331 U.S. 752 (1947), 95, Airport & Diesel Equipment Corp. v. Hirsch

Docket Nº:No. 95
Citation:331 U.S. 752, 67 S.Ct. 1493, 91 L.Ed. 1796
Party Name:Airport & Diesel Equipment Corp. v. Hirsch
Case Date:June 16, 1947
Court:United States Supreme Court

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331 U.S. 752 (1947)

67 S.Ct. 1493, 91 L.Ed. 1796

Airport & Diesel Equipment Corp.



No. 95

United States Supreme Court

June 16, 1947

Argued January 15, 1947




1. Pursuant to the First and Second Renegotiation Acts, the Secretary of War and the War Contracts Adjustment Board, respectively, determined that appellant had realized excessive profits during two years on subcontracts under which it had supplied parts to contractors manufacturing war equipment for the Army, and the Under Secretary of War directed certain of appellant's customers to withhold and pay into the Treasury sums due appellant equal to such excessive profits (less tax credits) for the second of the years in question. After petitioning the Tax Court for redetermination and while such proceedings were pending, appellant sued in a federal district court for a declaratory judgment that the Renegotiation Acts are unconstitutional and for an injunction against further proceedings thereunder.


(a) The suit is premature, since appellant had not exhausted its administrative remedy before the Tax Court. Pp. 764-774.

(b) The district court had no jurisdiction in equity, since appellant had a complete remedy at law by actions against the contractors to which it had supplied the parts. Pp. 774-781.

2. Mere suggestions of claim for relief raising serious constitutional questions are not to be entertained upon dubious presentations or, most certainly, when the presentation reasonably may be taken as not intended to put them forward squarely and inescapably. P. 763.

3. The doctrine of exhaustion of administrative remedies requires not merely the initiation of prescribed administrative procedures; it requires pursuing them to their appropriate conclusion and awaiting their final outcome before seeking judicial intervention. P. 767.

4. Where Congress has clearly commanded that administrative judgment be taken initially or exclusively, the courts have no lawful function to anticipate the administrative decision with their own, whether or not, when it has been rendered, they may intervene either in presumed accordance with Congress' will or because, for constitutional reasons, its will to exclude them has been exerted in an invalid manner. P. 767.

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5. By providing in the Renegotiation Acts for administrative determinations of excessive profits by the War Contracts Price Adjustment Board and for redeterminations de novo by the Tax Court, Congress intended to secure uniformity of administrative policy and disposition, expertness of judgment, and finality of determination at least of those things which Congress intended to and could commit to such agencies for final decision. Pp. 767-768.

6. Congress intended the Tax Court's functions with respect to redetermination of excessive profits under war contracts not only to be put in motion, but to be fully performed, before judicial intervention at the instance of one in appellant's position, even though constitutional questions are raised. P. 771.

7. Where Congress clearly intended to require administrative determination, either to the exclusion of judicial action or in advance of it, a strong showing is required, both of inadequacy of the prescribed procedure and of impending harm, to permit short-circuiting the administrative process -- especially in the case of wartime legislation resting, at least in part, on war powers. Pp. 773-774.

8. Appellant subcontractor has an adequate remedy at law by suits upon its contracts against its customers; since such suits are not forbidden expressly or impliedly by the Renegotiation Acts, they are not made dependent upon completion of the Tax Court proceedings, and there appears to be no reason why every question of constitutionality raised in this suit could not be presented and determined in such a suit. Pp. 775-777.

9. Appellant's allegations that it would suffer irreparable injury as a result of the withholding of the funds due from its customers are insufficient to sustain the intervention of a court of equity, particularly to avoid or anticipate the congressionally authorized proceeding. Pp. 777-778.

10. Nor, on the facts of this case, is the showing made concerning multiplicity of suits sufficient to justify intervention of a court of equity or the substitution of its extraordinary relief for what appears to be a dull, adequate, and completely available remedy at law. Pp. 778-781.

62 F.Supp. 520 affirmed.

While proceedings were pending in the Tax Court for redetermination of excessive profits determined by the Secretary of War and the War Contracts Price Adjustment Board to have been realized by a subcontractor on production of war equipment, the subcontractor sued in

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a Federal District Court for a declaratory judgment that the Renegotiation Acts are unconstitutional and for an injunction against further proceedings thereunder. The District Court dismissed the suit. 62 F.Supp. 520. On appeal to this Court, affirmed, p. 781.

