Aircraft & Diesel Equipment Corporation v. Hirsch

• Decision Date: 28 September 1945
• Docket Number: Civil Action No. 28999.
• Citation: 62 F. Supp. 520
• Parties: AIRCRAFT & DIESEL EQUIPMENT CORPORATION v. HIRSCH et al.
• Court: U.S. District Court — District of Columbia

62 F. Supp. 520

AIRCRAFT & DIESEL EQUIPMENT CORPORATION v. HIRSCH et al.

Civil Action No. 28999.

District Court of the United States for the District of Columbia.

September 28, 1945.

Gallagher, Rinaker, Wilkinson & Hall, of Chicago, Ill., and Hill & Crenshaw, of Washington, D. C., for plaintiff.

Rawlings Ragland, Acting Asst. Atty. Gen., Edward M. Curran, U. S. Atty., of Washington, D. C., Arnold Levy, Sp. Asst. to Atty. Gen., and Walker Lowry and A. Morris Kobrick, Attys., Dept. of Justice, both of Washington, D. C., for defendant.

Before MILLER, Associate Justice, United States Court of Appeals, District of Columbia, and BAILEY and PROCTOR, Associate Justices, District Court of the United States for the District of Columbia, sitting as a statutory three-judge court.

BAILEY, Associate Justice.

The plaintiff is a corporation under the laws of the State of Delaware. The defendant Henry L. Stimson was the Secretary of War and the defendant Robert P. Patterson was the Under Secretary of War at the time of the filing of the amended complaint. The remaining defendants are the members of The War Contracts Price Adjustment Board.

This is a suit filed by the plaintiff, seeking a declaratory judgment to the effect that the original Renegotiation Act passed by Congress on April 28, 1942 and the later Act which became effective on February 25, 1944, being Title VII of the Revenue Act of 1943, 26 U.S.C.A. Int.Rev.Acts, which amended and reenacted the Act of April 28, 1942, is each unconstitutional as repugnant to Articles I and II and Amendments V, VII and X of the Constitution of the United States.

The plaintiff has filed an amended and supplemental complaint in which it also seeks injunctive relief restraining the defendants from further proceeding under the Renegotiation Act and particularly under Sections 403(c)(2) and 403(e)(1) in so far as said Act, 50 U.S.C.A.Appendix § 1191(c)(2), (e)(1), and said sections provide for the taking of plaintiff's "property" without any form of judicial review, and, in addition, injunctive relief restraining the defendants from taking plaintiff's "property" prior to a redetermination by The Tax Court of the United States of the determination of the War Contracts Price Adjustment Board, for the reason that said order was entered by the Board illegally, arbitrarily, capriciously and without regard to the evidence then before it, finally that the enforcement of said order of January 11, 1945 will cause plaintiff irreparable injury, and this latter relief is sought also under the general equity powers of the Court.

The amended complaint states that the plaintiff made a contract with the United States Navy on May 21, 1941, under which it agreed to furnish certain pumps to the United States Navy; that on March 17, 1942 it entered into an agreement supplemental to contract of May 21, 1941, by which plaintiff agreed to furnish certain pumps and other material to the United States Navy, and that during the fiscal year ended November 30, 1943, it furnished to the Navy Department pumps and other material as had not been previously furnished on the supplemental contract of March 17, 1942, and that all the equipment delivered by the plaintiff to the United States Navy in the fiscal year ended November 30, 1943, were all paid for by the United States on or before the 27th day of August 1943; that after certain proceedings and conferences the War Contracts Price Adjustment Board notified plaintiff that it had received excessive profits of $1,265,000 in the fiscal year ended November 30, 1943 and that on or about January 11, 1945 plaintiff was notified of the entrance and issuance of an order by the defendant, Robert P. Patterson, Under Secretary of War, acting as a delegate of the War Contracts Price Adjustment Board that plaintiff had realized the said excessive profits in the said fiscal year and plaintiff was directed to pay that sum, less applicable taxes previously paid, to the Treasury of the United States; that on February 28, 1945, plaintiff requested the said Board to initiate a review of the above determination but that on May 3, 1945, the Board refused to do so; that under the provisions of Section 403(c)(2) of the Renegotiation Act the Board may direct the defendant Henry L. Stimson, Secretary of War, to direct contractors or sub-contractors for whom the plaintiff had done work under contract or pursuant to sales orders, to withhold such sums of money due the plaintiff as will aggregate $1,265,000 less applicable tax adjustment; that on April 4, 1945 plaintiff, pursuant to right granted by Section 403(e)(1) of the Renegotiation Act, petitioned the Tax Court of the United States to redetermine the excessive profits, if any, realized during the fiscal year ended November 30, 1943; that the United States filed a motion to strike this petition on the ground that it was filed prematurely; that this motion was heard on May 16, 1945, but that in the event The Tax Court shall dismiss said petition, the plaintiff will file another petition in The Tax Court for the same purpose; that "notwithstanding the fact that the plaintiff has filed its petition for redetermination in The Tax Court of the United States whereby it seeks an orderly determination of the amount, if any, it may owe to the United States of America, as excessive profits for its fiscal year ending November 30, 1943," the War Contracts Price Adjustment Board purposes to direct the Secretary of War to withhold moneys due to the plaintiff by said contracts for the account of the United States in the amounts determined by it to be due as excessive profits and the Secretary of War purposes to follow such directions; that in the event of such seizure of such amounts due to the plaintiff or the payment thereof by customers thereof to the Treasury, the amounts so seized or paid would be transferred to the Surplus Fund of the United States Treasury; that the Renegotiation Act in so far as it may authorize such seizure is in violation of rights guaranteed to the plaintiff by the Constitution of the United States; that there was, as of May 1, 1945, due plaintiff from its customers (they being firms, individuals and corporations, other than the United States of America, or any department, agency or instrumentality thereof) approximately $274,000, and on that date plaintiff had on its books unfilled orders from such customers and others (not the United States of America or any department, agency or instrumentality thereof), calling for the manufacture and sale of its products at prices approximately aggregating $890,000. The said sums now due, or such portion...