speculative, unwarranted, and abnormal increases in prices and rents; to eliminate and prevent profiteering, hoarding, manipulation, speculation, and other disruptive practices resulting from abnormal market conditions or scarcities caused by or contributing to the national emergency; * * * to prevent hardships to persons engaged in business, to schools, universities, and other institutions, and to the Federal, State, and local governments, which would result from abnormal increases in prices; and to assist in securing adequate production of commodities and facilities; * * * and to permit voluntary cooperation between the Government and producers, processors, and others to accomplish the aforesaid purposes.'
It is furthermore provided by Section 4(a) of the Emergency Price Control Act that it is unlawful for any person to violate any regulation under Section 2(a), which sets forth as follows:
'Whenever in the judgment of the Administrator any person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of section 4 of this Act, he may make application to the appropriate court for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, and upon a showing by the Administrator that such person has engaged or is about to engage in any such acts or practices a permanent or temporary injunction, restraining order, or other order shall be granted without bond.'
It is obvious that no exemption exists for exclusion from the provisions of said Regulation 2(a) or any other section or regulation of the Emergency Price Control Act, which would exonerate the defendant company from complying with the terms thereof.
Although the defendant company rendered invaluable services to the public generally and to the war effort when said equipment was rented or leased, the proceeding now being considered is one for injunctive relief. Its purpose is not in any degree to punish the defendant, but solely to protect the public. It is a police regulation of great scope and importance, and innocent non0conformity with the Price Control Act is as inflationary and as damaging to competitors and the public as guilty non-conformity.
It furthermore appears that on July 14, 1945, by Amendment 19 to Maximum Price Regulation No. 134, the Office of Price Administration established dollars and cents ceiling prices for operating and maintenance charges on the major items of equipment that the average contractor would own in ninety per cent of his business. This Regulation, therefore, dispensed with compliance to Section 1(b) of Maxim-m Price Regulation No. 134 by the defendant, except in about ten per cent of the cases where operating or maintenance equipment would be purchased and then leased or rented to third persons.
We then must consider the following questions:
1. What is the probable likelihood of the defendant failing to comply with Section 1(b) of Maximum Price Regulation 134 in the future?
2. Should the defendant be enjoined from violating a regulation where past violations have been discontinued?
It appears that a spot check was made by a representative of the Enforcement Division of the Office of Price Administration, at the place of business of the defendant on July 27 and July 30, 1945.
As a result of said investigation, it was learned that the defendant had not complied with Section 1(b) of Maximum Price Regulation No. 134, although the defendant had been aware of its provisions since July of 1942.
The defendant explains that as a result of the pressure of business, limitations on clerical help, the detailed ramifications involved in preparing the application, and the fact that no equipment had been leased prior to December of 1944 justifies its noncompliance.
Furthermore, the defendant filed its application on August 2, 1945, which was approved by the Office of Price Administration on August 28, 1945, and received by the defendant on August 30, 1945. This action was filed by the Government on September 25, 1945, without knowledge that the defendant had complied with the regulation, and the defendant contends that its actions should not be construed as an indication of bad faith or a desire to flout the regulation.
It is, therefore, the duty of the court to consider all the factors that exist and in its discretion, to then ascertain whether the issuance of an injunction would insure better compliance in the future and be for the best interests of the public generally. Hecht Co. v. Bowles, 321 U.S. 321, 64 S. Ct. 587, 88 L. Ed. 754.
Since in this case the defendant has fully complied with the regulations of the Office of Price Administration, and no overcharge was at any time made by the defendant for the leasing or renting of said equipment, it is the belief of the court that it would be unjust to presently grant the injunctive relief.
An injunction is used only to stop existing or threatened violations, and not to punish past offenses. Swift & Co. v. United States, 276 U.S. 311, 326, 48 S. Ct. 311, 72 L. Ed. 587; Walling v. Shenandoah-Dives M. Co., 10 Cir., 134 F.2d 395; Brown v. Hecht Co., 78 U.S.App.D.C. 98, 137 F.2d 689.
I am convinced the defendant has displayed good faith and diligence to presently comply with the law, and the issuance of an injunction presently would not insure better compliance and would be unjust and not in the public interest. Bowles v. Huff et al., 9 Cir., 146 F.2d 428.
A court of equity need not afford an injunction to prevent in the future that which in good faith has been discontinued before the commencement of a suit, in the absence of any evidence that the offense will be, or is likely to be, repeated in the future. There should be some basis for an injunction besides suspicion or ungrounded fear that the defendant will repeat the wrong or wrongs in the future. Bowles v. Huff et al., 9 Cir., 146 F.2d 428, at page 431; Bowles v. Carnegie-Illinois Steel Corp., 7 Cir., 149 F.2d 545, at page 547; Bowles v. Cohn, D.C., 57 F.Supp. 306.
However, under the Emergency Price Control Act, the cessation of violations, whether before or after the institution of suit by the Administrator, does not bar the issuance of an injunction, but the type of order and whether one should issue is being exercised by this court in the light of the large objectives of the Act, that of all the consequences of war and economic adjustment during the post-war period, none is more hazardous than inflation and that delay or indifference would be fatal. Bowles v. Warner Holding Company, D.C., 60 F.Supp. 513.
The court has considered the following principles in deciding that the injunction should not presently be issued:
1. That the equities of the case are not in favor of the Government.
2. That the purpose of an injunction is not to punish a guilty party for past violations, but to prevent his future non-compliance.
3. The issuance of the injunction, admitting past non-compliance, should depend upon whether there is a reasonable likelihood of violations in the future.
4. Will more good or harm result from the issuance of the injunction prayed for?
Since the defendant has shown a present willingness to comply and to cooperate in the future, which he is legally bound to do, and a court of equity has the power to mould each decree to the necessities of each particular case, the complaint for injunctive relief is being presently dismissed with the right, however, being given to the Administrator, on reasonable notice to the defendant and a showing that the defendant has failed or neglected to continue to comply with said Regulation, or a showing that violations of the Act have been resumed, to again apply to the court for appropriate injunctive relief. Brown v. Hecht Co., 78 U.S.App.D.C. 98. 137 F.2d 689; Bowles v. Cohn, D.C., 57 F.Supp. 306; Bowles v. W.T. Grant Co., D.C., 57 F.Supp. 773; Hecht Co. v. Bowles, 321 U.S. 321, 64 S. Ct. 587, 88 L. Ed. 754; and Bowles v. 870 Seventh Ave. Corp., 2 Cir., 150 F.2d 819.
The prayer of Chester Bowles, Price Administrator, Office of Price Administration for the granting of injunctive relief against the McCrady Construction Company, defendant, is presently denied. Provided, however, that said proceeding shall remain on the docket in the Office of the Clerk of Courts, with the right given to the Administrator of the Office of Price Administration, on reasonable notice being given to the defendant that violations of the Act have been resumed, to again apply to the Court for injunctive relief, at which time additional and appropriate consideration will be given the facts which are then presented.
The defendant is directed to pay the costs which have accrued to date in connection with said proceeding.
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