[Twenty-First Quarterly Report for the Period Ended March 31, 1947]
[From the U.S. Government Publishing Office, www.gpo.gov]

OFFICE OF PRICE ADMINISTRATION
MAX McCULLOUGH, Commissioner
TWENTY-FIRST QUARTERLY REPORT
FOR THE PERIOD ENDED
MARCH 31, 1947
UNITED STATES GOVERNMENT PRINTING OFFICE • WASHINGTON • 1947
LETTER OF TRANSMITTAL
' Office of Temporary Controls, Washington £5, D.GnMay I®, 1947.
Sirs : I have the honor to submit herewith the twenty-first report of the Office of Price Administration, covering the period ended March 31,1947. For some functions of the Office which were transferred to other agencies early in the following quarter, the report carries information through the date of transfer. Throughout the period described, Max McCullough was Commissioner of Price Administration,, the Office of Price Administration having been incorporated in the Office of Temporary Controls by Executive Order 9809 as of December 12,1946.
This report and the one which will follow, covering the two-month period prior to liquidation of the agency, complete the series of quarterly reports filed under the requirements of title 3, section 301, of the Emergency Price Control Act.
Sincerely yours,
Philip B. Fleming,
Major General, U. S. A.,
Administrator..
The President Pro Tempore of the Senate.
The Speaker of the House of Representatives.
TABLE OF CONTENTS
Chapter	'	Page
I.	Progress of Liquidation_________________________________ 1
Transportation and Public Utilities 2________________________ 1
Subsidy and Audit Programs___________________________________ 2
Tightening of Organization___________________________________ 3
II.	Sugar and Rice Controls_______________________________ 6
Price Control____________________________________________     7
Rationing___________________________________________________  8
III.	Rent Control__________:_____________________________ 11
Amendments and Interpretations______________________________ 11
Area Office Operations______________________________________ 13
Protests and Review Proceedings_____________________________ 13
Veterans’ Housing Sales Control_____________________________ 14
IV.	Emergency Court of Appeals____________________________ 16
Price Control Cases_________________________________________ 16
Rent Control Cases__________________________________________ 23
V.	Enforcement__________________________________________, . 25
Disposition of Decontrolled Cases___________________________ 25
Continuing Enforcement Programs_____________________________ 26
Litigation__________________________________________________ 29
Statistical Summary_________________________________________ 33
Progress of Liquidation • 1
PROGRESS OF LIQUIDATION
Complete liquidation of the Office of Price Administration and the Office of Temporary Controls by June 30,1947, was ordered by the Congress in March when it specified that the urgency deficiency appropriations for the 1947 fiscal year were to include all expenses incident to the closing and liquidation of both the Office of Price Administration and the Office of Temporary Controls. An order of the Temporary Controls Administrator issued in March directed that the liquidation of OPA was to be completed not later than June 28,1947.1 Shortly after the close of the quarter, however, the President ordered that both agencies were to be abolished by June 1, with transfer by May 1 to other Federal agencies of most remaining OPA functions.2
Pending final liquidation, the Office continued to administer surviving regulations and to concentrate on remaining auditing and enforcement tasks. Actions taken in connection with rent control, sugar rationing, and control over prices of rice and sugar, as well as enforcement cases, are described in subsequent chapters.
During the quarter several amendments to the price regulations were issued which affected commodities already removed from control.3 Retroactive in effect, these actions concerned products such as ethyl alcohol, linseed oil, and cotton textiles, which had been sold under adjustable pricing provisions permitting sales at prices subject to upward revision when and if approved by OPA. Such provisions had been allowed, to insure continued production and sale of a commodity during a period of rising costs, pending conclusion of analyses of necessary price changes. The amendments gave legal effect to the increases in ceiling prices of these commodities.
TRANSPORTATION AND PUBLIC UTILITIES
Duties of OPA with regard to transportation and public utility rates were terminated early in the quarter. Throughout the war period and during most of 1946 the Office had successfully intervened before regulatory agencies to block many proposals for higher rates
1F. R. Doc. 47—2609 ; filed March 19, 1947.
2 Executive Order 9841, April 23,1947. F. R. Doc. 47—3998.
8 Amendment 16, MPR 28, retroactively effective June 20, 1946 ; Amendment 27, SR 14—F, effective October 29, 1946 ; Amendment 39, SO 131, retroactively effective May 13,1946.
2 • Twenty-First Quarterly Report
for transportation, public utilities, and accessorial services which would have increased the cost of living or raised business costs. -Authority for intervention in such matters was derived from the Stabilization Act, and the directives pursuant thereto, whch required all common carriers and public utilities to file notices of proposed general increases with OPA 30 days in advance of their proposed -effective dates.
As of January 21, 1947, the Temporary Controls Administrator withdrew this authority from OPA and designated the Commissioner for War Mobilization and Reconversion as the agency which was to : receive notices of proposed increases in common carrier or public utility rates and charges. The Commissioner was not given authority to intervene against proposed increases since this was considered unnecessary under prevailing postwar conditions.
SUBSIDY AND AUDIT PROGRAMS
During the first quarter of 1947 the Office wound up its work on the remaining subsidy programs and made substantial progress in completing the audits it had been conducting prior to approving payments by the Reconstruction Finance Corporation on Government purchases of industrial alcohol, on compensatory adjustments for war-increased costs of shipping coal to the New England area, and on meat-subsidy claims under Directives 41 and 90 of the Office of Economic ¡Stabilization.4
Subsidies
Throughout the quarter, the Office went on with the work of certifying to the Reconstruction Finance Corporation stripper oil wells which were eligible for subsidy payments, and of determining the eligibility of questionable pools.5 The stripper oil well program, involving the Government’s wartime subsidy on marginal oil well production, ended on March 31 after bringing some 120 million dollars to oil well operators. The program was successful in greatly increasing production from the stripper well pools and areas, and in preventing the closing of many wells which would otherwise have been abandoned.
The copper, lead, and zinc premium payment program, under which the Office had determined premium prices on the basis of financial reports submitted by producers, was transferred as of January 27, 1947, from the Office of Price Administration to the Office of War .Mobilization and Reconversion. The premium payments on these metals were to be continued to June 30,1947, by provision of the 1946 Price Control Extension Act.
4 See also Twentieth Quarterly Report, pp. 16—17.
* See Twentieth Quarterly Report, pp. 15—16.
Progress of Liquidation • 3
Continuing Audit Programs
Industrial alcohol audits.—By the end of March audits of the costs of producing the industrial alcohol purchased by the Government during the war had covered cost-plus-fixed-fee contracts amounting to $529,187,176. These audits had revealed overpayments totaling $16,-963,869 which the distillers were required to refund to the Government. Claimed costs under contracts amounting to $125,522,048 remained to be audited at the end of the quarter.
By June 1,1947, the scheduled date of transferring this function to the Department of Commerce, claims amounting to approximately 586 million dollars were completed, and required refunds to the Government were estimated at about 19 million dollars. The amount of the claims still to be audited at the time of the transfer was put at 68 million dollars.
Compensatory adjustment audits.—At the beginning of the quarter the base-period transportation costs of about one-third of the applicants for compensatory adjustment remained to be verified. This part of the audit program had been completed by the end of March. The claims received under the compensatory adjustment program reached a total of $65,770,656 during the quarter. Claims amounting to $63,-035,106 had been reviewed for payments and in some cases fully audited. Disallowances and recoveries of overpayments paid or pending on these claims prior to March 28,1947, amounted to $2,504,225.
This auditing function was transferred to the Reconstruction Finance Corporation May 5,1947. At that time the audits of 247 claims amounting to $292,476 had not yet been completed.
Meat subsidy audits.—Audits on 141 of the 233 claims for supplementary livestock subsidy payments under Directives 41 and 90 of the Office of Economic Stabilization had been completed by the close of the quarter. Of these, 43 claims, amounting to $583,639, were approved and 98 claims, amounting to $846,660, were invalidated, leaving 92 claims still to be audited. This program was also transferred to the Reconstruction Finance Corporation in May.
During the short period between the end of the quarter and the transfer of this auditing function to the Reconstruction Finance Corporation on May 5, 1947, the Office completed the audits of 10 additional claims. Audits of 82 claims amounting to approximately $1,900,000 remained to be completed.
TIGHTENING OF ORGANIZATION
Following the end of the appropriations hearings, it was clear that the Congress intended OPA to curtail its staff immediately. While it was not possible to reduce expenditures sufficiently to permit continu
4 • Twenty-First Quarterly Report
ance of programs to June 30, the Office made every effort to effect maximum reductions at every point where reductions would not seriously jeopardize the program.
Offices were reorganized so as to retain only persons who were needed for sugar and rent controls, for completion of enforcement cases, and for putting in order records of continuing public interest. Reductions were geared to possible transfer of sugar and rent operations to other agencies. In the staff-reduction program the Office endeavored to observe insofar as possible the rights of individuals and the commitments which the Government had made to them.
