4. The defendants, in charging more than the maximum legal rent of $ 28 per month from February of 1948 without petitioning for an increase in accordance with Section 5(a) (3) of the Rent Regulation, violated Section 204(b) (1) of the Housing and Rent Act of 1947, as amended.
5. The violations of the defendants were wilful.
6. The defendants failed to take practicable precautions against such violations.
7. Defendants have failed to exhaust their administrative remedies to contest the order of September 30, 1949.
8. Defendants, during the period from February 5, 1948 to October 4, 1949, overcharged the tenants, Mr. and Mrs. Baldiga, the total sum of $ 440, out of which total the sum of $ 66 was collected within one year from the date of the bringing of this instant suit.
9. Because of the foregoing violations, the issuance of an order enforcing compliance and requiring restitution to the tenants is authorized and warranted.
10. Plaintiff is entitled to recover damages in the amount of twice the overcharges received by defendants within one year prior to the date of institution of this action.
11. An order should issue which
(a) enters judgment for plaintiff and against defendants in the sum of $ 132.
(b) directs defendants to pay to the Treasurer of the United States the sum of $ 440 for the use and benefit of Mr. and Mrs. Joseph Baldiga;
(c) enjoins defendants, their agents, servants, employees and all persons in active concert or participation with them from directly or indirectly demanding, accepting, receiving or retaining any rent in excess of the maximum legal rent established by the Housing and Rent Act of 1947, as amended or superseded, and the Regulations issued thereunder, as amended or superseded.
(d) directs defendants to pay the costs of suit.
The acts of the defendants herein constituted violations of the Housing and Rent Act of 1947.
Section 204(b) (1) of the Housing and Rent Act of 1947, 50 U.S.C.A. Appendix, §§ 1881-1902, provides:
'Subject to the provisions of Paragraphs (2) and (3) of this subsection, during the period beginning on the effective date of this title and ending on the date this title ceases to be in effect, no person shall demand, accept, or receive any rent for the use or occupancy of any controlled housing accommodations greater than the maximum rent established under the authority of the Emergency Price Control Act of 1942, as amended, and in effect with respect thereto on June 30, 1947 * * *.'
Pursuant to the authority vested in him by virtue of the Act as aforesaid, the Housing Expediter promulgated the 'Controlled Housing Rent Regulation' effective July 1, 1947 through March 30, 1948, published in 12 Fed.Reg. 4331. Section 5(a) of the Regulation provided:
'(a) Grounds for increase of maximum rent. Any landlord may file a petition for adjustment to increase the maximum rent otherwise allowable only on the grounds that * * *
'(3) Substantial increase in space, services, furniture, furnishings or equipment. There has been a substantial increase in the services, furniture, furnishings or equipment provided with the housing accommodations since the date or Order determining its maximum rent or a substantial increase in the living space since June 30, 1947 * * *'
There need be no discussion as to decontrol, because the overwhelming preponderance of the evidence, including even the admitted facts taken from the defendants' testimony, establishes that the third floor had never been rented as a separate and distinct unit from the second floor apartment. Since this, at best, was an increase of the size of an existing controlled unit, Section 5(a)(3) of the Regulation governs.
Even if this were considered as a first rental (and it is submitted that the overwhelming preponderance of the testimony proves that it was not), the defendants failed to comply with the rent regulation by not filing a Registration Statement within thirty (30) days of such first rental. Section 4(c) of the Controlled Housing Rent Regulation provides (12 Fed.Reg. 4331 et seq.):
'First rent after June 30, 1947. For controlled housing accommodations first rented on and after July 1, 1947, the maximum rent shall be the first rent for such accommodations. Within thirty (30) days after so renting, the landlord shall register the accommodations as provided in Section 7. The Expediter may order a decrease in the maximum rent as provided in Sections 5(c)(1) and 5(c) (6) * * * '
Section 4(c) further provides that if the Registration Statement is not filed within thirty days, the Area Rent Director is permitted to make a retroactive order demanding a refund.
Since, however, we are dealing here with the increased space allotted to an existing unit, Section 4(c) is not applicable, and the case is governed by Section 5(a)(3) quoted above.
Section 205 of the Housing and Rent Act of 1947, as amended, provided for the assessment of treble damages against any person committing an overcharge, in the amount of three times the sum overcharged during the period of one year from the date that suit is brought. The burden under this Act is upon the defendants to prove that the overcharges were neither wilful nor the result of failure to take practicable precautions against the occurrence of the violation in order to reduce the judgment to single damages. In the instant case, there seems to be little doubt that the conduct of the defendants was wilful. They knew or were charged with knowledge that the former tenant, Mary Jane Chambers, was using the third floor attic for storage purposes and that she was paying the sum of $ 28 per month. They knew, as prudent persons, or were charged with the knowledge that the rent for this space could not be increased without complying with the Rent Regulation. Had they inquired from the proper authorities and made a true disclosure of all the facts, they would have been informed of their obligation to petition for the increase under the appropriate regulation.
As an indication of their frame of mind, defendants attempted to prove that the third floor was first rented to the Baldigas in February of 1948 in the face of the overwhelming testimony of the former tenant and landlord that the space had been used from 1946 by the Chambers.
The right of the Government to ask for restitution of rental overcharges is too well settled for argument. Such has been the law since the generic case of Porter v. Warner Holding co., 1946, 328 U.S. 395, 66 S. Ct. 1086, 90 L. Ed. 1332.
An appropriate order is entered.
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