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Nicastro v. United States.

Rehearing Denied Aug. 5 1953.: June 30, 1953.

NICASTRO ET AL.
v.
UNITED STATES.



Phillips

Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.

PHILLIPS, Chief Judge.

The United States brought this action against Nicastro and Klotz under § 409(c) of the Defense Production Act of 1950, 50 U.S.C.A.Appendix, § 2109(c),*fn1 to recover damages and reasonable attorney's fees for alleged violations of Ceiling Price Regulation 11,*fn2 16 F.R. p. 2391 et seq.*fn3

Nicastro and Klotz*fn4 operate the El Cabana Lounge in Salt Lake City, Utah. They opened the Lounge in 1942, occupying only a portion of the building in which the Lounge was then located. Until August, 1951, they operated under a Class C beer license, selling beer, soft drinks, peanuts and pretzels primarily for consumption on the premises. Prior to July, 1951, they sold no other food items and provided no entertainment for their patrons. In July, 1951, the owners acquired all of the building in which the Lounge is located, remodeled the building and substantially increased the floor space of the Lounge. The enlarged Lounge embraced a dance floor and other improvements not present in the original Lounge. The owners had to obtain a cabaret and restaurant license to operate the new Lounge. In August, 1951, the owners began to provide entertainment after 9 p.m. for their patrons. To offset the increased costs incurred for providing entertainment, the owners increased the price of beer sold after 9 p.m. from 30 cents to 40 cents a bottle and the price of soft drinks sold after 9 p.m. from 20 cents to 25 cents.

The trial court found there had been a wilful overcharge by the owners in the amount of $5,503.34 and assessed the damages at one and one-half times that amount. The trial court also awarded the United States attorney's fees in the amount of $900. The owners have appealed.

The owners selected as their base period the calendar year 1949. That base period gave them a ratio of "food cost per dollar of sales" of 39.36 per cent. The increase of the charges for drinks to cover the entertainment cost resulted in a violation of Ceiling Price Regulation 11.

The owners contend that they were new operators within the meaning of § 6 of the Regulation, but the facts do not bring them within the term "new operator" as defined in § 6 of the Regulation. The owners operated a drinking establishment prior to April 1, 1951, and prior to that time sold some food. It was not a new business, but the expansion of an existing restaurant. Moreover, the owners made no effort to comply with the requirements of § 6 of the Regulation with respect to new restaurants.

The owners further contend that the claimed overcharges were not wilful and not the result of failure to take practicable precautions against the occurrence of the overcharges. Under the statute the burden was on the owners to prove that the violation of the Regulation was neither wilful nor the result of failure to take practicable precautions against the occurrence of the violation if they sought on those grounds to ameliorate their liability for damages. The word "wilful" as used in the statute means voluntary, knowing and intentional, as distinguished from accidental, involuntary or unintentional. It does not mean with an evil purpose or criminal intent.*fn5 Practicable precaution against the occurrence of the violation, as used in the statute, means the exercise of ordinary care and caution to avoid the commission of the wrong.*fn6

Here, the owners voluntarily, knowingly and intentionally raised the prices of beverages sold at their restaurant. The increases in price were not made accidentally, involuntarily or unintentionally. All the owners did in respect to the exercise of ordinary care and caution to avoid the commission of the wrong was to entrust the whole matter to the judgment of their bookkeeper. They did not seek legal advice nor official interpretation with respect to the effect of their increasing the price of beverages, or otherwise inquire with respect to whether such increases would result in a violation of the Regulation. Clearly, their acts were wilful and they failed to take any practicable precautions against an occurrence of their violation.

Finally, the owners challenge the award of attorney's fees. 50 U.S.C.A.Appendix, § 2109(c) in part provides:

"* * * in any action under this subsection, the seller shall be liable for reasonable attorney's fees and costs as determined by the court, plus whichever of the following sums is greater: * * *."

Clearly, under this subsection, the United States was entitled to an award for reasonable attorney's fees.

The United States has made a motion for the allowance of additional attorney's fees in this court. An appeal is a proceeding in the original cause and the suit is pending until the appeal is disposed of.*fn7

Considering the appeal as a mere continuance of the cause, it is our opinion that the award of $900 by the trial court is adequate for the entire proceeding. Accordingly, no ...


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