Work of most of the various advisory committees—labor, consumer, agricultural, minority, and veterans—ceased as of January 30. Industry advisory committees had been discontinued as the particular industry was freed from control. All of these committees as well as the many war price and rationing boards had been an invaluable asset in the administration of the Emergency Price Control Act.
The Price Department was abolished at the end of January. Responsibility for premium payments for copper, lead, and zinc was transferred to the Office of War Mobilization and Reconversion, and all other subsidy operations to the newly established Office of Public Records, in the Office of the Commissioner. Responsibility for price regulations, amendments, and interpretations necessary in connection with commodities and services decontrolled before January 1, 1947, was assigned to the Office of the General Counsel. Price control of sugar, certain sirups, and rice had been transferred to the Sugar Department as of December 1,1946;
Administrative management functions, particularly fiscal accounting, property disposal, records disposal, and personnel separation were shifted to the appropriate management offices.
The Office of Public Records was established as of February 1 in order to provide for direction, during the liquidation process, of certain functions previously assigned to units which had been or were to be abolished or reorganized. These included economic data analysis, transferred from the Office of Research; policy analysis, formerly the history branch, transferred from the Office of Budget and Planning; and three subsidy operation sections transferred from the Price Department.
Most of the economic data collected during the price-control period at great expense to the Government had never before been available» and business and research agencies as well as Government departments showed great interest in their preservation. Summary of the data by OPA staff members who were acquainted with the records was decided upon as a means of serving interested industries and public
Progress of Liquidation • 5
agencies and of avoiding again having to collect similar data, with its attendant annoyance to businessmen. Among the Government agencies making use of these data in order to eliminate possible recollection were the Federal Trade Commission, the Tariff Commission, the Department of Commerce, and the Department of Agriculture.
As of the end of March provision was made for absorption of the remaining activities of the accounting department by other departments. Rent accounting functions were transferred to the rent department and sugar accounting to the sugar department. A large proportion of the department staff was transferred to the Office of Public Records in order to carry on the auditing of the subsidy and alcohol-purchase programs.
All accounting personnel who had been working on rent surveys and adjustments were to concentrate upon clearing up the backlog of adjustment cases, pending the transfer of the rent department to another agency. The Office attempted to simplify and speed up these cases without any sacrifice in accounting standards.
The enforcement department was reorganized so as to facilitate eventual transfer of its operations to other agencies, with the rent, sugar, and review and disposition programs set up as completely self-contained units, each having its own litigation and reporting staffs.
Regional administrators were appointed to act as liquidating officers of the regions, with further staff reduction slated for April. In all except the four largest regions, staffs were to be cut to the liquidation officer and one secretary.
Eight of the sixty-four sugar branch offices8 handling sugar rationing application forms and inquiries concerning consumer, wholesaler, retailer, industrial, and institutional users were closed early in February. Business of the closed offices was consolidated with nearby sugar branch offices for more efficient operation of the sugar rationing program within the budget available.
By the end of March the Office staff had been reduced to 12,680 full-time employees, a reduction of almost 3,000 having been effected during the quarter. About 1,100 of the retained employees were in the national office. As of March 31, approximately 57 percent of the remaining staff was occupied with rent control, 22 percent with the sugar and rice programs, 8 percent with reducing the backlog of enforcement cases, 5 percent with cleaning up the subsidy audit programs, and the rest with necessary management functions.
* See Twentieth Quarterly Report, p. 70.
745286—47---------2
6 • Twenty-First Quarterly Report
. II.
SUGAR AND RICE CONTROLS
Scheduled to terminate at the end of March with the expiration of the Second War Powers Act from which rationing authority was derived, sugar rationing was continued until October 31, 1947, by act of Congress. The Sugar Control Extension Act of 1947,1 signed by the President March 31, also embodied the extension through October of price control over sugar and rice; these controls would have ceased on June 30, the end-date of the Emergency Price Control Act. The new act transferred all powers and responsibilities for the rationing and price control program to the Department of Agriculture.
Outstanding provisions of the act were:
1.	The continuation of the power to ration nonprovisional industrial sugar users on an historical base.
2.	The fixing of the minimum consumer ration at 35 pounds per person on an annual basis; the additional allocation for home consumption, up to 50 pounds per capita, of any increase in sugar available for allocation in 1947 over the amount recommended for the United States by the International Emergency Food Council.
3.	Designation of limited quantities of sugar for the establishment of new industrial users and for relief of hardship (including provisional allotment users).
4.	Authorization to continue a form of inventory control for industrial and institutional users through March 31,1948.
In signing the measure, the President pointed out that he did so “with reluctance” because of the early date set for the ending of controls. Expressing concern at the probable situation resulting from premature termination, the President indicated that he would ask the Congress to reconsider the October terminal date for sugar control authorization if it became apparent later in the year that hopes for supply increases were not materializing.
Under the terms of the new act, a sugar rationing administration was established in the Department of Agriculture, and all duties in connection with the distribution and price control of sugar were transferred from the Office to the Department of Agriculture as of April 1. In general, all existing delegations of authority, directives, rules, and regulations enacted under the Office of Price Administration, were
1 Pub. Law 30, 80th Cong.
Sugar and Rice Controls • 7
confirmed and validated by . the Secretary of Agriculture and remained in full force and effect.2
Actions pertaining to sugar taken by the Office during the January-March quarter before the transfer to Agriculture was effected, are described below.
PRICE CONTROL
A major problem during the quarter resulted from the industry’s request for an adjustment in packaging differentials on sugar packs. This was granted following an analysis of data submitted by a representative number of cane refiners and beet processors.® The adjustment effectuated a closer realinement between packaging differentials and cost of packaging, particularly on packaging materials, notably cotton and burlap, costs of which had greatly increased since December 1,1941, the freeze-date for calculation of packaging cost.
Two ceiling increases on raw cane sugar were allowed, accompanied by increases on direct-consumption sugars.4 The first, amounting to 18^ cents per 100 pounds of raw cane sugar, was required in order to assure a continued supply of sugar in this country under the terms of an agreement with the Cuban government which tied Cuban sugar prices to the United States Bureau of Labor Statistics’ retail food price index.5 The higher raw sugar costs were reflected in a 20-cent-per-100-pounds rise on direct-consumption sugars.
The second increase on raw sugar, amounting to 6 cents per hundred pounds, grew out of an increase of 6 cents per hundred pounds in ocean shipping rates for shipping raw sugar from north-side Cuban ports to New York City. This amendment was followed by a 5-cent-per-100-pounds rise on direct-consumption sugars, requiring a partial absorption by refiners of the freight-rate increase. The decision to require some absorption of the higher raw material cost was made on the basis of anticipated higher earnings which would accrue to the refiners from the package differential adjustment and the expected increases in melts for 1947. This amendment also permitted a seller who had no liquid sugar cartage rate on December 1,1941, to adopt a rate based on the December 1, 1941, liquid sugar cartage rate of the primary distributor located nearest freightwise to him, who had such, cartage rate.
Blackstrap and beet final molasses were decontrolled at the end of January by order of John R. Steelman, Assistant to the President*
2 F. R. Doc. 47-4079 ; filed April 29, 1947.
3 Amendment 9, MPR 60, effective March 21, 1947.
4 Amendment 5, MPR 16; Amendment 8, MPR 60; both effective January 18, 1947’.
Amendment 6, MPR 16, effective March 30, 1947. Amendment 10, MPR 60, effective March 31, 1947.
6 See also Twentieth Quarterly Report, p. 23.
• Amendment 2, SO 193; Amendment 12, RMPR 291; both effective January 29, 19471
8 • Twenty-First Quarterly Report
Rice continued under control during the quarter, with the price remaining unchanged. A concerted drive was made to secure compliance by intensive field enforcement investigation and by plans for community pricing of rice at retail.
RATIONING
The world supply of sugar improved considerably during the quarter, as compared with the preceding year, making it possible to increase the calendar year total allocation to the United States to 6,800,-000 tons, raw value) as compared with 5,597,000 tons in 1946. Those quantities included sugar for the exempt agencies and exports to United States territories, as well as for distribution to civilians within the continental limits of the country.
This supply of sugar was expected to permit distribution of approximately 87 pounds per capita to United States civilians during 1947 as compared with about 73.5 pounds annually during the two previous years and with an annual average of 96.5 pounds during the prewar years 1935-39.
Nearly half of the total sugar expected to be available to this country in 1947 was estimated as grown in Cuba, one-fourth in the continental limits of the United States, and the balance in Puerto Rico, Virgin Islands, and Hawaii.
Shipments of raw and off-shore direct consumption sugar from the new Cuban and Puerto Rican cane crops made it possible to terminate deficit area shipments on January 31, 1947. During the last quarter of 1946, extensive shipments of beet and cane sugar had been made to relieve these areas, excess freight costs being paid by the Government because the shortage areas were not a normal trading area for western beet- and cane-sugar producers.
