285 F. 751 | D. Mass. | 1922
This is an action to recover profits which the defendant, a central wool dealer, made during the year 1918 in excess of 5 per cent, on his gross sales. It was heard on demurrer to the declaration; but the parties introduced by agreement various orders and official letters and regulations on the theory that the court took judicial notice of such documents. The case is therefore to be decided on the declaration and demurrer in connection with the orders, etc., that have been called to the Court’s attention.
The act of 1916, § 2 (Comp. St. §§ 3115a-.3115e) established a Council of National Defense and authorized it to constitute subordinate agencies and boards. Under the Act the War Industries Board was created. Its powers and duties are defined in a letter from President Wilson to Mr. Baruch; it appears not to have been expressly recognized in the statutes. Its functions toward the Council of National Defense were merely advisory. Rater it became the personal agency of the President, and from that source obtained very large real powers.
The preliminary estimates of the quantity of wool .which would be required for government and civilian consumption during the year 1918 amounted to about double the available supply. The War Industries Board believed — rightly—that a bad situation would be created
The defendant, was a wool dealer, and he made profits in excess of 5 per cent, of his gross sales. This suit is based on the agreement contained in the permit, in connection with the regulation referred to. The defendant contends that he is not bound by this agreement; that the War Board acted arbitrarily and without right in attempting to control the business of dealing in wool; that it had no right to require permits, nor to attempt to penalize or discriminate against persons who-dealt in wool without permits; that its assertion of such authority was illegal; and that, in deferring to this assertion of authority and taking a permit, he was acting under cQercion and duress, which relieve him from his agreement. He further contends that the avowed purpose of the government in suing for the profits is to pay them over to the wool growers; that this purpose is entirely illegal; and that on this account also the action cannot be maintained.
Demurrer overruled.
Supplemental Opinion. •
As stated in my opinion of August 23, 1922, which was withdrawn when the request for rehearing was granted, I was of the opinion that the defendant, in accepting a permit ¡under the regulations promulgated by the War Industries Board, became bound by those regulations, in so far, at least, as they were within the power of the government to prescribe. Upon a careful' re-examination of this point I see no sufficient reason to change the views upon it then expressed, and the opinion is refiled herewith.
Some months later, in August, 1918, all' dealers were notified by the board that:
“As far as possible it [the excess profit paid to the government] is to be returned to the growers under the direction of the War Industries Board.”
“to continue as far as practicable the distribution among the growers of the wool clip of 1918 of all sums heretofore or hereafter collected or recovered with or without suit by the government from all persons, firms, or corporations which handled any part of the wool clip of 1918.”
A provision expressly legalizing the regulations was struck out in the House on the ground, as stated by Representative Anderson during the debate, that:
“The House committee [of conference] felt that whatever rights the government had and whatever the private individuals had under those regulations were determined by the regulations themselves.”
It is not contended by the plaintiff that the government was under any legal obligation to the growers; it plainly was not. And it does not seem to me that there was anything which could reasonably be thought to have created a moral or honorary obligation on the Government to them. They had not gone into business in reliance on any law or regulations made by it; they had the right to consign their wool for sale, in which case they got the full purchase price less only necessary expenses and a 4 per cent, commission, or to sell it outright ■to wool dealers at such price as. they agreed to. They stood in the same position as persons in many other lines of industry who produced and sol'd merchandise part of which was needed for the use of the government in the prosecution of the war. Those who consigned their wool got the price fixed by the government; those who chose to sell outright got the price at, which they sold. The distribution among them of public money is a pure gratuity, and nothing else. Neither the War Industries Board nor the Department of Agriculture have power so to deal with public money without a clear mandate from Congress for such action. I do not think such authority is to be found in the Appropriation Acts, either of 1919 or of 1920, which are relied on by the government. If the acts he construed as conferring such authority, they would, in my opinion, be unconstitutional.
The same result has been reached in an elaborate opinion by Judge Sater, of the Southern District of Ohio, in U. S. v. Gordin (unreported).
Demurrer overruled.
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