractors. Two-thirds of the business was based on goods so made up and received from the contractors. The goods so made up were delivered to the tenant and eventually sold and repacked and shipped to the customers. Better than SO per cent of sales were made to customers out of the state of New York.

Herbert & Pohs. This concern dealt in costume jewelry. It maintained a showroom where it had a sample line. Some sales were made from existing stock. When not in stock an order was sent to a manufacturer. All orders were by number. If the manufacturer had the goods in stock he sent them on, if not they had to be made up. When goods were received from the manufacturer they were unpacked, put in stock, and when sold, wrapped up and shipped, the majority of the shipments were made to out of the state customers.

The goods were not made to specifications. On occasions the tenant might buy a sketch which he submitted to the manufacturer, who in turn developed it but the tenant might or might not buy the article. This is not the case of goods made by a contractor according to specifications. This tenant did nothing more than buy the finished articles from a manufacturer and in turn sell them to the trade. Production stopped when this manufacturer completed his part of the contract. This is a border-line case, but I do feel that this firm did nothing more than sell and distribute goods and did not “produce”; whatever handling it did was in connection with the sale of goods and not the manufacture.

Stanley Singer, Inc. This concern was engaged in the sale of costume jewelry and this firm should be put in the same category as the one last referred to (Herbert & Pohs). It was in no way connected with manufacturing. As the president of the firm testified: “We buy and sell.” True, at least, some of the buying was done pursuant to designs submitted. This, however, in my opinion does not constitute this concern as a manufacturer or handler as part of manufacturing. ■

Loni Feitler. This tenant is engaged in the same type of business as the two concerns to which I have just referred (Herbert & Pohs and Singer, Inc.) and should be placed in the same category. I do not regard this tenant as engaged in “production.”

We now come to the group of tenants designated by plaintiff as Class 1. Plaintiffs’ contention is that each of them are engaged in actually manufacturing goods as we ordinarily use the term.

Jacob Wallach. This tenant gathered news regarding New York merchandising and markets and distributed it all over the United States. Reporters gathered the news. Stencils were cut to reproduce the various items; releases were run off on a mimeograph machine. About 20,000 sheets were turned out each week, mimeo^ graphed, folded, stamped, addressed and forwarded by mail to the various subscribers. Practically all the work was done on the premises. This certainly constitutes “production.” Baldwin v. Emigrant Savings Bank, supra.

Frederick Schnitzer (Regina Novelty). This tenant was engaged in the business of selling earrings, necklaces, bracelets and similar novelty jewelry. A large percentage of the sales were to customers out of the state. Part of the business consisted of buying these articles from manufacurers and then selling them to the trade. A large and substantial part of the business, however, may very well be classed as manufacturing. Raw materials such as stones, beads and spangles were purchased in bulk and delivered to the tenant’s premises where they were made into necklaces, bracelets, earrings, etc. and were then sold to the trade. At least a dozen employees were so engaged. The owner of the business was unable to state just what percentage this branch of his business amounted to. He did say it was a fair size part and that it took up about half of his premises.

This tenant should be classed as one who was engaged to a substantial extent in the production of goods in interstate commerce.

Miriam Haskell. There is a real dispute of fact as to the character of business as to this tenant. Plaintiffs claim she did the same type of business as the last tenant (Schnitzer) ; assembling and producing from various materials such as glass, beads, etc., items of costume jewelry such as earrings, bracelets, etc. However, the tenant, the owner of the business, testified that none of the assembly work or manipulation of materials to make finished articles was' done on the premises during the period in question. In this she is flatly contradicted by one of her former employees. However, it is not necessary to pass on this disputed factual issue. Even on the story of tenant she must be classed as a “producer” of goods. This tenant purchased the materials in bulk; glass, beads, bits of wood, etc., counted them out and sent them out to be made up into jewelry by contractors in accordance with sketches and samples made up by her. When finished they were delivered, put in stock and sold. As a part of the sale, of course, they had to be packed and sent out to the purchasers by the tenant. This tenant may not be catalogued as one who purchased from a manufacturer and was a distributor or sales outfit. If assembling raw materials and fashioning them into various items of jewelry may be said to be manufacturing or assembling, and I think it may, then this tenant is engaged in manufacturing or producing goods, even though the actual work was not done on these premises. She clearly comes under the definition of a manufacturer giving the work out to a contractor. Baldwin v. Emigrant Savings Bank, supra.

American Needlecraft, Inc. This tenant was a manufacturer of quilted articles such as robes, negligees, comforters, bedspreads, etc. Its actual manufacturing plants were in the state of Kentucky where it had many employees. Its office at 392 Fifth Avenue was the main office of the company. The president, secretary and treasurer had their offices there. Directors’ meetings were held there. The bookkeeping for the entire organization was done there, including invoicing, paying, billing and receipts of all payments for goods sold.

These activities, however, as I pointed out heretofore in my discussion of the Bo-rella and Callus decisions, are not such as to bring this concern under the classification of “producers” of goods for commerce.

However, there was some work performed in these offices which should be classed as production or manufacturing. Unfortunately, the testimony is not too clear as to the percentage of this type of work in comparison with the rest of the activity, which I have decided is not “production.” A substantial amount of such work (production) should be at least 20 per cent of all the activities of said offices. The evidence has not so convinced me.

