Century Arms, Inc. v. Kennedy

Citation323 F. Supp. 1002
Decision Date26 February 1971
Docket NumberCiv. A. No. 5929.
PartiesCENTURY ARMS, INC. v. David KENNEDY, Secretary of the Treasury.
CourtU.S. District Court — District of Vermont

McNamara, Fitzpatrick & Sylvester, Burlington, Vt., and Ginsburg, Feldman & Bress, Washington, D. C., for plaintiff.

Norman Cohen, Asst. U. S. Atty., George W. F. Cook, U. S. Atty., Rutland, Vt., for the Government.

OPINION and ORDER

OAKES, District Judge.

From a hearing on the Government's motion to dismiss, and plaintiff's motion for summary judgment, it emerges that the facts in this case are not substantially in dispute.

Plaintiff, Century Arms, Inc., is a Vermont corporation engaged in the importation and sale of firearms for law enforcement and sporting purposes. Between June of 1967 and August of 1968, Century Arms negotiated contracts with police departments and military branches of several foreign governments for the importation of $343,192.04 of surplus military rifles suitable for sporting purposes.

Between July of 1967 and September of 1968, Century applied to the Office of Munitions Control of the State Department for licenses to import the firearms, as required by regulations issued under the Mutual Security Act of 1954 § 414, 22 U.S.C. § 1934 (Supp. V, 1969) amending 22 U.S.C. § 1934 (1964). Between August 16, 1968, and October 8, 1968, valid licenses were issued to Century, duly signed by authorized officers of the Department of State. Although printed "Form DSP-38," on which the licenses were issued, contains the statement "License valid for six months from above date" date of issuance, each of the licenses granted to Century had stamped in bold letters across its face "License Not Valid After December 15, 1968." This stamped modification concededly superseded the six months' limit in the printed form. December 15, 1968, was the day before the Omnibus Crime Control and Safe Streets Act of June 19, 1968, Pub.L. No. 90-351, § 907, 82 Stat. 197 (hereinafter called the Crime Control Act1), was to take effect.

Upon receipt of the licenses, and before their December 15 expiration, Century took steps to insure the arrival of the firearms in this country. The first shipment reached the United States on October 21, 1968. The last was here by December 6, 1968. Thus the shipments were received in the United States before the licenses had expired.

The shipments were not, however, received before Congress had enacted the Gun Control Act of 1968, 18 U.S.C. §§ 921-925 (Supp. V, 1969)2, on October 22, 1968. Sections 922(l) and 925(d) (3) of the Gun Control Act prohibit the importation of all surplus military firearms. Section 105(b) of the Gun Control Act provided that § 922(l) and § 925(d) (3), among others, were to take effect upon enactment, viz., October 22, 1968.

The genesis of this suit is the Secretary of the Treasury's refusal, after October 22, 1968, to allow Century to "import" the firearms covered by the licenses issued by the Office of Munitions Control. "Importation" is used here in a narrow sense, as the guns are physically in the United States, but are being held in bonded warehouses pending the outcome of this suit. When we speak of the Secretary's refusal to allow Century to "import" the guns, then, we mean refusal to allow Century to remove the guns from the warehouses and resell them to its customers.

Century contends that the Secretary of the Treasury misconstrued the Gun Control Act, as that Act was never intended to invalidate then-existing licenses. Furthermore, the argument runs, if the Secretary's construction of the Gun Control Act is proper, then that Act must be held unconstitutional in its application to Century as in violation of the Due Process and/or Just Compensation clauses of the Fifth Amendment. Century seeks declaratory relief against the interpretation of the Gun Control Act given by the Secretary, and relief in the nature of mandamus compelling the Secretary to grant the necessary licenses to Century.

The Government, on the other hand, seeks dismissal of the suit as an unconsented action against the sovereign, and for failure to state a claim upon which relief can be granted. The Government's argument in support of its motion to dismiss for lack of subject-matter jurisdiction is twofold: first, that the Secretary's interpretation of the Gun Control Act is correct, that the Secretary is thus acting within the scope of his authority, and that the suit therefore is, in reality, against the sovereign; second, that the absence of constitutional infirmity in the Act itself leaves this court without jurisdiction. The Government's motion to dismiss for failure to state a claim upon which relief can be granted is similarly premised on the Government's reading of the Gun Control Act, which is consistent with the Secretary's reading of the Act.