Higher Rationing Levels
In view of the improved supply situation, higher ration levels for the second quarter were announced in March for all classes of users. The annual consumer ration was raised 40 percent, from 25 to 35 pounds for home use and home canning combined. This was accomplished by the issuance of a 5-pound stamp on January 1 and a 10-pound stamp on April 1, with two 10-pound stamps to be issued later in the year.7 The change in value of stamps from 5 to 10 pounds was made solely to avoid the expense of printing and distribution of additional stamps to consumers, since too few stamps remained in the strip book to permit a 5-pound value until October 31. In order to avoid
’Amendment 15, Supplement 1, 3d Rev. RO 3, effective December 31, 1946; Amendment Hl» Supplement 1, 3d Rev. RO 3, effective March 10, 1947.
Sugar and Rice Controls • 9
the confusion and leakages that would occur with the simultaneous validity of a 5- and 10-pound stamp, the validity period of the 5-pound stamp issued January 1 was shortened from 4 to 3 months, terminating it as of March 31.8
The home canning program in 1947 was merged with the home use program without making a specific designation as to the quantity issued for each use. It was deemed preferable to recognize the complete flexibility as between the two uses, since the sugar had to be issued on the basis of stamps in consumers’ books.
Plans were made for increasing the allotments to institutional users by about 25 percent, beginning with the May-June allotment period.
Allotments for most classes of industrial users also were raised approximately 25 percent. Percentage factors applied to base-period use were raised from 60 to 75 for bakers, bottlers, confectioners and from 55 to 75 for preservers. The factor for pharmaceuticals remained at 120 percent. Factors for all other classes of user were ¿raised from 60 to 75 percent.9
Provision was made for a moderate increase in the maximum allowable inventory at wholesale and retail levels to facilitate the smooth flow of distribution at the higher levels and the larger individual purchases by consumers made possible by the higher-value stamp.10
Relief for Certain Industrial Users
Relief was provided during the quarter for industrial users who* had manufactured products for exempt agencies such as the Army and Navy.11 Sugar used for these purposes throughout the war period had constituted activity over and beyond what could have been done within the civilian rationing system. Following termination of war contracts, however, sugar was no longer available to these users on an ex-quota basis, necessitating a curtailment in their over-all operations to the level of civilian rationing except for the small amount of exempt-agency business which was. still available. The volume of exempt-agency requirements during the war had been very substantial, and many firms had invested in new or additional equipment to satisfy the war demands. To take care of this situation, the Office allowed registered users a larger sugar base and granted a base to establishments which did not previously have one. This step assisted such firms in recapturing a portion of their investment in equipment and buildings that were made idle by termination of war contracts.
8 Amendment 16, Supplement 1, 3d Rev. RO 3, effective February 19,1947.
9 Amendment 20, Supplement 1, 3d Rev. RO 3, effective March 10, 1947.
10 Amendment 38, 3d Rev. RO 3, effective March 14,1947.
u Amendment 37, 3d Rev. RO 3, effective February 21,1947.
10 • Twenty-First Quarterly Report
Another amendment affecting industrial users afforded relief for certain cases of hardship and inequity arising under the provision of the regulations which provided for maximum allowances of sugar for bulk sweetened condensed milk. Adjustments were permitted in instances where an operator’s historical record reflected an inequitable hase and also provided for temporary adjustments to meet emergency situations.12 Although this amendment allowed a greater degree of flexibility, the Office recognized that the method of allocation was not sufficiently flexible to meet rapidly changing production and market ■ demand situations. Therefore, in accordance with a recommendation issued by the Secretary of Agriculture, the issuance of sugar for bulk sweetened condensed milk on a provisional allowance basis was resumed effective March 31, 1947.13
Veterans’ Sugar Bases
By the close of March, approximately 15,000 new establishments had been granted sugar bases under the special program for veterans.14 The sugar bases for these establishments aggregated approximately 400 million pounds, which, at the 75-percent allotment rate current in the first quarter of 1947, supported an aggregate allotment of 300 million pounds for this class of new user. It was planned during the quarter to broaden the list of products for which veteran bases could be established. This amendment was to become effective during the second quarter of the year.
12 Amendment 35, 3d Rev. RO 3, effective February 6,1947.
13 Amendment 42, 3d Rev. RO-3, effective March 31,1947.
14 In effect since March 26, 1945 ; see Thirteenth Quarterly Report, p. 52 ; also Nineteenth Quarterly Report, p. 87.
Rent Control • 11
. Ill .
RENT CONTROL
The Office continued to administer the Federal rent regulations throughout the first quarter of 1947. As of March 31, these regulations were in effect in 649 defense-rental areas, including Alaska and Puerto Rico. Areas in the continental United States contained 76.5 percent of the total 1940 population and 87.2 percent of the 1940 nonfarm rental dwellings.
Portions of 12 areas were decontrolled during the quarter, and a portion of one other area was decontrolled with respect to transient and residential hotels, rooming houses, and motor courts only. Underlying these actions was the finding that control in these localities was no longer needed to safeguard tenants from rising rents and .widespread evictions.
AMENDMENTS AND INTERPRETATIONS
The hotel regulation was amended during the quarter to permit the landlord of a transient hotel, residential hotel, or motor court, to obtain decontrol of daily rates for transient rooms.1 Maintenance of rent ceilings on hotel rooms occupied by transient guests was vital during the war because of heavy travel by military personnel, persons engaged in essential war business, and visiting families of members of the armed forces at camps and hospitals. Since this type of travel had decreased substantially, action to permit decontrol of transient rates was taken, in accordance with the Administrator’s ¿desire to remove wartime controls wherever feasible. In view of the already critically short supply of permanent accommodations, however, weekly and monthly guests in such establishments continued to be protected against unwarranted eviction or overpeiljng rents.
A liberalization of the “hardship” adjustment provision of the housing regulation made it possible for additional landlords to obtain compensating rent adjustments when earnings of their property are substantially reduced by rising taxes or operating co§fs>? For the purpose of establishing substantial hardship, landlords may choose
1 Amendment 102, Rent Regulation for Transient Hotels, Residential Hotels, Rooming Houses and Motor Courts, effective January 20,1947.
2 Amendment 110, Rent Regulation for Housing, effective February 15,1947.
12 • Twenty-First Quarterly Report
any 2-year base period beginning on or after January 1, 1939. Previously, the landlord’s operating position for the current year could be compared only with a period ending on or prior to the maximum rent date. Landlords who had not kept records prior to that date, or whose accommodations had been constructed or first rented subsequent to that date, or who were recent purchasers and unable to obtain records from previous owners, were not eligible for an adjustment under this provision of the regulation^The amendment enabled all such landlords to qualify for adjustment if they establish hardship and if some of their rents are below the rent generally prevailing in the area for comparable accommodations on the maximum rent dat^.
The housing regulation was further amended to enable adjustment of rents established for housing built with priority assistance.3 Higher rents were permitted, if, prior to completion of all the units included in a single priority application but subsequent to the first renting of some of the units, the landlord had obtained the National Housing Agency’s approval of a rent increase because of increased construction costs.
An exception to the general rule barring security deposits was made during the quarter in order to provide an additional incentive to builders to construct rental housing. An amendment to the housing regulation permitted a landlord renting a newly constructed housing accommodation for the first time after March 25, 1947, fully furnished, under a written lease, to demand and retain as a security deposit the rent for the last period of the term, not to exceed 1 month.4
Revised Procedural Regulation 3 was amended to establish procedures for tenants seeking administrative review of orders granting certificates relating to eviction.5 This action was taken to conform to the Supreme Court ruling in Parker v. Fleming 6 that tenants are entitled to administrative and judicial review of orders granting certificates relating to eviction.
An interpretation issued during the quarter stated an exception to the general rule that certificates of eviction were not to be granted when eviction would result in mere substitution of tenants. Certificates were thereafter to be granted where the petition is filed in good faith for occupancy by a son, daughter, father, or mother of the landlord. Certificates were not to be granted for occupancy by relatives of the landlord where relationship is other than parent and child, ex
3 Amendment 109, Rent Regulation for Housing, effective January 15,1947.
4 Amendment 112, Rent Regulation for Housing, effective March 25, 1947.
• Revised Procedural Regulation 3, as amended February 17, 1947, effective February 17, 1947.
8 67 S. Ct. 463 (1947). See also Emergency Court of Appeals, p. 24.
Rent Control • 13
cept in the unusual and exceptional case where it is established that the relative is a dependent or that denial would cause extreme hardship to the parties involved. In addition, minor revisions of a number of official interpretations were made in order to bring the interpretations into conformity with the regulations.
AREA OFFICE OPERATIONS
Area offices reported a net increase of 306,174 housing registrations during the January-March quarter, bringing the total number to 16,778,346. During the same period there was a net increase of 22,786 hotel and rooming house registrations. Decontrol actions, however, cut the total number of rooms under control by 505,566. Over 68 percent of the housing registrations received during the quarter were for accommodations rented for the first time after the maximum rent date, which brought the number of first-rent housing registrations to 4,033,000. Likewise, 59 percent of the hotel and rooming house registrations filed during the quarter were for units rented for the first time since the maximum rent date.