It does appear that these premises were used mainly as a business office, showroom, salesroom and that whatever activity might be construed as manufacturing was not substantial. This is confirmed to a certain extent by the type of employees working there. There were 14 or 15 employees, composed of three salespeople; two or three girls working in the order department, three in the bookkeeping department, a purchase clerk, a packer, a switchboard operator and two or three in the preparatory department. In addition there were three executives. True, in the premises at New York, there was some actual work done toward the preparation of the goods for manufacture. Designs originated here. Some preparatory work was done here, which included perforating, “stamping,” model or pattern making and cutting cloth. A small amount of goods was sent back to New York to be put in the showroom for sale. This, of course, had to be packed and shipped. However, what was done by way of preparation, etc., I regard as not a substantial part of all the activities carried on in these premises. I have been unable to convince myself from the evidence that this tenant during the period in question was substantially engaged in the “production” of goods for interstate commerce.

By reason of the above, I have concluded and find that plaintiffs have failed to prove that a substantial portion of the building (at least 20 per cent) was occupied by tenants engaged in the production of goods for interstate commerce.

The rentable area of this building was 55,150 square feet. The floor space occupied by the four firms whom I have classified as concerns producing goods for interstate commerce in each of the years in question was as follows:

1942 — 5,645 square feet 1941 — 5,300 1940 — 4,650 1939 — 5,645 1938 — 4,195

It may appear that I have been somewhat arbitrary in passing on the character of business of these various tenants. That must be expected. The Supreme Court said in the Callus case:

“On the terms in which Congress drew the legislation we cannot escape the duty of drawing lines. And when lines have to be drawn they are bound to appear arbitrary when judged solely by bordering cases. To speak of drawing lines in adjudication is to express figuratively the task of keeping in mind the considerations relevant to a problem and the duty of coming down on the side of the considerations having controlling weight. Lines are not the worse for being narrow if they are drawn on rational considerations. It is a distinction appropriate to the subject matter to hold that where occupations form part of a distinctive enterprise, such as the enterprise of running an office building, they are properly to be treated as distinct from those necessary parts of a commercial process which alone, with due regard to local regulations, Congress dealt with in the Fair Labor Standards Act. Of course an argument can be made on the other side. That is what is meant by a question of degree, as in the question before us. But for drawing the figurative line the basis must be something practically relevant to the problem in hand. We believe that is true of the line drawn in this case.”

I have tried to draw the true line here.

The defendants are entitled to judgment in their favor. Complaint dismissed with costs.

Settle decree on notice.


author: MOSCOWITZ, District Judge.

text:
    THE ELQUI (ex SELMA) et al.
    No. 17621.
    District Court, E. D. New York.
    Sept. 26, 1945.
    Covington, Burling, Rublee, Acheson & Shorb, of Washington, D. C., and Stanley W. Schaefer, of New York City (Stanley W. Schaefer, of New York City, Spencer Gordon, John G. Laytin, and Donald Hiss, all of Washington, D. C., and Maurice J. Smith, of New York City, of counsel), for libellant.
    Kirlin, Campbell, Hickox & Keating, of New York City (Roger Siddall, of New York City, and David P. Dawson, of Brooklyn, N. Y., of counsel), for claimant-respondent.
   MOSCOWITZ, District Judge.

The Court has conducted a trial upon a libel for possession under which the Steamship Elqui (ex Selma) was arrested while unloading in Brooklyn, within the jurisdiction of this court. By consent of the parties, the Court reserved decision on an application made to it to exercise its discretion to decline jurisdiction on the ground that the character of the parties and the subject matter involved make another forum proper.

Prior to the invasion of Denmark on April 9, 1940, the steamship Selma (now Elqui) was owned by libellant’s predecessor, a Danish corporation. Upon the invasion,all merchant ships flying the Danish flag received official instructions to take refuge in neutral ports pending an agreement with the Allied authorities which would prevent such ships from being used for the benefit of the Axis. Lying idle in Chilean waters, on Majr 8, 1941 the Selma was requisitioned by the Republic of Chile pursuant to an official decree issued by the Minister of Foreign Relations and Commerce. This decree, which incorporated by reference the provisions of a similar previous document, provided as follows:

“Considering the premises:
“That due to the fact that tonnage has been considerably reduced in marine traffic from Chile to foreign countries with a consequent disturbance to the national economy;
“That the situation is due immediately and directly to the war taking place in Europe, and in which Chile has declared herself neutral;
“That the tonnage of the National Merchant Marine and that given by other neutral nations does not compensate this lack;
“That since it is impossible to determine the length of this conflict, it is the duty of the Government to seek means whereby trade will remain uninterrupted, indispensable for national welfare;
“That the only possible means whereby satisfaction can be given this urgent necessity is to avail ourselves of the tonnage lying idle of the foreign merchant ships which have taken refuge in the ports of this Republic for several months;
“That the Government has agreed upon this measure in order to ensure the welfare of the Republic and to carry on commercial interchange with other neutral nations;
“That this measure, urgent, temporary and eventual, will in no way damage the legitimate owners of said vessels, and will not entail any forced obligations to the personnel on board because the intentions of the Government of Chile are to adjust, opportunely and directly with each of the legitimate shipowners or representatives, indemnization for usage and provision for maintenance of the personnel referred to, who will enjoy, for as long as they care to remain in Chile, the same treatment accorded the subjects of free nations resident in neutral territory.
“Decree:
“1) Be it declared of public utility for the duration of the present war, the following Danish merchant vessels anchored' in the port of Talcahuano: FRIDA, LOT-TA and HELGA.
“2) The above mentioned vessels are subject as from this date to the regulations contained in our merchant marine, insofar as they are applicable and will sail with the national flag.”

