C. D. Johnson Lumber Corp. v. Leonard , 192 Or. 639 ( 1951 )

LATOURETTE, J.

Plaintiff in the trial court recovered judgment against defendants in the sum of $7,737.45, this being the amount claimed owing from defendants arising out of the operation of a broom handle manufacturing business on plaintiff’s premises in Toledo. The case was tried by the court without a jury. The question before us is whether plaintiff, in making the charges (the basis of the judgment), violated the Emergency Price Control Act (hereinafter referred to as E. P. C. A.) promulgated by Congress in 1942.

It is admitted in the pleadings and by the evidence that from December, 1941, until June 13, 1947, plaintiff furnished defendants a lath mill and plantsite at its sawmill in Toledo, and also power, light, water and steam necessary for the operation of said lath mill and for the handle factory and dry kilns of defendants located on the site, and also fire protection and watchman services and woodstock suitable for the production of handles in defendants’ said mill and factory. It is further admitted that plaintiff charged defendants, from the inception of the operation up to January, 1946, the sum of 13.3 cents per thousand feet and 8.5 cents per thousand feet on the basis of fir logs and spruce logs, respectively, that were cut in plaintiff’s main mill.

The above operation was carried on under such price arrangement until the 1st day of January, 1946, when plaintiff upped its charges to 29 cents per thousand feet. Defendants paid to plaintiff currently on their account from month to month until they [defendants] terminated the contract in June, 1947, when there was a balance owing plaintiff from defendants in the sum of $7,737.45, unless E. P. C. A. forestalls its recovery.

Defendants in their answer pleaded the enactment by Congress of the Emergency Price Control Act of 1942, the establishment of the Office of Price Administration (O. P. A.) thereunder, and the issuance of a General Maximum Price Regulation by the Administrator, which was in effect beginning May 11, 1942, and ending November 10, 1946, and which regulation, among other things, recited:

“ (a) No person shall sell or deliver any commodity, and no person shall sell or supply any service, at a price higher than the maximum price permitted by this G-eneral Maximum Price Regulation.

“1499.2 MAXIMUM PRICES FOR COMMODITIES AND SERVICES:

‘ ‘ General Provisions. Except as otherwise provided in this General Maximum Price Regulation, the seller’s maximum price for any commodity or service shall be:

“ (a) In those cases in which the seller dealt in the same or similar commodities or services during March, 1942: The highest price charged by the seller during such month—

“ (1) For the same commodity or service; # * *

“ ‘Highest Price Charged During March, 1942’ For the purpose of this General Maximum Price Regulation, the highest price charged by a seller ‘during March, 1942’ shall be:

“(a) The highest price which the seller charged for a commodity delivered or service supplied by him during March, 1942 * *

Plaintiff in its reply admitted the allegations with reference to the E. P. C. A. and O. P. A. as above set out.

It is the contention of defendants that when plaintiff raised the price of 13.3 cents and 8.5 cents, respectively, to 29 cents in January, 1946, it violated the O. P. A. regulations aforesaid, and, for that reason, it cannot collect the $7,745.31 claimed by it in this case, the amount being reflected in the increase to 29 cents per thousand feet. Plaintiff counters that O. P. A. does not apply. Defendants by counterclaim allege an overpayment to plaintiff, by reason of O. P. A., of the sum of $9,537.16, and seeks its recovery.

One of defendants’ assignments of error is as follows: “The Court erred in not applying the OPA regulations to the dealings of the parties, as shown by the record in this case. ’ ’

The important question before us is whether plaintiff sold to defendants, under the arrangement between them, commodities within the purview of the E. P. C. A.

Congress, under 50 U. S. C. A. App. § 942, p. 445, defined the term “commodity” as follows:

“The term ‘commodity’ means commodities, articles, products, and materials (except materials furnished for publication by any press association or feature service, books, magazines, motion pictures, periodicals and newspapers, other than as waste or scrap), and it also includes services rendered otherwise than as an employee in connection with the processing, distribution, storage, installation, repair, or negotiation of purchases or sales of a commodity, or in connection with the operation of any service establishment for the servicing of a commodity * * V’ (Italics ours.)

A case in point, but not cited, is Carothers v. Bowles, 148 P. (2d) 554, 555, 325 U. S. 875, 89 L. Ed. 1993, 65 Sup. Ct. 1556, decided by the United States Emergency Court of Appeals. The question before the court in that case was whether, in furnishing a “park and lock” type of parking, defendants were providing automobile storage service. It was the position of plaintiffs that they merely rented to their customers land on which the latter parked their cars, and that the operation involved did not constitute storage within the purview of the Act. The court, in dismissing this contention, said:

“By thus enlarging the ordinary meaning of the term ‘commodity’ to include services which relate to the creation, commercial distribution and continued use of commodities Congress has empowered the Administrator to control not only commodity prices but also the charges made for numerous services which relate to commodities. It will be observed that among the services thus included are services rendered in connection with the storage of a commodity. This, of course, includes the storage of automobiles since they are commodities within the meaning of the Act.

“The services to which reference is made in the statutory definition are not personal services alone. They include also the services of providing equipment, machinery and tools with which to perform the particular operation and a place in which to carry it on. We think that all these are included in the concept of services as ordinarily understood in connection with the operations referred to in the definition. Accordingly within the meaning of the Act services rendered in connection with the storage of an automobile may include not only such personal service of attendants and others as may be furnished but also the service involved in providing a suitably arranged place for the storage of the automobile and the appropriate lighting and maintenance of the place so provided. All of these comprise storage service as it is commonly understood and paid for by the owners of automobiles who desire it.” (Italics ours.) Certiorari denied by the United States Supreme Court.

