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Bowles, Price Administrator v. Leithold


decided.: December 27, 1945.


Author: Goodrich

Before BIGGS, GOODRICH, and McLAUGHLIN, Circuit Judges.

GOODRICH, Circuit Judge.

Only one question is involved in this appeal. That one question is rather important. The defendants violated the recordkeeping provisions of GMPR*fn1 and action was brought pursuant to the Price Control Act.*fn2 They failed for twenty-seven months after the Regulation became effective to provide the Price Administrator with the information required from them as manufacturers of certain types of women's underwear. The information was furnished only after this suit had been begun, but was given prior to the date of hearing. The District Judge enjoined the defendants from further violation of the record-keeping provisions.He also enjoined them from violating price ceilings with regard to the goods manufactured by them.

The defendants do not contest the validity of the injunctive order so far as it relates to record-keeping. Indeed they could hardly do so if they would. They do object, however, to the injunction forbidding them to violate price ceilings. They say, correctly, that there was no allegation made against them charging them with violation of price ceilings. Therefore, they say, they should not be enjoined for what nobody has ever claimed they did or threatened to do. Their reliance is, naturally, upon the Express case, National Labor Relations Board v. Express Publishing Co., 1941, 312 U.S. 426, 61 S. Ct. 693, 85 L. Ed. 930; also New York, New Haven & Hartford, etc., R. Co. v. I.C.C, 1906, 200 U.S. 361, 26 S. Ct. 272, 50 L. Ed. 515. The doctrine in the Express case is well known and has been applied since its pronouncement in this*fn3 and other*fn4 Circuit Courts of Appeal.

We think the general problem of injunctions in the type of case here considered is the same as that involved generally in the granting of an injunction by an equity court. This view is fortified by the decision of the Supreme Court in the Hecht case (Hecht Co. v. Bowles, 1944, 321 U.S. 321, 64 S. Ct. 587, 591, 88 L. Ed. 754)*fn5 and by the Senate Committee Report*fn6 in presenting the statute to that body. There is a latitude of discretion on the part of the District Court in the granting of this form of relief and the order is not to be upset if an appellate court finds it to be within the bounds of that discretion. It is not necessary to cite authorities for the proposition that the discretion is not an uncontrolled one but is a legal discretion to be exercised within the limits of rules of law. With that as a background, we proceed with the injunction issued in this case.

The case for the Administrator may be stated in this wise: These defendants failed for more than two years to file the information material required of them. The record does not show why they failed to file the required reports. Whatever their state of mind may have been, the effect was as complete a disregard of the wartime control statute as if they were operating at the North Pole. It is not correct to say, as the defendants do, that the effect of the violation was complete at the end of the first day's failure to file so far as that failure bears upon their state of mind and attitude toward wartime price controls. They did withhold the information for twenty-seven months and only supplied it after the lawsuit had been brought against them. Furthermore, this information was the only foundation on which their price structure could be raised if that structure was to be in accordance with law. Their ceiling price was to be built upon sales during base period, or other information.*fn7 One who withholds the data on which ceiling price is based makes it almost impossible to tell whether the price violation has occurred. Defendants say they kept books and the information could have been found by examination of their books. Some of it could, of course. The O.P.A. claims that all of the necessary figures could not be assembled even with accountants in defendants' plant to look over their records. At any rate, the defendants were required to furnish the information to the O.P.A. rather than have the Administrator come and get it. A defendant who has thus made it practically impossible for anyone to tell whether he is violating price ceilings or not, by withholding the fundamental information, is not unlikely to violate those ceilings under cover of the darkness which his failure to give information has created. At least it is not unreasonable for one to conclude that such a happening is within the range of probability and to guard against it by injunction.

We think this view is sound and we adopt it. In doing so we quite realize that the question is new, and our path is not clearly marked out by authority. The precise problem with which we are concerned has not been considered by the other circuits. Five cases, arising in four different circuits have dealt with related problems. Bowles v. Sacher, 2 Cir., 1944, 146 F.2d 186; Bowles v. Town Hall Grill, 1 Cir., 1944, 145 F.2d 680; Bowles v. Montgomery Ward & Co., 7 Cir., 1944, 143 F.2d 38; Bowles v. May Hardwood Co., 6 Cir., 1944, 140 F.2d 914; Henderson v. Burd, 2 Cir., 1943, 133 F.2d 515, 146 A.L.R. 714. In both Bowles v. Sacher and Bowles v. Town Hall Grill, the latest of the circuit cases, the courts affirm a narrow injunction.*fn8 That, of course, is the converse of our problem. The other three cases present three levels of our problem, but in a corollary field since in all three cases, there was a price violation to start with, as distinguished from the instant case. In Bowles v. May Hardwood Co., the plea for injunction was dismissed by the district court because a new ceiling higher than the violative price had been set prior to trial; the circuit court reversed and remanded on authority of the Express decision. The Burd case involved a broad decree which the appellate court narrowed on a ground not relevant here - namely, that the violation occurred because of a mistaken conception of relationship between defendants and a manufacturer, and hence was not likely to carry over into fields where the mistake had not occurred. Bowles v. Montgomery Ward & Co. involved a broad decree which the circuit court affirmed.*fn9 At best, the light shed by these decisions is indirect. Nor do the many district court decisions*fn10 bring the problem into brighter focus. The Supreme Court decisions have already been discussed.*fn11

In affirming we are not running contrary to decided cases. We conclude we are taking a position on a set of facts not heretofore dealt with by this Court nor any other of the Circuit Courts of Appeals. Every question must have its first decision and if we are otherwise right, are none the worse off for being first.*fn12


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