Before AUGUSTUS N. HAND, CHASE, and FRANK, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge.
The defendants were indicted upon the following counts: (1) For demanding of one Mrs. Bellew as rent for the occupancy of an apartment at 935 Park Avenue, New York City, for one year, the amount of $1900, payable in advance, in violation of Rent Regulations for Housing; for receiving from Mrs. Bellew such amount of rent in advance; for demanding from Mrs. Bellew, as rent for the apartment, $1,900 payable in advance, and the amount of $10,000 as additional rent, the total of said sums being an amount higher than the maximum price permitted under the Rent Regulations; (4) for receiving from Mrs. Bellew $1,900 and $9,500 for rent of the apartment for one year. The defendants have appealed from a judgment of conviction on each of the four counts. We affirm as to all four counts.
On August 28, 1946, the defendants obtained a lease of Apartment B on the 11th floor of the building known as 935 Park Avenue, in the Borough of Manhattan, City of New York, for the term of one year to commence on the 1st day of October, 1946, at an annual rental of $1,900 payable in advance. The lease was executed by the company owning the building and contained a clause permitting an assignment of it by the defendants. The latter had a bill of $2,000 against one Dr. Lengyel for services as real estate brokers in connection with the purchase of the building by Dr. Lengyel, who had acquired the property in the name of the corporation, which sum of $2,000 he was then unable to pay in cash. The defendants accepted the lease of the apartment in payment of the indebtedness to them. On September 16, 1946, they assigned the lease to Mrs. Bellew, who wished to rent the apartment, under an agreement to pay them $1,900 in advance for the year's rent. There was evidence that Mrs. Bellew was required to pay the defendants an additional sum of $10,000 for furniture - which they were to procure for the apartment - as a condition of obtaining the assignment of the lease. Preliminary negotiations were followed by delivery to Mrs. Bellew of the assignment of the lease and payment by her of $1,900 by check and $9,500 in cash (a conceded reduction for the furniture to be supplied). Two agents of the OPA, who were in waiting, witnessed the various steps in the transaction and arrested the defendants for violation of the rent regulations. DePorceri gave up the $9,500 in cash which had been paid to him by Mrs. Bellew, and the $1,900 for which she had given her check. There was testimony that DePorceri stated that the $9,500 was a bonus which he was to divide with his "partner Bialek," and that Bialek said, on the same occasion, that the check was to go one-half to the owner of the building, and the remainder to be devided between himself and DePorceri.
Section 13(10) of the Rent Regulations relating to Housing, New York City Area, has defined "rent" as follows:
"(10) 'Rent' means the consideration, including any bonus, benefit, or gratuity demanded or received for or in connection with the use or occupancy of housing accommodations or the transfer of a lease of such accommodations."
The foregoing subdivision includes any payments received from an occupant of premises in consideration for the assignment of a lease as "rent." Counts 1 and 3 charge the defendants with demanding and receiving $1,900 as rent in advance for one year in violation of Section 2(d) of the Regulations, which is as follows:
"(d) Security deposits - (1) General prohibition. Regardless of any contract, agreement, lease or other obligation heretofore or hereafter entered into, no person on or after September 1, 1944 shall demand or receive a security deposit for or in connection with the use or occupancy of housing accommodations within the Defense-Rental Area or retain any security deposit received prior to or on or after September 1, 1944 except as provided in this paragraph (d). The term 'security deposit,' in addition to its customary meaning, includes any prepayment of rent except payment in advance of the next periodic installment of rent for a period no longer than one month but shall not include rent voluntarily prepaid subsequent to possession by a tenant under a written lease for his own convenience.
"(2) Maximum rent established under section 4(a) or (b). Where the maximum rent of the housing accommodations is or initially was established under section 4(a) or (b), no security deposit shall be demanded, received, or retained except in the amount (or any lesser amount) and on the same terms and conditions (or on terms and conditions less burdensome to the tenant) provided for in the lease or other rental agreement in effect on the date determining the maximum rent established under section 4(a) or (b)."
It is clear from the foregoing Regulations that it can make no difference, when the lease was transferred to Mrs. Bellew, that rent had already been paid under that lease by her assignors, for the Regulations clearly provided that the consideration she furnished for the transfer was under the definitions "rent," and that it could not be paid in advance. In the face of the clear language of the Regulations we can see no basis for invoking the decision of the Supreme Court in M. Kraus & Bros. v. United States, 327 U.S. 614, 66 S. Ct. 705.
The defendants argue that the government must fail on Counts 1 and 3 because it did not negative the exception in Section 2(d)(2) quoted above by introducing the lease in effect on March 1, 1943, and showing that the prepayment demanded by the defendants of Mrs. Bellew exceeded the rent provided for in the lease of March 11, 1943. The defendants, however, had the burden of bringing themselves within the exception as a matter of defense. McKelvey v. United States, 260 U.S. 353, 43 S. Ct. 132, 67 L. Ed. 301; United States v. Van Den Berg, 7 Cir., 139 F.2d 654, 656. Moreover, it seems that they would be likely to have readier access to the facts concerning the terms of such a lease, if there ever was one, than the government.
In his charge to the jury the judge made the following statement as to Counts 2 and 4:
"You will see that the term 'rent' is very broad and includes not only any bonus payment but also includes all consideration for or in connection with the use or occupancy of an apartment such as this.
"If you believe from the evidence that in addition to the sum of $1900 the defendants demanded and required as a condition of the rental that Mrs. Bellew purchase furniture and pay cash therefor of $9500 in order to rent the apartment, and as a condition of the rental of such apartment, such sum of $9500 would constitute additional ...