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UNITED STATES v. SMITH

February 8, 1951

UNITED STATES
v.
SMITH



The opinion of the court was delivered by: GOURLEY

The United States brings this action against Anna Smith because of rent overcharges in violation of Section 206(a) of the Housing and Rent Act of 1947 as amended, 50 U.S.C.A.Appendix, 1891 et seq. The authority of the United States to bring such an action is found in Sections 205 and 206(b) of the Act as amended.

The complaint demands, among other things, an injunction against the defendants to prevent further violation of the Act, judgment for three times the amount of the total overcharges received from the tenants within one year from the date of the institution of the instant suit or, alternatively, if restitution to the tenants be ordered, judgment in favor of the United States for twice the amount of the overcharges.

 The Rent Director for the Pittsburgh Area Rent Office issued an order on April 29, 1949, under Section 5(c) and (1) of the Control Housing Rent Regulation, decreasing the maximum rent for said housing accommodation from $ 8.00 per week to $ 4.00 per week, effective October 1, 1947. Said Order, which was retroactive in nature, also provided that any rent collected between the period from October 1, 1947 to April 29, 1949, in excess of the amount of $ 4.00 per week be refunded to the tenant within thirty days from the date the order was issued.

 The Housing and Rent Act of 1947, more particularly Section 205, made no provision whereby the United States or the Housing Expediter could sue for treble damages. Under Section 206(b), which prescribed no time limit within which suit must be brought, the Housing Expediter was authorized to institute action for injunctive relief. United States v. Gianoulis, 3 Cir., 183 F.2d 378.

 The amendments made to the Act in 1949 retained all provisions of Section 205 and 206(b) here pertinent, but a provision was added to Section 205 to permit the United States to bring an action for treble damages against violators of maximum rent regulations if the tenants should fail to bring such an action within thirty days. It was provided that a suit by the United States would bar a suit by the tenant, and the suit, whether brought by the United States or by the tenant, had to be instituted within one year after the violation. These amendments became effective on April 1, 1949. United States v. Gianoulis, supra.

 The authority to issue an order of the type involved in this proceeding, that is, an order effective upon a date prior to the date of issuance and requiring a refund, is found in the express language of the Controlled Housing Rent Regulation as amended. 12 F.R. 4331; 13 F.R. 1861, Section 5(c)(1).

 The statute and regulations which govern the rental of property made the rentals tentative which were collected by the landlord from the tenant but not unlawful. Until the contingency of readjustment occurred, the tenant could have had no cause of action for recovery of any part of the rental exacted by the landlord. The cause of action, therefore, cannot date from the time of the collection of the excess rental since the day to refund was created and measured by the refund order, and was not breached until that order was disobeyed. It is, therefore, from the date of the refusal of the landlord to refund the excess rental within the required period of time that the statute of limitations commenced to run. Rawlings v. Ray, 312 U.S. 96, 61 S. Ct. 473, 85 L. Ed. 605; Fisher v. Whiton, 317 U.S. 217, 63 S. Ct. 175, 87 L. Ed. 223; Cope v. Anderson, 331 U.S. 461, 67 S. Ct. 1340, 91 L. Ed. 1602.

 Since the refund order was issued April 29, 1949, and effective October 1, 1947, which reduced the rental from $ 8.00 to $ 4.00 a week, and the landlord was directed to refund to the tenant, within thirty days from the date of said order, any rentals collected in excess of $ 4.00 a week, the statute of limitations did not commence to run until May 29, 1949.

 Since the complaint was filed on October 21, 1949, it was within the one year limitation prescribed by the statute, and the claims for relief demanded by the United States of America are basically proper.

 The damages provided for by the Housing and Rent Act, as amended, for overcharges of rent do not constitute criminal sanctions and Congress possesses the constitutional right to give retroactive effect to the statute if it sees fit to do so. United States v. Gianoulis, supra.

 It is the considered judgment of the Court that the defendant charged rental during the period of time involved in this action in excess of the maximum legal rent which had been authorized.

 The burden of proof that a violation was not wilful and that it did not result from the failure to take practicable precautions against its occurrence, in order to regulate the damages, rests upon the defendant. Bowles v. Weitz, D.C., 64 F.Supp. 829; Haber ...


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