author: JAMES, District Judge.

text:
    BURNS v. UNITED STATES.
    No. 8422-J.
    District Court, S. D. California, Central Division.
    Feb. 21, 1940.
    Dempsey & Mackay, of Los Angeles, Cal., by Arthur McGregor, of Los Angeles, Cal., for plaintiff.
    Ben Harrison, U. S. Atty., E. H. Mitchell, Asst. U. S. Atty., and Eugene Har-pole, Sp. Atty., all of Los Angeles, Cal., and C. L. Christie, Sp. Atty. for Bureau of Internal Revenue, of Washington, D. C., for defendant.
   JAMES, District Judge.

The above case came on regularly for trial on the 16th day of May, 1939, before the Court sitting without a jury, a trial by jury having been waived by the parties-thereto.

Findings of Fact.

I. Plaintiff is, and at all times hereinafter mentioned, was a citizen of the-United States and a resident of and domiciled in the County of Los Angeles, State-of California, within the Sixth Internal Revenue Collection District.

II. During the year 1928 plaintiff and', one Thomas E. Adams entered into an oral partnership agreement whereby profits and losses from speculation in securities owned by the partnership were to be shared equally. Adams handled the business transactions for the partnership and the firm continued throughout the year 1930 and thereafter until all of its assets were lost.

III. In the year 1929 the value of certain securities owned by the partnership of' Burns and Adams and held in a margin account with McCabe, Fewel & Company,, brokers of Los Angeles, depreciated greatly and it became necessary to either supply these brokers with additional margin or permit them to sell the securities. Plaintiff thereafter and on November 1, 1929; caused four hundred shares of Pacific Gas & Electric Corporation stock, which she owned, to be transferred from her account with H. N. Whitney & Sons of New York to. the partnership account of Burns and Adams with McCabe, Fewel & Company at Los Angeles. This was done with the understanding on her part that said stock was still to be her stock after the transfer to the McCabe, Fewel & Company account and that it was placed there in pledge to bolster the partnership’s margin account and would be returned to her in case it was not needed for that purpose, but if the margin account became any thinner or lower, then her stock was to be sold. McCabe, Fewel & Company did sell the stock in question on May 21, 1930.

IV. On March 16, 1931, plaintiff filed her income tax return for the calendar year 1930, showing an income tax liability for said year of $1,846.68. During the calendar year 1931 plaintiff paid said sum to Galen H. Welch, the then Collector of Internal Revenue within the Sixth Internal Revenue Collection District.

V. Thereafter, the Commissioner of Internal Revenue assessed additional taxes against the plaintiff on account of her 1930 income in the sum of $1,874.55 plus interest. Said additional taxes were paid by the plaintiff in installments as follows:

February 6, 1933 $151.13
March 28, 1933 151.00
April 12, 1933 151.00
May 9, 1933 151.00
June 10, 1933 151.00
July 10, 1933 151.00
August 11, 1933 151.00
September 11, 1933 151.00
October 10, 1933 151.00
November 11, 1933 151.00
December 9, 1933 151.00
January 12, 1934 151.00
February 12, 1934 1.38
$1,813.51
June 14, 1933 23.05
July 10, 1933 23.05
August 11, 1933 23.05
September 11, 1933 23.05
October 10, 1933 23.05
October 18, 1933 161.37
276.62
$2,090.13

Said sum of $2,090.13 consists of, the prin-' cipal sum of $1,874.55, plus interest.

VI. In computing the additional taxes of $1,874.55, plus interest, paid by the plaintiff, the Commissioner of Internal Revenue included, among other items as net income, the sum of $19,381.56, on the ground that it represented the profit to plaintiff arising from the sale on May 21, 1930, of four hundred shares of Pacific Gas & Electric Corporation stock. This stock cost plaintiff $7,330.94 and its market value on November 1, 1929, was $23,650. It was sold through McCabe, Fewel & Company on May 21, 1930,- for $26,712.50.

VII. On February 26, 1935, plaintiff filed a claim for refund in the amount of $1,324.75, plus interest, for income taxes paid for the calendar year 1930, wherein the following grounds for a refund, and no others were asserted:

“In determining the additional taxes paid by this claimant there was erroneously included as claimant’s income the sum of $9,695.78, being one-half of the purported profit realized on the sale of 400 shares of Pacific Gas & Electric Company stock. In the Revenue Agent’s report dated January 17, 1933, the examining officer computes a profit upon the sale of these shares of $19,381.56. Claimant states that she is subject to tax. on only one-half of this profit for the reason that these shares were sold by the partnership of Burns & Adams to protect other securities held by said partnership. During the year 1928 this claimant and one Thomas E. Adams entered into a partnership agreement whereby profits or losses made upon the sale of securities were to be split 50/50 between the partners. During the year 1929 the partnership had a marginal account in the name of Adams with the brokerage firm of Mc-Cabe, Fewel & Company, 716 South Spring Street, Los Angeles. It became necessary to place additional security to maintain the margin. Claimant turned over to Mr. Adams the 400 shares of Pacific Gas & Electric Company stock, which he pledged with said brokerage firm. The securities were sold for $26,712.50 by said brokerage firm and the proceeds were applied as a credit on said partnership margin account. Claimant has never received back the stock from the partnership and neither has she received any benefits therefrom. Substantially all of the proceeds derived from this stock were lost by said partnership on this trading account. The sale of this stock by the brokerage firm of McCabe, Fewel & Company was a partnership transaction of which this taxpayer was entitled to but one-half of the proceeds. Even this one-half has never been received by her.
“It is respectfully submitted that her income has been overstated by $9,695.78, which results in an overpayment of tax of $1,324.75, which claimant respectfully requests be refunded to her together with interest thereon.
“Claimant requests and demands such further or additional refund or refunds as may now or hereafter appear to be due her by reason of the foregoing or on account of (a) any mistake in fact or in law made by her or any officer, clerk, or other employee of the United States Treasury Department in the preparation, amendment and/or adjustment of her said return, (b) any mistake in the payment and/or collection of the tax made by any person designated in subdivision (a) of this paragraph, (c) any erroneous or illegal requirement or regulation of any officer, clerk, or other employee of the United States Treasury Department, (d) any repealed law, whether heretofore or hereafter repealed, (e) any unconstitutional law whether heretofore or hereafter declared unconstitutional, or (f) any other act or matter in connection with the said return, whether covered by the foregoing or not so covered.”

VIII. On August 16, 1935, a Revenue Agent’s report was made in which it was recommended that plaintiff’s said claim for refund be disallowed. Thereafter and on December 20, 1935, plaintiff filed a protest to said Revenue Agent’s report. The material part of said protest reads as follows:

“Reference is made to Revenue Agent’s report dated August 16, 1935, which recommends disallowance of taxpayer’s claim for refund on the basis that no evidence was submitted to show that the taxpayer contributed 400 shares of Pacific Gas & Electric Company stock to the partnership of Burns & Adams. Taxpayer does not acquiesce in the recommendation of the examining officer and files the following as her protest:
“Attached hereto is an affidavit which has been executed by this taxpayer and Thomas E. Adams, one of the partners of the partnership of Burns & Adams, which is self-explanatory. The taxpayer’s records indicate that on November 1, 1929, she transferred 400 shares of Pacific Gas & Electric Company stock to the partnership account in McCabe, Fewel & Company, stock brokers, 716 South Spring Street. The stock market records indicate that there were no stock sales on November 1, 1929, as the stock market was closed, but on October 31, 1929, the nearest day on which the stock market made sales, to this date, the lowest sale was 58-% with a high of 60, making an average of 59-%. The stock therefore had a fair market value at the time it was transferred to the partnership of $23,650.00. The records of McCabe, Fewel & Company, stock brokers, show that this stock was sold on May 21, 1930, for $26,712.50 which would indicate a profit to the partnership of $3,068.50, one-half of which, or $1,534.25, was taxable to this taxpayer in lieu of $19,381.56 determined by the Department as shown by the Revenue Agent’s report dated January 17, 1933. Taxpayer states that the contribution that she made to the partnership in the way of stocks and securities and cash during the latter part of 1929 was nothing more nor less than an advance to it for the purpose of protecting the partnership brokerage account which was then greatly in distress; that all the proceeds that were derived from the sale were held in the partnership account and were subsequently lost and the partnership still owes taxpayer the stock or its fair market value at the date of transfer to it, as well as the cash advances made.”

IX. That in plaintiff’s complaint filed in this action, and in the briefs submitted by' her attorneys, she seeks to recover a portion of the income taxes paid by her for the calendar year 1930 upon the ground that the sale of said ‘ four hundred shares of Pacific Gas & Electric Corporation stock was a partnership transaction and that she derived no taxable gain or income whatever from the disposition of said stock.

X. On July 21, 1936, the Commissioner of Internal Revenue disallowed said claim for refund.

Conclusions of Law

As Conclusions of Law from the foregoing Facts, the Court determines:

I. That the plaintiff cannot recover in this action for the reason that it is not based on the ground set forth in her claim for refund but on an entirely distinct and different ground from the ground set forth in said claim for refund of income taxes for the calendar year 1930.

II. That the plaintiff alone owned the four hundred shares of the Pacific Gas & Electric Corporation stock; that the profit of $19,381.56 from the sale of said stock was solely her profit and was not the profit in whole or in part of any other person or or any partnership and was taxable to the plaintiff and that the plaintiff did not overpay her income tax for the calendar year 1930.