It appears to be the position of the li-bellant that the decree under which the Chilean government became entitled to the use of the Selma was limited to “the duration of the present European war” and that since in libellant’s view the war in Europe has terminated and is no longer in duration, -the Danish corporation is entitled to-possession of the ship. It is not necessary for this Court to determine .whether the Chilean government acquired the use or the title to the ship under its decree, as only the question of the right to possession is-involved in this proceeding. The Steamship Elqui is now registered in the Chilean-National Merchant Marine and the certificate is that it is under the “tuición” (i. e. guardianship or protection) of the Republic of Chile and is operated by claimant-respondent (known as the Chilean line),, sailing regularly in common carrier service between Chile and the United States for the past four years.

Claimant-respondent’s motion for this Court to exercise its discretion to decline jurisdiction is urged upon the ground' that the parties are foreign nationals contesting the right to possession of a foreign-ship, which right depends upon the construction of a foreign decree. Ever since The Belgenland, 114 U.S. 355, 5 S.Ct. 860, 29 L.Ed. 152, the right of the District Court to decline to act where justice would be as well done by remitting the parties to their home forum has been clear. But in most of the cases cited by claimant-respondent (Canada Malting Co. v. Paterson Steamships Co., 285 U.S. 413, 52 S.Ct. 413, 76 L. Ed. 837; Charter Shipping Co. v. Bowring, Jones & Tidy, 281 U.S. 515, 50 S.Ct. 400, 74 L.Ed. 1008; The Kotkas, D.C.E.D.N.Y. 1941, 37 F.Supp. 835), both parties were from the same foreign country or there was a complicated question of foreign law involved. Here neither circumstance is present. The libellant is a Danish corporation while the claimant-respondent is a Chilean corporation operating under the Chilean government. The parties have stated to the Court that no question of sovereign immunity is raised at this time and that it is not necessary for this Court to determine whether the Chilean government acquired title to the ship or merely requisitioned its use. Nor has either party introduced any Chilean law under which the term “for the duration of the present European war”, as used in the decree, has any peculiar significance. Under such circumstances, it would be unusual for a court to decline jurisdiction, having the res within its province.

In discussing the subject of foreign litigants, the Supreme Court in The Belgen-land, supra, 114 U.S. at page 368, 5 S.Ct. at page 866, 29 L.Ed. 152, made the following observations:

“ * * * Indeed, where the parties are not only foreigners, but belong to different nations, and the injury or salvage service takes place on the high seas, there seems to be no good reason why the party injured, or doing the service, should ever be denied justice in our courts. Neither party has any peculiar claim to be judged by the municipal law of his own country, since the case is pre-eminently one communis juris, and can generally be more impartially and satisfactorily adjudicated by the court of a third nation having jurisdiction of the res or parties, than it could be by the courts of either of the nations to which the litigants belong. As Judge Deady very justly said, in a case before him in the district of Oregon: ‘The parties cannot be remitted to a home forum, for, being subjects of different governments, there is no such tribunal. The forum which is common to them both by the jus gentium is any court of admiralty within the reach of whose process they may both be found.’ Bernhard v. Creene [Fed.Cas.No.1,349], 3 Sawy. 230, 235.”

And in The Mandu, 2 Cir., 102 F.2d 459, 462, decided by Judge Patterson in this circuit, it was said:

“So for jurisdictional purposes the case may be treated as one where the adversaries were German shippers on the one side and a Brazilian ship owner on the other. On such a basis the foreigners interested were of different nationalities; they had no common home to which they might be sent to try their case; no agreement had been made that litigation be carried on in a particular country. Under these conditions it would have been unusual to have declined jurisdiction even at an early stage.”

The application for the Court to exercise its discretion to decline jurisdiction is therefore denied.

On the merits, the validity of the possession of the Chilean government under its decree as it existed prior to V-E Day is not challenged. The only question presented is whether the decree provides automatic termination to that lawful possession and whether such termination has materialized. Neither side has aided the Court in determining what the Chilean government intended by the use in this decree of the words “for the duration of the present European war.” Libellant has offered newspaper clippings reporting the remarks of prominent Chilean officials applauding the end of the war but it is obvious that such pronouncements are in no way binding upon the government of Chile and its official view on the determination of the European war. Various persons in the United States, from President Truman down, have spoken of the end of the war but there is no doubt that officially the war is not at an end in the United States.

