Full opinion text
PORTERIE, District Judge. The following statement is to serve a dual purpose: a narrative of the case and a partial findings of fact. Defendant is a corporation organized under the laws of the State of Louisaiana, having its principal office in Louisiana within the jurisdiction of this court. It is engaged in the lumber manufacturing business at Holopaw, Osceola County, in the State of Florida, where it owns and operates a large sawmill, a planing mill, and all necessary appurtenances, and a lumber yard. It also owns timberlands located in Osceola County and Orange County, Florida. The officers of defendant are: A. J. Peavy, Chairman of the Board; D. L. Handley, President; R. T. Moore, Vice-President; T. E. Trigg, Vice-President; S. G. Sample, Vice-President; J. S. Welsh, Secretary-Treasurer. There are 139 stockholders in defendant company. Its capital stock is $1,000,000. In connection with its lumber-manufacturing operations in Florida, defendant employed, during the period from October 24, 1938, through October 31, 1941, an average of approximately 325 employees, exclusive of executive, office and company store employees. These employees have been and are engaged in various classes of work which include the felling of timber, transporting of logs from the timberlands to the manufacturing plant, and the different operations at the manufacturing plant. Approximately 200 are employed at the mill and about 125 are employed in log-cutting, skidding, right-of-way and track-laying operations in the woods. During the period from October 24, 1938, through October 31, 1941, defendant’s lumber sales amounted to between $800,000 and $900,000 annually. Substantial portions of the lumber manufactured by defendant are shipped by it to points outside the state of Florida. Some interstate shipments were made practically every day during the aforesaid period, and substantial amounts were shipped in interstate commerce every week during such period. During this three-year period defendant shipped directly out of the state a total of 12,458,296 board feet of lumber to some 26 states and to Ontario and Quebec, Canada, the invoice price of which, less freight, amounted to over half a million dollars ($532,202.00). Substantial additional amounts of lumber were produced for lumber dealers in Florida for subsequent shipment by such dealers to points out of the state of Florida. During the period involved in this suit, defendant continuously manufactured its lumber with the intent or expectation that some unsegregated part of it would be shipped in interstate commerce. All employees of defendant employed in defendant’s woods, sawmill, planing mill and shipping operations, and all employees engaged in any processes or occupations necessary to these operations, in and about Holopaw, Florida, have been engaged in this production of lumber, unsegregated quantities of which have been regularly transported, offered for transportation, or shipped to points outside the state of Florida by the defendant during every week in which defendant has operated since October 24, 1938, through October 31, 1941. Holopaw, Florida, is, for all practical purposes, a company-owned town. There are some 265 tenant houses, a large general store, and several churches, mainlj' built with funds of the company, located in the vicinity of the sawmill and business office of defendant. Defendant has been operating its plant at Holopaw since February, 1934. Thé plant, including the sawmill, the power house, and other appurtenant buildings, together with some 200 tenant houses comprising the town, was purchased in February, 1934, from the J. M. Griffin Lumber Company at a total lump sum price of $82,500. The J. M. Griffin Lumber Company in about the years 1924-1926 constructed on a four-hundred acre tract — contiguous to the original community — a sawmill and sawmill village which included some 270 dwellings for white and negro employees, boarding houses, hotels, a sawmill, planing mill, power plant, water and light plant, a general merchandising store building, and sundry appurtenant buildings. The property so constructed and developed by the J. M. Griffin Lumber Company was appraised as of December 1,1926, by Coats and Burchard Company, a nationally known appraisal company, at a then reproductive value of $1,393,805.37. The town of Holopaw is situated upon Florida State Highway No. 29, a paved highway leading directly from the city of Orlando through Holopaw to Melbourne and the East Coast of Florida. The community is located seventeen miles southeast of St. Cloud, the nearest town of any consequence. The community of Holopaw is served by three stores; the largest is that operated by Peavy-Wilson Lumber Company, a general merchandising store which has done an annual business with gross sales to $150,000 and which draws trade from as far as 25 miles; another is a general store operated by the Stevens Tie and Lumber Co. which is about a third the size of the Peavy-Wilson Lumber Co. store; and the third is a small store operated by J. M. Sullivan. The employees of the company may, but are in no manner required to, rent dwellings from the company. They may trade at the company store but that is strictly a matter of choice. The small store operated by the railroad tie company has offered no serious competition to defendant’s store, though all the laborers are free to purchase at the other stores, or at the city of Orlando and at St. Cloud, Kissimmee, the county seat, and elsewhere, and, also, are free to order goods from wherever they please. The company store carries a full assortment of merchandise and the prices are invariably not higher than elsewhere, not higher even than in the nearby city of Orlando, and ofttimes cheaper. The Administrator’s regulations, part 531, defining the term “reasonable cost” to-the employer “of furnishing” the employee “with board, lodging, or other facilities” with respect to Section 3(m) of the Act,. 29 U.S.C.A. § 203(m), were issued afielan informal conference between Mr. Joseph Rauh, Jr., of the Wage and Hour-Division, and certain individuals, arranged by Mr. Walter White, Assistant to tho Chairman of the Business Advisory Council of the Department of Commerce, and with the consent of the Administrator of the Fair Labor Standards Act, 29 U.S.C. A. § 201 et seq. This informal conference was held in Washington, D. C., on October 17, 1938. It was attended by several individuals who, when acting in their official characters or capacities of employment, were connected with certain trade associations, which included two coal associations, the National Petroleum Association, the Textile Association, the Southeastern Railways Association, the American Mining Congress, the National Sand and Gravel Association, and the National Lumber Manufacturers Association. These individuals were invited to give of such knowledge as they might have with respect to the effect of the regulations on the businesses which might be affected. According to Mr. Walter White, who arranged the informal conference, those invited were .expected to contribute such knowledge as they had of the industries to be influenced by the regulations. “They were told they were to come there to discuss this matter, but not in any way to commit any member of their association if they happened to be an association man.” Under the terms of the invitation extended it was understood they were not to commit themselves or