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Bowles v. 870 Seventh Avenue Corp.

August 3, 1945

CHESTER BOWLES, ADM'R, OPA,
v.
870 SEVENTH AVENUE CORPORATION



Author: Hand

Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

This is a suit brought by the Administrator, Office of Price Administration, against 870 Seventh Avenue Corporation to restrain the defendant's violations of Maximum Price Regulation No. 2-1. The defendant conducts a large hotel in the City of New York known as The Park Central Hotel, and maintains in it five separate restaurants. The violations fall into two general classes: (1) Those which took place in connection with meals served to so-called Budget Plan tenants in defendant's Hawaiian Room, and (2) violations which took place in the four restaurants other than the Hawaiian Room, and consisted of overcharges on a number of items of food and drink.

Overcharges in the Hawaiian Room

Between October 1, 1942 and October 1, 1943, the defendant rented certain suites in the hotel under Budget Plan leases which entitled the tenants to the occupancy of their particular suites, and, in addition thereto, dinner nightly in the Hawaiian Room, laundry service not exceeding $2.50 per week per person, and the pressing of three suits or dresses per person a week. Until November, 1943, tenants were billed a flat sum each month, without indication of the various amounts allocated to rental, meals, and services, but allocation was made upon the defendant's books. In a typical case of a monthly charge of $150, $90 was allocated for rent, $21.66 for laundry for two, and $38.34 for meals and pressing service.

The OPA Rent Regulations became effective in November, 1943. Since that time, as required by them, defendant has billed its Budget Plan tenants as follows:

To rent for month ending $To meals, laundry & valet $Defendant also, in renewing leases in effect during the April 4-10, 1943 period, increased the total sum billed to the tenants each month, allocating the entire increase to "meals, laundry & valet."

The District Court held that the increase in the amount charged for "meals, laundry & valet" was an overcharge in violation of Restaurant Maximum Price Regulation 2-1, effective July 26, 1943. From this part of the judgment the defendant has appealed.

Section 2 of Restaurant MPR No. 2-1 provided: "Your maximum price for any food item or meal which you offered in the seven-day period beginning Sunday, April 4, 1943, and ending Saturday, April 10, 1943, is the highest price at which you offered the same food item or meal in that seven-day period." Section 1 provided that a restaurant or hotel owner "must not offer or sell" any meal or food item at a price higher than the maximum price. It is the contention of the defendant that no "offer" was made in the week of April 4-10, 1943; that the "offer" to an individual tenant was made months before at the time when the individual Budget Plan lease was entered into. In support of this, defendant points out that Section 2 contains only the word "offered", whereas Section 1 has the broader phrase "offer or sell."

But Section 2 does not refer to the highest prices offered during April 4-10, 1943. It only refers to "the highest price at which" a food item or meal was offered during that period. The defendant offered meals in the Hawaiian Room during the week of April 4-10, 1943, and the fact that the price for the meals offered was fixed several months before is irrelevant. That price, just as the rate of rental received pursuant to a lease entered into some months before the Rent Regulations became effective, did not depend upon the time when the contract to provide meals at that price was entered into. Section No. 2-1 MPR fixed price ceilings at the highest prices actually established during the week of April 4-10, 1943, regardless of whether these prices were established by prior contract or otherwise.

The Price Administrator's Statement of Considerations published with Restaurant MPR 2 on June 29, 1944, indicates that restaurant prices were stabilized at the April, 1943, levels because by that time "controls had been established over raw food and labor costs and at the same time, restaurant prices in general had risen sufficiently to enable operators easily to absorb all intervening cost increases." From this the defendant argues that, since the Budget Plan leases were entered into months before April, 1943, to hold that price ceilings were at the level of the rates charged tenants under the Budget Plan leases which were in effect in April, 1943, would be to defeat the avowed purpose to give restaurant operators the benefit of the increase in price levels during the months prior to April, 1943. It is further argued that it would impose an unjust hardship upon the defendant to deny it the benefit of this increase.

The express language of the regulation, if clear and unambiguous, must override any general statement of its purpose. The language of Section 2 is clear and unambiguous, as has been indicated. Further, the Statement of Considerations included the following: "The accompanying Regulation * * * is primarily a regulation which freezes the maximum prices of eating and drinking places in the 48 states and the District of Columbia to the April 4-10, 1943 levels." The Price Administrator intended to stabilize prices at the level of prices actually charged during the base period whether those prices were fixed by an earlier contract or not, even though the effect in some cases might be to deny to restaurant operators the benefit of the increase in price levels during the months prior to April, 1943. The result here is undoubtedly harsh, but there is no greater hardship to this defendant in denying it the benefit of the increase than in tying maximum rents to an amount which may have been fixed by a lease negotiated years in the past. It is a lamentable fact that war does entail hardships, and even minor economic strictures are often more difficult to accept philosophically than is actual risk of life. Any order of general application my bring hardship to individuals. This is unfortunate, but it is not the function of this court to amend general administrative orders. Section 19 of Restaurant MPR 2-1 provides that the OPA may adjust the maximum prices for any eating establishment if the establishment "is operating under such hardship as to cause a substantial threat to the continuance of its operations". If the hardship to the defendant is sufficiently great, it may obtain relief under Section 19, but it can obtain no relief from this court.

Dinners in the Hawaiian Room were served to Budget Plan tenants and their guests from a menu which offered a choice of food with nothing to indicate any price for the food. Between April 4 and April 10, 1943, inclusive, a charge of $1.50 was made for a guest's dinner, except that the charge was $2 if the dinner included roast beef or steak. It is defendant's contention that, even if ceiling prices in the Hawaiian Room are fixed by the highest prices charged during the week of April 4-10, 1943, the highest prices charged were the prices for guests - $2 for steak or roast beef, and $1.50 for other meals. This contention cannot stand in the face of Section 9 of Restaurant MPR 2-1, which reads in part:

"Sec. 9. - Evasion. (1a) You must not evade the provisions of the regulation by any scheme or device whatsoever. Some, but not all practices ...


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