III. That the defendant is entitled to judgment; and that the defendant is also entitled to costs of suit herein.

Let judgment be entered against the plaintiff accordingly.


source: Caselaw Access Project

author: KALODNER, District Judge.

license: Public Domain

text:
    UNITED STATES v. GOLDMAN.
    No. 4429.
    District Court, E. D. Pennsylvania.
    June 25, 1945.
    Gerald A. Gleeson, U. S. Atty., and Thomas J. Clary, Asst. U. S. Atty., both of Philadelphia, Pa., for plaintiff.
    Raymond A. White, Jr., of Philadelphia, Pa., for defendant.
   KALODNER, District Judge.

The plaintiff in this case seeks to recover for damage to one of its mail trucks resulting from a collision with defendant’s automobile. The cause, was tried without a jury.

The accident occurred at the intersection of Paschall Avenue and 67th Street in the City of Philadelphia, on December 13, 1943. The defendant freely admitted his negligence and the sole question for determination is whether or not the plaintiff’s driver was guilty of contributory negligence.

Upon consideration of the evidence I make the following findings of fact:

1. The accident out of which this case arose occurred on December 13, 1943, at about 11:30 a.m. Plaintiff’s vehicle was travelling eastward on Paschall Avenue, toward and across the intersection with 67th Street. Defendant was driving his motor vehicle southward on 67th Street across the intersection of Paschall Avenue.

2. Paschall Avenue at its intersection with 67th Street, in the City of Philadelphia, is a through highway.

3. Proper “stop” signs are located at the southeast and northwest corners' of said intersection requiring vehicles on 67th Street to come to a full and complete stop before entering the intersection.

4. Plaintiff had the right of way over the defendant.

5. Defendant in violation of the Motor Vehicle Code of Pennsylvania, 75 P.S. § 1 et seq., failed to stop, and entered the intersection without stopping, entirely disregarding the “stop” signs.

6. The cost of repairs to plaintiff’s vehicle is $75.81.

7. The collision occurred because of the negligence of the defendant and the contributory negligence of the plaintiff.

Discussion

The testimony conclusively established that both the defendant and the plaintiff’s truck driver negligently operated their respective vehicles at the time of the happening of the accident and that their negligence caused the accident. The defendant was negligent in that he failed to stop his automobile when he came to Paschall Avenue, in disregard of the “stop” signs at the intersection. The plaintiff’s driver was negligent in that, although he was operating his vehicle on a “through” highway, he failed to exercise due care under the circumstances.

The plaintiff’s driver, Moore, testified that he was driving the mail truck east on Paschall Avenue and that when the front of the truck was at the west curb line he first saw defendant’s motor vehicle coming south on 67th Street, just west of the center of the street. At that time the defendant’s car was about a car length north of the north curb line on Paschall Avenue. Moore testified he didn’t stop but continued to cross the intersection at about 25 miles per hour, and that when he was a little more than half way he concluded that an accident was inevitable and that he swerved to the right but was unable to avoid a collision between the two cars. The weather was clear and the streets were dry.

On cross-examination Moore testified that he had stated in writing on February 8, 1944, that he had first observed the defendant’s car when the front of his truck was about half way across 67th Street and that the defendant’s car was then at the north curb of Paschall Avenue, trav-elling at a speed of about 20 miles an hour. Moore’s testimony clearly establishes his negligence.

Under the Pennsylvania decisions motorists must exercise due care at street intersections under all circumstances. Operators of motor vehicles must have their cars under such control that they can stop at the slightest danger. The right of way on a through highway is merely a permissive right' — due care must be exercised to avoid a collision with an approaching vehicle at an intersection.

In Schall v. Penn Transit Co., 352 Pa. 129, at page 131, 42 A.2d 278, at page 279, decided April 9, 1945, the Supreme Court of Pennsylvania stated the applicable rule as follows: “* * * It is true that, because of those provisions, it has frequently been ruled that a person operating a vehicle on a through highway is justified in assuming that anyone approaching on an intersecting road or street will obey the stop signal and give him the right of way as required by the code. Rhinehart v. Jordan, 313 Pa. 197, 199, 200, 169 A. 151, 152; Balkie v. Philadelphia Rapid Transit Co., 331 Pa. 93, 95, 200 A. 52, 53; Rowles v. Evanuik, 350 Pa. 64, 68, 69, 38 A.2d 255, 257; Torrens v. Belfatto, 116 Pa.Super. 339, 343, 176 A. 533, 535; Roth v. Hurd, 140 Pa.Super. 401, 404, 405, 13 A.2d 891, 893; Steingart v. Kaney, 144 Pa.Super. 534, 19 A.2d 499; Glennon v. Ostroff, 147 Pa.Super. 182, 184, 185, 24 A.2d 29, 30; Reiter v. Andrews, 155 Pa.Super. 449, 451, 38 A.2d 508, 510. But section 1014(c) of the Vehicle Code [75 P.S. § 573(c)], after providing, as above stated, that the operator of a vehicle entering a through highway shall yield the right of way to all vehicles approaching on such highway, further states that ‘This provision shall not operate to relieve the driver of any veliicle being operated on a through highway from the duty to drive with due regard for the safety of vehicles entering such through highway, nor shall it protect the driver of any vehicle on a through highway from the consequence of arbitrary exercise of such right of way.’ Therefore the operator of a vehicle on a through highway cannot, notwithstanding his superior right of way, rely blindly upon an assumption that the operator of a vehicle on an intersecting road or street will obey the law; he must be reasonably vigilant to observe traffic conditions on the intersecting highway, and if he carelessly ignores the approach of a vehicle after he sees, or should have seen, that it has not in fact stopped before entering the through highway he is thereby guilty of contributory negligence. * * *” (Emphasis supplied.)

Accordingly, I state the following conclusions of law:

1. The plaintiff’s driver, Moore, was guilty of contributory negligence in the manner in which he drove his motor vehicle across Paschall Avenue at its intersection with 67th Street.

2. Under all the evidence in the case, the finding is in favor of the defendant.

An order may be submitted in accordance with this opinion.

       Sec. 1016, Pennsylvania Vehicle Code of May 1, 1929, P.L. 905, 75 P.S. § 591(c).


author: MULLINS, District Judge.

text:
    ENSLEY BANK & TRUST CO. v. UNITED STATES.
    No. 5171.
    District Court, N. D. Alabama, S. D.
    April 17, 1945.
    L. C. Bradley, of Birmingham, Ala., for plaintiff.
    Jim C. Smith, U. S. Atty., and William H. Burton, Jr., Asst. U. S. Atty., both of Birmingham, Ala., Samuel O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe and Homer R. Miller, Sp. Assts. to Atty. Gen., for defendant.
   MULLINS, District Judge.

This cause came on to be tried upon the facts by this Court without a jury and upon consideration and pursuant to Rule 52, Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723c, the Court finds the facts specially and states its conclusions of law thereon with direction for the entry of the appropriate judgment as set forth below:

Findings of Fact

1. This is a civil action under the Tucker Act by Ensley.Bank & Trust Company, a dissolved corporation, against the United States for the recovery of $4,587.65, plus interest, federal income and excess profits taxes for the years 1933 and 1934.

2. Plaintiff was duly incorporated under the laws of Alabama, as the Bank of Alabama, on August 14, 1906, for the purposes of engaging in the General banking business in the Ensley District of Birmingham, Alabama. The banks in that district depended largely on the steel business and suffered seriously from the 1929 depression. As a result of this situation the Bank of Alabama was compelled to discontinue its operations and began liquidating its affairs in 1930. In December, 1930, the Bank of Alabama sold its assets to the Ensley National Bank of Birmingham Alabama, the Ensley National Bank assuming the liabilities of said Bank of Alabama.

3. In 1932, on account of further adverse conditions it became apparent the Ensley National Bank could no longer safely conduct a banking business and its business and affairs were liquidated in the following manner:

The Ensley National Bank obtained authority from its stockholders for a voluntary liquidation of its affairs. On July 16, 1932, the First National Company of Birmingham, Alabama, an affiliate of the First National Bank, Birmingham, Alabama, and Birmingham Trust and Savings Company organized the Western Holding Company, Inc., and loaned money to that corporation with which money Western Holding Company, Inc., purchased all except the directors’ qualifying shares of stock of the Bank of Alabama. On July 18, 1932, the Ensley National Bank by written contract appointed the Bank of Alabama as its liquidating agent or trustee. On October 4, 1932, the name of the Bank of Alabama was changed to Ensley Bank & Trust Company. The Bank of Alabama continued as a legal corporation under the name of the Bank of Alabama and Ensley Bank & Trust Company (hereinafter called plaintiff) from August 14, 1906, to September 30, 1935. On September 30, 1935, plaintiff was duly dissolved under and pursuant to the laws of Alabama. Plaintiff existed as a legal corporation from September 30, 1935, to September 30, 1940, under the provisions of Section 7069, Code of Alabama 1923, Code 1940, Tit. 10, § 110, and pursuant to a decree entered in the Circuit Court of Jefferson County, Alabama, on May 17, 1940, and pursuant to Section 7069, Code of Alabama 1923, plaintiff’s corporate existence was extended for a period of five years from September 30, 1940. During all times mentioned herein the principal place of business of the plaintiff was located at Birmingham, Jefferson County, Alabama.

4. From and after July 19, 1932, and throughout the years 1933 and 1934, and subsequent thereto, plaintiff engaged in the general banking business in that part of the City of Birmingham, Alabama, known as Ensley. The First National Bank of Birmingham, and the Birmingham Trust & Savings Bank were both engaged in the general banking business in the downtown section of Birmingham, Alabama. The First National Company of Birmingham, an affiliate of the First National Bank of Birmingham, and the Birmingham Trust & Savings Bank in an effort to save the banking business in Birmingham from the catastrophe anticipated on account of the failure of the Ensley National Bank caused and induced the plaintiff to enter into and execute with said Ensley National Bank on July 18, 1932, a written contract. On February 1, 1933, plaintiff and Ensley National Bank executed a completed contract.