any organization or industry. Mr. Henry Bahr, who was Assistant to the Secretary-Manager of the National Lumber Manufacturers Association, was in attendance at the informal conference. He was requested by Mr. Joseph Rauh, Jr., then an attorney on the staff of the General Counsel of the Wage and Hour Division, not to remove the draft of the regulations from the room nor to discuss the conference or the provisions of the proposed regulations with any of the companies in the lumber industry. It does not appear from the evidence in this case that any lumber manufacturer was ever advised of the regulations until after their adoption. The defendant is a member of the Southern Pine Association and the Southern Pine Association is a subscriber to the services of the National Lumber Manufacturers Association. The Administrator’s regulations provide a procedure whereby an employer might apply for a specific determination of the cost of board, lodging and other facilities furnished by him. It appears that defendant, while not making a formal demand for such determination, did request that the Administrator assist it in ascertaining the appropriate charge to be made as rental for dwellings and in the working out of an appropriate formula in operating the company store. Upon the passage of the Fair Labor Standards Act, Mr. A. J. Peavy, then President and Executive Officer of PeavyWilson Lumber Company, Inc., instructed Mr. D. L. Handley, then Vice-President in charge of the operations of the plant, to comply with the Fair Labor Standards Act. The first contact that any representative of the company had with a representative of the Wage and Hour Law was in March of 1939 when Mr. Handley met Mr. Andrews, then Administrator of the Fair Labor Standards Act, in New Orleans, Louisiana. Mr. Andrews was there for the purpose of speaking to lumbermen, and told Mr. Handley and the others in attendance that “ * * * anybody who made an honest effort to try and comply with the Act would get all the assistance that they needed from the Department in order that they could comply with it.” While Mr. Handley was in New Orleans, on March 22, 1939, an inspector of the Wage and Hour Division, a Mr. Wilson, came to Holopaw and there spent a day. He talked with Mr. Max Handley, a son of Mr. D. L. Handley and a bookkeeper for the company. While in Holopaw, Mr. Wilson interviewed some of the employees, went over the payroll records at the office and took a transcript of some of them. In so doing he was assisted by the bookkeeper of the company. Mr. Wilson in no wise advised whether practices engaged in by the company in relation to its employees were a violation of the law. In July, 1939, Mr. Wilson returned to the plant and there conducted an investigation, on July 6, 7, 13, 14, 17, 18 and 19. Mr. D. L. Handley was present and explained in great detail to Mr. Wilson every practice engaged in by the company with respect to its employees; all types of charges made to their payroll accounts; the basis upon which such charges were made, at whose directions and what for; the full history of the manner of issuing and using coupons, the reasons why coupons were used and the arrangements made with the community barber, given in detail later. The next contact Mr. Handley or any other representative of the company had with the Wage and Hour Division was a day or two prior to November 3, 1939, when a Mr. Funston, then an attorney for the Department, called Mr. Handley on long distance telephone and simply requested that he'meet him, a representative of the Wage and Hour Division, at the Angebilt Hotel in Orlando on November 3, 1939. Mr. Handley complied with the request and there met Mr. Funston, and also a Mr. Vernon K. Gimson, a principal witness for the plaintiff in this case. Without ado Mr. Funston then demanded that the company sign a consent decree providing for a general injunction prohibiting it from violating any provision of the Fair Labor Standards Act and any regulation issued by the Administrator thereunder. Mr. Handley asked for the privilege of consulting his attorney, which was granted. On that day, November 3, after the conference, the defendant’s attorney addressed a letter to Mr. Funston, as attorney for the Wage and Hour Division in Washington, reiterating the desire of the company to comply with the law and all valid regulations, and requested a particularization of alleged violations — two contentions only having been stated at the conference with respect to violations, namely: that the rental charged for houses, water and lights exceeded the reasonable cost, and that the use of coupon books was a violation of the law. Defendant’s attorney on several occasions thereafter requested a particularization of the alleged violations of the Act, but was advised by the Assistant General Counsel of the Wage and Hour Division that no such information would be given, and a conference was arranged in Washington for December 11 and 12, 1939. At this Washington conference, where were present Mr. Levy, Assistant General Counsel of, Mr. Funston, attorney for, the Wage and Hour Division, Mr. Handley, Mr. Maguire, attorney for defendant, and others, all facts pertaining to the transactions between the company and its employees were frankly discussed. Mr. Handley told the counsel of the Wage and Hour Division of his desire for help in working out formulas that would enable the company to comply with the law. He then made proposals for the achievement of this end, which the attorneys agreed to consider. Such proposals were detailed by Mr. Maguire in a letter to the attorneys for the Department of Labor, dated December 13, 1939, and the letter was filed in evidence in this case. No formal application, however, was made for a particular hearing as provided by the-Regulations. The letter proposals were ineffective and,, we believe, were impossible, because the parties differed fundamentally on the law; and, consequently, this suit had to be filed. Notwithstanding the institution of this suit, the defendant thereafter cooperated with the representatives of the Administrator during the weeks of their checking of the records of the company. It furnished' all records requested that could have any bearing upon the suit and permitted the representatives to take and study elsewhere, and make photostatic copies of, those of the-records desired. During the period from October 24, 1938,. through October 31, 1941, defendant made numerous deductions from the wages of almost all of its ■ employees, including deductions for coupons issued in lieu of cash wages, for rent of company-owned houses,, for purchases at the company store, for drugs, for tools, for ice water and water coolers, for medical attention, for loans, and advances, and for a number of other things. By reason of the location of defendant’s plant, practically the only living quarters, and the only source of food, water and essential supplies available to employees were those furnished by the defendant. During the first year of the operation of the Fair Labor Standards Act approximately 250 of defendant’s hourly rate employees were employed at the bare minimum rate, according to defendant’s records. During the two succeeding years the number so employed was approximately 210. Although the Administrator’s regulations provided a procedure whereby any employer might apply for a specific determination of the cost of particular facilities furnished by