Rendering his opinion in a letter to President Truman dated September 1, 1945, Attorney General Tom C. Clark stated:

“First of all, it should be borne in mind that the war powers of the President and the Congress do not automatically cease upon the termination of actual fighting. As the Supreme Court said in Stewart v. Kahn, 11 Wall. 493, at [page] 507 [20 L. Ed. 176]: ‘(The war power) * * * is not limited to victories in the field and the dispersion of the insurgent forces. It carries with it inherently the power to guard against the immediate renewal of the conflict, and to remedy the evils which have arisen from its rise and progress.’ See also Hamilton v. Kentucky Distilleries Co., 251 U.S. 146 [40 S.Ct. 106, 64 L.Ed. 194],
“The broad basis of governmental power on which the various emergency and wartime statutes rest cannot, therefore, be said to have been terminated by recent developments, including the unconditional surrender of our enemies. Questions do arise at the present stage, however, with regard to the time which the Congress has specified in individual statutes as being the termination date of the powers therein conferred. As will appear in the attached compilation, certain of the wartime statutes are made effective only ‘in time of war,’ or ‘during the present war,’ or ‘for the duration of the war.’ Still other expressions may be found of similar character.
“Speaking generally, I believe that statutes of the type just mentioned should be considered as effective until a formal state of peace has been restored, unless some earlier termination date is made effective by appropriate governmental action. In Hamilton v. Kentucky Distilleries Co., supra, Mr. Justice Brandéis, speaking for the Court, said: ‘In the absence of specific provisions to the contrary, the period of war has been held to extend to the ratification of the treaty of peace or the proclamation of peace.’ Again, in Commercial Cable Co. v. Burleson, [D.C.], 255 F. 99, 104, Judge Learned Hand rejected the contention that certain wartime powers conferred on the President in the First World War had terminated with the Armistice of November 11, 1918, and added: ‘Even if I were to assume that the power were only coextensive with a state of war, a state of war still existed. It is the treaty which terminates the war.’ See also Kahn v. Anderson, 255 U.S. 1, 10 [41 S.Ct. 224, 65 L.Ed. 469]; Ware v. Hylton, 3 Dali. 199, 236 [1 L.Ed. 568]; 1898, 22 Op.Atty. Gen. 190. It is perhaps unnecessary to add that the Congress can at any timé, in response to changed conditions, repeal or amend any wartime statute or group of statutes.”

Here is not involved a contract between private parties in which it might be said that the term “for the duration of the present European war” was used in its ordinary or lay concept, referring to the cessation of actual hostilities. The language is employed in an official decree of a government, presumably drawn with all the consideration and formality ordinarily accorded such a document. In the absence of proof to the contrary, this Court must therefore assume that those who drafted this document had in mind the technical meaning of “for the duration of the present European war” which must be construed to mean the formal signing of a peace treaty or a proclamation by the sovereign that the war has been officially recognized as being at an end. Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194; Stewart v. Kahn, 11 Wall. 493, 20 L.Ed. 176; Commercial Cable Co. v. Burleson, D.C., 255 F. 99.

In a note received by the Royal Danish Legation in Washington, D. C. from the Chilean Embassy, Washington, D. C., on September 11, 1945, it was stated in part: “The Ministry of Foreign Affairs of Chile has informed the Chilean Embassy in Washington that the Government of Chile is presently studying a proposal to be made to the Government of Denmark regarding delivery and compensation for the use of the vessels referred to. This study is progressing rapidly and the Government of Chile will be able in the very near future to submit to the Government of Denmark a formula which, it is felt, will solve this matter in a friendly manner.” It thus appears that arrangements are under way for the voluntary return of the vessel here involved to its Danish owners but this Court will not direct such return under its interpretation of the rights of the parties.

The libel is dismissed.

       President Truman, in his message to the Congress of September 6, 1945, in dealing with the war stated among other things: “The end of the war came more swiftly than most of us anticipated.” (See page 16, New York Times, Friday, September 7,1945.)


author: WELSH, District Judge.

text:
    UNITED STATES v. PEARSON et al.
    No. 4892.
    District Court, N. D. California, N. D.
    Sept. 28, 1945.

      Frank J. Hennessy, U. S. Atty., of San Francisco, Cal., Emmet J. Seawell, Asst. U. S. Atty., of Sacramento, Cal., and Neil Clark Godfrey, Atty. for W. P. B., of San Francisco, Cal., for plaintiff.
    Lewis H. De Castle, of Santa Rosa, Cal., for defendant.
   WELSH, District Judge.

This is a proceeding in contempt. The plaintiff petitioned for a rule to show cause why the defendant, Seward Pearson, should not be punished for contempt. Pursuant to an order awarding a rule in contempt and order to show cause, several hearings were •had.

A restraining order was entered herein on the 13th day of April, 1944, and a final decree on the 29th day of April, 1944, whereby said defendant was enjoined and restrained from continuing construction of, and from doing any act whatsoever which contributed to the completion of that certain construction project located on El Rancho del Santa Rosa, approximately seven miles northeast of the City of Santa Rosa, California. Said final decree specified: “which construction project consists of the following, to-wit: a guest cottage, superintendent’s cottage, bar and office, main residence, employee’s cottage (new), employee’s cottage (altered) main barn, septic tank and vault, cattle crossing and bridge; (2) doing any act whatsoever in violation of War Production Board Conservation Order, L — 41.”

Said defendant had notice of said restraining order and said final decree. His signature appears beneath the following statement at the end of the original final decree: “The said defendant, Seward Pearson, hereby submits himself to the jurisdiction of the court, agrees and consents to the entry of the foregoing decree, and states that the findings, statements, and recitations contained therein are true.”