A total of 135,197 landlords’ petitions for an upward adjustment of rents was processed during the quarter; 87,963 increases in rent were authorized; while 50,369 actions were pending decision at the end of March. Since the inception of rent control, 1,826,406 landlords’ petitions had been disposed of, and 1,074,934 upward adjustments granted.
Violations of the regulations were generally revealed by tenant complaints and administrative operations in the area offices. During the quarter 186,868 compliance actions were processed and compliance was obtained in 119,216 of these actions. At the end of March, 70,579 docketed compliance actions were pending settlement or adjustment.
Under the regulations, the area rent director may, on his own initiative, reduce maximum rents for housing accommodations rented for the first time after the maximum rent date to the rent for comparable accommodations, in the area on the maximum rent date. He may also require restoration of services or other rent reductions commensurate with failure to maintain services and equipment. During the quarter, 210,985 director’s initiative actions were disposed of, and 110,655 adjustments and orders were entered. There were 108,769 docketed director’s initiative actions pending decision at the end of March.
PROTESTS AND REVIEW PROCEEDINGS
Any landlord who is dissatisfied with an order issued by an area rent director may obtain administrative review on application to the
745286—47----3
14 • Twenty-First Quarterly Report
regional office, and in addition, he may request the Administrator to review such order by filing a protest.
By March 31, 1947, landlords had filed since the institution of Federal rent control a cumulative total of 52,117 applications with regional offices for review of orders issued by area rent directors. Disposal had been made of 48,072, and 4,045 cases were still pending decision. These landlords had applied to the Administrator for further administrative review in a total of 1,490 protests. Disposal of these cases resulted in the denial of 695. Grants in whole or in part were made in 221 cases, one was remanded to the region, and 283 others were dismissed, withdrawn, or closed. At the end of March, 290 protests were still pending before the Administrator. In addition, since January 22, 1947, when the distinction in handling of protests concerned with certificates relating to eviction was instituted, 63 such protests had been received. Forty-five of this number were protests originated by tenants, and 18 were those originated by landlords. By the close of the quarter 20 certificate protests had been dismissed or closed (all of them tenant protests), and 43 were pending.
Requests for consideration by a board of review were received in 72 cases during the quarter. Hearings were held by boards of review and subcommittees in 25 cases, and recommendation for disposition of the protests was submitted to the Administrator in 18 cases.
During the 3-month period ending March 31, 1947, landlords filed 1 protest against maximum rent regulations. Since the inception of rent control, a total of 258 such protests had been filed. Seven protests were pending before the Administrator at the end of the quarter. A cumulative total of 171 protests had been denied, 49 dismissed, 7 closed (including 4 cases in which relief was granted), and 24 withdrawn.
Landlords dissatisfied with any of these decisions may appeal to the Emergency Court of Appeals which was set up by the Emergency Price Control Act to hear cases arising under the act. The court’s opinions during the quarter regarding rent control cases are discussed in the following chapter.7
VETERANS’ HOUSING SALES CONTROL
During the quarter the Office continued the compliance and enforcement program in connection with the veterans’ emergency housing program which it had assumed October 14,1946. This program, delegated to the Office of Price Administration by the Housing Expediter, was principally concerned with enforcing the maximum sales price and veterans’ preference requirements of dwelling units authorized
7 See pp. 16, 23-24.
Rent Control • 15
under Priorities Regulation 33 and Housing Expediter Priorities Regulation 5 between January 15, 1946, and December 23, 1946. Dwellings authorized under the Housing Permit Regulation which became effective December 24,1946, were not covered.
Under procedures established jointly by the Office of the Housing Expediter and the Office of Price Administration, the owner of a dwelling built under either PR 33 or HEPR 5 was required to file a sales report with the Office of Price Administration whenever the dwelling was sold. During the first quarter of 1947, OPA area rent offices received 19,552 sales reports. Review of these reports, complaints from purchasers, and reports received from other agencies cooperating in the veterans’ emergency housing program resulted in 11,595 compliance investigations during the period. Of the 10,125 cases completed by the close of the quarter, compliance with the regulations was obtained in 5,725 cases, 828 cases involving flagrant or aggravated violations were referred for enforcement action, and the remaining 3,572 cases were dismissed.
A substantial majority of the investigations concerned violations such as failure to file a sales report or failure to post a placard ini accordance with the requirements of the regulations. However, compliance was obtained in 224 cases where the owner had not originally complied with the veterans’ preference requirements, and 331 claims were settled where a refund of overceiling charges was made to the purchaser. These refunds totaled $106,895. In 633 cases, builders were required to rectify a violation involving sale of a dwelling of substantially less value than the one for which the original authorization was obtained.
16 • Twenty-First Quarterly Report
. IV .
EMERGENCY COURT OF APPEALS
Thirteen complaints were filed in the Emergency Court of Appeals1 during the first quarter of 1947. Nine affected price control and 4, rent control. As of March 31,43 complaints were pending in the court.
Since the effective date of the Emergency Price Control Act of 1942 through March 1947, a total of 402 complaints had been filed against the Price Administrator or the Temporary Controls Administrator. Of this number, 288 involved price regulations or orders, and 114, rent regulations or orders. During this period 359 cases were disposed of by decision of the court or by agreement of the parties: 305 cases were decided in favor of the Administrator; and 54 decisions were adverse in whole or in part.
PRICE CONTROL CASES
Seventeen cases affecting maximum price regulations or orders were disposed of by the court during the quarter, nine favorably to the Administrator. The more important opinions rendered are described below.
Collins Case
Complainant2 claimed that neither the General Maximum Price Regulation nor Maximum Price Regulation 193, which covered domestic distilled spirits, applied to their sales of warehouse receipts representing bulk whisky, although these regulations had applied to sales of whisky itself in the appropriate periods. It wa$ also asserted that insofar as the regulations might be construed to apply to the sales of warehouse receipts, they were invalid for lack of definiteness; and that, in any event, the regulations did not specify the maximum prices for complainants’ sales, so that the Administrator was without authority to fix such prices by individual order.
The court ruled that the respective regulations were applicable to the sales of warehouse receipts representing bulk whisky and that there was no uncertainty in the regulations with respect to the prices
1 The Emergency Court of Appeals was established by the Emergency Price Control Act of 1942 to pass upon the validity of regulations or orders issued under sec. 2 of the act.
2 Collins et al. n. Fleming (Nos. 352, 353, 357, E. C. A., consolidated, decided Jan. 2, 1947), 159 F. (2d) 431; Collins v. Fleming (No. 371, E. C. A.i decided Jan. 2, 1947), 159 F. (2d) 426.
Emergency Court of Appeals • 17
at which such warehouse receipts might lawfully be sold or transferred. As to the third contention, the court pointed out that there were four specific methods of determining maximum prices at which warehouse receipts for bulk whisky could be transferred lawfully, and that even if the complainants could not have ascertained their maximum prices under the first three, the regulations clearly required that such prices be in line with the level of prices established by the regulations.
The court further pointed out that prices ascertained under the fourth method should be proved in the district court as the measure of damages for the violations alleged; and that the enforcement court was the proper and competent forum for determining such prices. As a corollary the Emergency Court of Appeals held as improper the Administrator’s order establishing specific maximum prices for the sales involved in Nos. 352, 353, and 357. In all other respects the contentions advanced by the complainants were rejected.3
Reliance Manufacturing Co.
The court declared invalid in this case4 the wholesale quota rule in Maximum Price Regulation 208, covering staple work clothing. Under that rule each manufacturer was required to maintain during each calendar year the same ratio of the lower wholesale prices that he had charged during a normal representative base period.
The court held that the basic purpose and effect of the challenged provision was to regulate the distribution of work clothing to the wholesale trade; and that such allocation power had not been conferred upon the Administrator by the Emergency Price Control Act. The court stated that the Second War Powers Act had bestowed the power to allocate upon the President and that, in the absence of specific delegation, the Administrator was not authorized to exercise such power.
W. T. Grant Co.
Section 1 (b) (2) of Restaurant Maximum Price Regulation 2 had provided that eating establishments could not charge more for any food item or meal than the highest price charged during the base period for a meal or food item within the same class, as defined in the regulation. Complainant5 asserted that this provision was invalid since it conflicted with section 2 (k) of the Emergency Price Control Act,
3 The Administrator’s petition for rehearing with respect to the setting aside of his order was denied on the merits in an opinion issued Jan. 30, 1947, in Nos. 352, 353, and 357.
4 Reliance Manufacturing Company v. Fleming (No. 364, E. C. A.), 158 F. (2d) 990
(1947).
8 W. T. Grant Company v. Fleming (No. 369. E. C. A,, decided Feb. 11, 1947), 159 F.
(2d), 720.
18 • Twenty-First Quarterly Report
added by the Stabilization Extension Act of 1944. That section prohibited the Administrator’s requiring highest price line limitations for “any seller of goods at retail.” The Administrator contended that eating establishments do not sell goods at retail, but are service establishments, furnishing services in connection with the distribution of food, and that section 2 (k) therefore did not apply to restaurant maximum price regulations.