5. The contract between plaintiff and Ensley National Bank contained the following pertinent provisions effective as at the beginning of business on June 19, 1932. Ensley National Bank appointed plaintiff as its liquidating agent, plaintiff agreeing to assume and pay off and discharge on demand all of the debts, liabilities, commitments and obligations of National Bank, direct or contingent with certain specified exceptions not here material. The National Bank agreed to pay plaintiff the amounts of liabilities, indebtedness, commitments and obligations of said Ensley National Bank “hereby or hereafter” assumed by plaintiff and in addition to pay plaintiff as compensation for its services under the contract or as interest on the amount of the indebtedness (at the election of plaintiff from time to time) an amount equal to 8% per annum on the amount of the indebtedness from the effective date of the agreement. As additional compensation plaintiff was to receive an amount equivalent to one per cent on amounts not assumed which was to be paid on account of services in effecting renewals or extensions or otherwise dealing with pledged property. Plaintiff was also to receive reimbursement for its expenses, court costs and other expenses of the liquidation. The amounts of compensation or interest would be computed on the average daily balance of liabilities of Ensley National Bank not discharged by realization out of assets or property of said Ensley National Bank, and were payable monthly from the first proceeds received out of such assets or property or at the option of plaintiff could be added to the liability of Ensley National Bank to plaintiff under the contract.

The obligation of Ensley National Bank to plaintiff was to mature upon demand by plaintiff after two years of the effective date of the contract, the right being reserved to plaintiff to call on Ensley National Bank for payment when that was deemed necessary in order that suits against stockholders could be filed within the period of the statutes of limitations. Under the contract Ensley National Bank sold, assigned, transferred and set over to plaintiff its good will and banking business without consideration therefor except the execution of the original and completed contract and the commencement of the performance of duties devolved upon plaintiff under the contract. The cash and cash items were assigned to plaintiff for its use in discharging the liabilities of Ensley National Bank. The obligation of Ensley National Bank to plaintiff under the contract was secured by the transfer, conveyance, mortgage, pledge or hypothecation to plaintiff of all the assets, business and property of Ensley National Bank except the corporate franchise of Ensley National Bank and membership in the Federal Reserve System. Only cash transferred to plaintiff or realized out of the assets and property was to be considered as being in payment or discharge of the obligation arising from Ensley National Bank to plaintiff and all other transfers, conveyances, mortgages and pledges were deemed to be executed and accepted as security only for the indebtedness of Ensley National Bank to plaintiff. Plaintiff was to proceed with the liquidation as promptly as possible and apply the net proceeds of collection, etc., upon the indebtedness of Ensley National Bank to plaintiff. Plaintiff was given broad powers in compromising claims owing En-sley National Bank making renewals, renewing obligations or substituting securities where these amounts did not involve over $500 in which case written consent of certain specified officers of En-sley National Bank was required. It was agreed that within 90 days of July 19, 1934, or the period extended by agreement of the parties, a final settlement in accounting would be made in which plaintiff would be charged with all payments and applications made upon or with respect to the assets or property of Ensley National Bank and credited with assumed liabilities as disclosed at the time of settlement and other payments made, including taxes, interest, compensation paid under the contract and expenses of liquidation specially incurred as provided in the contract. If the charges exceeded the credits plaintiff was to transfer all remaining assets to Ensley National Bank. If the credits exceeded the charges then Ensley National Bank was bound to pay the difference. If it could not do so all remaining assets should be foreclosed and sold.

6. In accordance with the terms of the aforesaid contracts, plaintiff proceeded to liquidate the Ensley National Bank. Through said contracts referred to in Paragraph 4 above, plaintiff acquired all of the assets and business of the Ensley National Bank including good will and thereupon and thereafter became the sole and dominant factor in the banking business in the Ensley locality.

7. An .examination and report on the affairs of the Ensley National Bank was made by J. A. Hand, vice president, First National Bank -of Birmingham, as of July 18, 1932. The report and examination indicated that (without considering good will items) Ensley National Bank was insolvent at that time. There was at that time $200,-000 face value outstanding bank stock of Ensley National Bank but the value of claims against the stockholders for double liability was not appraised at that time.

8. In 1930 the deposits of Ensley National Bank were about $450,000, and were increased to $1,250,000 in said year when-said bank took over the Bank of Alabama. In July, 1932, the deposits were about $375,-000, and in said year they dropped to a new low of $270,000. Pursuant to said contract, Ensley National Bank gave plaintiff its note as of July 19, 1932, for $355,080.63. Said note shows that the principal amount was paid down to $302,229.44, the last credit being made June 1, 1933. Proceedings were not started against the stockholders of Ensley National Bank until after July 18, 1934. In 1934, about $35,000 was collected from the stockholders and a little less than $50,000 was collected altogether, the balance being collected after the year 1934.

9. On August 26, 1935, plaintiff entered into a written contract with the First National Bank of Birmingham, Alabama, under which plaintiff sold to said First National Bank all of its assets with certain specified exceptions not here material. Under the contract First National Bank of Birmingham assumed and agreed to pay all deposit liabilities not in excess of $611,-336.87, and to pay plaintiff certain specified cash for retirement of certain preferred stock. The contract specified that claims against stockholders of Ensley National Bank were excepted from said sale, plaintiff being obliged to pursue these claims and pay over any recoveries to the First National Bank of Birmingham as trustee. The First National Bank of Birmingham as trustee agreed that it would liquidate all of the assets for the benefit of plaintiff’s creditors and stockholders. Included in the assets transferred to the First National Bank of Birmingham under the contract was the good will of plaintiff.

10. During all years here involved plaintiff kept its books and filed its federal income and excess profits tax returns on the calendar year and cash receipts and disbursements bases.

11. On March 15, 1934, plaintiff filed with the Collector of Internal Revenue, Birmingham, Alabama, a corporation income and excess profits tax return for the calendar year 1933, disclosing a total gross income of $37,090.61 (which included service charges of $24,721.47, received under the contracts) total deductions of $38,853.-09 (including a claimed deduction of $13,-039.03 for partial worthlessness of debts) and a net loss of $1,762.48.

12. On March 15, 1935, plaintiff filed with the aforesaid Collector of Internal Revenue, Birmingham, Alabama, a corporation income and excess profits tax return for the calendar year 1934, disclosing total gross income of $32,605.20 (including service charges of $16,175.90, received under the terms of the contracts) total deductions of $42,435.19 (including a claimed deduction of $14,318.03 for partial worthlessness of debts), and a net loss of $9,829.99.

13. On September 10, 1936, the Commissioner of Internal Revenue forwarded to plaintiff a deficiency letter covering the years 1933 and 1934. The letter proposed the following deficiencies in taxes:

1933 1934
Income tax..........$1,584.31 $1,798.17
Excess profits tax.... 26.11 653.88
Totals ..........$1,610.42 $2,452.05

The deficiency in tax for 1933 was the result inter alia of increasing the aforesaid service charges from $24,721.47 to $24,-985.47, and disallowance of a claimed bad debt deduction of $13,039.03. The deficiency in tax for 1934 was the result inter alia of increasing the aforesaid service charges from $16.175.90 to $24,667.61 and disallowing a claimed bad debt deduction of $14,318.03.

14. The proposed deficiences referred to in Paragraph 13 were duly assessed by the Commissioner of Internal Revenue against plaintiff and were paid by plaintiff on December 30, 1936,. to Harwell G. Davis, then United States Collector of Internal Revenue for the District of Alabama. These payments were as follows:

1933 ................. $1,610.42
Plus interest ........ 266.51
Total ...........$1,876.93
1934 ..............$2,452.05
Plus interest........ 258 67
Total ...........$2,710.72

Said Harwell G. Davis is not now and was not at the date of commencement of this suit in office as United States Collector of Internal Revenue. The amounts paid by plaintiff as aforesaid were duly covered into the Treasury of the United States by the Collector of Internal Revenue.

. 15. On November 21, 1938, within the time fixed by law plaintiff filed with the Collector of Internal Revenue, Birmingham, Alabama, a claim for refund of federal income and excess profits taxes paid for the year 1933. On June 28, 1940, the Commissioner of Internal Revenue mailed a letter to plaintiff by registered mail notifying plaintiff that said claim for refund had been rejected in toto.

16. On November 21, 1938, plaintiff also filed with the Collector of Internal Revenue at Birmingham, Alabama, a claim for refund of federal income and excess profits taxes paid for the year 1934. Later at the request of the Commissioner of Internal Revenue plaintiff submitted additional data in support of said claim. On June 28, 1940, the Commissioner of Internal Revenue mailed a letter to plaintiff by registered mail notifying plaintiff that its claim for refund had been rejected in toto.

17. The pleadings in this case and the claims for refund properly present for this Court’s determination the following questions :

A. Whether sums actually received, collected and credited by plaintiff as compensation or interest under the written contract with Ensley National Bank and pursuant to the terms thereof, constitute gross income to plaintiff in the years in which said sums were collected, received and credited.

B. Whether the sum of $264, which was part of the sum due as compensation or interest under the contract in and for the year 1933, which was admittedly available as compensation or interest, but which was not credited during the year 1933, through plaintiff’s inadvertence, constituted gross income to plaintiff in the year 1933.

C. Whether the sum of $8,491.71, which plaintiff was entitled to receive under the contract in and for the year 1934, and which plaintiff did not credit to itself as compensation or interest but exercised its election under the contract to have said sum applied upon liabilities which plaintiff assumed under the contract, constituted taxable income to plaintiff in the year 1934.