him, defendant never filed such-an application or petition. For at least a year after the effective date of the Act, defendant paid employees their earnings in scrip or coupons in lieu of cash, if the employee requested his pay between the regular bi-monthly pay days. On the back outside cover of the coupon books the following statement was written: “The coupons in this book are good only for merchandise purchased at the store of Peavy-Wilson Lumber Company, Inc., and will not be replaced if lost. They are not Transferable.” These coupons had no regular redemption date. They could be redeemed in cash only at 90 per cent, of face value. For the first few months after the operative date of -the Act, defendant itself discounted the scrip in cash at 90 per cent, of the face value. Thereafter (about January, 1939), defendant made a deal with the town barber, Mr. Homer Ett, whereby the barber was given the privilege of discounting the scrip, and in return the rent payable to the company by the barber for the building used as a barber shop was raised from $40 per month to $75. When the discounting was subsequently discontinued, the barber’s rent was reduced again to $40 per month. In addition to the increase in the barber’s rent, the defendant, when it observed the profits being made by the barber from the discounting, required the barber to give the company 40 per cent, of his discount. By the above negotiations defendant continued to profit from the discounting of coupons. Since the effective date of the Act, employees of defendant have been deprived of some of their wages by the discounting transactions. Some employees receiving the bare minimum wage were victims of these discounts, which repeatedly reduced their weekly wages below the minimum required by Section 6 of the Fair Labor Standards Act. Such discounting, therefore, resulted in repeated violations of Section 6 of the Act. Defendant discontinued the issuance of scrip on November 3, 1939, after there had been two inspections of defendant’s plant by a Wage and Hour Division inspector and when it appeared that litigation would be instituted by the Administrator. Shortly before discontinuing the issuance of coupons defendant had ordered a large stock of the coupon books, which books were on hand at the time suit was instituted and remained unused, and were a loss of nearly $500.00 to the defendant. Previous to discontinuance, some amount of scrip or coupons was used at the company store where merchandise, groceries, and other goods were sold to employees, and these articles were not furnished at the actual cost to defendant within the meaning of Section 3(m) of the Act and the Administrator’s Regulations, Part 531. A number of employees employed at the bare minimum wage made purchases at the company store with coupons for which deductions were made from their wages. Therefore these deductions resulted in numerous and repeated violations of Section 6 of the Act. Further findings of fact will be found unsegregated in the body of the opinion, when decision is made on housing rentals, store operations, tools, milk and ice service, community medical service, travel and walking time, and record keeping. We have considered this case before. A motion to dismiss, comprising, in the main, an attack on the constitutional grounds, was not sustained, in Jacobs v. Peavy-Wilson Lumber Co., D.C., 33 F. Supp. 206. In that opinion, 33 F.Supp. at page 211, we said: “The constitutionality of the phrase ‘board, lodging, or other facilities’ in Section 3(m), interpreted so as to include ‘medicines and drugs, clothing, groceries, foodstuffs, meats and other commodities’, has not been decided.” The Act has been definitely validated as to constitutionality in the case of United States v. Darby, 312 U.S. 100, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430, but Section 3(m) has been untouched and uninterpreted, and the validity of the various regulations of the Administrator of the Wage and Hour Division under Section 3(m) has never been presented. Accordingly, before passing upon the merits as to whether or not the injunction should issue in any manner, that is, generally inclusive of all points of violation or only modifiedly prohibiting the repetition of certain acts, or should issue at all, we should consider the attack seriously made by defendant on (a) the meaning of Section 3(m), (b) the validity, effect and meaning of the regulations purported to be issued under Section 3(m), and dispose of the constitutional questions involved in considering Section 3(m) and the regulations under it. The defendant has first presented for our detailed consideration: I. The meaning of Section 3(m). The subdivisions under this general heading are: A. What is the meaning of “Board, Lodging, or Other Facilities”? B. The meaning of “Reasonable Cost of Furnishing”; and C. The section has no application to mutual accountings. II. The validity, effect and meaning of regulations purported to be issued under Section 3(m). And under this heading is pressed that: A. There has never been a determination of “The Reasonable Cost of Furnishing” under this section, such as is contemplated by Section 3(m) ; and under this heading are the following subdivisions: 1. The authority given to the Administrator by Section 3(m) is to determine “The Reasonable Cost of Furnishing” as a fact, not to define “Reasonable Cost of Furnishing”, or to provide a general formula by which “The Reasonable Cost of Furnishing” may be determined; and 2. Regulations issued by a Federal officer do not have any force or effect as laws unless there has been Congressional authorization therefor ; and 3. The Administrator has never made such a determination as is contemplated by Section 3(m) and, of course, has no right to file a suit on account of a violation of Section 3(m) until such a determination has been made. B. If the regulations issued by the Administrator mean that property owned by employers at the time the Wage and Hour Law went into effect and later used in furnishing board, lodging and other facilities to employees is to be valued on the basis of its original cost rather than on its then value in computing depreciation and return on investment, the regulations issued are unreasonable, create a rule out of harmony with the statute, and are mere nullities. C. The regulations should, of course, if possible, be construed in such a way as to be in harmony with the statutory standard; and it is possible so to construe the Regulations. III. Constitutional questions involved in considering Section 3(m) and the regulations issued thereunder. And under this general heading appear the following subheads: A. Section 3 (m) and the Regulations issued thereunder, if construed in accordance with the contentions of plaintiff, deprive defendant of his property without due process of law and without just compensation. B. The Act and the Regulations deprive defendant of its property without procedural due process. C. Section 3(m) and the Regulations issued thereunder are fatally indefinite, uncertain and impossible of compliance. For the purpose of ready reference, we quote Section 3(m) : “(m) ‘Wage’ paid to any employee includes the reasonable cost, as determined by the Administrator, to the employer of furnishing such employee with board, lodging, or other faciliities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees.” The first big issue between the parties to this litigation is whether