73 Findings of Fact namely between July 3, 1943, and June 30, 1945, a corporation duly organized and existing under and by virtue of the laws of the State of Maryland, with its head office in Oakland, California. Safeway Stores, Incorporated, during this period was engaged in the retail grocery business and operated 2,300 retail food stores, including grocery and meat departments, in 23 states and the District of Columbia, as an integrated retail food chain store organization. 2. The historical policy and usual habit of doing business of Safeway Stores, Incorporated, was either to manufacture, process or purchase commodities, including meat and grocery items, and distribute them only through its retail stores to consumers. At no time during the period pertinent to the issues in this case did it vary from this practice or engage in a wholesale business, or operate as a wholesaler of either meats or grocery items. 3. In connection with its operation of these more than 2,300 retail stores plaintiff found itself faced with a critical meat shortage in 1943. This shortage was particularly acute in plaintiff's East and West Coast areas of operation. 4. On June 29, 1943, Safeway Stores, Incorporated, purchased all the issued and outstanding capital stock of the Nebraska Beef Company, a Delaware corporation, having a slaughtering plant located at Omaha, Nebraska. At the close of business on July 3, 1943, all assets and operations of the Nebraska Beef Company, a Delaware corporation, were transferred to plaintiff herein, Safeway Stores, Incorporated, a Maryland corporation, and thereafter throughout the period pertinent to the issues in this case such plant was operated by Safeway Stores, Incorporated, as its Nebraska Beef Company Division. 5. At the date of purchase of Nebraska Beef Company, Inc., by Safeway Stores, Inc., full wartime controls had been established in the entire meat producing and marketing industry with the exception of controls over the purchase of live bovine animals. Such controls were established by MPR 574, effective January 29, 1945. The amounts which could be slaughtered, the methods of slaughter, the persons to whom the meat could be sold, the percentages to each, and the prices at wholesale and retail were the subject of rigid control by Findings of Fact 118 C. Cls. the United States. Compliance with all wartime regulations was a prerequisite to the privilege of doing business. The meat shortage with which plaintiff was confronted was, in large measure, due to the operation of such controls to insure to the armed forces and other priority purchasers, an adequate supply of meat. The imposition of ceiling prices on the marketing of live cattle met with considerable resistance and such ceilings were not put into effect until the issuance of MPR 574 on January 29, 1945. In the effort to keep such prices within a predetermined range, and in part to compensate processors for the disadvantages of distributing in a controlled market the products of live cattle purchased in an uncontrolled market, a system of subsidies to slaughterers was devised and put into effect some time after ceiling prices had been imposed. Under this system subsidies were payable to the slaughterer on live cattle bought within the predetermined price range. Prices paid outside of this range were deducted from subsidies otherwise payable. 6. The Nebraska Beef Company facilities were acquired by Safeway Stores, Incorporated, for the purpose of supplying carcass beef to Safeway's retail markets on the East Coast, namely the retail outlets in the Washington, D. C., and New York Divisions of the company. The retail markets under these divisions consisted of the Washington, D. C.-VirginiaMaryland area and the New York-New Jersey area. 7. The Nebraska Beef Company Division of Safeway Stores, Incorporated, was what is known in the trade as a nonprocessing slaughterer. 8. The Nebraska Beef Company plant was so designed as to lend itself to efficient slaughtering operations and after its acquisition and throughout its operation by Safeway Stores, Incorporated, it was efficiently operated as a nonprocessing slaughterer. 9. During the period from July 3, 1943, to June 30, 1945, plaintiff's Nebraska Beef Company Division was subject to certain directives issued by the United States Government, commonly known as set-aside orders. These orders required all large-scale slaughterers, including plaintiff, to set aside, reserve, and hold for the United States, varying percentages 73 Findings of Fact of their production of carcass beef until ordered delivered to the Government under purchase orders, or to authorized Government purchasers, who were required by these orders in each case to give the slaughterer an exemption certificate showing the Government purchase order contract number under which said beef would be delivered to the Government by said authorized purchasers. These set-aside orders required plaintiff and other slaughterers to set aside certain percentages of its total weekly slaughter before plaintiff could make delivery of any of its carcass beef for civilian consumption through its retail outlets. During the period in question defendant ordered from plaintiff about 45 percent of its entire output. Failure to observe the provisions of these directives would have subjected the plaintiff to varying penalties of fines and imprisonment, ranging up to three years in prison and $50,000 fine, dependent upon which of the regulations was violated. In addition, violation of these regulations would have subjected plaintiff to revocation of its license to slaughter. 