Said petition for rule to show cause was filed herein on the 16th day of October, 1944. Annexed thereto as exhibits were affidavits of Carl L. Hanson and Conrad T. Kett, which set forth that affiants examined the aforesaid El Rancho del Santa Rosa premises on the 18th day of April, 1944, and again on the 19th day of September, 1944, and that the second examination and inspection of the premises disclosed construction work done thereon as detailed in the said affidavits.

Both affiants took the witness stand at the hearings on the 28th day of November, 1944, and the 10th day of May, 1945, testified to the same subject matter so set forth in their affidavits, and were subjected to cross-examination.

Hearings were had on several different days. Witnesses called by the Government included carpenters, painters and laborers, as well as those connected with the War Production Board. They described the condition of defendant’s premises prior to April 11, 1944, and subsequent thereto. Some of said witnesses admitted working for the defendant on the buildings mentioned in the complaint and in the petition herein during the summer of 1944.

The testimony of the witnesses on behalf of the plaintiff was more convincing than that offered by the defendant.

Photographs were introduced which graphically depicted the barn, septic tank, and numerous buildings before and after the restraining order and decree were duly given and made.

The Court cannot but conclude from the oral testimony and the photographs that the defendant did violate the injunctive and restraining provisions of its order and decree.

The Court also viewed the premises involved in this case. The inspection made of the buildings on El Rancho del Santa Rosa confirmed the testimony of .the witnesses for the Government. The appearance of the structures evidenced that construction work had been done after the entry of the final decree on the 29th day of April, 1944. The Court took particular pains to ascertain whether or not the buildings themselves showed the changes which appeared in the photographs introduced in evidence by the Government. Such changes were, in fact, shown to exist.

The Court was impressed, during such viewing, with indications that attempts had been made to conceal certain of the items of construction and improvement. It was concluded therefrom that defendant became disturbed by the investigations which were made by the Government and sought to restore his premises as nearly as he could to their condition as of April 11, 1944.

Such attempts were unavailing so far as purging him of contempt is concerned. The final decree entered herein was conclusive of all matters to be determined. South Butte Mining Co. v. Thomas, 9 Cir., 260 F. 814.

Defendant’s obligation was to see that said decree was precisely and promptly obeyed. He failed so to do and is guilty of contempt. In re Sylvester, D. C., 41 F.2d 231, 233.

Any act which is calculated to embarrass, hinder, or obstruct the court in the administration of justice or which is calculated to lessen its authority or its-dignity is a contempt. 17 Corpus Juris Secundum, Contempt, § 8, p. 9.

Defendant’s contempt consisted of a clear and open willful disregard for the authority and dignity of the Court in a manner contrary to the provisions of Title 28 United States Code Annotated, Section 385. In re Presentment by Grand Jury of Stetser, D. C., 45 F.Supp. 556, 557.

. Defendant endeavored to establish that he did not fully understand said final decree and its legal effect. Such lack of understanding does not seem consistent with his ability and resourcefulness in other respects. Furthermore, every man is presumed to know everything that he can learn upon inquiry, when he has facts in his possession which suggest inquiry. Defendant must be charged with knowledge of that which it was his duty to know. United States v. Hoffman, D. C., 13 F.2d 269, 277.

Defendant, Seward Pearson, is therefore found guilty of contempt of court.


author: KALODNER, District Judge.

text:
    In re GREENEBAUM BROS. & CO., Inc.
    No. 21767.
    District Court, E. D. Pennsylvania.
    Oct 17, 1945.

      Wexler & Weisman, of Philadelphia, Pa., for trustee and unsecured creditors.
    Mayer, Magaziner & Brunswick, of Philadelphia, Pa., for Greenbaum’s Estate et al.
   KALODNER, District Judge.

Two petitions arising out of the Referee’s final order of distribution of the bankrupt estate of Greenebaum Bros. & Co., Inc., have been presented for disposition. The one, a petition for review, was filed by the Executrices of the estate of Simon Greenebaum and asserts three alleged errors in the final order. The other is a petition of the bankrupt corporation filed by one of its attorneys, for leave to intervene.

The Trustee not only disputes the alleged substantive errors of the Referee, but denies the standing of the Executrices to question the Referee’s order, and denies the right of the bankrupt to intervene at this time.

The executrices of the estate of Simon Greenebaum unquestionably stand in no better position than their decedent with regard to the right to petition this Court for review of. the Referee’s . order. The right is asserted on the ground that Simon Greenebaum was the owner of all the outstanding stock in, and that he was the creditor of, the bankrupt corporation.

During his lifetime, Simon Greenebaum filed two proofs of claim against the bank-' rupt, one, for $65,000, was filed as a preferred stockholder’s claim for the purpose of Chapter X, 11 U.S.C.A. § 501 et seq., proceedings; another, for $16,533.36, was based on the claim of a debt due in the amount- of $15,000 because the bankrupt failed to call in 50 shares of preferred stock in each of the three years preceding the bankruptcy (1938, 1939 and 1940), plus $1,533.36, representing undeclared dividends.