In opposition to the defendant's motion to dismiss for lack of subject matter jurisdiction, the plaintiff relies on the line of cases highlighted by Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 689-690, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949), which holds that an action in the nature of mandamus will lie against an officer of the federal government where (1) the officer acted beyond the scope of his delegated authority, or ultra vires as is sometimes said, or (2) the action of the federal official is unconstitutional, whether or not permitted by the statute in question. It is the plaintiff's contention that both of those conditions are here met, and that 28 U.S.C. § 1361 (1964)3 therefore confers subject matter jurisdiction.

Whether or not one takes the view that 28 U.S.C. § 1361 merely enlarges the available venue in cases of so-called "non-statutory" judicial review but does not provide an independent source of federal jurisdiction, we think the question of subject-matter jurisdiction can be disposed of only after consideration of the merits. See Land v. Dollar, 330 U.S. 731, 739, 67 S.Ct. 1009, 91 L.Ed. 1209 (1949).

The traditional rationale (here relied upon by the Government) to divest the federal courts of subject matter jurisdiction in actions where mandamus is sought against a government official has rested on the argument that if the official act sought to be compelled is ministerial only, mandamus will lie, but that if the act involves official discretion, then the suit must be dismissed, lest the federal courts begin directing an administrator in the exercise of his constitutionally-delegated discretion. See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 166, 2 L.Ed. 60 (1803). Larson, supra, is of course the oft-cited authority for the proposition that when an administrator acts within his allowable discretion, he is in reality acting as the sovereign and is therefore not amenable to suit. 337 U.S. at 688, 69 S.Ct. 1457. The logical corollary to that proposition, as the Court went on to note in Larson, is that when an administrator acts outside the scope of his delegated authority, he is no longer performing the acts of the sovereign; he can then be sued in an individual capacity. 337 U.S. at 689, 69 S.Ct. 1457. And when the constitutionality of the administrative action is challenged, suit may be brought, for even the acts of the sovereign are circumscribed by the prohibitions of the constitution. 337 U.S. at 690, 69 S.Ct. 1457.

While it may be well to say that there is no jurisdiction to interfere with the lawful exercise of discretion, the basing of jurisdiction on the "ministerial-discretionary" distinction leaves the perimeters of administrative discretion undefined in the particular cases. See, e. g., Byse & Fiocca, Section 1361 of the Mandamus and Venue Act of 1962 and "Nonstatutory" Judicial Review of Federal Administrative Action, 81 Harv.L. Rev. 308, 331-36 (1967); and Jaffe, Judicial Control of Administrative Action 572 (1965). To define the permissible limits of an administrator's discretion is a peculiarly judicial function. Safir v. Gibson, 417 F.2d 972 (2d Cir. 1969). Mr. Justice Frankfurter apparently saw it as a necessary assumption of federal jurisdiction. In a vigorous dissent to Larson, supra, he argued that to decide whether the "authority is rightfully assumed is the exercise of jurisdiction, and must lead to the decision of the merits of the question." United States v. Lee, 106 U.S. 196, 219, 1 S.Ct. 240, 27 L.Ed. 171, 330 U. S. at 728, 69 S.Ct. at 1481 (dissenting opinion).

Furthermore, although neither party has raised the issue, it is at least arguable that the statute in question, the Gun Control Act of 1968, provides the plaintiff statutory judicial review. Section 923(d) (2) of 18 U.S.C. provides for appeal to a federal district court from the Secretary of the Treasury's denial of a manufacturer's or importer's license under the Act, specifically mentioning 28 U.S.C. § 1361. While Section 923(d) (2) was not in effect at the time this controversy arose Pub.L. No. 90-618, § 105(a), the Act as a whole clearly contemplates judicial review of the Secretary's decisions on license applications under the new law. If an analysis of the merits were to find the plaintiff bound by the provisions of the Gun Control Act as interpreted by the Secretary of the Treasury, it would seem a harsh result indeed to deny the plaintiff judicial review because § 923(d) (2) had not yet taken effect when the plaintiff was told it could not import these guns. We are also aware that the grant of judicial review of agency action under one section of a federal regulatory scheme does not necessarily foreclose review of action under other sections. See Abbott Laboratories v. Gardner, 387 U.S. 136, 140-141, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967).

Accordingly, we think, as did Mr. Justice Frankfurter, that the jurisdictional issue necessitates a preliminary consideration of the merits.

The question first to be decided, of course, is the proper construction of the Gun Control Act of 1968. If the Secretary were mistaken in his reading of the statute,...

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