or not “or other facilities”, under accepted statutory construction, would include, since the phrase follows the words “board, lodging”, under the rule of construction commonly known as ejusdem generis, the general sale of groceries, shoes, clothing, and household effects in a store operated by the defendant, or the relationship of landlord and tenant, since the defendant company rents houses by the month to its employees. The defendant claims that the other facilities referred to could very well include a cafeteria, a restaurant, or a hotel operated by an employer and patronized by his employees, and may very well include coal,, kerosene, firewood, electricity, water, gas, laundry, telephone service, to be given as an incident to and in connection with “board” or “lodging”. Defendant further claims that the plaintiff is not warranted in seeking to stretch “or other facilities” as used in Section 3(m), following the specific words “board” and “lodging”, to embrace the business of merchandising or the relationship of landlord and tenant. It is not necessary for us to quote the many decisions which have clearly defined the difference between furnishing board and lodging, which generally connotes the legal relation between the keeper of an inn and his guest, and the meaning of landlord and tenant on the one hand, and storekeeper and customer on the other. Among the numerous cases is the case of Coggins v. Gregorio, 10 Cir., 97 F.2d 948, at page 950, from which we quote: “ * * * The principal distinction between the two relations [lodginghouse keeper and lodger, and landlord and tenant] is that the tenant acquires an interest in the real estate and has the exclusive possession of the leased premises, while the lodger acquires no estate and has merely the use without the actual or exclusive possession.” In ruling on Section 3(m), the court is well impressed with the fact that we are interpreting an excerpt from the actual statute and that the court is free to arrive at its own conclusion and is not of necessity to be controlled by the Administrator’s views as represented by regulations drawn by him from the section. The rule of statutory construction commonly known as that of ejusdem generis is well accepted, not only be our Federal courts but generally by the courts of our various states. Gooch v. United States, 297 U.S. 124, 56 S.Ct. 395, 80 L.Ed. 522; Reidle v. Smythe, 13 Wall. 162, 22 L.Ed. 566; United States v. Salen, 235 U.S. 237, 35 S.Ct. 51, 59 L.Ed. 210; Rorick v. Devon Syndicate, 307 U.S. 299, 59 S.Ct. 877, 83 L.Ed. 1303. We believe that one of the state cases, Anderson & Kerr Drilling Co. v. Bruhlmeyer, Tex.Civ.App., 115 S.W.2d 1212, says that the principle of “ejusdem generis” frequently employed in the construction of statutes suggests that where general words follow the enumeration of particular classes or persons or things, the general words shall be construed as applicable only to persons or things of the same general nature or kind as there enumerated. See, also, South West Missouri Light Co. v. Scheurich et al., 174 Mo. 235, 73 S.W. 496, 498; Riverside County v. Yawman & Erbe Mfg. Co., 3 Cal.App. 691, 86 P. 900; Gates & Son Co. v. City of Richmond, 103 Va. 702, 49 S.E. 965, 966; People v. Richards, 108 N.Y. 137, 15 N.E. 371, 375, 376, 2 Am.St.Rep. 373. One of the textbook writers, Sutherland, on Statutory Construction, § 268, says: “Where there are general words following particular and specific words, the former must be confined to things of the same kind.” The plaintiff, in answer to defendant’s contention that neither rented houses nor company stores are included within the scope of Section 3(m), first admits that there is not much legislative history on the language of Section 3(m) prior to the enactment of the Act on June 25, 1938. To this first point the defendant says that the legislative history demonstrates that the House of Representatives was not interested in including housing in Section 3(m) along with board and lodging because there was an amendment offered by Congressman Crawford, as follows: “ ‘Wage’ paid to an employee includes the reasonable cost, as determined by the Secretary, to the employer of such employee of furnishing such employee board, lodging, housing, or other facilities, if such board, lodging, housing or other facilities are customarily furnished by such employer to his employee free of charge.” This amendment was not passed, and it would seem to be obvious that the word “housing” was the cause of its rejection; and the defendant counters further that the Administrator is to determine the reasonable cost of board, lodging or other facilities in the light of the judicial construction to be given the words of the Congress, because in the case of Powell v. United States of America, 300 U.S. 276, 57 S.Ct. 470, 476, 81 L.Ed. 643, we find: “Unless the project is one covered by section 1(18) [49 U.S.C.A. § 1(18)], the Commission is not authorized by the act to consider whether it is in the public interest and, for lack of jurisdiction to determine that question, it must deny the application. Upon presentation by the carrier of application for a certificate, the Commission, for the purpose of determining whether it is authorized by the act to consider the merits, may pass incidentally upon the question whether the project is one covered by section 1(18). But the decision of that question is for the court in either a suit to set aside an order granting a certificate or in a suit under section 1(20) to enjoin a violation of section 1(18). The function of the court is to construe that paragraph; that of the Commission is to determine whether the project, if it is one covered by the paragraph, is in the public interest.” The defendant adds further that no court has defined board, lodging or other facilities, as used in Section 3(m), to include the relation of landlord and tenant or the relation of merchant and customer, or has covered any of the relationships existing between the defendant and its employees with respect to either merchandising or housing. And that the assertion is made notwithstanding the cases of Morgan v. Atlantic Coast Line R. Co., D.C., 32 F.Supp. 617, 618, 619; Williams v. Atlantic Coast Line Railway Co., 3 Wage-Hour Reporter 82; Fleming v. Pearson Hardwood Flooring Co., D.C. 39 F.Supp. 300. We have read these last cases and they have coercive features of which the record in this case is utterly devoid, and in some cases represented deductions for weekly and monthly house rent for abandoned, dilapidated houses along the railroad lines which the laborers sometimes did not even use, though charged for their use. The houses rented in the instant case were habitable and were all fully and regularly used. The plaintiff admits that the verbiage of Section 3(m) came out of the conference committee of both houses of Congress on June 12, 1938. The plaintiff’s position (the government’s) is that the Act is essentially a cash wage statute, that Section 6(a) of the Act literally requires the payment of the basic wage in cash only, and that Section 3(m) provides the only exceptions to the cash wage requirement. The contention of the government is that the purpose of Section 3(m) is to protect the basic wage from indiscriminate and unlimited deductions for charges arising out of profit-making transactions between employer and employee, and that this purpose would be wholly defeated unless the phrase “or other