The court ruled that restaurants are sellers of foods at retail and held the highest price line limitation in the restaurant regulation invalid. In so ruling the court relied on the fact that in the regulation under consideration and in other regulations issued prior to the enactment of section 2 (k), the Administrator had referred to restaurants and other eating establishments as retailers and had spoken of “the sale of food items and meals” by eating establishments. It was the court’s opinion that, in enacting section 2 (k), Congress must be presumed to have had knowledge of, and therefore to have adopted, prior administrative definitions. Thus, it must have intended section 2 (k) to apply to regulations controlling restaurant prices.
Accordingly, the court set aside section 1 (b) (2) and (d) of Restaurant Maximum Price Regulation 2.
Federated Meat Corp.
The court in this case 6 upheld the validity of Maximum Price Regulation 574, covering live bovine animals (cattle and calves), issued January 29,1945.
The court reviewed the cattle stabilization plan of the subsidy regulations which was incorporated into the price regulation by the maximum and minimum permissible payments provisions. The court held that the regulation was generally fair and equitable; that the Administrator had ample authority under section 2 (c) of the Price Control Act to impose controls on buyers only; rejected complainant’s assertions that it was impossible to comply with the regulation; and entered a judgment dismissing the complaint.
Reliable Wood Products Co.
An order under Maximum Price Regulation 188, the consumer goods regulation, establishing an inline maximum price for a cedar wardrobe manufactured by the complainant was upheld by the court.7 The court reaffirmed the well-established principle that in setting an inline price, the Administrator was not required to treat the particular seller’s costs
8Federated Meat Corp, and United Meat Co., Inc., v. Fleming (No. 330, E. C. A.), 159 F. (2d) 725 (1947).
194?)e^^^e ^ro^uc^8 Company v. Fleming (No. 379, E. C. A., decided February 14,
Emergency Court of Appeals • 19
as determinative. It pointed out that the complainant’s high costs did not indicate a correspondingly high quality or market value of its product. The court rejected the complainant’s contention that consideration should have been given solely to the maximum prices of manufacturers in the same locality as the complainant, holding it proper to consider the maximum prices of manufacturers selling in the same competitive area. The court further held that opinion evidence based upon catalog descriptions and photographs was substantial evidence, the value and weight of which were for the Administrator to determine.
Starr Jobbing House
Complainant, a jobber in finished piece goods, filed a protest against a provision in Maximum Price Regulation 127 (Finished Piece Goods), which prohibited the charging of mark-ups by jobbers commencing business after a specified date.8 Without referring the protest for consideration by a board of review, as requested by the complainant, the Administrator dismissed the protest on the ground that complainant was not subject to the “grandfather” provision. The Administrator’s determination was based upon a finding that complainant had commenced business prior to the cut-off date.
The court sustained the Administrator’s position that complainant had no standing to protest the provision in question and held that the dismissal of the protest without board of review consideration was proper.
Seminole Rock & Sand Co.
In February 1942 complainant made a contract to deliver crushed stone on demand at $1.50 per ton. No deliveries were made under this contract in March 1942. During that month, however, complainant did make deliveries to another purchaser, at a price of 60 cents per ton, under a previous contract entered into in October 1941. The Administrator brought a treble damage action against complainant for sales made in and after August 1942 at more than 60 cents. The Federal district court9 and the circuit court of appeals10 held that complainant’s ceiling price was $1.50 per ton, but the Supreme Court11 reversed this, holding that under the provisions of Maximum Price Regulation 188 (Consumers’ Goods Other Than Apparel), complainant’s ceiling price was established at 60 cents per ton by reason of having made actual deliveries at that price during March 1942, the freeze base period.
8 William Starr, doing business as Starr Jobbing House v. Fleming (No. 368, E. C. A.’), 159 F. (2d) 867 (1947).
8 Bowles v. Seminole Rock & Sand Company, 59 F. Supp. 751.
10 Bowles v. Seminole Rock & Sand Company, 145 F. (2d) 482.
11 Bowles V. Seminole Rock £ Sand Company, 325 U. S. 410.
20 • Twenty-First Quarterly Report
The Emergency Court of Appeals12 held that the regulation was valid in establishing maximum prices on the basis of prices charged for actual deliveries in March 1942 where such actual deliveries had been made. The court stated that in seeking to stabilize prices at their March 1942 levels, the Administrator might reasonably conclude that contracts entered into before that time were probably speculative and did not necessarily represent actual prevailing market conditions. It also held that the Administrator was reasonable in basing maximum prices upon the highest offering prices for delivery in March 1942 where there were no actual March 1942 deliveries. These provisions, in conjunction with provisions for individual adjustments, were reasonable on their fact, and the regulation was not rendered invalid because it had caused complainant hardship or established complainant’s maximum price at a level below its cost. The court emphasized the fact that the regulation contained broad general provisions under which individual price adjustments might be granted. Complainant had never applied for an individual adjustment, and in the absence of such an application it could not be said that the regulation as applied to complainant was unreasonable.
The court further ruled that Maximum Price Regulation 188, a general, omnibus regulation, covering a great multitude of classes of commodities, was not rendered invalid by reason of the Administrator’s failure to consult with members of the industry producing crushed stone.
Steem Electric Co.
Complainant in this case13 had protested the Administrator’s order establishing specified maximum prices, on application, under the fourth pricing method of Maximum Price Regulation 188 for steamelectric irons. In the course of the protest proceeding, the Administrator amended the original order by changing the ceiling prices specified from a delivered basis to an f. o. b. basis (i. e., increasing the prices by removing the requirement that the complainant absorb freight). At the same time a specification of prices for the iron without accessories was adde,d to the order, since in the protest complainant had indicated it desired to sell the iron without certain accessories included in the prices originally specified. The order as originally is-• sued specified maximum prices “from the time Maximum Price Regulation 188 became applicable to these sales and deliveries.” In amending the order the Administrator left this statement unchanged.
'12 Seminole Rock & Sand Company v. Fleming (No. 402, E. C. A., decided February 15, 1947).
13 Steem Electric Company v. Fleming (No. 372, E. C. A., decided Feb. 17, 1947), 160 F.
(2d) 213.
Emergency Court of Appeals • 21
Upon denial of the protest, after extended proceedings following the amendment of the order, the complainant filed a complaint in the Emergency Court. The complaint conceded that the order as amended was valid, but contended that, prior to its amendment, it had been violative of section 2 (h) of the Emergency Price Control Act and that the prices specified were not properly in line as required by the regulation.
The court adopted the Administrator’s contention that the order as originally issued was not reviewable since it had been superseded by the amended order which specified maximum prices for all sales of the iron after MPR 188 had become applicable. The Administrator’s authority to amend the order retroactively was sustained.
The court further agreed with the Administrator’s contention that, even if the unamended order were still of any effectiveness, complainant had not shown that it was in any manner invalid. The court rejected complainant’s argument that it and one other manufacturer of steam irons constituted an industry within the purview of section 2(h). It also ruled that complainant had failed to demonstrate any established practice to sell electric irons on f. o. b. rather than on a delivered basis, or any established practice to sell electric irons without specified accessories. The court further held that the order as originally issued did not compel complainant to sell the iron with accessories. The court held that maximum prices specified by the order as originally issued were properly in line with those of the most closely comparable item and were not rendered invalid by the fact that the comparable iron was not actually in production at the time the pricing order was issued.
R. D. Reser
Revised Maximum Price Regulation 164 (Red Cedar Shingles), like other OPA lumber regulations, provided that ceiling prices for direct mill shipments of lumber were the same regardless of seller. It contained a provision prohibiting the payment of any fees or commissions for the procurement of shingles, if such payment, plus price of the shingles, exceeded the ceiling price established for the shingles, The prohibition contained the following provision:
* * * This prohibition has no application to the case of a bona fide employeremployee relationship where the employee serves only one employer, insofar as shingles procurement is concerned, and where the compensation paid by the employer is a fixed salary and is not based directly or indirectly on the quantity, price or value of the shingles in connection with which the service is rendered. One of the objections raised by the complainant,14 a lumber whole
14 Reser v. Fleming (No. 319, E. C. A., decided Feb. 27, 1947), 160 F. (2d) 378. Cert den. May 19, 1947.
22 • Twenty-First Quarterly Report
saler and commission salesman, was that the regulation purported to deny him the right to be employed by several lumber purchasers, in contravention of section 302 (c) of the Emergency Price Control Act.. The Administrator argued (1) that the regulation properly construed did not cover, or seek to control, the payment of compensation by employers to any employees; (2) that complainant had not shown that he had ever intended to become an employee of any purchaser of shingles and therefore that he had no standing to object to the regulation; and (3) that if the court should reject the first two contentions, the regulation could be set aside only to the extent that it was construed to control payment of compensation by employers to their employees. The Administrator conceded that he was without authority to control such payments.