D. Whether plaintiff is entitled to deductions for 1933 and 1934 as partial bad. debts the respective sums of $13,039.03 and $14,318.03. The claims for refund as filed by plaintiff herein and as rejected by the Commissioner of Internal Revenue did not present either to the Commissioner or this Court any question as to whether plaintiff was entitled to losses under Section 23(f), Revenue Acts 1932 and 1934, 26 U.S.C.A. Int.Rev.Acts, pages 490, 672, or for ordinary and necessary business expenses under Section 23(a), Revenue Acts of 1932 and 1934, 26 U.S.C.A. Int.Rev.Acts, pages 489, 671, on account of said sums set forth in D or any parts thereof.

The claims for refund were filed within the time prescribed by law and this action was timely instituted within two years from the date the Commissioner notified plaintiff of the rejection of the claims for refund by registered mail.

18. During the year 1933, plaintiff credited on its books as compensation or interest received from the Ensley National Bank the sum of $24,721.47. Pursuant to the terms of the contracts referred to plaintiff was entitled to receive as interest or compensation from said Ensley National Bank for 1933, the sum of $24,985.47. However plaintiff through inadvertence neglected to record the receipt of $264 of said amount at any time during the year 1933 and it was not paid or accrued on plaintiff’s books during said year. This is 8% on $3,300 of indebtedness due by En-sley National Bank charged off by plaintiff at the end of 1932 and excluded in the calculation of interest until 1934. It was included in the amount demanded of Ensley National Bank as set forth above. During the year 1933, plaintiff received income from other sources aggregating $12,369.14. Plaintiff reported the sums of $24,721.47 and $12,369.14 as gross income for 1933. For the year 1933, plaintiff was entitled to and has been allowed by the Commissioner of Internal Revenue deductions for depreciation, compensation of its officers, salaries and wages, rents paid, interest paid, taxes paid and miscellaneous expenses in the aggregate amount of $25,836.56. Plaintiff contends that it is entitled to deduct certain alleged partially worthless indebtedness due and owing the Ensley National Bank which alleged indebtedness was taken over by plaintiff under the contracts. The aggregate amount claimed as a deduction is $13,-039.03. In its return for 1933, plaintiff claimed a deduction for $13,039.03 in addition to other deductions herein above set out. Said claimed deduction has been disallowed by the Commissioner of Internal Revenue.

19. During the year 1933, plaintiff realized from assets pledged to it by the En-sley National Bank the total sum of $87,-271.16. Of said sum $74,578.78, represented gross amounts received, by plaintiff through liquidation and collection of the principal amount of indebtedness due and owing the Ensley National Bank and assigned to plaintiff and the sum of $12,-692.38, represented the gross amount of interest and other earnings by said assets which was collected by plaintiff. During 1933, plaintiff incurred expenses in maintaining said assets and making collections in the amount of $2,454.29. During the year 1933, plaintiff paid to the Reconstruction Finance Corporation and the Federal Reserve Bank of Atlanta, Georgia, the sum of $3,028 interest and $30,745.16 principal on claims held by the institutions against the Ensley National Bank which claims were secured by a prior lien on some of the assets from which the sums above referred to were realized.

20. Up to July 18, 1934, plaintiff regularly credited on its books as compensation or interest received from the Ensley National Bank the sums from time to time accrued as due therefor under the contracts. After July 18, 1934, plaintiff generally did not credit on its books as received from the Ensley National Bank the sums accruing for compensation or interest under said contracts but instead applied the net amounts to which it would be entitled as compensation or interest upon the principal claims under said contracts. During said year 1934, plaintiff credited on its books as compensation or interest received from En-sley National Bank only the sum of $16,-175.90, although the total amount to which it was entitled under said contract was $26,-757.33. Plaintiff did not in 1934, and has not at any subsequent time, credited on its books as interest or compensation received the remaining sum of $10,581.43. During said year 1934, plaintiff received income from other sources amounting to $16,970.48. The plaintiff reported as gross income the sum of $16,175.90 credited on its books as compensation or interest as aforesaid and the further sum of $16,429.30. It did not include in its gross income the sum of $10,-581.43, to which it was entitled as compensation or interest for the year 1934, but which was not credited on its books as received as stated aforesaid. Through inadvertence and mistake plaintiff failed to report the sum of $541.18 which it received as income from other sources during the year 1934. For the year 1934, plaintiff was entitled to and has been allowed by the Commissioner of Internal Rev-nue deductions for depreciation, interest, compensation to officers, rent, taxes, salaries and wages, and miscellaneous expenses, and loss on the sale of bonds in the aggregate amount of $42,878.50.

Plaintiff also claimed a deduction on account of alleged worthless accounts and debts assigned to plaintiff by the Ensley National Bank as aforesaid in the aggregate amount of $14,318.03. The Commissioner of Internal Revenue has disallowed said claimed deduction.

21. During the year 1934, plaintiff realized from the assets pledged to it by the Ensley National Bank the sum of $73,-811.51. Of said sum $67,793.87 represented the gross amount received by the plaintiff through the conversion of the principal of the assets received from said Ensley National Bank into cash either by sale, collection or otherwise, while the sum of $6,-017.64 represented interest and other gross earnings from said assets which was collected by the plaintiff. During the year 1934, the plaintiff incurred expenses in maintaining said assets and in collecting said sums from said assets in the aggregate amount of $2,078.07. During the same year the plaintiff paid to the Reconstruction Finance Company and to the Federal Reserve Bank of Atlanta, the sum of $71,-486.80 as principal, and $972.07 as interest, on indebtedness owing by the Ensley National Bank to said institutions which indebtedness was secured by a prior lien on some of the assets from which the gross amounts above-mentioned were realized.

22. Under the contract the plaintiff was entitled to compensation or interest for the months of October, November and December, 1934, in the amount of $6,585.27. Said amount exceeded the total gross amount collected from the pledged assets by the sum of $2,089.72. Said last-mentioned sum is a part of the sum of $10,581.43, above referred to, which plaintiff voluntarily did not credit on its books as compensation or interest received from the Ensley National Bank in 1934. Of said sum of $10,581.43, the said sum of $2,089.72 has not been included in plaintiff’s gross income from the year 1934. The remaining sum of $8,491.71 for the payment of which the total proceeds of collections made on account of pledged assets was sufficient but which the plaintiff voluntarily failed to credit on its books as compensation or interest received was included in plaintiff’s gross income by the Commissioner of Internal Revenue.

23. Pursuant to the contracts plaintiff on August 12, 1934, made a demand on the Ensley National Bank for payment of the entire balance of its principal claim as shown by an accounting then made. The National Bank failed to make said payment and the plaintiff therefore retained possession of and continued to liquidate the pledged assets. Since said date plaintiff or its assigns have liquidated substantially all of the assets pledged by the Ensley National Bank. Plaintiff has taken steps to make collections from stockholders of the Ensley National Bank • for amounts due from them pursuant to the laws of Alabama. The proceedings against the stockholders continued into the years subsequent to 1934 and were terminated in years subsequent to 1934. Substantially all of the amounts that can be collected from said stockholders have now been collected. The total amounts collected through liquidation and proceedings against the stockholders are less than the principal amount of the Ensley National Bank debts assumed even if no part of such amounts should be applied to payment of plaintiff’s claim for compensation or interest.

24. The evidence offered is insufficient to show the amount of value; if any, which attached to the name, reputation, location, depositors’ lists, and other good will items of Ensley National Bank in the years 1932, 1933, or 1934. Moreover, the value of good will during said years is immaterial.

25. Plaintiff made a demand and claim upon Ensley National Bank for payment of its note of $355,080.63, as reduced by credits in accordance with the terms of the contract with Ensley National Bank, on or about August 12, 1934. No demand or claim was made by plaintiff against Ensley National Bank under said contract prior to said date.

26. On July 18, 1932, and during all the balance of the year 1932, the responsible officers and officials of plaintiff and the First National Bank of Birmingham knew or should have known that plaintiff would realize a loss on transactions covered by the contract between plaintiff and Ensley National Bank, in so far as all items of the contract were concerned with the exception of good will items.

27. The identifiable event from which gain or loss was determinable under the transactions between plaintiff and Ensley National Bank was the purchase of the assets of plaintiff (which included the assets taken over by plaintiff from Ensley National Bank) which event occurred on August 26, 1935. There is no competent evidence from which this Court can determine the amount of loss sustained by plaintiff in the year 1935. In any event the year 1935 is not involved in this action and consequently the amount of loss if any which plaintiff sustained in that year is immaterial and not within the issues in this case.

Conclusions of Law

1. The sum of $24,721.47 was earned, received and credited by plaintiff in 1933 as compensation or interest and constituted gross income to plaintiff in the year 1933, within the provisions of Section 22(a), Revenue Act of 1932, 26 U.S.C.A. Int.Rev.Acts, page 487, and was properly treated as gross income for said year by the Commissioner of Internal Revenue.

2. The sum of $264 was earned and received by plaintiff as compensation or interest in 1933 since it was available to plaintiff and could have been drawn by plaintiff in said year but was not credited as compensation or interest because of plaintiff’s inadvertence. Said sum was therefore gross income to plaintiff in 1933, and properly treated as such by the Commissioner of Internal Revenue in accordance with the provisions of Section 22(a), Revenue Act of 1932.

3. The sum of $16,175.90 was earned and received by plaintiff in 1934, as compensation or interest and credited as such pursuant to the contract with Ensley National Bank. Said sum constituted gross income to plaintiff in said year and was properly treated as such by the Commissioner of Internal Revenue within the provisions of Section 22(a), Revenue Act of 1934, 26 U.S.C.A. Int.Rev.Acts, page 669.

