Land v. Dollar

• Decision Date: 07 April 1947
• Docket Number: No. 207,207
• Parties: LAND, Chairman, U.S. Maritime Commission, et al. v. DOLLAR et al
• Court: U.S. Supreme Court

330 U.S. 731

67 S.Ct. 1009

91 L.Ed. 1209

LAND, Chairman, U.S. Maritime Commission, et al.

v DOLLAR et al.

No. 207.

Argued Feb. 11, 12, 1947.

Decided April 7, 1947.

[Syllabus from pages 731-733 intentionally omitted] Mr. Paul A. Sweeney, of Washington, D.C., for petitioners.

Mr. Gregory A. Harrison, of San Francisco, Cal., for respondents.

Mr. Justice DOUGLAS delivered the opinion of the Court.

Petitioners are present and former members of the United States Maritime Commission. Respondents are stockholders of Dollar Steamship Lines, Inc., Ltd. (Dollar of Delaware), whose corporate name was changed to American President Lines, Ltd., subsequent to the execution in 1938 of a contract out of which the present litigation arises. By 1937 Dollar of Delaware was in difficult financial straits. The problems confronting it and the various steps taken to remedy the situation need not be recapitulated here.¹ It is sufficient for purposes of the various questions presented by this case to say that the Commission and respondents entered into a contract in 1938 by which respondents delivered their common stock in Dollar of Delaware, endorsed in blank, to the Commission; and the Commission released some of respondents from certain obligations and agreed to grant Dollar of Delaware an operating subsidy and to make a loan to it and to obtain for it another loan from the Reconstruction Finance Corporation.

The subsidy was granted and the loans were made. By 1943 American President Lines, Ltd., had fully paid all indebtedness due the United States. Respondents thereupon demanded return of their shares of stock from the then members of the Commission, claiming that the shares had only been pledged as collateral for a debt which had been paid. The members of the Commission refused to surrender the shares, claiming that they had not been pledged under the 1938 contract but transferred outright. Acting on that theory the Commission had indeed offered the shares for sale and had under consideration substantial offers to purchase them.

Thereupon respondents instituted the present suit in the District Court for the District of Columbia, see 11 D.C.Code, §§ 301, 305, 306, claiming that petitioners were unlawfully in possession of respondents' stock and illegally withholding it. The prayer was that petitioners be restrained from selling the shares and be directed to return them to respondents. Respondents moved for a preliminary injunction. Petitioners submitted affidavits opposing the motion. After a hearing, the District Court on its own motion dismissed the complaint with prejudice, holding that the suit was against the United States. The Court of Appeals reversed. 154 F.2d 307. The case is here on a petition for a writ of certiorari which we granted because of the importance of the question presented.²

First. The facts asserted in the affidavits support the view that the 1938 contract called for the outright transfer of the shares, not for their pledge. But we put the affidavits to one side for two reasons. In the first place the function of the affidavits was to oppose the motion for a preliminary injunction. The case had not been submitted for decision on the merits. Issue, indeed had not yet been joined. And the ruling of the District Court, as we read it, was based on the premise that since the Commission had the right to make the contract, the suit was against the United States.³ Hence we do not think the District Court in fact relied on the affidavits in dismissing the complaint. In the second place, although as a general rule the District Court would have authority to consider questions of jurisdiction on the basis of affidavits as well as the pleadings,⁴ this is the type of case where the question of jurisdiction is dependent on decision of the merits.

The allegations of the complaint, if proved, would establish that petitioners are unlawfully withholding respondents' property under the claim that it belongs to the United States. That conclusion would follow if either of respondents' contentions was established: (1) that the Commission had no authority to purchase the shares or acquire them outright; or (2) that even though such authority existed, the 1938 contract resulted not in an outright transfer but in a pledge of the shares.

If respondents are right in these contentions, their claim rests on their right under general law to recover possession of specific property wrongfully withheld. At common law their suit as pledgors to recover the pledged property on payment of the debt would sound in tort.⁵

If viewed in that posture, the case is very close to United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171. That was an action in ejectment to recover possession of a tract of land. The defendants were military officers who, acting under orders of the President, took possession of the land and converted one part into a fort and another into a cemetery. For the lawfulness of their possession they relied on a tax sale of the property to the United States. On the trial it was held that the claim of the plaintiffs to the land was valid and that the defendants were wrongfully in possession. The Court affirmed the judgment over the objection that the suit was one against the United States. It held that the assertion by officers of the Government of their authority to act did not foreclose judicial inquiry into the lawfulness of their action; that a determination of whether their 'authority is rightfully assumed is the exercise of jurisdiction, and must lead to the decision of the merits of the question.' 106 U.S. at page 219, 1 S.Ct. at page 259, 27 L.Ed. 171. It further held that while such an adjudication is not res judicata against the United States because it cannot be made a party to the suit, the courts have jurisdiction to resolve the controversy between those who claim possession. And it concluded that an agent or officer of the United States who acts beyond his authority is answerable for his actions. And see Philadelphia Co. v. Stimson, 223 U.S. 605, 619, 620, 32 S.Ct. 340, 343, 344, 56 L.Ed. 570; Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corp., 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762.