The court held that the regulation actually did control payment by employers to persons working as employees of more than one employer and to employees paid on a commission basis; that complainant’s allegation that he was an employee of several retail yards was sufficient to give him standing to raise the objection; and that the regulation was invalid “insofar as it prohibited the receipt of a commission by a part-time employee for services in procuring shingles for an employer.” It held the regulation valid to the extent that it prohibited the payments of finders’ fees to independent lumber wholesalers and commission salesmen.15
Jack Schaefer & Associates
Complainant in this case16 challenged the reasonableness of an order fixing maximum prices for certain imported bamboo rakes pursuant to section 8 (e) of the Maximum Import Price Regulation. Complainant contended that the order was arbitrary and capricious because the prescribed maximum prices were below its alleged current costs and were not in line with the maximum prices of other im-porters of the commodity.
The court agreed with the Administrator that the only substantive question in the case was whether there was sufficient evidence in the record to support the Administrator’s finding that the established maximum prices were in line with those of other importers. The court found, however, that the administrator’s finding was not based on substantial evidence, and it set aside the protested order.
15 Complainant requested rehearing, which was denied by the court. Complainant filed a petition for a writ of certiorari in the Supreme Court.
16 Jack Schaefer and Hazel M. Schaefer, doing business as Jack Schaefer & Associates v. Fleming (No. 367, E. C. A., decided March 27, 1947).
Emergency Court of Appeals • 23
RENT CONTROL CASES
Seven cases involving rent regulations or orders were disposed of by the court during the quarter. The more important opinions are summarized below:
Easley Case
Complainant17 sought relief from an order directing refunds to tenants on the ground that he was not “at fault” in failing to file timely registration statements pursuant to section 4 (e) of the Kent Regulation for Housing. The court held that ignorance of the law and the receipt of advice from area office personnel, which was correct in the light of inaccurate information disclosed by complainant, did not demonstrate an absence of fault within the contemplation of section 4 (e).
Walter F. Bell
This case18 concerned orders issued by the Administrator modifying prospectively, earlier orders granting excessive adjustments under section 5 (a) (3) by reason of additional furniture, furnishings, and equipment. Complainant contended that the Administrator was without authority to modify the earlier orders and that the Administrator’s determinations as to the increased rental value of the units by reason of the additions involved were, in any event, improper. Both contentions were rejected by the court which held that the Price Control Act plainly gave the Administrator authority to reopen and reconsider proceedings and, further, that the Administrator’s determinations were amply supported by the evidence in the record.
A. J. Helfend
Complainant contested the validity of orders of the Administrator reducing the rents of his units pursuant to section 5 (c) (1) of the Rent Regulation for Hotels and Rooming Houses.19 Complainant alleged there was no substantial evidence to support these orders and that he had been denied a fair hearing by the Rent Director. The court found that there was substantial evidence to support the Administra-tor’s orders and that the complainant was not prejudiced by any defect in the proceedings before the Rent Director.
Accordingly the complaint was dismissed.
17 Easley v. Fleming (No. 339, E. C. A., decided January 13, 1947), 157 F. (2d) 422.
18 Bell n. Fleming (No. 307, E. C. A., decided January 15, 1947), 159 F. (2d) 416.
18 A. J. Helf end v. Fleming (No. 343, E. C. A., decided February 17, 1947), 159 F (2d) 730.
24 • Twenty-First Quarterly Report
Parker
The United States Supreme Court in this case20 held that tenants are entitled to administrative and judicial review of orders granting certificates relating to eviction to their landlords. The Court decided that tenants are “subject to” such orders relating to eviction within the contemplation of section 203 (a) of the Emergency Price Control Act of 1942, as amended, which provided that a protest against an order may be filed by any person “subject to any provision of such *	*	* order.” The Court’s determination rested largely upon
the ground that orders granting certificates relating to eviction immediately, substantially, and adversely affect tenants in that they are required by such orders to move to another abode, which may be difficult or impossible to obtain, or to undertake defense of eviction proceedings in the local courts.
20 Parker v. Fleming (67 S. Ct. 463, 1947), (No. 271, E. C. A., decided March 13, 1946).
Enforcement • 25
.V.
ENFORCEMENT
Enforcement operations were further reorganized during the «quarter in preparation for eventual transfer of functions to successor agencies, and the Office moved ahead rapidly in disposing of cases in the decontrolled fields. The principal organizational changes were effected in the national office by making each of the three program operations (rent, sugar, and review and disposition) a completely self-contained unit with its own litigation and reporting staffs. The division of special investigations was transferred intact to the enforcement of sugar regulations. Part of the staff of the litigation division was assigned to the rent and sugar enforcement operations to provide them with special trial and appellate attorneys; the others were assigned to the disposition of cases in the decontrolled fields.
Another major change occurring before the close of the quarter was the Housing Expediter’s withdrawal of the delegation to the Office to enforce veterans’ housing sales control. The request for the withdrawal of the delegation was initiated by the Office because of severe budget cuts which had made it unable to continue this function.
The field structure remained unchanged during the period under review but just prior to the end of the quarter, the Office prepared to reduce the number of its field enforcement offices by abolition of all but four branch offices.
In both appellate and trial litigation, the Office continued its record •of successful accomplishment.
DISPOSITION OF DECONTROLLED CASES
In accordance with its announced policy not to proceed further with those types of cases which had become insignificant because of decontrol, the Office issued a series of directives (known as Enforcement Exceptions) describing the types of cases which were to be dismissed. Copies were sent to the various committees of the Congress which were considering price and rent control legislation.1
These directives generally required discontinuance of cases where the only violation involved was of what might be termed a procedural pricing provision (for example, failure to file a report, to petition for
1 These exceptions were subsequently incorporated in the Congressional Record, fox April 16, 1947, VoL 93, No. 71, at p. 1826 et seq.
26 • Twenty-First Quarterly Report
an increase, or to seek an authorization) and where the facts affirmatively showed that had the seller followed the proper procedure, he would have been allowed to charge the higher price.
Through the application of these criteria, as well as those mentioned in the preceding quarterly report,2 approximately 1,800 pending court actions were dismissed and over 6,000 cases in various prelitigation stages were discontinued. The total number of cases pending in court was reduced substantially in spite of the fact that over 800 new cases were filed. The over-all total of all cases pending in the decontrolled fields was reduced from 17,652, as of December 31, 1946, to 9,641, as of March 31,1947, a reduction of slightly more than 45 percent.3
The work on concluding the meat subsidy program4 continued during the quarter. Practically all applications for release of subsidy on the grounds that violations were caused by extenuating circumstances had been acted upon by the end of March. In a few cases where the facts indicated that a slaughterer had manipulated his records or reports so as to claim a larger subsidy than he was legally entitled to, “determination proceedings” were instituted to determine whether there had been violation.
CONTINUING ENFORCEMENT PROGRAMS
The Office was responsible throughout the quarter for enforcing the existing regulations covering sugar rationing, control over rice and sugar prices and over residential rentals, as well as for enforcement of the program for veterans’ housing sales control. Work of the division of special investigations led to uncovering and later prosecution of a number of black market sugar cases, and to notable successes in investigation and prosecution of flagrant offenders against the rent regulations in New York, Boston, Detroit, and Los Angeles.
Sugar
Revisions of the sugar enforcement program made toward the close of 1946 were put into effective operation during the quarter. As a result, there was a marked decrease in investigative and sanction activity at the retailer and institutional user levels, with a corresponding concentration at the wholesaler and other more significant levels. The tendency of violators to shift emphasis, both locally and on a nation-wide basis, from one type of evasion to another, was carefully
* See Twentieth Quarterly Report^ p. 74.
4 Tables 2 and 3 at the end of this chapter show, respectively, the cases pending in the decontrolled fields on March 31, 1947, and a comparison of cases pending on December 31r 1946, and March 31, 1947.
4 See Twentieth Quarterly Report, p. 75.
Enforcement • 27
watched. This led to a substantial amount of activity with respect to veterans’ applications under Revised General Ration Order 18 and to new wholesaler applications under 3d Revised Ration Order 3. The cooperation of the Alcohol Tax Unit of the Bureau of Internal Revenue proved especially valuable in these two fields.
Efforts to combat counterfeiting of sugar ration evidences were concentrated in those parts of the country where counterfeiting was greatest. Statistics on counterfeit stamps passing through the verification centers showed a decrease of counterfeits in those areas and a general holding of the line in other areas.
A number of important cases involving black market diversions of sugar in large volume by means of counterfeit and stolen ration currency, overdrafts, fraudulent applications, and various other highly developed techniques were brought to a successful conclusion with the apprehension of the persons responsible, and the initiation of criminal prosecutions. Particularly notable were approximately 70 indictments returned by a special grand jury in Chicago, based primarily upon an exceptional piece of undercover investigation by special agents of the Office amongst a ring of Chicago racketeers engaged in large-scale distribution of counterfeits, extending throughout the country. Though less well publicized, equally important cases were broken in New York, Detroit, and various other cities, putting an end to a number of organized sugar diversion channels.
Except for a few cases, sentences after conviction were substantial, with resulting good effect.