Granting that Simon Greenebaum was a stockholder, and his estate now in his stead, no right to petition for review obtains thereby. The corporation having been adjudicated a bankrupt, the stockholders have no standing in the bankruptcy proceedings. Donnelly v. Consolidated Investment Trust, 1 Cir., 1938, 99 F.2d 185, 38 A.B.R.,N.S., 105; In re F. P. Newport Corp., Ltd., 9 Cir., 1938, 98 F.2d 453, 37 A.B.R.,N.S., 470, 475; see 8 Remington, Bankruptcy (5th ed.) 3758. This is true even though there may be a surplus available to the bankrupt. In re Witherbee, 1 Cir., 1913, 202 F. 896, 30 A.B.R. 314, 317; Donnelly v. Consolidated Investment Trust, supra.

Concerning the claims on which the cred-itorship is based, it should be noted that the Trustee filed objections thereto. Insofar as I can determine, the claims were never proved nor allowed. In his certificate the present Referee stated:

“ * * * neither of which said claims were allowed by the said then Referee or by me as claims of a party in interest properly filed in this proceeding, entitled to a share in distribution out of the proceeds and funds realized by the Trustee in the liquidation of the bankrupt’s assets. * * * ”

A certificate of stock ownership, despite the fact that it contains a redemption clause, does not make the stockholder a creditor of the corporation. Warren v. Queen & Co., 1913, 240 Pa. 154, 158, 87 A. 595; Warren v. King, 1883, 108 U.S. 389, 399, 2 S.Ct. 789, 27 L.Ed. 769. And, as it will be seen, the obligation to redeem cannot be enforced after the corporation becomes insolvent. 14 C.J., Corporations, p. 424, § 585, 18 C.J.S., Corporations, § 278.

Moreover, the claims filed must disclose a debt due. In re A. & G. Knitting Mills, Inc., 3 Cir., 1944, 144 F.2d 125. On examination, the claims fail to meet this requirement. The stock certificate here involved provides that called stock be paid out of surplus or net profits, and the Pennsylvania Corporation Law forbids a corporation to redeem stock where such redemption would reduce the remaining assets below an amount sufficient to pay all debts and known liabilities: 15 P.S.Pa. § 2852— 705. Also, the stockholder is not entitled to the corporate earnings until a dividend is declared. Green v. Philadelphia Inquirer Co., 1938, 329 Pa. 169, 175, 196 A. 32. Thus, if the claim were provable at all, it would have to disclose, at the very least, facts warranting the redemptions and dividends, aside from showirg abuse of discretion by the directors. Wetherill v. Ara-sapha Manufacturing Co., 1915, 24 Pa.Dist. 1045, 1048; Green v. Philadelphia Inquirer Co., supra. Furthermore, it appears from the face of the stock certificate that it was issued in 1941, subsequent to the bankrupt’s asserted failure to redeem (in 1938, 1939 and 1940).

Accordingly, I am of the opinion that the claims filed by Simon Greenebaum were neither proved nor allowed and the Executrices of his estate have no standing to petition this Court for review of the Referee’s order.

However, because of the nature of the complaints against the Referee’s order, I am inclined to dispose of them on their merits. Although three objections were stated in the petition, one, that the Referee erred in turning over the balance of the bankrupt estate to the bankrupt’s attorneys, has been withdrawn.

The petitioners, secondly, object to the action of the Referee in allowing an additional counsel fee to the attorneys for the Trustee. The objection is that the fee allowed is excessive, but it is not contended that the attorneys for the Trustee are not entitled to a “reasonable” fee. It should be noted that the Trustee’s attorneys first suggested the sum of $2500. Strikingly indicative of the fairness of the request is a statement made at the final meeting of the creditors by T. G. Rich, Esq., one of the counsel for the bankrupt:

“I understand that the petition for additional counsel fee for the Trustee was considered before I arrived at the meeting, therefore I should like to have an opportunity to state at this time, as the other counsel for the bankrupt and as counsel for Albert Greenebaum, Jr., vice-president of the corporation, that I have no objection to the allowance and in fact, wish to go on record as stating that we believe counsel for the Trustee has done an excellent piece of work in this case.”

In point of fact, the Referee awarded a lesser sum ($1750), than that suggested by the Trustee’s counsel, and his opinion supporting that award is highly persuasive. In his Certificate for Review the learned Referee pointed out the peculiarly successful bankruptcy administration and the outstanding services rendered by the Trustee’s counsel:

“I consider it appropriate at this point to state that during my experience covering almost nineteen continuous years as a Referee in Bankruptcy, I have not known personally nor have I had brought to my attention a bankrupt estate in which a Trustee and his counsel have rendered such-faithful, diligent, painstaking and businesslike services as in this instant case. Here we have a bankruptcy proceeding in which the Debtor filed a plan of proposed reorganization whereunder unsecured creditors were to receive 25% of the face amount of their respective claims, • which offer met with rejection at the hands of the unsecured creditors -and their counsel and when the order of liquidation was entered Maurice A. Kendall, the Trustee herein, under the careful and sound guidance of his counsel, so managed and conducted the assets and affairs of the bankrupt corporation that not only were secured and unsecured creditors who filed proofs of claim and whose claims were allowed herein, paid in full as to the face of their respective claims but also have received or are entitled to receive interest upon their respective claims at the legal rate in full, and still, after the payment of all thereof, there remains in the possession of the Trustee a fund of upwards of $4,000, as a surplus and residue over and above the amount necessary to satisfy the proven claims of secured and unsecured creditors in full together with interest thereon. Most certainly here is a bankruptcy case wherein a diligent, -astute and businesslike Trustee exercised extraordinary sound judgment in the performance of his responsible duties, guided, as he was, by painstaking and learned counsel, who obtained the bank’s close cooperation herein, which has certainly brought credit to them both. Surely this is a case for the books.”