facilities” be interpreted so as to include the relation of landlord and tenant, merchant and customer. The representatives of the government make the point very seriously that the purpose of Congress in its enactment of Section 3(m) was to protect against abuses of the company village system. They admit that prior to- the enactment of the act there was no discussion or debate regarding the precise definition of the words “board, lodging, or other facilities”. They seem to overlook the Crawford amendment, previously quoted, but show that the Congressional debates on wage and hour legislation contain many references to the necessity of protecting “victims of low wage scale and the company store system.” Congressman Dies, in offering an amendment which would make it a crime for an employer to evade or attempt to evade the provisions of the Act by increasing charges for housing, fuel and lights furnished to his employees (83 Cong.Rec., Part 7, p. 7277), used the following language: “The need of this amendment should be apparent to everyone * * *. It is plain to see that chiseling employers will increase these charges for housing, fuel and lights in order to offset the increase in the wages of those who receive less than the minimum provided in the bill, and legitimate employers will be placed at a great disadvantage and in the end the act will be so completely evaded that it will amount to nothing.” Congressman Crawford, in offering an amendment to the House bill, said: “Mr. Chairman, we face a practical fact that where board, lodging, or housing is furnished, unless it is taken into consideration, charges for that service will be increased in proportion to the amount of the wage increase. This amendment leaves the matter entirely up to the Secretary of Labor, and in behalf of the employee this type of relationship should be brought into the definition part of the act and made a part of the act. Everyone understands it; there is no need of taking a lot of time to discuss it or explain it. In the coal industry, and in many other industries, there is this realistic thing to deal with, and I think it must have been an oversight on the part of the committee in leaving that out of the definition portion of the bill.” The case of Gooch v. United States, supra, states that the rule of ejusdem generis in our federal courts is “firmly established”, then goes further and develops an exception to the rule in the following language (56 S.Ct. at page 397): “The rule of ejusdem generis, while firmly established, is only an instrumentality for ascertaining the correct meaning of words when there is uncertainty. Ordinarily, it limits general terms which follow specific ones to matters similar to those specified; but it may not be used to defeat the obvious purpose of legislation. And, while penal statutes are narrowly construed, this does not require rejection of that sense of the words which best harmonizes with the context and the end in view.” (Citing a number of cases) Then, our query has resolved itself to the question of what was the obvious purpose of the Congress in the enactment of 3(m) ? Amendments were offered to the Fair Labor Standards Act in the spring of 1940, and we quote in particular the following amendment to Section 3(m), offered by Representative Kitchens of Arkansas (86 Cong.Rec. No. 84, p. 7961, April 29, 1940): “(m) ‘Wage’ paid to any employee may include a reasonable charge, as determined by the Administrator, for the furnishing to such employee of board, lodging or other facilities.” (Italics supplied.) Opposition to the above proposal was made by Congressman Ramspeck in the following language: “The amendment offered by the gentleman from Arkansas [Kitchens] states that the wage paid to any employee may include a reasonable charge determined by the Administrator for the furnishing of such employee with board. The difference between the present law and the amendment, as I understand it, is that under the present law the charge is limited to the actual cost and under the amendment offered by the gentleman from Arkansas the employer would be permitted to charge more than cost if it were a reasonable charge as determined by the Administrator. I do not see, personally, why an employer should be permitted to charge more than the cost of board or lodging, if he undertakes to furnish them to an employee, and I hope the Committee will reject the amendment.” (Italics supplied) The amendment was rejected on April 29, 1940. 86 Cong.Rec. No. 84, at p. 7963. Mr. Kitchens again introduced his amendment on May 1, 1940. 86 Cong. Rec. No. 86, at p. 8214. After debate, the amendment was decisively defeated by the House sitting as a committee of the whole. 86 Cong.Rec. No. 86, p. 8214. The fact that the Administrator’s regulation had been in effect for almost two years prior to the debates on this proposed amendment, and Congress expressly considered the regulation and refused to legislate an amendment, is compelling evidence that the Administrator’s regulation was in harmony with Congressional intent. Or, it might be as well put to say that the refusal by the Congress to amend is the equivalent of an enactment of the present Regulation of the Administrator by the Congress. Frankly, we must admit that the purpose of the Regulation was to attempt to eliminate the ills of the past existing in our mining and lumber industries, and, in certain cases, was to prevent an invasion of the Act through profit-making transactions between employer and employee in which the employee is generally recognized not to be on equal contracting terms with his employer. So, though the question be close, we rule that the phrase “or other facilities” is to include the relation of landlord and tenant, and merchant and customer, and further, that subsection (b) of Section 531.1 of the Original Regulations of the Administrator, issued October 20, 1938, is legally permissible. A condition of numerous accountings existed between defendant and its employees such as we know to be very common at sawmill plants; in truth, we doubt that there would be an exception in all of the southeastern United States. Long prior to the filing of suit in this case defendant established the custom of accommodating employees by making payments for their accounts, at their requests and upon their respective orders, and charging the amounts so paid against the payroll accounts of the employees respectively. For instance, the company would pay accruing premiums on insurance policies held by the employee and charge to his account the amount of the premium. At the request of a negro employee or a white employee, as the case might be, the company paid money into one of the two charity funds, one wholly controlled and handled by the negroes, and the other wholly controlled and handled by the white employees. If an employee suscribed a certain amount each month or week to the support of one of the cnurches in the community of which he was a member, the company would pay the amount of his subscription and charge it to his account if given an order to do so. The company would pay orders given by the employee to the community barber and to the person operating the community pressing club. The company would, at the employee’s request, make payments on account of an automobile. The company handled orders given by the employee, drawn on it, to pay for gasoline and for innumer^ le other things, including the taking up for the employee of