Rent
The rent enforcement program was greatly accelerated at the start of the quarter as a result of the previous quarter’s increase in investigative manpower and the greater emphasis on evasive practice cases. Successive reductions in the Office budget during the quarter were reflected in a substantial decrease in investigations, making it impossible fully to continue field investigations in all cases. Because of the importance of the evasive practice cases, the reduction in staff was accomplished through narrowing the scope of field investigation in ordinary overcharge cases (including area office referrals) and placing greater emphasis on certain mail investigative techniques which had previously been successfully tried.
The number of violation cases rose substantially during the quarter. More efficient operations resulting in the disclosure of, and action against, a higher percentage of violators were probably responsible for part of the increase. Total violations clearly mounted, however, undoubtedly due to the prevailing uncertainty about the future of rent control along with the continued shortage of rental housing.
28 • Twenty-First Quarterly Report
The 3,070 cases filed in court during the quarter represents the largest number of cases filed during any quarter in the history of rent enforcement. During the same period, in addition to a substantial number of settlements effected before suit, 1,870 cases pending in court were either tried or settled. As a result of all settlements and trials, approximately $225,000 was paid to the United States Treasury and approximately $113,000 was refunded to tenants.
The most serious problem in the rent control enforcement program was the backlog of in-court cases remaining to be disposed of, amounting to 5,638 cases. Plans were inaugurated at the end of the quarter to make greater use of various “pre-trial” techniques in order to decrease this backlog and eventually eliminate it.
The increase in the number of violations also increased the number of cases referred for criminal action. A number of landlords were arrested and convicted during the quarter for accepting side payments, insisting upon furniture tie-ins, evicting tenants illegally, and engaging in other similar practices.
To supplement action by the area rent offices, surveys were launched in various parts of the country to uncover violations not revealed by complaints filed in the area rent office. This was particularly true in New England.
Veterans’ Housing Sales Control
Enforcement activity in the veterans’ housing sales control program was accelerated during the quarter. Numerous investigations, most of which were prolonged and complicated, were instituted and completed. A number of civil cases were successfully tried and a number of criminal referrals were made. Restitution of overcharges was secured for veterans in many instances. Wide geographical coverage was obtained, with cases pending in most of the larger cities of the country.
As a result of the severe reductions in budget near the end of the quarter, the Office found itself unable to continue this program under the authority previously delegated to it by the Housing Expediter.5 Accordingly, 474 sales control files, both open and closed, were returned to the Housing Expediter. Of the 356 open files returned, investigation was incomplete in 219 cases; in 78 cases investigation had been completed but suit had not been instituted; 37 civil cases were pending in court; and 22 cases had been referred to the United States attorney for criminal prosecution. Of the 118 closed cases, 86 were closed after investigation because no violation was found, and 32 cases were closed as a result of successful disposition of the cases, either through settlement or informal adjustment, or after criminal or civil trials.
• See Twentieth Quarterly Report, pp. 77-9.
Enforcement • 29
LITIGATION
Litigation during the first quarter of 1947 was fruitful of many fundamental decisions in appellate courts. Many of the principles enunciated were set forth for the first time and some had far wider application than the case at issue. A number of cases reaffirmed previous decisions handed down in the Administrator’s favor.
An outstanding case was the unanimous opinion of the United States Supreme Court in Testa and Fleming n. Katt6 which held that State courts of competent jurisdiction may not refuse to entertain treble damage actions brought pursuant to section 205 (e) of the Price Control Act. In that case the Supreme Court of Rhode Island had held that the action for statutory damages was a proceeding for a penalty created by a foreign Sovereignty (although that Sovereignty was the United States), and that its courts had no jurisdiction to entertain the action. The Supreme Court, relying on that fact that section 205 (e) vested concurrent jurisdiction in both Federal district courts and State courts, and that the section referred to “any court of competent jurisdiction,” held that the “supremacy clause” of the Constitution (art. VI, sec. 2) required the State courts to entertain the action. This obligation existed, the Supreme Court said, regardless of whether the action was characterized as “penal” or “remedial.”
Appellate Cases
The doubts which assailed many district courts as to whether an administrator’s action abated upon retirement of the administrator, and whether the succeeding administrator could be substituted as party plaintiff, were finally resolved in Porter n. Maule? a decision of the Circuit Court of Appeals for the Fifth Circuit. The court held that the explicit saving provisions in the Price Control Act prevented the action from abating, and that substitution should be granted since the suit is brought merely in the name of the administrator, and since “he acts not for himself but for the office.”
After many years of litigation, a decision was finally rendered by an appellate court8 holding that a violation of the “highest price line limitation” (such as appears in Revised Maximum Price Regulation 287 and other regulations to assure a continued availability of low-priced merchandise) constitutes a violation of a maximum price, subjecting the seller to statutory damages under section 205 (e) of the Emergency Price Control Act.
8 No. 431, October Term 1946, decided March 10, 1947 ; 67 S. Ct. 810. See also Twentieth Quarterly Report, p. 80.
7 Decided February 24, 1947.
8 Fleming v. Richter (C. C. A. 2d), decided Feb. 10,1947 ; 159 F. (2d) 792.
30 • Twenty-First Quarterly Report
The first appellate decision dealing with the timeliness of an application to file a complaint in the Emergency Court of Appeals, following judgment in a civil enforcement proceeding, was handed down.9 In conformity with the legislative history of the stay provision (H. R. 1593, 78th Cong. 2d Sess., p. 7), the Circuit Court of Appeals for the Ninth Circuit held that the 5-day period after “judgment” within which application must be made under section 204 (e) of the act “means the judgment of a district court from which an appeal lies.”
Several favorable opinions involving the construction of the rent regulation for housing were rendered. In the first reported enforcement action on the question, the Circuit Court of Appeals for the Fifth Circuit held that the housing regulation was applicable to company-owned dwellings.10
In another case, the same court also held that the collection from apartment house tenants of unauthorized extra charges for garages constitutes a rent overcharge.11
On the other hand, a construction was given to the meaning of “immediate compelling necessity” (section 6 (a) (6) of the Rent Regulation for Housing) by the Sixth Circuit Court of Appeals contrary to the Office contention and interpretation. It was held that a landlord who owned two houses, one of which he rented while the other was self-occupied, had an “immediate compelling necessity” to obtain possession of the former house after he sold and surrendered possession of the house in which he was living.12
A significant victory .was achieved on the scope of the exclusive jurisdiction provisions of section 204 (d) of the Price Control Act. In Porter v. Eastern Sugar Associates^ a case involving the applicability of a retroactive price order upon services rendered in connection with storage of sugar in the territories, the Circuit Court of Appeals for the Fourth Circuit held that section 204 (d) applies as fully to individual orders as to broad general regulations, and that the issue of the invalidity of a retroactive pricing order may be raised only before the Emergency Court of Appeals. The court also held that the question of whether the Administrator had authority to delegate his power to establish maximum prices involved the validity of a regulation, which the district was barred from considering by this section.
The widespread and easily concealed practice of upgrading received a severe jolt at the hands of the Fourth Circuit of Appeals in
9 Gray v. Fleming (C. C. A. Sth), decided Feb. 5,1947.
10 Dixie Pine Products V. Bowles, decided Feb. 15, 1947.
u John M. McCoy V. Fleming, decided Feb. 26,1947.
18 Fleming v. J. 0. Campbell (C. C. A. 6th), decided March 17, 1947.
» Decided Jan. 6, 1947 ; 159 F. (2d) 299.
Enforcement • 31
Porter v. Bledsoe^ The court ruled that in sales of lumber for “direct-mill” shipment, the regulation (Revised Maximum Price Regulation 19) placed upon the wholesaler and mill alike the responsibility of correct grading, and the wholesaler was not relieved of liability because he did not handle the lumber and was unaware of the fact that the mill had improperly graded the lumber. In that case, the wholesaler was held liable for not less than the overcharge even though the judgment exceeded the commissions earned by him.
Many decisions were handed down reaffirming principles and decisions previously enunciated in favor of the Administrator.
An important “class of purchaser” case was successfully concluded in the case of United Furniture Corporation v. Fleming The court held that a large chain store was a purchaser in a class by itself within the meaning of Maximum Price Regulation 188, because it had consistently received lower prices, although by external standards it might be in the same class as other purchasers.
Adhering to previous rulings, the Tenth Circuit Court of Appeals in Porter n. Rumsey and 'White16 held that a seller of used farm equipment was forbidden from charging the higher warranted prices, unless he furnished a written warranty as was required by the regulation. Oral warranties, even though coupled with performance of actual repairs, did not satisfy either the provisions or purposes of the regulation, but on the contrary led merely to equivocation and evasion. The same result was reached by this court in a case involving the sale of a used car.17
The courts reaffirmed the ruling that the constitutional privilege against self-incrimination protects individuals from being forced to produce private but not public documents for inspection and that records required to be kept by law are public records.18 Likewise, the doctrine was followed that section 205 (e) requires the granting of a judgment for at least single damages where a violation, however “technical” is proven, and that section 204 (d) bars consideration in an enforcement proceeding of the claim that the regulation operates to deprive defendant of property without due process.19 Cessation of violation after institution of suit was again held not to be a bar to the issuance of injunction relief pursuant to section 205 (a) .20
The doctrine of piercing corporate identities was applied in several interesting cases. Thus for example, splitting shipments of broom
14 Decided Jan. 8,1947 ; 159 F. (2d) 495.
15 (C. C. A. 4th), decided January 7, 1947; 159 F. (2d) 321.