The Exequtrices of the estate of Simon Greenebaum are, in effect, asking me to ignore the opinion of one of the counsel for the bankrupt, to set aside the approbation of the creditors and to substitute my discretion for that of a competent and experienced Referee who has been in charge of the case for more than three years. After consideration of the matter I am of the opinion that the circumstances are such as to warrant full approval of the Referee’s exercise of his discretion.

Thirdly, petitioners assert that the Referee erred in ordering dividend payments to the New York .Credit Men’s Adjustment Bureau, Inc., as assignee of certain creditors. It is their position that the assignors had waived their right to the interest, which was the subject of the assignment. . | ■

The simple facts, as I perceive them, are that many of the creditors agreed to subordinate their right to interest to the claim of the Philadelphia National Bank up to the point where that institution received 100% on account of its claim with lawful interest; they then assigned their right to interest to the aforementioned Bureau. The assignments were filed and recognized by the Referee. ' ■

By no reasonable construction may it be said that, in executing these .documents, the creditors who were parties thereto intended to waive their right to interest for all purposes. The peg on which petitioners hang their contention is a statement made by counsel for the Trustee at a meeting held on October 24,' 1944: “Without in any way discouraging the objector, it just is worthy of mention that the committee and counsel has been giving considerable thought to the possibility of unsecured creditors other than the Philadelphia National Bank waiving their claims for interest altogether so that some fund can be created for the heirs of Simon Greenebaum upon his death. * * ^ »

It is urged that the two documents referred to be construed “in accordance with the intention of the creditors as expressed” in the quoted statement. This I cannot do without doing violence to the quoted statement and without ignoring the actual wording and purposes of the two documents. The quoted statement is merely the expression of a thought of a possibility. The two documents, on their face, belie any construction which would convert them into expressions of waiver; they are not ambiguous, nor are they capable of such distorted meaning as the petitioners seek to impose. The very words of the agreements preclude any idea, short of fantasy, that the intention of the creditors was to waive their right to interest, least of all in favor of the bankrupt or the petitioners.

The petitioners press the contention that the assignment to the Bureau ought to be held invalid and of no effect because, first, there is nothing to show consideration for the assignment, and, second, the Bureau acted as secretary to the creditors’ committee. Assuming this to be so, just how it affects the petitioners I am at a loss to understand. The. theory seems to be that the creditors intended to forego their right to interest, and therefore, since their assignee could not take, the right escapes both the creditors and the Bureau, and vests in the bankrupt. Clearly this cannot be, for an assignment merely transfers a right; it is not a waiver in the general sense of the term; if the assignment fails for any reason, the parties can only be in the position they were before the assignment was attempted.

Equally unconvincing is the argument that the assignments to the Bureau should be held invalid. The view suggested is that the Bureau, as secretary to the creditors’ committee, occupied a fiduciary position, and, like the Referee, Trustee, or Receiver, the committee “should not be permitted to acquire the trust estate or any rights therein, directly or indirectly, through its secretary or any other agent.” This chain of thought is made of faulty links merely “pasted” together. The' creditors’ committee by its very nature is interested in the bankrupt estate, and the Chandler Act, 11 U.S.C.A. § 1 et seq., does not cloak the committee in the fiduciary’s familiar legal garments.

The actual facts leave no room for doubt as to the disposition of petitioner’s objections. The creditors subordinated their claim to interest, by an unmistakable document, to the Bank. Such cooperation resulted in the preservation by the Bank of certain life insurance policies, and upon the demise of the insured parties, the Bank’s claims were paid in full leaving a substantial balance, which the Bank turned over to the bankrupt estate, making available a distribution to remaining claimants plus a balance. Discovering there were sufficient funds for payment of interest,, certain of the unsecured creditors assigned their right to interest to the Bureau.

I see nothing in these arrangements to arouse suspicion, nor is there anything so ambiguous as to permit an interpretation contrary to that of the Referee’s. Accordingly, the Order of the Referee should be affirmed.

Finally, as to the petition of the bankrupt for leave to intervene, it need only be said that the petition comes at a late date. Section 39, sub. c, of the Bankruptcy Act, 11 U.S.C.A. § 67, sub. c, limits the time for securing a review of the Referee’s order to ten days after the order is filed. To permit intervention at this time would amount to circumvention of the provisions of the Act. Accordingly, the petition for leave to intervene must be denied.

For the reasons stated the exceptions to the Referee’s final order of distribution are dismissed, the petitions for review and intervention are denied and the Referee’s Order is affirmed and confirmed.


author: BOYD, District Judge.

text:
    BOWLES, Price Administrator, v. SEITZ et al.
    Civil Action No. 716.
    District Court, W. D. Tennessee, W. D.
    Oct. 10, 1945.