4. While plaintiff was entitled to receive the sum of $8,491.71, as compensation or interest under the contract in and for the year 1934, plaintiff did not receive said sum. It elected as it was entitled to do under the contract, to have said sum credited on the note which it held against Ensley National Bank. Said sum did not constitute gross income to the plaintiff in 1934, within the provisions of Section 22 (a), Revenue Act of 1934, and the Commissioner of Internal Revenue erroneously included said sum in plaintiff’s gross income for said year. In making said credit upon said note plaintiff acted in good faith and in accordance with the terms of the contract and there is no evidence that plaintiff’s motives were those of tax avoidance or tax evasion.

5. The burden of proof rests upon plaintiff to establish that it is entitled to deductions from, gross income and to establish the amounts of deductions allowable and the proper year in which the deductions should be taken. Plaintiff has failed to establish that it is entitled to partial bad debt deductions for 1933 in the amount of $13,039.03, or any other amount within the provisions of Section 23(j), Revenue Act of 1932, 26 U.S.C.A. Int.Rev.Acts, page 490, or in the amount of $14,318.03, or any other amount for the year 1934, within the provisions of Section 23 (k), Revenue Act of 1934, 26 U.S.C.A. Int.Rev.Acts, page 673.

6. The claims for refund and supplemental data filed by plaintiff for the years 1933 and 1934, claimed deductions only on the ground of partial bad debts and did not advance any claim that plaintiff was entitled to deductions for ordinary and necessary business expenses under Section 23 (a), Revenue Acts of 1932 and 1934, or losses under Section 23(f), Revenue Acts of 1932 and 1934, 26 U.S.C.A. Int.Rev.Acts, pages 490, 672.

7. The allowance of partial bad debt deductions for the years 1933 and 1934 are discretionary with the Commissioner of Internal Revenue and said discretion is only reviewable when the same has been abused. Here the claimed deductions were not allowable. Consequently it cannot be said that the Commissioner abused his discretion in disallowing said deductions.

8. Plaintiff is not entitled to deductions except those allowed by the Commissioner on any theory for either the j'ears 1933 or 1934. The identifiable event from which gain or loss could be determined occurred in 1935 and any loss on the transaction between plaintiff and Ensley National Bank occurred in said year which is not involved in this action.

9. The good will and the business of Ensley National Bank as acquired by plaintiff under the contract was a capital asset. Plaintiff paid for said capital asset the 'difference between the amount of liabilities assumed and paid under the contract and the amounts realized and collected on liquidation.

10. The Commissioner correctly determined that plaintiff’s net income for 1933 was $11,522.26, and correctly assessed the additional income and excess profits taxes for said year involved in this action. Plaintiff did not overpay its income and excess profits taxes for the year 1933.

11. The Commissioner incorrectly determined the amount of plaintiff’s net income for 1934. The correct amount of plaintiff’s net income for 1934 is $4,585.91, instead of $13,077.62, as determined by the Commissioner. Income and excess profits taxes for 1934 should be determined on the corrected basis. Plaintiff overpaid its income and excess profits taxes for 1934 in the amount of $1,760.15, including assessed interest.

12. Plaintiff is entitled to recover from defendant the sum of $1,760.15, with interest from December 30, 1936, the date of payment as provided by law.

13. Judgment should be entered for plaintiff in the sum of $1,760.15, plus interest from December 30, 1936, as provided by law.

Done this the 17th day of April, 1945.

Judgment Order

This cause came on regularly to be heard and all issues of fact as well as law were submitted to the Court. The Court, having heard the evidence, considered the briefs and arguments of the parties and being duly advised in the premises, finds for the plaintiff and that plaintiff is entitled to recover from the defendant the sum of $1,-760.15, with interest as provided by law.

It is, therefore, ordered and decreed that plaintiff, Ensley Bank & Trust Company, a dissolved corporation, do have and recover from the defendant, United States of America, the sum of $1,760.15, with interest upon said sum at 6% per annum from the date of payment, to-wit, December 30, 1936, to a date preceding the date of the refund check but not more than 30 days, said date to be determined by the Commissioner of Internal Revenue pursuant to the terms and conditions of Title 28, Section 284, U.S.C.A. Section 177, Judicial Code, as amended, and such costs as are taxable against the United States under the provisions of Title 28 U.S.C.A., § 258.

Plaintiff excepts.

Defendant excepts.


author: SYMES, District Judge.

text:
    WALLING v. J. FRIEDMAN & CO., Inc., et al.
    District Court, S. D. New York.
    Feb. 23, 1945.
    See, also, 4 F.R.D. 384.
    Irving Rozen, Regional Attorney, of New York City, for plaintiff.
    Otterbourg, Steindler & Houston, of New York City, for defendants.
   SYMES, District Judge.

1. Plaintiff brings this action to enjoin defendants from violating the provisions of Section 15(a) (1) of the Fair Labor Standards Act of 1938, Act of June 25, 1938, c. 676, 52 Stat. 1060, 29 U.S.C.A. § 201 et seq., hereinafter called the Act.

2. Irving Lieblich was not served with process and did not appear in the action.

3. Defendants, Murray Rosenberg, Max Lieblich and Samuel Frank, reside respectively at 359 Fort Washington Avenue, New York, New York; 1421 Fteley Avenue, Bronx, New York; and 1283 East 10th St., Brooklyn, New York, and are co-partners, together with Irving Lieblich, who is presently serving with the Armed Forces of the United States, doing business under the name and style of Rosenberg, Lieblich & Frank.

4. Rosenberg, Lieblich & Frank are now, and have been since at least June 1, 1943, the owners of a place of business and manufacturing plant located at 149 Fifth Avenue, New York City, where they are engaged in the production, sale and distribution of men’s overcoats and top coats.

5. Rosenberg, Lieblich & Frank since on and before June 1, 1943 have had a substantial part of their overcoats and topcoats produced by the S. & A. Clothing Co., Inc., a contractor with a place of business and manufacturing plant at 257 Varet Street, Brooklyn, New York.

6. A substantial part of all the goods produced by the employees of S. & A. Clothing Co., Inc., for Rosenberg, Lieblich & Frank during the period beginning on or about June 1, 1943 have been, and are now-being produced for interstate commerce.

7. The goods produced by the employees of S. & A. Qothing Co., Inc., have subsequently been shipped, delivered, transported, offered for transportation and sold in interstate commerce from the place of business of Rosenberg, Lieblich & Frank at New York, New York, to, into and through states other than the State of New York.

8. Since at least on or about June 1, 1943, S. & A. Clothing Co., Inc., has employed many of its employees in the production of overcoats and topcoats for Rosenberg, Lieblich & Frank, and since that date S. & A. Clothing Co., Inc., has employed the aforesaid employees for workweeks in excess of 40 hours per week without compensating these employees for their employment in excess of 40 hours per week at rates not less than one and one-half times the regular rates at which they were employed.

9. Rosenberg, Lieblich & Frank shipped about 80 percent of their total production from their place of business located in New York, New York, to various points outside the State of New York.

10. Since on or about June 1, 1943, Rosenberg, Lieblich & Frank have sold, shipped, delivered, transported, and offered for transportation in interstate commerce from their place of business at New York, New York, to, into and through states other than the State of New York, overcoats and topcoats in the production of which many of the employees of S. & A. Clothing Co., Inc., were employed for workweeks longer than 40 hours and for which hours in excess of 40 per week the employees of S. & A. Clothing Co., Inc., were compensated at rates less than one and one-half times the regular rates at which they were employed.

11. Rosenberg, Lieblich & Frank since on or about June 1, 1943 shipped, delivered, sold, transported, and offered for transportation in interstate commerce overcoats and topcoats with knowledge that the said overcoats and topcoats were produced by the employees of S. & A. Clothing Co., Iric., and with knowledge that the employees of S. & A. Clothing Co., Inc., were not compensated for hours worked in excess of 40 per week at one and one-half times their regular rates of pay.

12. Rosenberg, Lieblich & Frank took no affirmative action until July 7, 1944, to ascertain that the overcoats and topcoats produced for them by the employees of S. & A. Clothing Co., Inc., were not being produced by the said employees in violation of the overtime provisions of the Fair' Labor Standards Act of 1938.

Conclusions of Law

1. The employees of S. & A. Clothing Co., Inc., were, and are now employed in the production of goods for interstate commerce within the meaning of the Fair Labor Standards Act.

2. The employees of S. & A. Clothing Co., Inc., since on or about June 1, 1943 and up to at least the commencement of this action on June 23, 1944, were employed in the production of goods for interstate commerce in violation of the provisions of Sections 7 and 15(a) (2) of the Fair Labor Standards Act.

3. Since on or about June 1, 1943 and up to at least the said 23rd day of June 1944, Rosenberg, Lieblich & Frank have repeatedly shipped goods in interstate commerce in violation of the provisions of Section 15(a) (1) of the Fair Labor Standards Act.

4. Knowledge by Rosenberg, Lieblich & Frank, the shipper of the goods in interstate commerce, that their goods were produced by their contractor, S. & A. Clothing Co., Inc., in violation of the Fair Labor Standards Act is not a prerequisite to charging them with violation of Section 15(a) (1) of the Act.

6. Discontinuance by defendants of violations of Section 15(a) (1) after the commencement of the action does not deprive this Court of its power under proper circumstances to issue an injunction.

7. The Court in this case has the discretion to determine whether an injunction should issue in accordance with traditional practices of equity courts, as conditioned by the necessities of the public interest which Congress has sought to protect. This discretion should not be exercised grudgingly and the court should exercise its discretion so as to attain the prescribed end of the Fair Labor Standards Act and the large objectives of that Act. The standards of the public interest, not the requirements of private litigation, measure the propriety and need for injunctive relief, and the court’s discretion should reflect an acute awareness of the Congressional admonitions set forth in Section 2(a) of the Fair Labor Standards Act.