C.O.D. packages from mail order houses at the Post Office. Each of such advancements was charged to the extent, and to the extent only, of the moneys paid out. Nothing whatsoever was charged to the employee by the company on account of the cost of rendering such service or the cost of stationery and stamps which might be used in complying with the employee’s requests. If an employee owed a third person money he would frequently give to his creditor an order on the company in discharge of his debt. All of such payments amounted to courtesies extended by the defendant to its employees. It is the testimony of the bookkeepers in the bookkeeping department of the defendant that they expended thirty-five per cent, of their time in rendering gratuitous and unrequired services to the employees. Obviously such services greatly extended the amount of bookkeeping required and caused the defendant to incur a very substantial expense. All of such things were done for the benefit and the convenience of the employees. The defendant accommodated its employees in the arrangement made with respect to milk and ice furnished by the milk and ice suppliers, and there'was, also, a system of mutual accounting established to operate the medical service. In addition to the foregoing, an employee could purchase from the company wood for fuel at a cost actually less than the cost of delivery and such charge for wood was charged to the payroll account. To a small degree employees purchased on credit groceries and supplies from the company store, the purchase price of which was charged to the employees’ payroll accounts. The same thing was true and for the most part during the same period of time, i.e. prior to the early part of December, 1939, with respect to rent on houses rented by the employees of defendant. The employee well knew that each of the charges referred to created a debt by him immediately due and owing to the company and that at the end of the then current accounting period the money by him owing to the company would be balanced against the money up to that time earned by the employee, and a balance struck, and that on the next ensuing pay day the company would pay to the employee in cash money the balance, if any, then owing by it to the employee. Under such circumstances the employee was due the company a certain amount of money and the company was due the employee a certain amount of money. As a practical matter nothing was to be gained by the ceremony of the company paying to the employee the total amount o.f his wages in cash money and the employee then turning around and paying to the company, likewise in cash money, the amount of any indebtedness owing by the employee to the company. Moneys were actually paid to the extent only of balances due. That the transactions between the employer defendant and the employees were on a basis entirely voluntary, and further, that the defendant in dealing with its employees never at any time exercised coercion of any character, is very clear. We agree with the conclusion so well expressed in plaintiff’s brief, in the following language: “It is apparent that the clear intention of Congress, in enacting section 3(m), was to protect the basic minimum wage and overtime compensation required to be paid to the employee, from profiteering or manipulation by the employer in dealings with his employees; and in particular to prevent increases in charges for rent, board, groceries and merchandise, so as to offset the increase in wages provided and intended by the Act. The reasonableness of the Administrator’s determination, therefore, must be weighed in the light of that purpose. The ‘actual cost’ standard adopted by the Administrator was deemed to be the most workable, if not the only practicable, way to achieve this purpose.” However, the recent decisions have been in the nature of a declaration to the effect that laborers enjoy freedom of contract and are still possessed of initiative. The very' concept of what an American should be exacts that he should be left with freedom to decide and to act. In other words, the government, through regulations and exactions, by jealously keeping the employer and employee so commercially apart, would become so patriarchal as to deprive the average American of any free will, and our millions of laborers would be converted to a docility and dumbness which would undermine our real standards. And we think we are supported by the language of Associate Justice Reed in the case of Williams v. Jacksonville Terminal Co., 315 U.S. 386, 62 S.Ct. 659, at page 671, 86 L.Ed. 914, when he says: “Congress approached the problem of improving labor conditions by the establishment of a minimum wage in certain industries. It required that workers in these industries receive a compensation at least as great as that fixed by the Act. Except for that requirement the employer was left free, in so far as the Act was concerned, to work out the compensation problem in his own way. Other courts are in accord with our view. Harrison v. Kansas City Terminal R. Co., D.C., 36 F.Supp. 434; Harrison v. Terminal R. Ass’n of St. Louis [8 Cir., 126 F.2d 421] 4 C. C. H. Labor Cases ¶ 60,346; Ryan v. Denver Union Terminal Co. [10 Cir., 126 F.2d 782] id., ¶ 60,618.” Without going into the detailed facts of the Jacksonville Terminal case, supra, we believe that the general background and tenor are to the effect that laborers (terminal red caps) enjoy the right to contract, and exercise the privilege of exacting performance from the employer; the laborers, in turn, have the satisfaction of fulfilling their obligation. It is to be noted in this case that the Supreme Court took jurisdiction because of the divergence of views in our circuit courts, and certiorari was granted because of the importance of the fundamental issues. A placing side by side of Section 6(a) and Section 3(m) of the Act, we believe, will disclose the absence of any prohibition of mutual accountings between employer and employees. The provision from 6(a) that every employer shall pay not less than 25^ an hour, though fully indicative that the payment should be in cash, does not denote the want of authority in the laborer to contract that some of the cash due him be paid for this, to that one, and the other. The long record in this case discloses no coercion, to even the slightest degree, as to what the employee had or had not to order or direct to be paid from his cash wages. Further, the record shows a complete absence of evidence showing any one of the laborers to have been defrauded of one cent in any of the numerous types of accountings and for a period of better than three years. We believe that in the case of Southern Ry. Co. v. Black, 4 Cir., 127 F.2d 280, 283, the following language is proof that the purpose of the Fair Labor Standards Act was not to interfere with the methods and practices by which an employee’s compensation is to be paid (127 F.2d at page 283) : “The purpose of Congress in the passage of the Fair Labor Standards Act was to provide that employees be compensated for their labor at not less than the minimum wage, not to interfere with the methods and practices by which the compensation was paid (Williams v. Jacksonville Terminal Co., supra); and if the employee receives for his labor the minimum which the statute requires, it cannot be important whether he receives it direct from the employer or, with the employer’s consent, from the employer’s patrons.” In