Source: https://supreme.justia.com/cases/federal/us/327/614/
Timestamp: 2019-04-26 06:06:01+00:00

Document:
1. Section 1429.5 of Revised Maximum Price Regulation No. 269 (issued December 18, 1942, under the Emergency Price Control Act) -- which provides that the price limitations on poultry prescribed by the regulation shall not be evaded by any method, direct or indirect, whether in connection with any offer or sale of a price-regulated commodity alone "or in conjunction with any other commodity," or by way of any trade understanding "or otherwise" -- held not to forbid all tie-in sales, but only those which involve secondary products that are worthless or that are sold at artificial prices. Pp. 327 U. S. 622-626.
accused "unlawfully, willfully and knowingly evaded the provisions of" the regulation "by demanding, compelling and requiring" the retail buyer to purchase chicken feet or chicken skins at a specified price as a condition of the sale of poultry, and there was evidence that the chicken skins and feet sold had value, and were sold at their market price, a charge by the trial judge that the "one" question in the case was whether the sale of chicken parts was a necessary condition to the purchase of the poultry was a reversible error, since the jury may well have disregarded as irrelevant the evidence of value as to the secondary product, and convicted solely on the ground that there was a tie-in sale. P. 327 U. S. 626.
3. In order to sustain a criminal conviction, regulations prescribed by the Price Administrator under § 2(g) of the Emergency Price Control Act to prevent circumvention or evasion of price limitations must be explicit and unambiguous, and must adequately inform those who are subject to their terms what conduct will be considered evasive; the dividing line between unlawful evasion and lawful action cannot be left to conjecture. P. 327 U. S. 621.
4. A prosecutor, in framing an indictment, a court, in interpreting the Administrator's regulations, or a jury, in judging guilt, cannot supply that which the Administrator failed to do by express word or fair implication. P. 327 U. S. 622.
5. Nor can the Administrator's interpretations of his own regulations cure an omission or add certainty and definiteness to otherwise vague language of a regulation. P. 327 U. S. 622.
6. A criminal conviction for violation of an administrative regulation ought not to rest upon an administrative interpretation reached by the use of policy judgment, rather than by the inexorable command of relevant language of the regulation itself. P. 327 U. S. 626.
7. Where correct statements in a charge to a jury are so intertwined with incorrect statements as to negative the effect of the correct statements, the charge is a reversible error, since a conviction ought not to rest on an equivocal direction to the jury on a basic issue. Bollenbach v. United States, 326 U. S. 607. Pp. 327 U. S. 626-627.
Petitioner was convicted of violating Revised Maximum Price Regulation No. 269, promulgated by the Price Administrator pursuant to the Emergency Price Control Act. The Circuit Court of Appeals affirmed. 149 F.2d 773. This Court granted certiorari. 326 U.S. 699. Remandedfor new trial. P. 327 U. S. 627.
The petitioner is engaged in the wholesale meat and poultry business in New York City. Poultry is a commodity subject to the provisions of Revised Maximum Price Regulation No. 269, [Footnote 2] promulgated by the Price Administrator pursuant to Section 2(a) of the Emergency Price Control Act of 1942. Two informations, each containing six counts, were filed against petitioner. Each count alleged that, as an integral part of a specified sale of poultry on a day during the Thanksgiving season in November, 1943, the petitioner "unlawfully, willfully, and knowingly evaded the provisions of said Revised Maximum Price Regulation No. 269, Sec. 1429.5, by demanding, compelling, and requiring" the retail buyer to purchase chicken feet or chicken skin at a specified price as a condition of the sale of the poultry. Petitioner's president was named as a codefendant in the first information, and the two informations were consolidated for trial purposes.
commonly known as a "combination sale" or a "tying agreement." It is argued that the petitioner thereby received for the poultry the ceiling price plus the price of the secondary commodities, the chicken parts.
