wilfully violated any meat or livestock regulation or order issued by the Price Administrator.'
But in the following section of Directive 41, namely Section 7(b)(2), an entirely new provision was added, reading as follows: 'Upon a nisi prius determination in a civil action or proceeding * * * against a subsidy applicant, that such applicant has violated any substantive
provision of an Office of Price Administration meat or livestock regulation or order, the Office of Price Administration shall certify the determination to Defense Supplies Corporation, including the period of time during which the violation is found to have occurred. Defense Supplies Corporation shall thereupon withhold payment on all subsidy claims of the applicant for the accounting period in which the violation is found to have occurred.'
It will be noted that in the new provision for a nisi prius determination, the requirement for a finding of wilfulness is omitted.
On April 24, 1945, defendant's Revised Regulation No. 3 was amended, effective May 5, 1945, pursuant to Directive No. 41, supra, and as amended it added to its Regulation 3, hereinabove set forth, a new provision requiring that Defense Supplies Corporation shall also declare invalid 'any claim of any applicant who the Price Administrator certifies to Defense Supplies Corporation has been determined in a civil proceeding to have violated a substantive provision of any regulation or order of the Office of Price Administration applicable to the purchase or sale of livestock or to livestock slaughter or to the sale or distribution of meat.'
It therefore appears that the Office of Economic Stabilization in the promulgation of its Directive No. 41, and the Defense Supplies Corporation in the promulgation of its amendment to Revised Regulation No. 3, not only omitted, but intentionally omitted, the necessity for a finding of wilfulness in the case of a judicial determination of violations of OPA Regulations as a basis for withholding subsidy payments, but retained the necessity for such a finding in the case of a determination of such violations by the War Food Administrator or the Price Administrator. I am therefore of the view that a finding of wilfulness is not necessary to warrant a judicial determination of violation in this proceeding.
The Court of Appeals having held that such determination can be made in the instant cases, and there being no genuine issue of the fact that there have been violations, the conclusion is inescapable the defendant is entitled to the declaratory judgment sought in its counterclaim.
It does not assist plaintiffs to note that in the spring of 1946, one year later, the requirement for a judicial determination of violations of MPR 574 for non-payment of a subsidy claim and invalidation thereof was eliminated and an automatic sliding scale for subsidy invalidation was put into effect. This sliding scale was made necessary because the delay inherent in a judicial determination of violations permitted dangerous pressures upon the price control structure to develop. Under this automatic device, if the violations were 2% or more of the permissible cost, the subsidy claims were completely invalidated. Assuming, arguendo, that the sliding scale device had some retroactive significance, in the case of Federated Meat Corporation, the overage rounded to the nearest percent was 2% or greater for every month involved, and the overage in the case of United was 2% or greater for every month involved save one, when it was 1%. For the months involved in the complaint the overage was from 4% to 10%.
It is true that the United States Court of Appeals in this case on special appeal, in affirming the denial of plaintiffs' motions for summary judgment, stated that 'the issues of fact, particularly those relative to willful violations of price regulations, must be determined as a prerequisite to judgments in the actions.'
This statement concerns an allegation by defendant of wilful violations of OPA Regulations; these cases as they went to the Court of Appeals on motions for summary judgment contained this additional defense and this phase of the opinion related to this defense. The defendant now, although still maintaining that wilfulness is established by the record, claims that wilfulness is not essential to a decision in its favor, and it is so decided herein.
Other contentions of the plaintiffs have been examined and are found to be without merit.
The motions for summary judgment will be granted. Counsel will submit appropriate orders.