## Facts

- M. Kraus & Bros., Inc., a meat and poultry dealer, sold poultry subject to federal maximum price ceilings under Revised Maximum Price Regulation No. 269.
- The government charged that Kraus evaded the poultry price ceilings by conditioning sales of poultry on purchasers also buying chicken feet and chicken skins at specified prices.
- The charging instrument alleged Kraus “willfully and knowingly” evaded the regulation by “demanding, compelling and requiring” the additional purchases as a condition of the poultry sale.
- Evidence at trial indicated the chicken feet and skins had some market value and were sold at market price.
- The trial judge instructed the jury that the “one” question was whether purchase of the chicken parts was a necessary condition to buying poultry; the instruction did not require a finding that the tied items were worthless or artificially priced.
- The jury acquitted the corporation’s president but convicted the corporation, which was fined on multiple counts.
- The court of appeals affirmed, and the Supreme Court granted review.

## Issues

1. Whether the regulation’s broad anti-evasion clause barred all tie-in sales involving regulated poultry, or only tie-ins used to raise the effective price above the ceiling (such as by tying worthless goods or goods sold at artificial prices).
2. Whether a criminal conviction may rest on an administrative regulation that does not clearly and unambiguously define the conduct treated as unlawful “evasion,” consistent with due process notice requirements.

## Decision

- The Supreme Court reversed the corporation’s conviction.
- The Court construed the regulation to reach only tie-in arrangements that function as evasion—i.e., those involving secondary products that are worthless or sold at artificial prices—rather than all conditional sales.
- The trial court’s instruction was reversible error because it permitted conviction based solely on the existence of a tie-in condition, without requiring the jury to consider evidence that the secondary items had value and were sold at market price.
- The case was remanded for further proceedings consistent with the Court’s interpretation.

## Legal Principles

- A broadly worded anti-evasion clause in a price-control regulation is construed to prohibit schemes that effectively raise the regulated price above the ceiling, not ordinary sales practices absent a disguised overcharge.
- When violation of an administrative regulation is punishable as a crime, the regulation must be explicit and unambiguous and must adequately inform regulated parties what conduct is prohibited; the line between lawful and unlawful conduct cannot be left to conjecture.
- Prosecutors, courts, and juries may not supply missing prohibitions that the regulator did not provide by express language or fair implication.
- Administrative interpretations cannot cure a regulation’s lack of clarity or add definiteness needed to support criminal liability.

## Conclusion

The Court set aside Kraus’s conviction because the poultry regulation did not clearly criminalize all tie-in sales and, properly construed, targeted only tie-ins used as a device to circumvent price ceilings; in criminal enforcement, regulatory prohibitions must be stated with clear notice in the regulation’s text.


M. Kraus & Bros., Inc. v. United States, 327 U.S. 614 (1946)