The evidence was undisputed that the poultry was billed by petitioner at ceiling prices fixed by the Price Administrator, and that no ceiling prices had been set for chicken feet or chicken skin. It was also undisputed that the demand for poultry during the Thanksgiving season far exceeded the supply, and that petitioner voluntarily imposed a rationing system among its customers.
The Government's case rested primarily upon the testimony of seven retail butchers who had purchased poultry and poultry parts from petitioner during the period in question. Only one of them testified explicitly that the sale of poultry to him had been conditioned upon the sale of poultry parts which he did not want and for which there was no consumer demand. His testimony, however, was disbelieved by the jury, since it acquitted the petitioner on the two counts involving sales to him. With two exceptions, the other butchers testified either that the feet and skins were loaded on their trucks, without previous order or solicitation, along with the poultry, or that they were billed for both the poultry and the parts without comment. Five of them stated that they sold a small amount of the chicken parts and gave away the balance; one remarked that he could not sell any parts, and was forced to dump them. There was no explicit evidence that any of the butchers protested, sought to return the chicken parts, or asked to buy the poultry separately. It was reasonable, however, for the jury to find that the sale of poultry was conditioned upon the simultaneous sale of the chicken parts, and no contrary claim is made before us.
"The government has inferred through all of its testimony that chicken skin and chicken feet are so much waste, that they are dumped, that they are not used, and they have opened up the door to this type of testimony."
But the trial judge ruled that the Government had not put that matter in issue, and that the "only thing we are concerned with is whether or not the witnesses who testified purchased chicken feet to meet a demand in their stores." He accordingly refused to admit the proferred testimony from petitioner's witnesses, stating to petitioner's counsel that "I direct you not to put them on the stand."
On cross-examination, however, petitioner's president was questioned as to the resale value of chicken skins from the retailer to the general public. He stated that the value was from 25 to 30 cents a pound, and that the skin was used to make chicken fat. He also testified that chicken feet had a resale value of from 12 to 16 cents a pound, and were used in making soup and gelatin. He further stated that the demand for chicken feet came from retail butchers such as had been on the stand. Petitioner's counsel then recalled one of the retail butchers whose testimony previously had been excluded by the court. He testified that he had bought chicken feet from the petitioner, had "created a demand" for them in his store, and had sold them for from 15 to 20 cents a pound. No further witnesses were called in regard to the retail value of chicken feet and skins.
cents. And the testimony about the use of these additional articles sold, the use that can be made of them, will enable you to determine that they were sold at prices -- and the prices are on all these slips that are in evidence -- entirely out of line with any value that attaches to them, so that it is almost entirely profit to these defendants, and, in doing that, by making the purchase of these things at the prices fixed, the defendants both realized a greater consideration than the Office of Price Administration allows for the commodity sold."
He also told the jury that the "one question in the case is whether the sale of the chicken skin and feet was a necessary condition to the purchase of the other [poultry]."
The jury acquitted petitioner's president, but convicted the petitioner on nine counts. Petitioner was fined $2,500 on each count, a total of $22,500. The conviction was affirmed by the court below, one judge dissenting because of the exclusion of petitioner's proffered testimony. 149 F.2d 773. In our opinion, however, the conviction must be set aside.
"Regulations, orders, and requirements under this Act may contain such provisions as the Administrator deems necessary to prevent the circumvention or evasion thereof."
"Price limitations set forth in this Revised Maximum Price Regulation No. 269 shall not be evaded, whether by direct or indirect methods, in connection with any offer, solicitation, agreement, sale, delivery, purchase, or receipt of, or relating to, the commodities prices of which are herein regulated, alone or in conjunction with any other commodity, or by way of commission, service, transportation, or other charge, or discount, premium, or other privilege or other trade understanding, or otherwise."
sales at above-ceiling prices may be accomplished by devious, as well as by direct, means, Congress, in Section 2(g), authorized the Administrator to make provisions against circumvention and evasion of maximum prices. Hence, one who willfully sells commodities at prices above the maximum in an evasive manner specified by the Administrator subjects oneself to criminal liability. These statutory warnings are clear and unambiguous. When incorporated with such definite and clear regulations and orders as the Administrator may promulgate, the provisions of the Act leave no doubt as to the conduct that will render one liable to criminal penalties.