8. Under all the circumstances of this case, the Court’s discretion should be exercised against the issuance of an injunction at this trial. In the event of future violations by the defendants, or any of them, the plaintiff may, upon 30 days’ notice to the said defendants, or their attorneys, apply at the foot of the decree herein for injunctive relief such as is provided by law.


author: GALSTON, District Judge.

text:
    THE HENRY E. THE MAGIC CITY. THE JIM. THE U. S. D. NO. 3. EXNER SAND & GRAVEL CORPORATION v. GALLAGHER BROS. SAND & GRAVEL CORPORATION et al.
    Nos. A-16944, 16935, 16936.
    District Court, E. D. New York.
    June 22, 1945.
    Purdy & Lamb, of New York City (Edmund Lamb, and Thomas Irving, both of New York City, of counsel), for Exner Sand & Gravel Corporation.
    Foley & Martin, of New York City (Christopher Heckman, of New York City, of counsel), for Gallagher Bros. Sand & Gravel Corporation.
    John R. Stewart, of New York City, for F. E. Grauwiller Transp. Co.
    Reid, Cunningham & Freehill, of New York City (James E. Freehill, of New York City, of counsel), for United States Dredging Corporation.
   GALSTON, District Judge.

These causes, under stipulation, were tried together.

Gallagher Brothers Sand & Gravel Corporation chartered the scow Henry E from the Exner Sand & Gravel Corporation on December 12, 1942, and the owner was to provide the scow with a captain on board. The charter was for an indefinite period at an agreed rate per day. Up to the time of the happening of the accident hereafter to be described, on September 13, 1943, the scow remained in the possession of Gallagher Brothers Corporation. On August 28, 1943 the captain of the scow Henry E left the scow. That fact was made known to both the owner and the charterer. Gallagher Brothers continued to use the scow, and after it had discharged the cargo which was then lying upon it at Bridgeport, Connecticut, on September 2, 1943, the scow was towed on September 7 to Oyster Bay, arriving on September 8, 1943. It was there to be loaded with a cargo of sand and gravel for the charterer.

The scow was placed alongside the stakeboat U. S. D. No. 3, owned by the United States Dredging Corporation. At the request of Gallagher Brothers, the scow, on September 9, 1943, was taken by the United States Dredging Corporation from its stakeboat and placed alongside its dredge, Magic City, to receive a split load of sand and gravel. At the time there were two other scows lying at the stakeboat, and the order to the United States Dredging Corporation was to load all three scows with separate cargoes, two of the orders being for full cargoes and the other for five-sixths of a full cargo. As to what cargoes were to be placed on the respective scows was left to the discretion of the plant superintendent of the United States Dredging Corporation. He put a full cargo on the scow Henry E. A full cargo is normally 600 cubic yards. The normal carrying capacity of the scow Henry E is 660 to 670 cubic yards, and it appears that there was actually placed upon the scow, on September 9, a quantity of cargo in excess of 720 cubic yards. When thus loaded the scow had but six inches of freeboard.

The loading having been completed, on September 10, 1943, the Henry E was towed by the tug Barretto, owned and operated by the United States Dredging-Corporation, and put alongside the U. S. D. No. 3 stakeboat. On September 11, 1943 there still being no captain aboard the Henry E, the dredging watchman pumped the scow Henry E on the afternoon of that day and reported to the dredging superintendent that water was seeping into the hold, and that the scow would require watching and attention. The necessary pumping was not thereafter provided, and in consequence, on September 12, 1943, at or about 2 P. M., the Henry E overturned. In so doing, the Henry E sustained damage and also struck the stakeboat U. S. D. No. 3, and the scow .Jim, owned by the libellant, F. E. Grau-willer Transportation Co., Inc., and damaged both of those vessels.

Thus the problem presented is to fix liability for the damage sustained by these three boats.

It is clear that the overturning of the scow Henry E was caused, at least in part, by water draining from the cargo of wet sand and gravel which had been placed on her deck by the Magic City. Those in control of the Magic City knew, or should have known, that such a cargo of wet sand and gravel would cause water to drain therefrom. They also knew that there was no captain on board the Henry E, but nevertheless permitted the Henry E to be towed from the dredge to the stakeboat without making proper provision for the removal of such water.

The Exner Sand & Gravel Corporation is likewise connected with the happening of the accident in that it failed to provide a captain in substitution of the bargeman who had left the vessel on August 28, 1943. Certainly the Exner Corporation is not entitled to limit its liability. Its general manager knew that there was no captain aboard, and he also knew the use to which the charterer was putting the scow. He knew that a man should have been on board to pump out the water from the wet cargo. His experience also informed him that there was leakage to be expected as a result of the loading of such cargo.

Gallagher Brothers also are involved in the negligence which resulted in the damage. They knew that there was no captain aboard and that the character of the cargo was such as to require pumping out. Nevertheless they took the risk of sending a scow for loading with no such attendant on board.

However, to find as I do that there was a contribution of fault, still leaves open the question of primary and secondary liability. The United States Dredging Corporation was primarily liable. They knew the facts, i. e., they knew that the Henry E was unattended; they knew the cargo capacity and also that a wet sand and gravel cargo would lead to drainage of water and consequent pumping. Nevertheless they proceeded with the loading operation at the dredge, the towing from the dredge to the stakeboat, and they failed to keep the scow pumped. Those faults establish primary liability of the United States Dredging Corporation. And such liability is upon the dredge Magic City in rem, and upon her owner, United States Dredging Corporation, as the employer of the crew. As to such primary liability as between the stevedoring corporation and the charterer, see the recently decided case in this Circuit, McGeeney, as owner, etc., v. Moran Towing Corporation and Maritime Terminal Co., Inc., 149 F.2d 791.

So far as the liability of Gallagher Brothers to the owner is concerned, I find liability, for the charterer, knowing full well all the facts as has been indicated, nevertheless elected to use the scow. It must be held responsible for the failure to return the scow in accordance with the obligations of its charter. However, this liability is secondary to the primary liability of the United States Dredging Corporation and the dredge Magic City.

So that in the first of these causes, Ex-ner Corporation against Gallagher Brothers, respondent, and United States Dredging Corporation and dredge Magic City, impleaded, the libellant may have a decree for 'damages against the United States Dredging Corporation, and the dredge Magic City primarily, and against Gallagher Brothers Sand & Gravel Corporation secondarily.

In the second cause, the consolidated suit, the Grauwiller Transportation Co., libellant, owner of the innocent bystander, the scow Jim, is, of course, entitled to a decree. Here again primary liability must be decreed against the United States Dredging Corporation and the dredge Magic City, and secondary liability against Gallagher Brothers.

The Exner Sand & Gravel Corporation seeks to avoid all liability on the ground that though the overturning of the scow Henry E gives rise to a presumption of negligence against the scow (see The Buffalo, 2 Cir., 56 F.2d 738) there is no warranty of seaworthiness to the other vessels damaged. See The Cullen No. 32, 2 Cir., 62 F.2d 68. The Henry E claims that the presumption of negligence may be rebutted. Of course, that is so, but certainly the Henry E was negligent in failing to provide a captain, and in consequence cannot escape liability. However, its liability would be of a tertiary nature. The Grauwiller Transportation Company, libellant, may, therefore, have such a decree in the consolidated cause against all the other parties with liability as to each in the order indicated herein.

The libel of the United States Dredging Corporation will be dismissed.


text:
    THE MARY. LIND et al. v. UNITED STATES.
    No. 17098.
    District Court, E. D. New York.
    June 20, 1945.

      Mahar & Mason, of New York City (Frank C. Mason, of New York City, of counsel), for libelants.
    Miles F. McDonald, U. S. Atty., of Brooklyn, N. Y. (Nicholas J. Healy, 3rd, Sp. Asst. to the Atty. Gen., and Frank P. Cox, both of New York City, of counsel), for respondent.
   GALSTON, District Judge.

This suit is brought under the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., or in the alternative, under the Public Vessels Act, 46 U.S.C.A. § 781 et seq.

The Mary was a fishing vessel engaged in trawling on the night of April 18, 1944. The Abner Doubleday, a Liberty Ship, one of a convoy, came into collision with the fishing vessel that night at a point about 100 miles southeast of Ambrose Light. The collision took place at about 9:58 P. M. on a clear dark night, with stars visible. The visibility generally was good. ’ The sea was calm and there was no appreciable wind. As a result of the collision the Mary, her equipment and stores, the catch of fish, and the personal effects of her master and crew members were totally lost. The master and all crew members were saved.

In the respective versions of the collision given by the parties, though there are the expected contradictions to be found, nevertheless there are some basic facts that stand out pertinently which were clearly proved.