RUTLEDGE, J., lead opinion

MR. JUSTICE RUTLEDGE delivered the opinion of the Court.

This case is the fourth in a series seeking here a determination of the invalidity, on constitutional grounds, of the First and Second Renegotiation Acts1 and allied legislation.

In Coffman v. Breeze Corporations, 323 U.S. 316, and in Alma Motor Co. v. Timken-Detroit Axle Co., 329 U.S. 129, the Royalty Adjustment Act2 was attacked. The Alma Motor case was remanded to the Circuit Court of Appeals for a determination of the Act's applicability. The suit in the Coffman case was by a patent owner to restrain his licensees from paying accrued royalties to the Government pursuant to the Act's provisions. We held

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that the complaint had been rightly dismissed for want of equity jurisdiction, since the plaintiff had an adequate remedy at law by suit against its licensees, and also for want of a justiciable case or controversy.

In Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371, a government contractor challenged the Renegotiation Acts.3 The complaint sought to enjoin the Secretary of the Navy from taking action

which would stop payment by the government of money lawfully in the United States Treasury to satisfy the government's, and not the Secretary's, debt to the appellant.

326 U.S. at 374. Accordingly, we held that the Government was an indispensable party. Since it neither had been joined in the suit nor had consented to be sued in such a proceeding, it followed that the complaint had been properly dismissed.

In one other case, Macauley v. Waterman S.S. Corporation, 327 U.S. 540, constitutionality was not involved, but coverage of the [67 S.Ct. 1495] Renegotiation Acts was put in issue. The suit was brought in a District Court for a declaratory judgment and to restrain further renegotiation proceedings affecting the specified contracts. The contractor had not sought a decision on coverage from the Tax Court. We held that the Tax Court has power to decide such questions in the proceedings authorized by § 403(e)(1) of the Second Renegotiation Act. Hence, under the authority of Myers v. Bethlehem Shipbuilding Corp. 303 U.S. 41, the complaint in the Waterman case also was held rightly to have been dismissed, in this instance for the plaintiff's failure to exhaust its administrative remedy.

Now the Aircraft & Diesel Equipment Corporation seeks a declaratory judgment that the First and Second Renegotiation Acts are unconstitutional on various grounds. Injunctive relief also is asked. And, in addition

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to the constitutional questions, determination is sought of issues of coverage and other matters.

The defendants, appellees here, consist of the members of the War Contracts Price Adjustment Board, the Secretary of War, and the Under Secretary of War.4 Pursuant to the statutory requirement, 50 Stat. 751, 752, 28 U.S.C. § 380a, a district court of three judges was especially convened. After hearing, the complaint was dismissed.5 One ground for this action was that the suit is premature, since proceedings were pending and undetermined in the Tax Court, pursuant to appellant's applications, for redetermination of its allegedly excessive profits for 1942 and 1943.6 The court also held that it was without jurisdiction in equity, since, in its view, adequate remedy at law was available to Aircraft. Probable jurisdiction of the appeal was duly noted here.7

We think the District Court correctly dismissed the complaint, and for the reasons stated as grounding its action. The issues expansively include almost all comprehended in the causes previously determined here. But the case reaches this Court in a posture differing in some substantial

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respects from that characterizing any of those proceedings. Hence, it becomes necessary to set forth with some particularity the facts and controlling issues.


Appellant is in the business of manufacturing diesel fuel injection equipment and precision parts, and aircraft precision parts. Its manufacturing activities, insofar as material,8 were carried on under subcontracts with government contractors. The contractor, in turn, furnished the completed aircraft or engines to the United States.

Pursuant to the First Renegotiation Act, the Secretary of War, acting though his delegate the Under Secretary of War, determined [67 S.Ct. 1496] on October 27, 1943, that, during the fiscal year ended November 30, 1942, appellant had realized excessive profits (less tax credits) amounting to $204,000. On April 29, 1944, the Under Secretary directed appellant's customers to withhold this sum...

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