Administrator that the ordinary person can know in advance how to avoid an unlawful course of action.
In applying this strict rule of construction of the provisions adopted by the Administrator, courts must take care not to construe so strictly as to defeat the obvious intention of the Administrator. Words used by him to describe evasive action are to be given their natural and plain meaning, supplemented by contemporaneous or longstanding interpretations publicly made by the Administrator. But patent omissions and uncertainties cannot be disregarded when dealing with a criminal prosecution. A prosecutor in framing an indictment, a court in interpreting the Administrator's regulations or a jury in judging guilt, cannot supply that which the Administrator failed to do by express word or fair implication. Not even the Administrator's interpretations of his own regulations can cure an omission or add certainty and definiteness to otherwise vague language. The prohibited conduct must, for criminal purposes, be set forth with clarity in the regulations and orders which he is authorized by Congress to promulgate under the Act. Congress has warned the public to look to that source alone to discover what conduct is evasive, and hence likely to create criminal liability. United States v. Resnick, 299 U. S. 207.
Section 1429.5, so far as here pertinent, provides that price limitations shall not be evaded by any method, direct or indirect, whether in connection with any offer or sale of a price-regulated commodity alone "or in conjunction with any other commodity," or by way of any trade understanding "or otherwise." No specific mention is made of tying agreements or combination sales.
But we do not believe that, under the strict rule of construction previously discussed, such an interpretation of Section 1429.5 is dictated by its plain language. It prohibits evasions through sales of price-regulated commodities "in conjunction with any other commodity." That clearly and undeniably prohibits evasions through the use of tying agreements where the tied-in commodity is worthless, or is sold at an artificial price, thereby hiding an above-ceiling price for the primary commodity. But to say that the language covers more -- that it also applies to a case where the secondary product has value and is sold at its ceiling or market price -- is to introduce an element of conjecture, and to give effect to an unstated judgment of policy.
The language of Section 1429.5 is appropriate to and consistent with a desire on the Administrator's part to prohibit only those tying agreements involving tied-in commodities that are worthless, or that are sold at artificial prices.
The Administrator may have thought that other tied-in sales did not constitute a sufficient threat to the price economy of the nation to warrant their outlawry, or that they were such an established trade custom that they should be recognized. But we are told that he had no such thought -- that prohibition of all tying agreements is essential to prevent profiteering, and that this blanket prohibition is the only policy consistent with the purposes of the Act. All of this may well be true. But these are administrative judgments with which the courts have no concern in a criminal proceeding. We must look solely to the language actually used in Section 1429.5. And when we do, we are unable to say that the Administrator has made his position in this respect self-evident from the language used.
"No manufacturer shall make a sale of garments which is conditioned directly or indirectly on the purchase of any other commodity or service."
Section 15, Revised Maximum Price Regulation No. 287, issued June 29, 1943, 8 Fed.Reg. 9126. See also Section 1389.555, Maximum Price Regulation No. 330, as amended August 7, 1943, 8 Fed.Reg. 11041.
and the absence of any such prohibition in Section 1429.5 of Revised Maximum Price Regulation No. 269 might well have led a reasonable man to believe that tying agreements involving the sale of a valuable secondary commodity at its market price were permissible in the poultry business when the transactions in question took place. Certainly the language used by the Administrator did not compel the opposite conclusion. And certainly a criminal conviction ought not to rest upon an interpretation reached by the use of policy judgments, rather than by the inexorable command of relevant language.