Where the right to possession or enjoyment of property under general law is in issue, and the defendants claim as officers or agents of the sovereign, the rule of United States v. Lee, supra, has been repeatedly approved. Cunningham v. Macon & Brunswick R. Co., 109 U.S. 446, 452, 3 S.Ct. 292, 296, 27 L.Ed. 992; Tindal v. Wesley, 167 U.S. 204, 17 S.Ct. 770, 42 L.Ed. 137; Smith v. Reeves, 178 U.S. 436, 439, 20 S.Ct. 919, 920, 44 L.Ed. 1140; Scranton v. Wheeler, 179 U.S. 141, 152, 153, 21 S.Ct. 48, 53, 45 L.Ed. 126; Philadelphia Co. v. Stimson, supra, 223 U.S. at pages 619, 620, 32 S.Ct. at pages 343, 344, 56 L.Ed. 570; Goltra v. Weeks, 271 U.S. 536, 545, 46 S.Ct. 613, 616, 70 L.Ed. 1074; Ickes v. Fox, 300 U.S. 82, 96, 57 S.Ct. 412, 417, 81 L.Ed. 525; Great Northern Life Ins. Co. v. Read, 322 U.S. 47, 50, 51, 64 S.Ct. 873, 874, 875, 88 L.Ed. 1121. That rule is applicable here although we assume that record title to the shares is in the Commission. In United States v. Lee, supra, record title of the land was in the United States and its officers were n possession. The force of the decree in that case was to grant possession to the private claimant. Though the judgment was not res judicata against the United States, 106 U.S. at page 222, 1 S.Ct. at page 262, 27 L.Ed. 171, it settled as between the parties the controversy over possession. Precisely the same will be true here, if we assume the allegations of the complaint are proved. For if we view the case in its posture before the District Court, petitioners, being members of the Commission, were in position to restore possession of the shares which they unlawfully held.

We do not trace the principle of United States v. Lee, supra, in its various ramifications. Cases on which petitioners rely are distinguishable. This is not an indirect attempt to collect a debt from the United States by preventing action of government officials which would alter or terminate the contractual obligation of the United States to pay money. See Wells v. Roper, 246 U.S. 335, 38 S.Ct. 317, 62 L.Ed. 755; Mine Safety Co. v. Forrestal, 326 U.S. 371, 66 S.Ct. 219. It is not an attempt to get specific performance of a contract to deliver property of the United States. Goldberg v. Daniels, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191. It is not a case where the sovereign admittedly has title to property and is sued by those who seek to compel a conveyance or to enjoin disposition of the property, the adverse claims being based on an allegedly superior equity or on rights arising under Acts of Congress. Cunningham v. Macon & Brunswick R. Co., supra; State of Minnesota v. Hitchcock, 185 U.S. 373, 22 S.Ct. 650, 46 L.Ed. 954; State of Oregon v. Hitchcock, 202 U.S. 60, 26 S.Ct. 568, 50 L.Ed. 935; Naganab v. Hitchcock, 202 U.S. 473, 26 S.Ct. 667, 50 L.Ed. 1113; State of Louisiana v. Garfield, 211 U.S. 70, 29 S.Ct. 31, 53 L.Ed. 92; Morrison v. Work, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394. And see Stanley v. Schwalby, 162 U.S. 255, 271, 272, 16 S.Ct. 754, 761, 40 L.Ed. 960.

We say the foregoing cases are distinguishable from the present one, though as a matter of logic it is not easy to reconcile all of them. But the rule is based on practical considerations reflected in the policy which forbids suits against the sovereign without its consent. The 'essential nature and effect of the proceeding' may be such as to make plain that the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration. Ex parte State of New York, 256 U.S. 490, 500, 502, 41 S.Ct. 588, 590, 591, 65 L.Ed. 1057. If so, the suit is one against the sovereign. Mine Safety Co. v. Forrestal, supra, 326 U.S. at page 374, 66 S.Ct. at page 221. But public...