* Decided January 9, 1947; 159 F. (2d) 180.
17 J. E. Baggett n. Fleming (C. C. A. 10th), decided March 1,1947.
18 United States v. Shapiro (C. C. A. 2d), decided February 7, 1947.
18 Star Steel Supply n. Bowles (C. C. A. 6th), decided February 10,19'47; 159 F. (2d) 812.
20 Sh/adid v. Fleming (C. C. A. 10th), decided February 21, 1947.
32 • Twenty-First Quarterly Report
corn between a closely connected corporation and partnership for the purpose of charging higher prices permitted for small shipments was held to be an evasion.21 Provisions of Maximum Price Regulation 19, a lumber regulation, designed to prevent the pyramiding of mark-ups on sales by one company to another with interlocking directors, officers, and stockholders, were sustained.22 So, too, conviction was upheld of a blouse company which sold through a “dummy jobber” in order to obtain additional mark-ups.23
Consideration of the effect of consent judgments also finally received judicial attention. In Assman v. Fleming, the Eighth Circuit Court of Appeals agreed with the Administrator’s contention that upon the motion of a defendant to vacate a previously entered consent judgment, the only issue open is whether defendant’s consent was obtained, by fraud or misrepresentation and not whether defendant had a good defense on the merits.24 The Seventh Circuit Court of Appeals reached a different result in Huebsch Laundry Co. v. Fleming and held that a mistake of law relating to the merits of a case was a ground for vacating a consent judgment where the regulation was voluminous and complicated.
Several adverse decisions of varying importance were also rendered. Of these, the most disturbing was Moberly Milk Go. v. Fleming™ in which the appellate court for the District of Columbia held, one judge dissenting, that thje rationing of sugar on a historical-use basis is prohibited by the War Mobilization and Reconversion Act. Judgment was stayed in tliis case pending application to the Supreme Court for certiorari.
In another case decided by the same court, section 205 (d) of the Price Control Act (the “good faith” complete defense section) was held to apply where defendant conformed to the apparent meaning of a regulation but did not comply with its actual requirements.27
In still another case, tie-in sales were the source of an unfavorable decision, the Fifth Circuit Court of Appeals holding28 that where customers willingly bought wine and beer at ceiling prices, there was no evasion; also that return of wine (the tied-in commodity) to defendant and refund by the latter of the purchase price relieved him of liability not only to the purchaser but likewise to the Administrator.
a John L. Denning v. Fleming (C. C. A. 10th), decided March 7,1947.
™ Fleming v. Knudsen & Mercer Lumber Co. (C. C. A. 7th), decided January 29, 1947 £
159 F. (2d) 212.
to United States v. Glory Blouse & Sportswear Company, decided January 6, 1947.
to Decided January 29,1947 ; 159 F. (2d) 332.
26 Decided February 3, 1947.
29 Decided February 14, 1947.
to Fleming v. Jo Van Der Loo, decided March 24, 1947 (App. D. C.).
28 Sullivan v. Porter (C. C. A. 5th), decided March 21, 1947.
Enforcement • 33
STATISTICAL SUMMARY
Over 8,700 investigations were completed during the quarter and a similar number of violations were established (see table 1). Only 6 percent of the investigations and violations were concerned with decontrolled commodities, the remainder arising out of rent control, veterans’ housing, and the sugar and rice programs. More than 6,000 treble damage suits, injunction suits, license suspension suits, Federal and local prosecutions, and contempt proceedings were instituted. Almost 2,000 suspension order proceedings were instituted. Monetary settlements were made in more than 900 cases. Over 8,000 cases were closed with a warning letter, informal adjustment, or the issuance of a license warning notice.
Table 1.—Statistical Summary of Enforcement Activity January-March 1947
	Total	Rent and veterans’ housing	Sugar and rice	Decontrolled commodities
Investigations and violations .				
Investigations completed	,		8,729	3,413	4,797	519
Violations found with and without investigation			8,744	4,833	3,494	417
Administrative enforcement:				
Nonsancticn dispositions		8,343	1,501	1,486	5,356
Suspension order proceedings instituted		1,887	--				1,887	
Determination proceedings instituted	 Monetary settlements:,	24	—		24
Administrator’s consumer treble damage claim		826	477	3	346
Administrator’s own treble damage claim		104	5	7	92
¿Litigation instituted:				
Administrator’s consumer treble damage suit	.		2,832	2,688	1	143
Administrator’s own treble damage suit		185	2,834 ,		185
Injunction suit					2,871		17	20
License suspension suit					
Federal criminal prosecution	.		158	33	81	44
Local criminal prosecution.	...		104	63	2	39
Contempt proceedings....	.......	.....	8	7		1
Proceedings completed:				
Administrative proceedings closed				2,259		2,142	117
Proceedings completed		2,061		2,007	54
Orders issued (won)			.		1,840	—	1,790	50
Orders denied (lost)				221		217	4
Percent won					89.3				89.2	92.6
Proceedings withdrawn		 Court litigation closed:1	198		135	63
Civil litigation closed			6,868	2,911	46	3,911
Proceedings completed		....	....		2,384	1,579	28	777
Won				2,122	1,432	27	663
Lost		262	147	1	114
>	Percent won...._	...			89.0	90.7	96.4	85.3
Withdrawn		4,484	1,332	18	3,134
Criminal litigation closed2	.		665	151	93	421
Proceedings completed		498	111	78	309
Won				442	86	73	283
Lost	...	...	56	¿5	5	26
Percent won				88.8	77.5	93.6	91.6
Withdrawn							—	167	40	15	112
1 Number of cases except for number of defendents in contempt proceedings.
2 Number of defendants.
34 • Twenty-First Quarterly Report
The Office completed 2,250 administrative proceedings, almost 7,000 civil court proceedings of all types, and approximately 700 Federal and local criminal prosecutions.
Favorable decisions were obtained in 89.3 percent of the administrative proceedings completed, 89.0 percent of the civil proceedings, and 88.8 percent of the criminal prosecutions.
As of March 31, 1947, there were still 9,640 cases pending in fields which had been decontrolled (see table 2). About 35 percent of these were in meat and other decontrolled foods, 27 percent in the automotive field, 17 percent in industrial materials (including building materials), 13 percent in apparel, leather, and textiles, and the remainder in consumer durables.
Table 2.—Cases Pending in Decontrolled Fields, by Type of Product, Mar. 31, 1947
Type of action	Total	Meat	Other foods	Apparel	Leather and textiles	Industrial materials	Automotive	Durable goods
Total		9,641 1,136 2,869	1,801 104	1,571 88	911	362	1,695 201	2,579 515	722
Cases under investigation					120	33			75
Cases awaiting disposition			644	412	344	150	482	623	214
Cases pending in court		5,571	990	1,069	447	179	1,012	1,441	433
Federal criminal prosecution. -	568	142	87	14	22	46	246	11
Local criminal prosecution		26	8	4			1	11	2
License suspension suits		92	53	20	1		2	13	3
Administrator’s own treble								
damage suits		2,507	314	509	247	127	762	276	272
Administrator’s consumer								
treble damage suits		1,460	126	245	74	2	106	802	105
Injunction suits.. 		899	338	199	111	28	94	90	39
Contempt proceedings		19	9	5			1	3	1
Suspension order proceedings								
pending	 Determination proceedings pend-	63	61	2					
								
ing		2	2						
								
Of the total pending cases, 12 percent were still under investigation, 30 percent were awaiting disposition, and 58 percent were pending in court. From the end of December to the end of March, total pending cases had been reduced by 45 percent, those under investigation 40 percent, and those waiting disposition 65 percent (see table 3). In the same period, pending court cases had been decreased 26 percent, pending suspension order proceedings 28 percent, and pending determination proceedings 87 percent.
Enforcement • 35
Table 3.—Number of Cases Pending in Decontrolled Fields, Dec. 31, 1946 and Mar. 31, 1947
Type of action	Number of cases		Decrease during quarter	
	Dec. 21,1946	Mar. 21,1947	Number	Percent
Total		17,652	9,641	8,011	45.4
Cases under investigation		1,880	i; 136	' 744	40.0>
Cases awaiting disposition 		8^098	2,869	5,229	64.6
Cases pending in court		7,571	5j571	2^000	26.4
Federal criminal prosecution					646	568	78	12.1
Local criminal prosecution			69	26	43	62.3
License suspension suits		157	92	65	41.4
Administrator’s treble damage suits		2,737	2,507	230	8.4
Administrator’s consumer treble damage suits		2i 354	1'460	894	38.0
Injunction suits		1,578	899	679	43.0
Contempt proceedings		30	19	11	36.7
Suspension order proceedings pending		88	63	25	28.4
Determination proceedings pending. ~		15	2	13	86.7
o