The above statute defining services rendered in connection with the storage of a commodity, as a commodity, also defines services rendered in connection with the processing of a commodity, as a commodity. It thus remains to be seen whether or not the operation in the present case included services rendered in the processing of a commodity, to-wit: woodstock. Webster’s dictionary defines “process” as “a method of operation or treatment, esp. in manufacture; as * # * a process of making steel.” See Bedford v. Colorado Fuel & Iron Corporation, 102 Colo. 538, 81 P. (2d) 752; 34 Words and Phrases, Processing, 165. When plaintiff sold to defendants woodstock, it sold a commodity; when plaintiff furnished to defendants a lath mill and power, light, water and steam necessary for the operation of the lath mill, handle factory, and dry kilns, and rendered to defendants fire protection and watchman services, it was furnishing services to defendants in connection with the processing of woodstock into handles then being manufactured by defendants.

Plaintiff does not seriously dispute that defendants were processing woodstock into handles by the use of the following language found in its brief:

“The transaction was essentially one to enable appellants to manufacture handles. The manufacturing plant located at the source of wood byproducts with spur trackage and electric power, light, water, steam, fire protection and watchman’s services was what gave value to what would otherwise be a waste by-product.”

Plaintiff resists the application of O. P. A. on the following grounds stated in its brief:

“Charges made for commercial buildings, manufacturing plants and commercial real property were never subject to OPA control. The provisions of the Emergency Price Control Act were directed only to the control of prices of commodities and services and rentals from housing accommodations. T. 50, USCA, App. § 901 et seq.; Automatic Fire Alarm Co. et al v. Bowles, (U. S. Emergency Ct. App. 1944) 143 F. (2d) 602; Morrison v. Taylor et al, (CCA 5, 1944) 145 F. (2d) 466.”

We agree that charges made for commercial buildings, manufacturing plants and commercial real property, as such, were never subject to O. P. A. control, but where the sale of commodities and services is had, as in the case at bar, O. P. A. control definitely applies under the express provisions of the Act.

The case of Automatic Fire Alarm Co. v. Bowles, supra, cited by plaintiff, has no application to the question before us. In that case the plaintiffs were engaged in the business of rendering fire alarm protective service. The court said that:

“ * * * Services are not commodities in the ordinary and accepted meaning of that term and they are, therefore, not within the spirit or purpose of the Act except to the extent that they are expressly directed by the Act to be considered as commodities. Compare State v. Standard Oil Co., 1912, 61 Or. 438, 123 P. 40, 43, Ann. Cas. 1914B, 179.” (Italics ours.)

The court held that the services rendered by the plaintiff in that case were not expressly directed by the Act to be considered- as commodities, and, therefore, the plaintiffs ’ operations did not come under O. P. A.

In the case at bar, as hereinbefore pointed out, the Act expressly provides for services rendered in the processing of commodities.

Plaintiff in its brief states the following:

“The trial court considered the evidence on the dispute as to whether, as a question of fact, the agreement between the parties was predominantly a rental of a commercial manufacturing plant with power, steam, trackage and other facilities or a sale of slab wood and edgings, and the trial court made the decision as set forth in the court’s memorandum decision that:

‘Without the lath mill, the trackage and their location with reference to the slab pile, the right to select the slabs would be practically worthless. It is, therefore, my belief that the principal items for which the charge was made were the use of the lathmill and the trackage and their location in proximity to the slab pile.’

and on that basis concluded that

* * the transaction here involved does not come within the Act, * * * ’

The conclusion and the reasons assigned for it are patently correct.” (Plaintiff then cites Morrison v. Taylor, supra.)

The trial court evidently based its decision on Morrison v. Taylor, supra, relating to residential rentals and predicated on a different section of the law, the question being whether or not the building occupied by a tenant as a barber shop, with living quarters in connection therewith, was predominantly used for residential purposes or business purposes.

The predominance rule — if we may so term it— has no relevancy to the question before us as the law defining processing of a commodity, as a commodity, covers every step going to make up the processing and does not permit of segregation.

In the case of Carothers v. Bowles, supra (“park and lock” case), plaintiffs raised the same point, now advanced by plaintiff, that they were engaged in a rental proposition. Prom that opinion, at p. 555, we read: “Their contention is based upon the premise that they are engaged in the rental of real estate for business purposes and not the furnishing of a service.” The court, as hereinbefore pointed out, rejected plaintiff’s contention.

Since plaintiff’s charges against defendants of 13.3 cents and 8.5 cents, respectively, were frozen by O. P. A. as of March, 1942, the increase in charges to 29 cents was in violation of the E. P. C. A., and, for that reason, no claim could be predicated on such increase; therefore, the judgment must be reversed.

Defendants’ next assignment of error is that “The Court erred in not making findings in appellant’s favor, as requested by appellants and not entering judgment for appellants, on their counter-claim, for $9,537.16.” Defendants cannot recover on their counterclaim because they were parties to the violation of the O. P. A. regulations in payment of the overcharges and are in pari delicto. Bowles v. Trullinger (CCA 9, 1945), 152 F. (2d) 191; Bowles v. Glick Bros. Lumber Co. et al. (CCA 9, 1945), 146 F. (2d) 566.

Reversed.

In Banc