the case of Ryan v. Denver Union Terminal R. Co., 10 Cir., 126 F.2d 782, 4 Labor Cases 60,618, we have the following language: “The law does not say how that shall be paid, except that they are guaranteed the $2.00 or $2.40 a day.” We believe that we should quote further from the Jacksonville Terminal case, supra, 62 S.Ct. at pages 669, 671: “We stated in the discussion of the notice given by the terminals to their employees that its effect was to transfer the tips covered by the notice to the credit of the terminals. But this terminal credit in the hands of the red caps, assert petitioners in both cases, cannot be utilized as cash paid to the employee by the employer. “To interpret ‘pay-wages’ as limited to money passing from the terminal to the red cap would let construction of an important statute turn on a narrow technicality. It, of course, can make no practical difference whether the red caps first turn in their tips and then receive their minimum wage or are charged with the tips received up to the minimum wage per hour.” And finally, to sustain and better express the general principle we have attempted to pronounce, we quote from the case of Walling v. A. H. Belo Corporation, 316 U.S. 624, 62 S.Ct. 1223, at page 1229, 86 L.Ed. 1716: “When employer and employees have agreed upon an arrangement which has proven mutually satisfactory, we should not upset it and approve an inflexible and artificial interpretation of the Act which finds no support in its text and which as a practical matter eliminates the possibility of steady income to employees with irregular hours. Where the question is as close as this one, it is well to follow the Congressional lead and to afford the fullest possible scope to agreements among the individuals who are actually affected.” We believe there is nothing in the Act to prohibit an employer and employee from agreeing on an amount for house rent or agreeing upon the purchase price of an article of merchandise, provided there be not the prohibited profit of the Administrator’s Regulation made in the transaction; and further, we see nothing in the Act to prevent the further voluntary agreement, either expressed or implied, that the amount of house rent or the price of the merchandise may be deducted from the wage due. Though we believe the position of the court to be well sustained by these recent utterances of the Supreme Court of the United States, it is interesting to note that among the most distinguished of our legal minds, when speaking as presiding judges in state courts, found there was no offense to morals or justice in any accountings of this character between the employer and the employees. Mr. Justice Holmes in the case of Gallagher v. Hathaway Mfg. Co., 172 Mass. 230, 51 N.E. 1086, 1087, when interpreting a statute requiring certain employers “to pay weekly each employé engaged in its business the wages earned by such employé to within six days of the date of such payment,” wrote, as follows: “It surely would not encounter either the words or spirit of the law if an employer should lend his workman money to be set against his next week’s wages.” And, by analogy, he held that the deduction of other lawful indebtednesses might likewise be made, stating: “If the fine was lawful, as we have decided that it was, the payment of it might be arranged for in the same way.” In the same connection Mr. Justice Holmes commented further: “The plaintiff has been paid all that is due to her. She was overpaid one week, and was bound to repay the amount. We see nothing to prevent her agreeing that such an overpayment should go into a mutual account for the next week, and reduce the sum due.” The most striking language in support of this present-day tenor of our courts is that of Judge Hutcheson, found in the Belo Corporation case, when it was in the Circuit Court: “Freedom of contract, within constitutionally valid limitations, is, in the United States of America,' one of the fundamental freedoms and this is particularly so in regard to labor relations. When, then, it is contended as here, that a statute has cut off or limited this freedom, a litigant must point to something more than his opinion that it ought to be cut off or limited, must point to language clearly and validly so providing. There is no more authoritative principle in the field of labor law than that, subject of course, to valid statutes designed to prohibit substandard conditions and unfair labor practices, wages, hours, and work conditions are the proper subject of contract between employer and employee and their agreements must be, and are, given full effect in the courts.” Fleming v. A. H. Belo Corporation, 5 Cir., 121 F.2d 207, 214. Circuit Judge Sibley, in his opinion in the Jacksonville Terminal case, supra, when it was in the Circuit Court (5 Cir., 118 F.2d 324, 327) shows that the provision of 6(a), though apparently dictating the payment of wages in cash, has its exceptions, through the provisions of Section 3(m) of the Act, when he says: “The provision of Section 3(m), 29 U.S.C.A. § 203(m), ‘“Wage” paid to any employee includes reasonable cost, as determined by the Administrator, to the employer of furnishing such employee with board, lodging, or other facilities * * *’, refers to wage payments other than in money, * * *.” We repeat, therefore, that we find no transgression of the law in these mutual accountings. The channel through which the defendant is brought under the General Hearing that the Administrator informally held before the issuance of the Original Regulations, dated Oct. 20, 1938, effective Oct. 22, 1938, denominated Section 531.1, was defendant’s membership in the Southern Pine Association, which is an auxiliary member of the National Lumber Manufacturers Association, whose Assistant to the Secretary-Manager was in attendance at the conference. Opp. Cotton Mills v. Administrator of Wage, etc., 5 Cir., 111 F.2d 23. This is sufficient notice of or hearing to the defendant under the law, but we hold, additionally, that defendant’s silence in never requesting “a hearing to determine the reasonable cost to an employer of the board, lodging, or other facilities, customarily furnished”, as provided by Section 531.2 (Oct. 20, 1938), and by Section 531.2 (Amd. Reg. Sept. 12, 1940), precludes defendant from pleading now in this suit the want of due notice of or actual hearing. Consequently, there was and there is due process of law, in substance and in procedure. The previous determination, we find, under the facts, also gave the plaintiff the right to file suit. The informal hearing was sufficient to provide a general formula; the right to a determination of the reasonable cost of furnishing as a particular fact to cover the instant case was lost to the defendant by its own inaction. The Administrator and the defendant were widely and radically apart — not so much on facts, but on the interpretation of the Act, a noteworthy, because controlling, instance being on the meaning of Section 3(m). The defendant believed then — and we daresay believes now — that the Administrator has no business to inquire about either the store operations or the house rent charges. A particular hearing before the Administrator (a declared and open advocate of diametrically opposite legal principles) was not requested by the defendant, because the conclusions of the hearing on the law were readily predictable and were absolutely undesired by the defendant. The oral