10. During the period from July 3, 1943, to June 30, 1945, plaintiff's Nebraska Beef Company Division did comply with the compulsory set-aside orders issued by the Government and did set aside, hold, and deliver, under protest as to price, as hereinafter shown, to various agencies, designees, and authorized purchasers of the United States at various locations 23,790,296 pounds of carcass beef. 11. During the period from July 3, 1943, to June 30, 1945, retail sellers of meat were governed by the applicable provisions of Maximum Price Regulation 355, and wholesale sellers of meat were governed by the applicable provisions of Maximum Price Regulation 169. 12. Even though Safeway Stores, Incorporated, did not sell meat at wholesale, but solely at retail, the United States fixed the price it paid for the carcass beef, which it required the plaintiff's Nebraska Beef Company Division to set aside, hold, and deliver to the United States, at the prices established by the provisions of MPR 169, which was applicable to sales of meat at wholesale. 13. For the 23,790,296 pounds of carcass beef delivered to the Government, its designees and authorized purchasers, 941207-51-13 Findings of Fact 118 C. Cls. under protest as to price, and by reason of the compulsory set-aside orders, plaintiff received for such deliveries the sum of $4,509,946.72. In addition plaintiff received $543,321.32, representing the basic slaughtering subsidy paid to all slaughterers under Regulation No. 3 of the Defense Supplies Corporation, allocable to said beef. Violation of any of the wartime regulations or controls would have made plaintiff's right to receive this subsidy subject to forfeiture. The basic subsidy of $543,321.32 would have been paid whether the Government had taken the meat or whether it had been sold by Safeway at retail. It is included in the computations for the purpose of showing all moneys received from the Government. The total money, including the basic slaughterer's subsidy received from the Government by the plaintiff for the meat taken, came to $5,053,268.04. 14. The Government's compulsory set-aside orders required that certain percentages of the set-aside beef be boned. Plaintiff's Nebraska Beef Company Division had no boning facilities. The Government refused to relieve plaintiff from these boning requirements of the set-aside orders. Failure to comply with the boning requirements would have subjected plaintiff to having its managing officers liable to imprisonment for three years and a maximum fine of $50,000. Under direct threat of having its plant seized and such penalties invoked, plaintiff arranged with two authorized purchasers, commonly known as "boners," the Finer Foods Company of Chicago, Illinois, and the Ohio Packing Company of Athens, Ohio, to bone the percentage of the carcass beef required to be boned to comply with the set-aside orders. The required percentages of set-aside carcass beef were shipped to these two authorized purchasers for boning and they in turn provided authorized exemption certificates to Nebraska Beef Company. These exemption certificates were then applied against plaintiff's compulsory set-aside requirements in accordance with the set-aside orders. The beef delivered to the "boners" upon such exemption certificates is a part of plaintiff's deliveries to the Government, pursuant to compulsory set-aside orders totaling 23,790,296 pounds. 15. Under the weight of the evidence, plaintiff's retail outlets in the Washington, D. C., and New York Divisions could 73 Findings of Fact readily have handled an additional poundage of beef equivalent to that taken by the Government and its representatives, pursuant to set-aside orders. The facilities and personnel of said retail outlets were adequate to handle such increased output. During the period in question plaintiff's average output of meat per store in the Washington, D. C., area was 678 pounds. The Government beef would have added 162 pounds per day, or brought the total to 840 pounds. During the first quarter of 1948 the average per store was 1,040 pounds. 16. Had the 23,790,296 pounds of beef set aside, held, and delivered for the use and benefit of the Government under said compulsory orders been sold at retail through plaintiff's retail stores to consumers, plaintiff would have received not less than $5,818,542.57. This amount represents the minimum the plaintiff would have received from the sale at retail to consumers of 23,790,296 pounds of beef without exceeding the OPA applicable retail ceiling price, as provided for by MPR 355 for Class 4 stores under which plaintiff operated. 17. At no time during the period of July 3, 1943, to June 30, 1945, did plaintiff's Nebraska Beef Company Division, or any agent or agency of the plaintiff, enter voluntarily into any contract of sale or make any voluntary sale to the United States or its designated agencies, or authorized purchasers of carcass beef at prices established by MPR 169, the maximum wholesale price regulation. Nor did it at any time consent to such price. Plaintiff protested the prices paid it by the Government by stamping on its invoices a form protest, and did not remove its form protest from individual invoices submitted to Government-designated recipients and authorized purchasers of carcass beef until plaintiff had been refused payment of vouchers bearing such form protest. Plaintiff was forced to remove the form protest in order to avoid the loss of payment because of the refusal by the Government to make any payment for invoices carrying a protest stamp. Upon removal of the protest stamp from plaintiff's invoices, plaintiff wrote to the Quartermaster Market Center, Chicago, Illinois, under date of May 3, 1944, in part as follows: |