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RIVERVIEW PACKING CO. v. RECONSTRUCTION FIN. CORP.

July 12, 1950

RIVERVIEW PACKING CO., Inc., et al.
v.
RECONSTRUCTION FINANCE CORPORATION



The opinion of the court was delivered by: MEANEY

This is an action for a judgment declaring that respondent is unjustly arbitrarily and illegally withholding certain subsidy payments allegedly due petitioners as slaughterers of bovine animals under the regulations of respondent and its predecessor, the Defense Supplies Corporation. Jurisdiction is allegedly conferred upon this court by the Stabilization Extension Act of 1944, section 102, subsection (m), 50 U.S.C.A. Appendix, § 902(m).

Respondent answers, denying that it arbitrarily withheld payment on subsidy claims of petitioners, alleging that petitioners had failed to comply with existing regulations and counterclaims as against Riverview Packing Co., Inc., for reimbursement of moneys paid on claims allegedly later invalidated. Respondent also denies the jurisdiction of the court to grant the relief sought.

 The matter was referred to a master who furnished the court with two reports, one as to Penn Abattoir Co., and K. & J. Markets, Inc., the other as to Riverview Packing Co., Inc. On motions to confirm the master's reports respondent filed objections and decision was reserved.

 The question of jurisdiction has previously been disposed of on motion to strike the petition. However, it may be desirable to set forth the views of the court at this time.

 Section 102 of the Stabilization Extension Act of 1944, 50 U.S.C.A. Appendix, § 902(m), amending the Emergency Price Control Act of 1942, § 2(m), provides as follows: 'No agency, department, officer, or employee of the Government, in the payment of sums authorized by this or other Acts of Congress relating to the production or sale of agricultural commodities, * * * shall impose any conditions or penalties not authorized by the provisions of the Act or Acts, or lawful regulations issued thereunder, under which such sums are authorized * * *. Any person aggrieved by any action of any agency, department, officer, or employee of the Government contrary to the provisions hereof, or by the failure to act of any such agency, department, officer, or employee, may petition the district court of the district in which he resides or has his place of business for an order or a declaratory judgment to determine whether any such action or failure to act is in conformity with the provisions hereof and otherwise lawful; and the court shall have jurisdiction to grant appropriate relief. * * *' (Emphasis supplied.)

 On the face of this section, when read alone, it would seem clear that this court has jurisdiction in the instant matter. However, section 204(d) of the Emergency Price Control Act, 50 U.S.C.A. Appendix, § 924(d), had previously conferred exclusive jurisdiction 'to determine the validity of any regulation or order issued under section 2', on the Emergency Court of Appeals and the Supreme Court upon review.

 The withholding of a subsidy payment has been held to be an 'order' within the meaning of section 204 of the Emergency Price Control Act even though not expressly so designated by the R. F. C. Armour & Co. v. R. F. C., Em.App., 1947, 162 F.2d 918. This being so, exclusive jurisdiction would appear to be vested in the Emergency Court of Appeals under section 204(d). These two statutory provisions must, however, be construed together, and since section 2(m) was enacted after section 204(d) it must have been intended to modify section 204(d). Thus the district courts were granted jurisdiction in a limited group of cases previously exclusively within the cognizance of the Emergency Court of Appeals. This has been acknowledged by the Emergency Court of Appeals in the case of Illinois Packing Co. v. Bowles, Em.App., 1945, 147 F.2d 554, 560, where the court said: 'Subsection (m) does not purport to withdraw from the Emergency Court of Appeals any jurisdiction theretofore granted to it. It is conceivable, however, that the effect of the subsection, in a narrow class of cases, may be to give to the district courts a jurisdiction concurrent with ours, and to that extent it may, inferentially, modify the provision of § 204(d) making our jurisdiction exclusive.'

 The effect of section 2(m) has been under judicial consideration several times resulting in decisions which seem to be somewhat in conflict. In Blalack v. United States, 6 Cir., 1946, 154 F.2d 591, at page 596, the court said: '* * * there was blanket jurisdiction in the District Courts of all matters arising under the Stabilization Act, including challenges to the validity of regulations.'

 In Illinois Packing Co. v. Defense Supplies Corp., D.C.N.D. Ill. 1944, 57 F.Supp. 8, affirmed 7 Cir., 1946, 156 F.2d 875, it was held that section 2(m) does not give jurisdiction over an action seeking a declaratory judgment finding an amendment to a regulation of the Defense Supplies Corporation invalid. The court said that section 2(m) was intended only to cover actions where the agency made a determination which was incorrect in fact. A somewhat similar result was reached in Samett v. R. F. C., 10 Cir., 1947, 165 F.2d 605, where it was said that section 2(m) conferred jurisdiction on the district courts only in cases of administrative action or failure to act under the terms of a valid regulation. The Circuit Court of Appeals for the First Circuit has held in Atlantic Meat Co. v. R. F. C., 166 F.2d 51, that an action to recover meat subsidy payments may not be brought under section 2(m) because meat is not an agricultural commodity. In contrast to this is the decision of the District Court for the Northern District of Illinois in Swift & Co. v. R. F. C., D.C., 79 F.Supp. 546, holding that it had jurisdiction under section 2(m) in an action to recover meat subsidy payments the subsidy was one 'relating to the production of sale of agricultural commodities.'

 However, whether or not meat is an agricultural commodity, does not seem to this court to be the vital issue here as was decided in Atlantic Meat Co. v. R. F. C., supra, but it seems the inquiry should be directed to whether R. F. C. was an agency engaged in making payments 'relating to the production or sale of agricultural commodities'. The language used is broad; the statute does not require that the subsidy payment in question be for the production or sale of agricultural commodities, but only related to either the production or sale. Significant also on the question of jurisdiction is the fact that petitioners here are not attacking the validity of any regulations but assert that under the regulations they are entitled to payment.

 In attacking the jurisdiction of the court the R. F. C. also alleges that petitioners have failed to exhaust their administrative remedies in that the protest procedure provided in section 203(a), 50 U.S.C.A. Appendix, § 923(a), has not been used. Respondent argues that the protest procedure is a prerequisite to jurisdiction of the Emergency Court of Appeals, Illinois Packing Co. v. Bowles, Em.App., 1945, supra, and if the district court has concurrent jurisdiction it should be subject to the same requirement. The argument has much force. The statutory grant of jurisdiction to the Emergency Court of Appeals was limited to cases where the protest procedure had been followed, 50 U.S.C.A. Appendix, § 924(a). However, in section 2(m) no such limitation is imposed on the jurisdiction of the district court. The court concludes, therefore, that the petitioners need not have filed a protest before seeking relief in this court.

 In his report as to petitioners, Penn Abattoir Co., and K. & J. Markets, Inc., the master stated that the order to show cause placed upon the respondent the burden of proving that payment was withheld for valid and lawful reasons. He found that the respondent had failed to sustain that burden. The master was in error. An order to show cause does not shift the burden of proof. See: Morehouse v. Pacific Hardware & Steel Co., 9 Cir., 1910, 177 F. 337; Goldstein v. United States, 5 Cir., 1926, 11 F.2d 593, 60 C.J.S., Motions and orders, § 20.

 Because of this and the reasons set forth below, the motion to confirm the master's report as to K. & J. Markets, Inc., ...


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