proposals, as well as the written proposals (letter to attorneys of Department of Labor, dated Dec. 13, 1939) could not bring an adjustment, because of defendant’s legal predicates, which were impossible of acceptance by the Administrator. Conferences, interviews, letters, and even a particular hearing — never sought — could not reconcile the views of the Administrator and the views of the defendant on the meaning, interpretation and application of the Act. This suit was inevitable. We should immediately bring to our mind here that the plant, which the estimate of Coats and Burchard Company, reputable professionals in the line, estimated as being worth $1,393,805 in 1926, was bought by the defendant for the relatively small sum of $82,500. The plaintiff contends that the actual cost of the houses is $10,065 — the proportionate part for the village houses out of the total plant cost — and that this actual cost should serve as the basis for the computation of rent cost. The defendant contends that they made a tremendously good bargain when they purchased this plant in the very depth of the depression, and that the capital outlay on which to compute the rental they should receive from the village houses should be based on the actual value or worth of the houses at the time they are rented, irrespective of the low purchase price. We could not imagine any casé where the factual background could draw the issue of difference in interpretation more sharply and widely than in this case. The plaintiff asserts the validity of the provisions .outlined by the Administrator in Regulations, Part 531, published in the Federal Registry, October 20, 1938, wherein is stated that “reasonable cost” is “not more than the actual cost to the employer of the board, lodging or other facilities customarily furnished * * * to * * * employees.” (Emphasis supplied.) Although the Administrator determined that “reasonable cost does not include a profit to an employer or to any affiliated person”, the Regulations do provide for a “reasonable allowance (not more than 5%%) for interest on the depreciated amount of capital invested by the employer”. This allowance is in addition to the expenses of “operation and maintenance including adequate depreciation.” The argument of the defendant is that “reasonable cost” means a return on “fair value”, and that, insofar as the Administrator’s determination deviates from the “fair value” concept, it is unconstitutional. The plaintiff’s position may be outlined as follows: 1. The Administrator’s determination as set forth in Regulations, Part 531, is binding as legislation and cannot be set aside or modified by the courts unless palpably arbitrary or capricious, or unless unconstitutional. 2. The Administrator’s regulation is a valid exercise of the authority conferred upon him by section 3(m) and is clearly designed and adapted to achieve the purpose of Congress. A. The literal language of the statute, as well as the legislative history, established that “cost” and not “fair value” was intended to be the standard in enforcing section 3(m). B. The “actual cost” standard is the only practicable interpretation if the purpose of section 3(m) to prevent evasions of the Act is to be accomplished. 3. There is no constitutional requirement entitling employers to a return on the value of services or facilities furnished in lieu of wages. We agree with plaintiff’s view that the Administrator’s Regulation under Section 3(m), defining what is thereunder “reasonable cost”, as just above quoted, to be the “actual cost”, is legally correct. We do not fail to realize the hardship on the defendant in such a rule because it robs the defendant of the fruits of a prudent good bargain; and, concomitantly and additionally, we realize that if there be no reward for astuteness in business the converse will become true, that there will be no punishment for poor dealings. What we mean here is that the defendant might as well have paid the Coats and Burchard estimate for the plant of $400,000 when it bought on February 6, 1934, instead of just paying $82,500. The reason why we may legally and conscientiously take this position in the face of a full appreciation of its shortcomings and difficulties is that we firmly adhere to the plaintiff’s position that we are not dealing here with the “fair value” principles applied in public utility rate making, nor are we dealing here with a direct and comprehensive regulation of prices to be charged by grocery stores and landlords; we are dealing primarily in shaping and maintaining minimum wage and maximum hour standards for employees engaged in interstate commerce or the production of goods for interstate commerce, and consequently any regulation of prices charged for rent or merchandise resulting from the operation of Section 3(m) is merely incidental to the accomplishment of the wage and hour standard provided by the Act. The charges made by ordinary landlords and merchants are not affected at all by Section 3(m), nor are the charges made by the employer regulated, except to the extent to which the employer may choose to furnish facilities in lieu of the minimum wages and the overtime compensation required by the substantive provisions of the Act. The determination by the Administrator in Regulations, Part 531, is binding as legislation and cannot be set aside or modified by the courts unless palpably arbitrary or capricious, or unless unconstitutional. The Congress may delegate to administrative agencies the power to issue regulations, having the force and effect which they would have if Congress itself had written the regulations into the statute. Gray v. Powell, 1941, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301; United States v. George S. Bush & Co., Inc., 1940, 310 U.S. 371, 60 S.Ct. 944, 84 L.Ed. 1259; American Tel. & Tel. Co. v. United States, 1936, 299 U.S. 232, 57 S.Ct. 170, 81 L.Ed. 142; Pacific States Box & Basket Co. v. White, 1935, 296 U.S. 176, 56 S.Ct. 159, 80 L.Ed. 138, 101 A.L.R. 853; United States v. Shreveport Grain & Elevator Co., 1932, 287 U.S. 77, 58 S.Ct. 42, 77 L.Ed. 175; Currin v. Wallace, 1939, 306 U.S. 1, 59 S.Ct. 379, 83 L.Ed. 441; United States v. Rock Royal Co-op., 1939, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; Avent v. United States, 1924, 266 U.S. 127, 45 S.Ct. 34, 69 L.Ed. 202; United States v. Grimaud, 1911, 220 U.S. 506, 31 S.Ct. 480, 55 L.Ed. 563; In re Kollock, 1897, 165 U.S. 526, 17 S.Ct. 444, 41 L.Ed. 813; Belden v. Chase, 1893, 150 U.S. 674, 14 S.Ct. 264, 37 L.Ed. 1218; McKinley v. United States, 1919, 249 U.S. 397, 39 S.Ct. 324, 63 L.Ed. 668; Buttfield v. Stranahan, 1904, 192 U.S. 470, 24 S.Ct. 349, 48 L.Ed. 525; Boske v. Comingore, 1900, 177 U.S. 459, 20 S.Ct. 701, 44 L.Ed. 846. We believe that since Section 3 (m), as interpreted by the Administrator’s Regulation, is plainly designed and adapted to the constitutional end of enforcing fair wage and hour standards, the fact that curtailment of the employer’s profits from the sale of merchandise and the renting of houses to employees incidentally results, cannot invalidate the regulation. ■ Secondly, the constitutional objection urged by the defendant cannot prevail. Even if it be assumed that Congress is without power directly to regulate prices of grocery stores and amounts, charged by landlords generally, regulations providing the conditions under which such charges may be credited to an employer as wages paid are clearly val