In view of these considerations, we interpret Section 1429.5 as prohibiting only those tying agreements involving secondary products that are worthless or that are sold at artificial prices. It follows that the conviction below cannot stand. While the informations can be interpreted as charging a crime under Section 1429.5 as we have read it, the trial judge's charge to the jury was clearly erroneous. There was evidence, at first excluded but later admitted, that the chicken parts which the petitioner sold did have value, and were sold at their market price. If the jury believed such evidence, it was entitled to acquit the petitioner. But the trial judge charged that the "one" question in the case was whether the sale of the chicken parts was a necessary condition to the purchase of the poultry. On the basis of that charge, the jury may well have disregarded as irrelevant the evidence of value as to the secondary products and convicted solely on the ground that there was a tie-in sale. Such a charge is thus reversible error.
to them." While such statements tended to charge a violation of Section 1429.5, as properly interpreted, they were so intertwined with the incorrect charge as to negative their effect. "A conviction ought not to rest upon an equivocal direction to the jury on a basic issue." Bollenbach v. United States, 326 U. S. 607.
The case must therefore be remanded for a new trial, allowing full opportunity for the introduction of evidence as to the value of the chicken parts and charging the jury in accordance with the proper interpretation of Section 1429.5.
56 Stat. 23, 50 U.S.C. App. § 901 et seq.
7 Fed.Reg. 10708; reissued with amendments, 8 Fed.Reg. 13813.
Section 205(b) is somewhat inartistically drawn. It does not specifically impose criminal liability on those who violate the regulations and orders of the Administrator. But the hurdle of United States v. Eaton, 144 U. S. 677, is cleared by the reference in Section 205(b) to Section 4, which makes it unlawful, among other things, to sell or deliver and commodity in violation of any regulation or order. See In re Kollock, 165 U. S. 526; United States v. Grimaud, 220 U. S. 506; United States v. George, 228 U. S. 14; Singer v. United States, 323 U. S. 338. Congress has subsequently emphasized this reference even more clearly when, in adding Section 204(e)(1) to the Emergency Price Control Act, it spoke of a criminal proceeding "brought pursuant to section 205 involving alleged violation of any provision of any regulation or order issued under section 2." Section 107(b), Stabilization Extension Act of 1944, 58 Stat. 639. See also Section 6, Act of June 30, 1945, Public Law 108, amending Section 204(e)(1) of the Emergency Price Control Act.
Cf. United States v. George F. Fish, Inc., 154 F.2d 798.
"(a) As to freeze regulations: a purchaser may not be required to buy a combination of commodities if he was not required to do so during the base period, because such an arrangement is a tying agreement which results in the seller's receiving a larger consideration for his commodity than he charged during the base period."
"(b) As to regulations other than base period freeze regulations: OPA has also consistently held that any arrangement by which a seller conditions the sale of a commodity in any manner upon the purchase by the buyer of any other commodity is a tying agreement, and constitutes a violation."
"For example, it is a violation for a seller to compel a purchaser of a load of corn to also purchase a load of alfalfa, even though the total price for the corn, plus the alfalfa, does not exceed the aggregate of the ceiling price for each item, or another example: it is a violation for a seller to compel a purchaser of nylon hose to also purchase a war bond."
OPA Service (Pike & Fischer) vol. I, p. 2:812.
If a retailer sold meat or any other commodity to a consumer only on condition that he purchase and pay for a wholly worthless article, it would be clear that price ceilings and been violated. For the attribution of value to the worthless article would be nothing more than an evasive method of increasing the ceiling price on the other commodity. I can see no difference where the additional commodity, although it has value, has no value to the purchaser.
be shown either by proof of the fact that the market value was lower or by showing that the quantity forced on the retailers was in excess of the quantity which the market could absorb.
The case should be remanded for a new trial on that basis. For the trial court ruled that the additional articles sold were valueless, and that the "one question in the case is whether the sale of the chicken skin and feet was a necessary condition to the purchase of the other." That ruling took from the jury the basic issue in the case.
I think there was evidence that these chicken gizzards, chicken skin, and chicken feet were valueless to some of the retailers, and that a conviction would be warranted. But it is not enough that we conclude on the whole record that a defendant is guilty. Bollenbach v. United States, 326 U. S. 607. The jury under our constitutional system is the tribunal selected for the ascertainment of guilt.