      James O. Clarke and Paul Hyman, both of Memphis, Tenn., for plaintiff.
    Lowell W. Taylor, Frank B. Gianotti, Jr., and James W. Watson, all of Memphis, Tenn., for defendant.
   BOYD, District Judge.

The defendant, J. Edward Seitz, has been required to testify and produce documentary evidence in accordance with an administrative subpcena duces tecum and an order of Court in connection with the treble damage feature of this case. This defendant claims his constitutional privilege against self-incrimination and invokes Section 202(g) of the Emergency Price Control Act, 50 U.S.C.A.Appendix § 922 (g), and the Compulsory Testimony Act, found in 49 U.S.C.A. § 46.

It is plaintiff’s contention that the present action for treble damages is not a “criminal case” within the meaning of the Fifth Amendment and, therefore, it is not the type of case to which immunity conferred by Section 202(g) of the Emergency Price Control Act extends. The Court agrees with . the plaintiff’s contention. While our Circuit Court of Appeals, in Bowles, Administrator, v. Farmers National Bank of Lebanon, Kentucky, 6 Cir., 147 F.2d 425, held that the exaction.of treble damages established by this statute in Section 205(e), 50 U.S.C.A.Appendix § 925(e), falls within the classification of a penalty, it does not necessarily follow that it is such a penalty as would entitle one to claim his constitutional privilege against self-incrimination.

Penalties are of many types and are “elastic in meaning.” Huntington v. At-trill, 146 U.S. 657, 667, 13 S.Ct. 224, 227, 36 L.Ed. 1123; Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917. As to whether they are in nature “criminal” is not always clear. Quoting Mr. Justice Cardozo in Life & Casualty Co. v. McCray, 291 U.S. 566, 574, 54 S.Ct. 482, 486, 78 L. Ed. 987, “ ‘penalty’ is a term of varying and uncertain meaning.. There are penalties recoverable in vindication of the public justice of the state. There are other penalties designed as reparation to sufferers from wrongs.” The Court is of the opinion that treble damages sued for in this action is a penalty which comes within the latter class; that is, one “designed as reparation to sufferers from wrongs,” and that its motivating purpose is to protect the public at large from inflationary tendencies. This was clearly the intent and purpose of Congress in enacting the Emergency Price Control Act. This is all the more apparent since Congress enacted the special provision under Section 205(b) of the Emergency Price Control Act, 50 U.S.C.A.Appendix § 925(b), providing for willful or criminal violations.

Congress has clearly expressed its intention to make the treble damage action provided for under Section 205(e) one of a civil nature rather than criminal. In Hel-wig v. United States, 1903, 188 U.S. 605, at page 613, 23 S.Ct. 427, at page 430, 47 L.Ed. 614, the Supreme Court said:

“If it clearly appear that it is the will of Congress that the provision shall not be regarded as in the nature of a penalty, the court must be governed by that will.”

It was intended that the constitutional privilege against self-incrimination should apply only to criminal cases in the ordinary sense of that term.

Claims of violations of rights guaranteed by the Fifth Amendment in requiring testimony and the production of the records in question are without merit since this is not a “criminal” action.

Irrespective of the foregoing aspect of the case, plaintiff’s position is sustained for the additional reason that the Price Administrator is authorized under Section 202(b) of the Emergency Price Control Act to require one engaged in business to make and keep records and other documents and to make reports, and may require any. such person to permit inspection and copying of records and other documents. Such records, so required by the statute and Maximum Price Regulation No. 97 thereunder, are quasi-public documents and are not private records within the doctrine laid down in Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746. They are open to inspection by such persons and officers as are duly authorized under the statute to inspect them, and do not come within the immunity provisions of the statute or constitution.

This principle was enunciated and elaborated upon in Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 544, 55 L.Ed. 771, Ann.Cas.1912D, 558. In that case the Supreme Court pointed out the distinction in the matter of privilege between private papers and records and those of a public, or quasi-public, nature, saying :

“The principle applies not only to public documents in public offices, but also to records required by law to he kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established.”

This doctrine has been sustained by the Court in the following recent cases: Bowles, Adm’r, v. Beatrice Creamery Co., 146 F.2d 774, 779; Bowles, Adm’r, v. Glick Bros. Lumber Co., 9 Cir., 146 F.2d 566; Bowles, Adm’r, v. Joseph Denunzio Fruit Co., D.C., 55 F.Supp. 9; Bowles, Adm’r, v. Chew, D.C., 53 F.Supp. 787; Bowles, Adm’r, v. Amato, D.C., 60 F.Supp. 361.

Also, compare Rodgers v. United States, reported in 138 F.2d 992, an opinion by our Sixth Circuit Court of Appeals, in which records and reports required by the Agricultural Adjustment Act, 7 U.S.C.A. § 1281 et seq., are held to be quasi-public documents, open to inspection by such persons and officers as are authorized under the statute to inspect them and further holding that the requirement that such reports be made does not violate the constitutional privilege against self-incrimination.

It, therefore, follows that the defendant, J. Edward Seitz, by reason of his testimony and production of the records called for, is not entitled, for the purposes of this proceeding, to claim the immunity guaranteed by Section 202(g) of the Emergency Price Control Act or the Fifth Amendment to the Constitution.