The opinion of the court was delivered by: GOURLEY
This is an action brought by Chester Bowles, Administrator, Office of Price Administration, against Charles S. B. Ward, Arthur J. McCarthy and Norman L. Parkins, individually and as partners doing business as Wieman and Ward Company.
It is claimed by the Government that the defendants have violated the provisions of MPR 120, and recovery is demanded in the amount of $ 5827.23, which is three times the overcharge of $ 1942.41 which it is alleged was made, together with the granting of injunctive relief.
The case is now before the Court on motion filed by the plaintiff in accordance with the provisions of Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c, in which the plaintiff asks for the granting of summary judgment against the defendants.
At the time of argument, the Court permitted the introduction of testimony to clarify certain facts which were not clear from an examination of the pleadings. Rule 56(d), Federal Rules of Civil Procedure.
In the consideration of said motion, it was necessary for the Court to consider the following pleadings:
The original Complaint and Bill of Particulars set forth that the defendants violated the Emergency Price Control Act of 1942, as amended by the Stabilization Extension Act of 1944, 50 U.S.C.A.Appendix, § 901 et weq., and Maximum Price Regulation 120.
It being more particularly claimed that the defendants purchased, sold and delivered bituminous coal in excess of the maximum prices prescribed by Section 1340.213 of Maximum Price Regulation 120. That the defendants failed to indicate on their invoices the name of the mine from which each shipment was made, the mine index number, and the size of the coal, all of which was in violation of Section 1340.205(a)(3) of Maximum Price Regulation 120.
That during the period of one year immediately preceding the date of the filing of the Complaint, which was April 20, 1945, the defendants sold and disposed of bituminous coal in excess of the maximum ceiling prices in the amount of $ 1942.41, and that sales were made in the amount of $ 400.13 prior to said one year period.
It appears that prior to May 18, 1942, the effective date of the Act, and since then to the time of hearing on January 14, 1946, the defendants were and have been distributors of bituminous coal. In connection with their business, sales have been made of approximately 70,000 cars of coal, and this proceeding involves a transaction which comprised 125 cars of coal, or approximately 18/100 of 1% of the business conducted by the defendants since the effective date of the Regulation. It is admitted that the 125 cars of coal were sold at prices in excess of the maximum prices established by a previous mine index number issued for the mine where said coal was purchased, but it is contended that the defendants relied on the representations made to them by the producer of said coal that the prices charged were in accordance with the Regulation.
It is immaterial as to the amount of business done by the defendants or what percentage the basis for the Government's claim bears to the total business. If a responsibility exists on the part of the defendants to comply with the Regulation which gives rise to the Government's claim for money damages, innocent nonconformity will not justify or excuse said neglect since such action is just as inflationary and damaging to competitors and the public as guilty nonconformity. Bowles v. Hall-Holliday, D.C., 62 F.Supp. 486; Brown, Admr. v. Hecht Co., 78 U.S.App.D.C. 98, 137 F.2d 689, 691; Bowles v. American Stores, Inc., 78 U.S.App.D.C. 238, 139 F.2d 377.
The defendants, who were solely distributors of bituminous coal, purchased the coal involved in this claim from the Lucas-Smith Coal Company. It so happens that both the producer and distributor involved herein had offices located in the City of Pittsburgh, Allegheny County, Pennsylvania. Also, the mine which produced the coal was located in Armstrong County, Pennsylvania, a short distance from the office of all parties. The Lucas-Smith Coal Company is solely a producer of coal, and there is no business relationship existing between the producer and distributor either financially or in the operation of either business.
Sometime prior to December, 1943, the Lucas-Smith Coal Company, the producer, arranged for the opening of what was described as 'a new strip mine,' to be known as the 'Lucas-Smith Mine' in Washington Township, Armstrong County, Pennsylvania. Representatives of the Lucas-Smith Coal Company visited the location of the farm where the coal was to be stripped and found there had been an old pick mine on the farm which had been worked out 40 or 50 years before. The farm had formerly been owned by a person named Groves and, on inquiry by the producer, the Company was informed that no other person or company had ever made inquiry about the strip coal. The producer then agreed to lease the farm for the purpose of removing and stripping the coal.
The defendants learned that the Lucas-Smith Coal Company intended to strip said coal, and a representative of the defendants visited the premises to ascertain if the coal was of a quality that would satisfy their customers. It was also learned that the farm had never been touched by a previous stripper, and it was then agreed that the defendants would purchase the coal stripped by said producer.
