Adams v. Albany

• Decision Date: 05 November 1948
• Docket Number: No. 731.,731.
• Citation: 80 F. Supp. 876
• Parties: ADAMS et al. v. ALBANY et al.
• Court: U.S. District Court — Southern District of California

80 F. Supp. 876

ADAMS et al. v. ALBANY et al.

No. 731.

United States District Court S. D. California, N. D.

November 5, 1948.

COPYRIGHT MATERIAL OMITTED

James W. Harvey, of San Francisco, Cal., for plaintiffs.

Ray W. Hayes, of Fresno, Cal., for defendant Southeran Realty Co.

Claude L. Rowe, of Fresno, Cal., for defendant Edward Payson Gregory.

Samuel B. Stewart, Jr., and Christopher M. Jenks both of San Francisco, Cal., for defendants Bank of America, K. H. McIsaacs, Reid E. Titus, Cesare Pierini, Julius B. Nielsen, and Robert J. Parkinson.

Courtney L. Moore, of San Francisco, Cal., for defendants William C. Albany, Richard M. Vail, and Wade J. Howells.

YANKWICH, District Judge.

Forty-one plaintiffs have joined in a Complaint for damages for a civil conspiracy alleged to have been entered into by the defendants to defraud them as members of a class — that is, veterans of World War II. As to each of the plaintiffs, two causes of action are set forth. One seeks to recover a sum of money alleged to have been paid as the purchase price for a home in excess of the maximum selling price and a reasonable attorney's fees.

The other seeks to recover damages claimed to have been suffered by the various plaintiffs by reason of faulty construction and failure to comply with the plans and specifications.

The following are stated as elements of damages in various amounts: cost of demolition and construction of homes purchased, cost of securing housing accommodations during the period of demolition and reconstruction, and general damages.

In all, the amount sought to be recovered, exclusive of attorney's fees, is $1,289,869.

I.

The Basis of Jurisdiction.

The first cause of action, as to each of the plaintiffs, is based on Section 7(c) of the Veterans' Emergency Housing Act of 1946,¹ which reads, in part, as follows:

"The district courts shall have jurisdiction of criminal proceedings for violation of section 5 of this Act, and, concurrently with State and Territorial courts, of all other proceedings under this section."²

Section 7(d) of the Act reads:

"If any person selling housing accommodations violates a regulation or order prescribing a maximum selling price, the person who buys such housing accommodations may, within one year from the date of the occurrence of the violation, bring an action for the amount by which the consideration exceeded the maximum selling price, plus reasonable attorney's fees and costs as determined by the courts."³

The second cause of action, as to each of the plaintiffs, is admittedly grounded on common law principles and is not within the jurisdiction of this court, unless we take jurisdiction of the first cause of action grounded on the express provisions of Section 7(d) of the Act.

After entertaining jurisdiction of a federal claim and a non-federal claim, we may render judgment on the non-federal claim, even if we conclude, on the facts, that no recovery could be had on the federal claim. None the less, if the federal claim cannot be entertained in the first place and we dismiss it for that reason, the second claim must fall with it.⁴

The defendants have moved to dismiss the Complaint upon the ground that none of the causes of action states a claim. As to the first cause of action, which we shall call the federal cause of action, it is urged that it is barred by the explicit provisions of Section 7(d) of the Act.⁵

The action was instituted on June 8, 1948. The purchases by each of the plaintiffs were made more than one year prior to that date. Anticipating the assertion of the year limitation, the plaintiffs aver in their Complaint that the maximum selling price for the houses was concealed by the defendants from the forty-one plaintiffs by a series of acts and representations, which will be referred to with some detail further on in the discussion. Discovery is alleged as of February, 1948.

This skeletonized outline of the proceedings posits the question which we are to determine — whether this court, by reason of lapse of time, has lost jurisdiction of the first group of forty-one statutory causes of action.

II.

The Jurisdictional Minimum Requirement.