The Mary was a diesel powered fishing' vessel, 70 feet in length, 19 feet 6 inches in beam. Her engine was 135 horse power. The vessel had been built in 1930 and from that time had been in command of Olsen, her master. The Mary had left New York on .the evening of .April 17, 1944 and had proceeded to the fishing grounds, about 100 miles southeast of Ambrose Light vessel. With the master there were five crew members on board. The Mary was equipped with steel cables about 175 fathoms in length. In passing it is important to note that this equipment was attached to the starboard side of the vessel. On the opposite ends thereof were affixed two gallows doors, which as they dragged the ocean bottom, served to keep the fish nets spread apart. As the gear was towed or dragged, there was a strain on the vessel’s steering gear. The testimony is that it was the practice of the wheelsman to use a rope run through a ring bolt in the deck below, the other end of the rope having an eye looped over one of the hand spokes to keep the wheel steady on the desired course. Also the rudder was in a fixed position to offset the drag off the starboard side.' From time to time during the day’s fishing operation, it was the practice for the vessel to take in the gear. The master would then turn her about to starboard, slow down the engine and stop it during the process of heaving the doors and net to .the vessel’s side. The wires were operated by the use of a power winch until the doors were alongside and the net pulled around to drop the fish. The fish was distributed in the hold, and working lights were required for this operation as well as for 'getting the net aboard. After the net had been emptied it would again be put oyer the starboard side and the fishing operation continued. The testimony given by those on the Mary established that she carried, on the night in question, a white masthead light about 35 feet above water line. She was provided with and there were lighted on the night in question, her red and green running lights attached to the forward rigging, at a distance of about 15 feet above the water line. These lights were set in screens. In addition to such lights, the vessel also had on the forward part of the pilot house, two working lights with reflectors behind them to cast the light down on the vessel’s deck. They too were about 15 feet above the water line. Lower down, about 8 or 10 feet above the water line, on the under side of the beam, were two white working lights. There was a starboard white light at the gallows, about 7 or 8 feet above .the water line; and at the stern there was a white light also about 7 or 8 feet above the water line. In addition to all of these there was a white light at the after end immediately above the stern light. This light was extended •two feet off the side of the vessel and about 10 feet above the water line.

However, despite the display of all of these lights, it is admitted that the Mary did not display trawling lights as required by the International Rules, art. 9(d), 33 U. S.C.A. § 79(d). Nor indeed was the Mary equipped with such trawling lights. There should have been displayed a tri-colored lantern with a white sector showing from dead ahead to two points on each bow, a green sector showing from two points on the starboard 'bow to two points abaft the starboard beam, and a red sector showing from two points on the port bow to two points abaft the port beam.

On the night of the collision the Mary-had been proceeding easterly. In the general vicinity there were two other fishing vessels, one the William Landry, which was on a parallel course with the Mary, and on the Mary’s port side, a distance off of about one-quarter of a mile; and the fishing vessel Viking, which was on a course westerly, off the Mary’s starboard side, a distance of about one and a half miles. Generally the testimony of the masters of these vessels corroborated the testimony given by the Mary as to the setting and visibility of her lights.

After the Mary had proceeded easterly and was about to heave the nets, the deck lights were put on and she started to swing slowly to starboard until she had made a complete circle, and then took a position in a southeasterly direction, then starting ahead at about 9:15 southwest by south. Olsen was at the wheel, and other members of the crew were taking the fish down and putting the catch on ice. Olsen then placed the rope on the wheel and stepped out of the pilot house, going aft a distance of about 10 feet to look at the lead to the wires. This was by way of a precautionary check. Then he saw the loom of a vessel off the starboard side at a distance of 10 or 15 feet. This vessel was the Doubleday, and immediately the stem of the Doubleday struck the starboard side amidships of the Mary.

Now as to the Doubleday and its maneuvering. The Abner Doubleday is about 420 feet in length, 57 feet in beam, is a single screw vessel and is owned and operated by the United States of America as a public vessel. She was equipped with a triple expansion reciprocating engine of 2500 horse power, with a maximum speed of approximately 12 knots when loaded. The Doubleday was a member of an eastbound convoy which was sailing blacked out. She was carrying United States Navy equipment and Lend-Lease supplies- for the British, and occupied the 5th position in the 10th column of the convoy.

It is suggested by the libellant that the collision arose because of the inexperience of the officer in charge on the bridge of the Doubleday. He was the third mate, 22 years old, and had received his third mate’s papers in January of 1944. The wheelsman also was a young man 20 years of age. The captain had joined the vessel in November, 1943, and the Doubleday was the first large vessel in his command. The third mate had been trained at the King’s Point Merchant Marine Academy from August to November 1942, and then served as a deck cadet until April 1943. He was then stationed on a training ship moored at Pier No. 1, North River, until June 1943, returning .to the Academy for advanced training at that time. The wheelsman had received an able seaman’s certificate in December 1943, and had been to sea commencing in April 1943. Bingle was a gunner’s mate, third class, and had 'been in the Navy twenty-three months, though he first went to sea in October of 1943. Bingle was on watch at the time of the collision, stationed on the gun platform at the bow, forward of the midship housing.

The captain of the Doubleday had been up during the day and turned in with his clothes on about twenty minutes to a half hour before .the collision. He had assumed at that time that the vessel was clear of the fishing banks because the Doubleday was in an area showing a depth of over 40 fathoms. It is perhaps significant that one of his standing orders was “If in doubt, stop and call me; stop your engine before you call me.” He was asked:

“Q. Before you left the bridge, had you given any orders to the third mate about calling you in the event that other vessels were later sighted? A. I did not expect any other vessels.
“Q. So no orders were given? A. I had given him orders. They have signed orders on the bridge, regular night orders.”
“Q. Was one of the orders to the effect that in the event they saw another vessel later in the vicinity, they were to call you? A. Only if in doubt.”

The third mate testified that about a half hour before the collision, and at a distance of about three miles, he saw a cluster of white lights, two and a half to three points off the ship’s port bow; that the distance seemed to be closing, but he nevertheless kept on the same course and speed. It was this third mate who testified that the Mary swung suddenly at right angles and appeared to be crossing the Doubleday’s bow, when at a distance from the Doubleday of only 150 feet. The third mate gave a slow down signal when .the vessels were about 250 to 300 feet apart. The engine was stopped at 9:56 P. M. and put full astern at 9:57 P. M., and the collision occurred at 9:58 P. M. When the engine was stopped, the .third mate put the wheel hard left at a time when the Mary was about 100 feet away. Then the master came into the pilot house and ordered the wheel hard right. At the same time the engine was ordered full astern. It waa either the slowing down or the stopping of the engines, as the captain testified, • that led him to go from his hunk .to the bridge, and not because he had been called by the third mate.

Thus it would appear that the collision arose from several causes. Clearly the Mary was at fault in failing to display proper trawling lights, and though it is sought • to excuse that failure by arguing that the absence of the trawling light in no way contributed to .the happening of the collision, such an explanation cannot be received. The very’charge of inexperience leveled by the libellants against the Abner Doubleday on the contrary would lead to the inference that a tri-colored light which would have been more prominently displayed and more easily understood by an approaching vessel, would greatly have aided the inexperienced navigator. Added to that fault of the Mary, she must also be held at fault for failure to have a lookout and for having even momentarily no one at the wheel in the circumstances prevailing. By that is meant that though the Mary had received no notice or warning of the presence of a convoy, nevertheless it was common knowledge that it was not unusual for blacked-out convoys to sail those waters. Those circumstances called for the utmost caution on the part of vessels navigating in the vicinity. On the other hand the Abner Doubleday cannot be freed of fault. Admission by the third mate that one-half hour before the collision he had seen a cluster of white lights three miles off, afforded compelling consideration of the probable proximity of other vessels. Such a situation called for extreme care. The captain’s standing orders for control of the navigation of the vessel in the circumstances should have been followed. Inexperience too seems .to have been indicated when at the time that the captain entered the pilot house, the captain gave a hard right order, changing the hard left order of the third mate.

As to the claim that the Mary made a sudden turn to port across the Doubleday’s bow, I accept the libellant’s version. With the gear out on the starboard side, the fishermen agree that it was impossible for the Mary to make a sudden turn to port Vessels attempting to do so would run the danger of fouling the rudder and the propeller.

So the Mary and her master and the respondent must both be held at fault; but no fault is attributable to the other members of the Mary. The owner and the master may have a decree for half damages. The members of the crew may have a decree for full damages against both the owner of the Mary and the respondent.


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    In re CAPITAL FOUNDRY CORPORATION.
    No. 46229.
    District Court, E. D. New York.
    June 26, 1945.

      Protter & Bagley, of Brooklyn, N. Y., for UE.
    Zalkin & Cohen, of New York City, for trustees.
   GALSTON, District Judge.

The trustees have filed a petition which sets forth that on taking possession of the assets and property of the above named debtor, they ascertained that the production employees of the debtor were represented by two unions. Each of these unions had a separate contract with the debtor which provided for vacation with pay. It was the custom of the debtor also to allow vacations with pay to all of its other employees who were not covered by the union contracts.

Pursuant to the authority of appointment, the trustees continued the business of the debtor, and though they did not adopt the union contracts, they agreed with the unions that they would conform their operations to the terms of the contracts.

Now representatives of both unions have demanded that the trustees recognize the right of such employees to vacation pay on the basis of the union contracts. In view of the fact that the business of the debtor is about to be discontinued and employees are being paid off, the trustees seek permission to make vacation payments.

United States of America is the largest creditor of the debtor and also of the trustees. Representatives of the Government do not oppose the application; nor does any other creditor. A vacation with pay is in effect additional wages, as was said in Re Wil-Low Cafeterias, 2 Cir., 111 F.2d 429, at 432. The arrangement of employment which the trustees entered into with reperesentatives of the unions fell within the purview of their powers as conferred by the order of appointment of this court. In consequence each of the union employees is entitled to accumulated vacation pay for the period of his employment by the trustees as a proper expense charge of administration of the estate. Likewise employees who fall within the provisions of Section 64, sub. a(2), of the National Bankruptcy Act, 11 U.S.C.A. § 104, sub. a (2), are entitled to priority for wages earned within three months before the filing of this proceeding.

The trustees, therefore, will be authorized to make such payments to such employees.

As to the remaining thirty-seven employees of the debtor, who were also employed by the trustees and were not members of either union, the matter is not altogether clear. The petition recites that it was the custom of the debtor to allow vacations to such employees. The trustees’ petition does not recite any agreement with such employees for such vacation time. Accordingly on the face of the present showing, the court is not in position to order any vacation money to such employees.

Submit order.


