United States v. Jones, 11963.

• Decision Date: 24 June 1949
• Docket Number: No. 11963.,11963.
• Parties: UNITED STATES v. JONES.
• Court: U.S. Court of Appeals — Ninth Circuit

176 F.2d 278 (1949)

UNITED STATES v. JONES.

No. 11963.

United States Court of Appeals Ninth Circuit.

June 24, 1949.

Henry L. Hess, U. S. Atty., Victor E. Harr, and Gene B. Conklin, Asst. U. S. Attys., Portland, Or., for appellant.

Thomas H. Tongue, III, Neal W. Bush, Hicks, Davis & Tongue, Portland, Or., for appellee.

Before: DENMAN, Chief Judge, and STEPHENS, Circuit Judge, and YANKWICH, District Judge.

YANKWICH, District Judge.

On October 15, 1947, the appellant, United States of America, to be referred to as "the Government", as plaintiff, instituted an action against Herbert A. Jones, Jr., the appellant, as defendant, in which it sought to set aside and rescind a sale of certain surplus materials to Jones, made on October 30, 1946. The Complaint stated a single claim or cause of action, — mutual mistake. On December 4, 1947, an amended Complaint was filed which added to the causes of action of the original Complaint three others, (1) unilateral mistake, (2) lack of authority of the agents negotiating the sale, and (3) sale at an unfair price in violation of the Surplus Property Act of 1944. 50 U.S.C.A.Appendix, §§ 1611-1646.

A pretrial order, signed and approved by counsel, was not signed by the Court, Rule 16, Federal Rules of Civil Procedure, 28 U.S.C.A. And see, Fowler v. Crown-Zellerbach Corp., 9 Cir., 1947, 163 F.2d 773, 774. It was not included by the Clerk in the transcript on appeal and is before this court only because counsel for the Government have attached it as an appendix to their brief. However, in view of the fact that the trial judge indicated, at the trial, that the order would be signed and counsel, throughout the trial, assumed that the issues were as stated therein and that no testimony would be directed to any matters admitted in the order, and even on this appeal, counsel take the facts in the pretrial order as proved, we may refer to it as a stipulation for such admissions as may be pertinent to the discussion to follow.

After trial, the Court, on March 4, 1947, gave judgment in favor of the defendant Jones and dismissed the Complaint.

This is an appeal from the judgment.

In its challenge of the findings and judgment, the Government insists that uncontradicted evidence, which should have been given binding effect by the trial court, establishes that the sale was invalid (1) for lack of authority, (2) for mistake on the part of the Government in its consummation, and (3) that the trial court erred in dismissing the Complaint without adjudicating fully the rights of both parties in the matter.

I. Narrowing of Issues

(A) Discretion in Declaratory Relief.

The obvious answer to the last assertion is that, — as the Declaratory Judgment Statute makes the granting of relief discretionary, — when a trial court reaches the conclusion, as it did in this case, that judgment should be against the actor in the lawsuit, it would be an illusory act to grant a further declaration of rights. 28 U.S.C.A. §§ 2201-2202; and see, Eccles v. People's Bank, 1948, 333 U.S. 426, 431, 68 S.Ct. 641, 92 L. Ed. 784; Declaratory Judgments, 1940, 1 F.R.D. 295, 301. This was not a dismissal without a trial. Cf. Guardian Life Ins. Co. v. Kortz, 10 Cir., 1945, 151 F.2d 582. The dismissal was ordered, after a trial on the merits. It was part of a decree which gave judgment in favor of the defendant upon findings which concluded that the Government was "not entitled to rescind said sale or to the other relief prayed for".

A declaration of rights, after such conclusion, would have served no useful purpose. And it is an accepted principle that no declaration should be made, unless it serve a useful, practical purpose, or when no beneficial result would follow. See, 1 C.J.S., Actions, § 18(12), pages 1033-1034; Borchard, Declaratory Judgment, 2 Ed., 1941, pp. 296, 299; Aetna Casualty & Surety Co. v. Quarles, 4 Cir., 1937, 92 F.2d 321, 325-326; Smith v. Massachusetts Mutual Life Insurance Co., 5 Cir., 1948, 167 F.2d 990; Redlands Foothill Groves v. Jacobs, D.C.Cal.1940, 30 F.Supp. 995.¹

The present cause was not solely a declaratory judgment action. It sought a specific equitable decree declaring the sale to be void and the plaintiff to be the owner of the property, and vacating and rescinding the sale. Declaration of rights was asked, ancillary to the affirmative relief, and coincident with a prayer for general equitable relief.