Lucas-Smith Coal Company exhibited to the defendants the copy of a letter written to the Solid Fuels Branch, Office of Price Administration, Washington, D.C., dated December 17, 1943, in which a request was made for an index number for said stripping project. It was set forth in said letter the name of the mine closest to said project, together with said mine index number and the price of the coal per ton. Said producer also represented to the defendant distributor that the mine had never been opened before, and that pending a classification of the mine, it was proper to proceed with the mining and selling of the coal on the basis sold at the nearest mine in the same seam.
After the application was filed by the Lucas-Smith Coal Company, the Office of Price Administration raised inquiry pertaining to the type or seam of coal to be mined. Considerable correspondence then took place between the Lucas-Smith Coal Company and the governmental agency in connection therewith. However, the defendants did not learn of this fact until approximately all of the coal produced had been sold by the defendants, and in connection therewith the Court will later make comment.
According to the records in the office of District II of the Bituminous Coal Producers Association, which is situate in the City of Pittsburgh, Pennsylvania, considerable difficulty was also experienced in the proper classification of said mine.
In the proper classification of mines, the Solid Fuels Administrator of the Office of Price Administration communicated with the Secretary of the National Bituminous Coal Producers Industry Advisory Committee.
The practice is for the producer to file an application with the Solid Fuels Administrator, requesting a mine index number, in which the producer sets forth the type of coal that he believes is existing and he also sets forth, where the coal has not been heretofore indexed or classified, the mine index number of the mine nearest adjoining with the same type of coal. In about a week or ten days after the application would be filed, the Office of Price Administration would send to District Number II of the National Bituminous Coal Producers Industry Advisory Committee a copy of said application. The Advisory Committee would then make an investigation and at a board meeting decide whether the application correctly set forth the facts as they actually existed. The Advisory Committee would fix the proper price and classification of the coal, and so certify to the Office of Price Administration at Washington, D.C. The Office of Price Administration, after the receipt of said certificate, would give the mine a certain index number and classification for said coal. If the Solid Fuels Administrator of the Office of Price Administration did not notify the producer of coal that the application filed had been disapproved within thirty days after the application was filed, then the producer had the right to proceed with the mining of coal on the basis of his application.
That during the period involved in the instant case, from February 23, 1944, to and including June 29, 1944, the practice above referred to was followed. Also, on some occasions distributors of coal would make inquiry to the Advisory Committee as to the mine index number or classification of coal. However, the customary procedure was for the distributor to rely on the producer that the coal had been properly classified and the mine given a correct mine index number. If the producer was vague, or the distributor believed the producer was indefinite or not reliable, it was also the custom of the distributor to request the Advisory Committee for help.
If a distributor would have made inquiry from the Advisory Committee, all information available would have been given as to whether the coal had been properly classified and the mine given a proper index number. That on some occasions inquiry had been made by distributors to the District II Advisory Committee from Cleveland, Ohio, and Buffalo, New York, but such action was not a common practice.
As a result of the confusion which existed in the coal industry, the Advisory Committee of District II, during the early part of 1945, started to send classifications of coal and the certification of mine index numbers to the distributors in the Pittsburgh District. This practice was not followed, however, during the period complained of in the case now before the Court.
The Advisory Committee referred to herein is composed of members of the coal industry, and there are no distributors of coal who are members of said Committee. The Committee serves without financial renumeration, and the Secretary of the Committee together with the expenses of the Committee are paid from assessments levied against the Western Pennsylvania Coal Operators Association. Also, this Committee serves the Government, as an accommodation or in an advisory capacity, to assist in the enforcement of such regulations as might be promulgated by the Office of Price Administration pertaining to the coal industry. This Advisory Committee was acting in the above capacity by virtue of the provisions of Section 2(a) of the Emergency Price Control Act of 1942.
In this case the mine in question, where the defendant distributor purchased its coal, was first given a mine index number on March 20, 1942. On that date the Advisory Committee certified to the Office of Price Administration, Coal Division, the classification of coal and mine index number on application of the Groves Coal Company, Groves Strip Mine. The Bituminous Coal Division at Washington, D.C., on April 20, 1942, set up the registration of said mine as Groves Coal Company, J. H. Christy, Groves Strip Mine, Lower Freeport Vein. That was listed in the records of the Bituminous Coal Producers Board, given general trade circulation, and published in the Federal Register.
The Lucas-Smith Coal Company, who was the producer in this case, made no inquiry from the Advisory Committee as to whether the acreage involved had been previously given a mine index number. However, since the Groves Mine had never been opened or operated, the Advisory Committee in the latter part of 1942 removed the mine index number and classification from the records of the Bituminous Coal Producers.