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    BOWLES v. KATZ.
    No. 4667.
    District Court, E. D. Pennsylvania.
    June 28, 1945.
    Robert J. Callaghan, District Enforcement Attorney, Walter N. Moldawer, Chief, Food Enforcement Section, and Jacob S. Richman, all of Philadelphia, Pa., Enforcement Attorney, for plaintiff.
    John Edward Sheridan, of Philadelphia, Pa., for defendant.
   KALODNER, District Judge.

This is an action for an injunction brought by the Administrator of the Office of Price Administration pursuant to Section 205(a) of the Emergency Price Control Act of 1942, 56 Stat. 23, as amended, 50 U.S.C.A. Appendix, § 901 et seq. Plaintiff alleges that the defendant, from December 1, 1944, to April 13, 1945, engaged in acts and practices which constitute a violation of Section 4(a) of that Act in that defendant has violated Sections 8 and 12 of Maximum Price Regulation No. 355, effective May 17, 1943 (8 F.R. 4423), and also Section 4002.4(4) of Office of Economic Stabilization Regulation No. 1, effective August 5, 1943 (8 F.R. 10988), promulgated pursuant to Section 2(a) of the Emergency Price Control Act.

Briefly, defendant, trading as the Central Meat Market, is charged with selling, delivering, displaying and offering to sell and deliver certain meats at higher than maximum prices (Sec. 12, MPR No. 355), failing to post in his store the official list of retail meat prices, failing to tag meats on display with the selling price (Sec. 8 MPR, No. 355), and failing to separate and designate meats on display by the appropriate official grade (Sec. 4002.4(4), O.E.S.R. No. !)•

The factual question for determination is whether the defendant did commit the violations alleged. Of course, as always in cases of this kind, the legal argument goes to' the exercise by the Court of its discretion to grant or refuse the equitable relief requested.

The parties have stipulated that the hearing be considered as final in this matter. The cause having been heard by the Court without a jury, on the basis of the pleadings and additional evidence, I make the following

Findings of Fact

1. Plaintiff is the Administrator of the Office of Price Administration.

2. At all times since December 1, 1944, the defendant Samuel Katz, has been and is engaged in the business of selling beef, veal, lamb, and mutton cuts at retail, and owns, operates and manages a retail meat market situate at 1300 West Columbia Avenue, Philadelphia, Pennsylvania, known as Central Meat Market.

3. Pursuant to the provisions of Section 2(a) of the Act, the Price Administrator and the Director of Economic Stabilization issued, and there was published in the Federal Register, the following Regulations, which Regulations, as amended, have been at all times since the dates of issuance, and at all times mentioned herein, in full force and effect: Maximum Price Regulation No. 355, “Retail Ceiling Prices for Beef, Veal, Lamb and Mutton Cuts and all Variety Meats and Edible By-Products” (8 F.R. 4423), issued April 5, 1943, effective May 17, 1943; and Office of Economic Stabilization Regulation No. 1, “Grading and Grade-Labeling of Meats” (8 F.R. 10988), issued August 5, 1943, effective August 5, 1943.

4. Section 8 of the aforementioned MPR No. 355 requires the posting, not later than June 21, 1943, of the “Official O.P.A. List of Retail Meat Prices,” or an exact copy thereof, on or at the meat counter in one or more places where customers can easily see and read it; the posting of such list for each 20 feet of meat counter space; and the tagging of meat cuts on display with the selling price for the cut.

5. Section 12 of the aforementioned MPR No. 355 prohibits, inter alia, on or after May 17, 1943, selling or delivering any meat cut at a higher price than the ceiling price for the same grade or type, or agreeing, offering, soliciting or attempting to do the foregoing.

6. Section 4002.4(4) of the aforementioned Office of Economic Stabilization Regulation No. 1, requires that each grade of meat which shall have been separated in the showcase as required in subsection (3) of that section, shall be designated by the appropriate official grade, so that customer can see and read it.

7. Three investigators from the Office of Price Administration made four separate investigations on December 8, 1944, February 12, 1945, February 20, 1945 and March 15, 1945, to determine defendant’s compliance with the aforesaid Regulations.

8. Of all the meat displayed at the time of these visits, four items were quoted over the ceiling price, one at the ceiling price, seven under the ceiling price, and two items could not be identified on the ceiling price chart.

9. On one visit, the Official OPA List of Retail Meat Prices was adequately posted and on one visit it was not adequately posted. On two occasions the meat on display had no price or grade tags.

10. Three checks were made by the local War Price and Ration Board on February 16, 1945, March 20„ 1945, ‘and April 13, 1945. On each occasion the Official Price List was adequately displayed; on one occasion meats on display were properly tagged; go meats were on display on one occasion; and no record was made on one occasion as to tagging. On each check, meats' on display were quoted at prices either at or below ceiling prices.

11. No evidence was offered as to actual sales in excess of the maximum ceiling prices.

Discussion

Plaintiff contends that the evidence in this case discloses a course of continued, wilful violation, over a period from December 1, 1944, to April 13, 1945, of the maximum price, the price list posting and the price and grade labeling regulations, and that it warrants the issuance of a final injunction by this Court in the exercise of its discretion. With this contention I find it difficult to agree.

One Edgar Campbell, an OPA investigator, testified that he visited defendant’s store on December 8, 1944, and March 15, 1945. On the first occasion, with respect to three meat items on display, .two were quoted above the ceiling prices and one under the ceiling price; the items were not tagged with selling price and grade; and the price list was partially obscured. On the second occasion the price list was properly posted, and of the five meat items, all were quoted below the ceiling price, one as much as eleven cents.

Another investigator, Helen Shackelford, testified that she visited defendant’s store on February 20, 1945, when she observed four meat items on display in the showcase without grade labels or price tags. Of the four items, two were quoted three and five cents, respectively, above the ceiling price, one at the ceiling price and one a penny under the ceiling price. She also testified that the official price list was so posted as to make it impossible to read. Her testimony on the latter score was rather doubtful.

One Charles Greene, an OPA investigator, testified that when he visited defendant’s store on February 12, 1945, no ceiling price list was posted anywhere in the store, nor were the displayed meats tagged. This investigator, unlike the others in this case, had made no record of his observations, and testified from memory. The weight to be given this evidence is diminished in view of the testimony of one Leon Steinberg, a member, of thé Price Panel of the local War Price and Ration Board and President of the local Business Men’s Association. Steinberg stated that he visited defendant’s store several times a week, including February 12, 1945, the day on which Greene claimed to have been there, and saw meat price lists and price tags.

In addition to the testimony of Steinberg, defendant also produced three check sheets of the local War Price and Ration Board. These check sheets, dated February 16, March 20, and April 13, 1945, disclosed that on each occasion the official OPA Ceiling Price List was adequately displayed. They also showed that, of a total of four meat items identifiable on the check list, three were offered for sale at from one to three cents below the ceiling price and one item at the ceiling price. The check sheet dated February 16, 1945, reveals that the selling price and grade tags were on the items displayed.

Finally, Katz testified that there are two ceiling price lists for meat items adequately posted in his store and that the meat items on display are tagged with the selling price and grade. As to those items which were reported by the investigators as being offered for sale at prices above the maximum, Katz asserted that the reason for the increased price was the fact that he had trimmed the fat from the meat before offering it for sale.

The plaintiff urges upon the Court the argument that the meat shortages render it unnecessary for defendant to sell at less than ceiling prices and that the unevenness of price arouses a suspicion that defendant does not know the ceiling prices. Inherent in the argument is the implication that selling honestly at below ceiling prices may cast unnatural suspicion upon the seller. When the seller offers and sells at below the ceiling price, the reason for his doing so is not important in a case, such as this, where the plaintiff does not contend that the prices quoted to the investigators were not the true offering prices. It is indeed difficult to construe as evidence against the defendant an honest offering price at less than the ceiling.

While defendant may have over-quoted on four items, the evidence, in my opinion, does not support the conclusion that such over-quotations constitute a practice of continuing violations warranting injunctive relief, especially where so many items were quoted at below the maximum. The evidence with respect to his failure to properly post the ceiling price lists, while it shows a violation on one, or at the most, two occasions, does not, in my estimation, require the equitable relief demanded.

On full consideration, I cannot say that the'violations which were committed by the defendant are of such degree, both in quantity and quality, as to wa-rant the exercise by this Court of its discretion to grant the injunction prayed for. Moreover, the evidence fails to establish that these violations were of such a continuing, wilful nature as to justify the conclusion that the defendant will continue to violate the regulations involved unless injunctive relief is granted: Brown v. Standard Oil Co., 1 Price Control Cases, par. 50,991.

Accordingly, I state the following conclusions of law:

1. This Court has jurisdiction of this action brought by the Administrator of the Office of Price Administration pursuant to Section 205(a) of the Emergency Price Control Act of 1942, as amended, to enjoin acts and practices of the defendant constituting violations of Section 4(a) of the said Act, of Maximum Price Regulation No. 355, “Retail Ceiling Prices for Beef, Veal, Lamb ’and Mutton Cuts and All Variety Meats and Edible By-Products” (8 F.R. 4423), issued April 5, 1943, effective May 17, 1943; and Office of Economic Stabilization Regulation No. 1, “Grading and Grade-Labeling of Meats” (8 F.R. 10988), issued August 5, 1943, effective August 5, 1943, and any other regulation issued by the Office of Price Administration, pursuant to the Act, establishing maximum prices for beef, veal, lamb and mutton cuts.

2. This Court has jurisdiction over the defendant.

3. The evidence does not disclose violations of the Regulations involved in such degree as to warrant this Court, in the exercise of its discretion, to issue an injunction.

4. The evidence is not of such character as to warrant the conclusion that defendant will continue to violate the Regulations involved unless injunctive relief is granted.

An Order may be submitted in accordance with this opinion.