There was, therefore, more cogent reason for denying a declaration when the primary relief sought — invalidation of the sale and restitution of ownership of the property to the plaintiff, — was denied. Even in ordinary civil actions, when the court has reached a conclusion upon the main issues involved, and has decided them against a litigant, it needs only state the ultimate facts and need not make findings on every incidental fact which the litigant may have sought to put in issue. McGee v. Nee, 8 Cir., 113 F.2d 543; Klimkiewicz v. Westminister Deposit & Trust Co., 1941, 74 App. D.C. 333, 122 F.2d 957; Schilling v. Schwitzer-Cummins Co., 1944, 79 U.S.App.D.C. 20, 142 F.2d 82; and see, Findings, 1948, 8 F. R.D. 271, 284-286.

It follows that if, as we have concluded, the ultimate disposition of the case by the trial court was correct, there was no error in its failure to make the declaration of rights which the Government sought.

(B) Federal Law Governs the Sale.

Another contention can be disposed of with brevity.

Jones asserts that the validity of the agreement between him and the Government is governed by Oregon law.

We cannot agree.

This is a case in which the Government, in its sovereign capacity, deals with property which it owns. Its contracts relating to such property stem from ownership, and the manner of its sale is governed by specific federal statute. There is, therefore, no room for the application of any local law merely because the sale took place in Oregon, was made to a citizen of Oregon by government agents resident in Oregon. As said in United States v. Allegheny County, 1944, 322 U.S. 174, 182, 64 S.Ct. 908, 913, 88 L.Ed. 1209:

"Every acquisition, holding, or disposition of property by the Federal Government depends upon proper exercise of a constitutional grant of power. * * * The validity and construction of contracts through which the United States is exercising its constitutional functions, their consequences on the rights and obligations of the parties, the titles or liens which they create or permit, all present questions of federal law not controlled by the law of any state."

And see, Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838; S.R.A., Inc. v. Minnesota, 1946, 327 U.S. 558, 565-566, 66 S.Ct. 749, 90 L. Ed. 851; United States v. Standard Oil Co., 1947, 332 U.S. 301, 308-309, 67 S.Ct. 1604, 91 L.Ed. 2067.

We come now to the other grounds urged for reversal.

II. Lack of Authority

(A) The Authority of Public Officers.

The trial court made no specific finding as to the authority of the agents of the Government to make the sale in the manner in which they did. But the court found: "Substantial evidence was introduced to establish that it was the custom and practice of said War Assets Administration, when goods could not or were not sold on a bid or fixed price basis for a substantial recovery, to offer said goods for sale on a negotiated basis for the best price offered. Substantial evidence was also introduced to establish that the foregoing sale was in accordance with said custom and practice." Finding VII.

The Government attacks this Finding upon the ground that Delbert F. Webb, the clerk-typist of the War Assets Administration, who made the sale to Jones, had no authority to make the sale in the manner and at the price he did.

It is, no doubt, true — to use a phrase which has become trite through constant use — that in assaying the acts of public officers, "the mode is the measure of the power." This means that a public officer, in exercising powers conferred upon him by statute and regulation, is bound to follow the mode or manner prescribed. One who deals with such official is on his notice of possible limitations of authority. And no estoppel can arise against the Government from the performance of unauthorized acts or from authority exercised in a manner forbidden. 43 Am.Jur., Public Officers, Secs. 249, 256; 54 Am.Jur., United States, Sec. 92; Wisconsin Central Railroad Co. v. United States, 1896, 164 U.S. 190, 211, 17 S.Ct. 45, 41 L.Ed. 399; Utah Power & Light Co. v. United States, 1917, 243 U.S. 389, 409, 37 S.Ct. 387, 61 L.Ed. 791; United States v. City and County of San Francisco, 1940, 310 U.S. 16, 31-32, 60 S.Ct. 749, 84 L.Ed. 1050. It is also true that officers of the Government of the United States are held to the utmost good faith, and one who deals with them cannot take advantage of their fraud towards the Government. 43 Am.Jur., Public Officers, Sec. 261; 54 Am.Jur., United States, Sec. 92; Hume v. United States, 1889, 132 U.S. 406, 10 S.Ct. 134, 33 L.Ed. 393. At the same time, presumption of legality attaches to the act of a public officer. As Chief Justice Marshall put it in an old case, an act done by an officer authorized by law to perform it "carries with it prima facie evidence that it is within his power" and "he who alleges that an officer intrusted with an important duty has violated his instructions must show it". Delassus v. United States, 1835, 9 Peters 117, 134, 9 L.Ed. 71. And see, United States v. Coe, 1898, 170 U.S. 681, 696-697, 18 S.Ct. 745, 42 L.Ed. 1195; Lamport Mfg. Supply Co. v. United States, 1928, 65 Ct. Cl. 579, 610.

Neither fraud nor venality on the part of any of the agents of the War Assets Administration was charged.

Was there lack of legal authority?

(B) The Agreed Facts.

Certain agreed facts may first be stated.

The United States Maritime Commission and the War Assets Administration (to be referred to as W.A.A.) are agencies of the United...