I am in agreement with the result, and substantially so with MR. JUSTICE MURPHY's opinion. I do not think that administrative regulations, given by statute the function of defining the substance of criminal conduct, should have broader or more inclusive construction than statutes performing the same function. If the regulations involved here had been enacted specifically by Congress in statutory form, I do not think they could properly be construed to forbid tie-in sales of these commodities per se.
against evasion contained in § 1429.5 of Revised Maximum Price Regulation No. 269 might be interpreted, if there had been no regulations specifically forbidding tie-in sales of other commodities, in view of their existence and the absence of any similar provision relating to poultry, I do not think it permissible to construe § 1429.5 as covering the same ground. Persons reading the regulations to determine what conduct had been forbidden were entitled, in my opinion, to conclude that the Administrator, whenever he thought tie-in sales were per se evasive or in violation of the Act's policy, had expressly so stated, and, conversely that, where he had not expressly forbidden the practice, it was not to be understood as prohibited by general language applicable to many other types of situation, but not specifically to this one. This view, I think, would be required if the regulations had bee enacted in statutory form. As regulations, they cannot be given broader content.
Accordingly, I agree with the conclusion that tie-in sales were not forbidden, at the time of these sales, as to poultry. I also agree that the trial court, both in its instructions and in some of its rulings upon the admissibility of evidence, went on a conception of the law inconsistent with this view. I therefore concur in the Court's disposition of the cause.
MR. JUSTICE FRANKFURTER, although agreeing with the opinion of MR. JUSTICE MURPHY, also joins in this opinion.
the demand of the many American families who wanted to celebrate in the customary style.
these unwanted items for the first time were not the regular retail outlet for disjointed chicken feet and peeled chicken skins, if there ever was such an outlet on a voluntary basis. It is clear, therefore, that, as a result of petitioner's forcing his customers to buy the feet and skins along with the turkeys, the retailers' cost price of the turkeys was, in effect, increased beyond the ceiling.
In my opinion, petitioner's practice in forcing the butchers to buy unwanted chicken feet in order to get wanted turkeys amounted to a direct violation of the Price Control Act. It certainly was no less a violation of the Administrator's regulation against evasion. In promulgating this regulation, the Administrator could not possibly foresee every ingenious scheme or artifice the business mind might contrive to shroud violations of the Price Control Act. The regulation does not specifically describe all manner of evasive device. The term "tying agreement" nowhere appears in it, and a discussion of such agreements is irrelevant. We need not decide whether what petitioner did would have violated every possible hypothetical regulation the Administrator might have promulgated. The regulation here involved prohibits every evasion of the Price Control Act. It thus condemns all actions that are "on the wrong side of the line indicated by the policy, if not by the mere letter, of the law." Bullen v. Wisconsin, 240 U. S. 625, 240 U. S. 631. What petitioner did here is on the wrong side of both letter and policy. The Court does not deny that there was ample evidence to support the jury's finding that petitioner did what the information charged in with doing. In my opinion, that was a crime.
at the time when bacon was almost impossible to purchase, been required to buy dog hoofs and hog skins with each purchase of a pound of bacon, I think the sellers would have violated the law. If the wholesaler can require the retailer to purchase unwanted items, the retailer can force the ordinary consumer to do the same thing. A restaurant could then force its customers to purchase used kitchen fats along with their meals. It would be little consolation to a customer forced to do so to learn that soap factories can use these fats, and would be willing to purchase them. He would pay the price, and either dump the fat into the nearest ashcan or tell the waiter to take the smelly substance away. The result would be increased cost of meals in that restaurant. Thinly disguised subterfuges like the one here adopted should not be sanctioned by courts. Once they are sanctioned, laws enacted by Congress for the public welfare are no longer respected.
When food is scarce and people are hungry it is a violation both of the letter and spirit of the Price Control laws to require consumers or retail stores where they make their purchases to buy things that they neither need nor want as a condition to obtaining articles which they must have. I dissent from the Court's disposition of this case.
MR. JUSTICE REED and MR. JUSTICE BURTON join in this opinion.

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