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Gallagher's Steak House Inc. v. Bowles

May 2, 1944


Appeal from the District Court of the United States for the Southern District of New York.

Author: Chase

Before CHASE, CLARK, and FRANK, Circuit Judges.

CHASE, Circuit Judge.

This appeal involves the validity of a rationing order made by the Office of Price Administration and of an order subsequently made by the same authority which is called a suspension order.

The appellant, a New York corporation, operates a restaurant in the City of New York where it features the serving of steaks. It is within the class known as institutional users of food to whom was allocated food which was made subject to allocation by virtue of § 2(a)(2) of the Act of June 28, 1940, 54 Stat. 676, as amended by the Priorities and Allocations Act of May 31, 1941, 55 Stat. 236, 50 U.S.C.A. Appendix § 1152(a)(2), and by title III of the Second War Powers Act of 1942, 56 Stat. 176, 50 U.S.C.A. Appendix § 631 et seq., and the regulations issued thereunder. This food included, inter alia, meats, fats, and oils which fall within the provisions of Ration Order No. 16 and General Ration Order No. 5. The allocation was made in accordance with the procedure established therefor and upon the application of the appellant showing the information required as to its business done in the base month of December, 1942.

The amount of such food which was allocated to the appellant was translated into terms of ration points. A designated number of such points per month was allotted to the appellant by its local War Price and Rationing Board, computed in accordance with an established formula upon the facts disclosed as to the base month. Later this number was increased, upon the further application of the appellant, by taking into consideration the number of meals it had served to its employees during the base month and the number of patrons to whom it had then served beverages without food. The allotment made on the last mentioned basis was considerably smaller than it would have been had the figures supplied by the appellant been accepted as correct by the local board in making the computation. The appellant duly appealed from the order of allotment, in accordance with Procedural Regulation No. 9, 7 F.R. 8796, to the District Director and then to the Regional Administrator and finally to the Office of Price Administration in Washington. The order was affirmed each time, the last affirmance being by order of the Chief of the Institutional User Branch of the Office of Price Administration on December 7, 1943, which was after this suit was brought.

Although the appellant now insists that this allotment order was invalid, both because made by an agency to whom the power to act had been unlawfully delegated and because it acted arbitrarily, we consider neither contention sustainable. The delegation of power was lawful, as we have recently held in United States v. Randall, 2 Cir., 140 F.2d 70. See, also, O'Neal v. United States, 6 Cir., 140 F.2d 908. The appellant did not allege in its complaint that the allotment was incorrect, nor does this record contain the record of the hearings and action of the administrative agency. The court below found that the appellant failed to prove that the allotment was not as large as it should have been and this record does not show the contrary. The order making the final allotment of points must, accordingly, be held correct and valid. Rickard v. Thompson, 9 Cir., 72 F.2d 807; Carter Oil Co. v. Norman, 7 Cir., 131 F.2d 451. Compare, Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286, 54 S. Ct. 692, 78 L. Ed. 1260.

The remaining question is whether the administrative agency had the power to modify the order upon due proof that the appellant had not limited its purchase and receipt of the commodities to the amounts it was entitled by its allotment of ration points to receive upon surrender of those points. The fact that the appellant did not surrender ration points as required is plain and undisputed. By June 28, 1943, it was in arrears to the extent of about 200,000 such points and could not, as it well knew, make up the deficit except by using for that purpose points it would receive in the future. Such use would curtail pro tanto the amount of such food it could buy for current use and would seriously impair its ability to continue in business.

It had been able to get the food for the ration point payment of which it was in arrears to this extent because the regulations permitted an extension of credit on ration point payments within the ability of the appellant to pay at the time of purchase or within a limited time thereafter, but the appellant had not kept its purchases and receipts within this limit.

Being advised of the situation, the appellee Bowles, who is the Administrator, Office of Price Administration, caused charges to be filed on June 26, 1943, against the appellant for violations of Ration Orders Nos. 5, 8 and 16. Hearings as provided by Procedural Regulation No. 4 of the agency were conducted upon due notice to the appellant, which appeared and was heard. It was found, and it is now undisputed, that as of August 27, 1943, the appellant had fallen still further behind in terms of ration point indebtedness and then had a deficit of 234,495 points. That was true also as of the date of the hearing, September 17, 1943. The only way, of course, in which the appellant could pay this debt was by using points which it would receive under its allotment from month to month in the future, for that was the only way it could lawfully obtain the currency to do so. And it was self-evident that to the extent it used for additional purchases the points it would obtain it would continue to acquire foods which it was not yet entitled to receive under the allocation.

Under such circumstances the so-called suspension order was made on September 20, 1943, by appellee Chambers as Chief Hearing Commissioner, Office of Price Administration, Region II. It provided that

"(a) Respondent, as an * * * institutional user * * * during this suspension,

"1. Shall not acquire or receive, directly or indirectly, rationed commodities as defined in Ration Order No. 16.

"2. Shall keep posted, plainly visible to the public, at its place of business any notice hereof furnished by the ...

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