We start with the fact that the statute under discussion was passed for the benefit of veterans of World War II. It was an act of munificence on the part of a grateful Government towards those who served in World War II, which expressed itself in the form of assistance in the purchase of housing accommodations. While thus extending its largess to these veterans, the Government sought to protect them against exploitation by providing that sales to them should be made at a maximum selling price established by the regulations of the Federal Housing Administration.⁶ It also gave to these veterans the right to bring an action for the amount of the excess paid over the maximum sale price, within one year from the occurrence of the violation.⁷ As the forty-one first causes of action are brought under this Housing Act, they are causes of action arising under a statute of the United States. This being the case, unless the act establishing the action specifically grants to the district courts jurisdiction regardless of the amount involved, the general rule which makes our jurisdiction dependent upon the presence of both a federal question and a jurisdictional minimum of three thousand dollars applies.⁸

None of the demands for damages under the group of forty-one statutory actions is in the amount of three thousand dollars. Absent the jurisdictional minimum, the claims must fail, for I do not find in the statute any words which confer jurisdiction on the federal court of this type of action irrespective of the amount involved. On the contrary, the statute gives to the federal courts concurrent jurisdiction with the state courts. And, in providing that an action may be brought in the district court, it does not say that it may be instituted there regardless of the amount of overpayment involved. In this respect, the statute does not differ from others in which the Congress, while establishing a right of action, does not, at the same time, confer jurisdiction on the District Court irrespective of the amount involved.

Such actions may be brought in any court. However, although they arise under the laws of the United States, the jurisdictional minimum must also be present before we can take jurisdiction.⁹

III.

Statutes Creating Liability.

But there is a more serious infirmity to the Complaint. We are dealing with a statute which creates liability. And a limitation in such statute affects the right. As said in a leading case:

"The liability and the remedy are created by the same statutes, and the limitations of the remedy are therefore to be treated as limitations of the right."¹⁰ (Emphasis added.)

And there is no jurisdiction to entertain the action after the expiration of the period within which it might have been brought. This, because we are dealing with a statute of creation and not with a statute of limitation.¹¹ The rule has been well stated by the United States Court of Appeals for the Tenth Circuit, speaking through Judge Bratton:

"Ordinarily, a statute of limitation does not confer any right of action, but merely restricts the time within which the right finding its source elsewhere may be asserted. It is not a matter of substantive right. It neither creates the right nor extinguishes it. It affects only the remedy for the enforcement of the right. And unless it affirmatively appears from the face of the complaint that the cause of action is barred by the applicable statute, limitation must be presented by special plea in defense.

"But here, section 205(e) 50 U.S.C.A. Appendix, § 925(e) creates a new liability, one unknown to the common law and not finding its source elsewhere. It creates the right of action and fixes the time within which a suit for the enforcement of the right must be commenced. It is a statute of creation, and when the period fixed by its term has run, the substantive right and the corresponding liability end. Not only is the remedy no longer available, but the right of action itself is extinguished. The commencement of the action within the time is an indispensable condition of the liability. Cf. The Harrisburg, 119 U.S. 199, 7 S.Ct. 140, 30 L.Ed. 358; Midstate Horticultural Co., Inc., v. Pennsylvania R. Co., 320 U.S. 356, 64 S.Ct. 128, 88 L.Ed. 96.

"In a case of this kind brought under the provisions of a statute creating the right of action where none previously existed and qualifies the right of action by requiring that the suit to enforce it be brought within a limited time, it must affirmatively appear from the face of the complaint that the action was commenced within the prescribed time. * * * Insofar as it related to the recovery of damages, the complaint was fatally defective in its failure to show that the suit was commenced within one year after the cause of action accrued, and therefore the denial of the motion to that extent constituted error."¹² (Emphasis added)

The expiration of the time in such case destroys the right.¹³ The statute under consideration is of this character, as clearly appears from its nature and its history. It confers special benefits upon a group who could not claim the particular benefits under any other statute relating to them or statutes passed especially for veteran groups of other Wars, such as the Civil War, the Spanish-American War, or World War I.

It follows that the action was not instituted in time as to any of the plaintiffs.

IV.

Concealment of Injury.

Can the allegations of concealment overcome this defect?

A right of action is the right to pursue a judicial remedy. The cause of action is the entire state of facts that give rise to an enforceable claim. Statutes of limitation do not begin to run until after a cause of action accrues.¹⁴ Not until then may an action be maintained. Institution prior to that time warrants dismissal on...