Daniels v. Chanute Air Force Base Exchange, Civ. No. 1267-D.

• Decision Date: 14 January 1955
• Docket Number: Civ. No. 1267-D.
• Citation: 127 F. Supp. 920
• Parties: Robert L. DANIELS, Plaintiff, v. CHANUTE AIR FORCE BASE EXCHANGE, Army and Air Force Exchange Service, and the United States of America, Defendants.
• Court: U.S. District Court — Eastern District of Illinois

127 F. Supp. 920

Robert L. DANIELS, Plaintiff, v. CHANUTE AIR FORCE BASE EXCHANGE, Army and Air Force Exchange Service, and the United States of America, Defendants.

Civ. No. 1267-D.

United States District Court, E. D. Illinois.

January 14, 1955.

John Alan Appleman, Urbana, Ill., for plaintiff.

Clifford M. Raemer, U. S. Atty., Salem, and John Morton Jones, Asst. U. S. Atty., Danville, Ill., for defendants.

PLATT, District Judge.

The defendant, the United States of America, by the United States Attorney, presents a motion to dismiss the complaint for the following reasons:

1. It fails to state a claim upon which relief can be granted;

2. The plaintiff lacks jurisdiction over all the defendants;

3. No defendant has consented to be sued;

4. The United States was not and is not the employer of any person or agency which is alleged to have negligently caused injury to the plaintiff.

The United States also argues that Public Law 397 of the 82nd Congress, Title 5 U.S.C.A. § 150k-1 provides that the Army and Air Force Exchange Service may obtain, for its employees, compensation insurance for death or disability incurred in course of employment, and this remedy is exclusive. The United States Attorney, by amendment, joined the Chanute Air Force Base Exchange and Air Force Exchange Service as parties to the motion to dismiss.

The plaintiff, a civilian employee of Chanute Air Force Base Exchange, brought this action under the Federal Tort Claims Act, Title 28 U.S.C.A. § 2671 et seq., against the three defendants to recover for personal injuries received in the course of employment as result of the negligence of defendants.

At the outset in determining the validity of the motion it must be borne in mind that a complaint is not subject to dismissal unless it appears to a certainty that the plaintiff cannot possibly be entitled to relief under any set of facts which could be proved in support of the allegations. Chicago & Northwestern R. v. First National Bank of Waukegan, 7 Cir., 200 F.2d 383. This court¹ is not deciding that plaintiff has a claim upon which relief can be granted for the reason this cannot be ascertained until proof is made.

The defendants in their argument maintain that a post exchange is not an agency of the United States and this suit does not come within the meaning of the Tort Claims Act. Section 2671, Title 28 U.S.C.A., defines "Federal agency" as the executive departments, independent establishments and instrumentalities of the United States. "`Employee of the government'" includes members of the military or naval forces of the United States. An officer of the armed forces is usually in executive control of an exchange.² These definitions would include an exchange as a "Federal agency" and the officer in charge as an "employee" of the government.

This court believes that the case of Standard Oil Co. v. Johnson, 316 U.S. 481, 62 S.Ct. 1168, 86 L.Ed. 1611, is decisive in holding that the Army Exchange is an instrumentality of the United States. The State of California imposed a license tax measured by gallonage on the privilege of distributing motor vehicle fuel. By the State Act the tax was to be inapplicable "to any motor vehicle fuel sold to the government of the United States or any department thereof for official use of said government". St.1923 Cal. p. 571 et seq., § 10, as amended by St.1927 Cal. p. 1309. A distributor sold gasoline to an Army Post Exchange in California and was required to pay the tax. The Supreme Court of California 218 Cal. 126, 22 P.2d 3 held that the exchange was not the "government of the United States or any department thereof", basing its decision on the relationship between the exchange and the United States Government. The United States Supreme Court held that whether exchanges are the "government of the United States or any department thereof" was a federal question. The California Supreme Court was reversed and in the decision the Supreme Court described the status of exchanges saying 316 U.S. 481, 62 S.Ct. 1169:

"On July 25, 1895, the Secretary of War, under authority of Congressional enactments promulgated regulations providing for the establishment of post exchanges. These regulations have since been amended from time to time and the exchange has become a regular feature of Army posts. That the establishment and control of post exchanges have been in accordance with regulations rather than specific statutory directions does not alter their status, for authorized War Department regulations have the force of law.

* * * * * *

"The commanding officer of an Army Post, subject to the regulations and the commands of his own superior officers, has complete authority to establish and maintain an exchange. He details a post exchange officer to manage its affairs. This officer and the commanding officers of the various company units make up a council which supervises exchange activities. None of these officers receives any compensation other than his regular salary. The object of the exchanges is to provide convenient and reliable sources where soldiers can obtain their ordinary needs at the lowest possible prices. Soldiers, their families, and civilians employed on military posts here and abroad can buy at exchanges. The government assumes none of the financial obligations of the exchange. But government officers, under government regulations, handle and are responsible for all funds of the exchange which are obtained from the companies or detachments composing its membership. Profits, if any, do not go to individuals. They are used to improve the soldiers' mess, to provide various types of recreation, and in general to add to the pleasure and comfort of the troops.

"From all of this, we conclude that post exchanges as now operated are arms of the government deemed by it essential for the performance of governmental functions. They are integral parts of the War Department, share in fulfilling the duties entrusted to it, and partake of whatever immunities it may have under the constitution and federal statutes. In concluding otherwise the Supreme Court of California was in error."

It is obvious in the Johnson case that the Supreme Court recognized the issue as to whether or not under federal law an exchange was a "Federal agency." It concluded that gas sold to exchanges was not subject to tax because under federal law exchanges are "`the government of the United States or any department thereof.'" Its decision was not based on the ground that such a tax would be a burden to the federal government, thus distinguishable here on the ground that exchanges are "Federal agencies" only for the purpose of taxation. While it was argued that if the California Act required exchanges to pay such a tax, the Act would be unconstitutional as a burden upon the United States, the court made it clear that its decision was not based upon this ground saying:

"Whether the California Supreme Court would have construed the Motor Vehicle Fuel License Act as applicable to post exchanges if it had decided the issue of legal status of post exchanges in accordance with this opinion, we have no way of knowing. Hence, a determination here of the constitutionality of such an application of the Act is not called for by the state of the record."

This case together with the definitions set out in said Section 2671 clearly shows that an exchange is a "Federal agency" and therefore the United States is subject to suit under the Tort Claims Act.

While the decision of the Supreme Court needs no support it has been held that post exchanges are "Federal agencies" in other cases. In United States v. Query, D.C., 37 F.Supp. 972, affirmed 4 Cir., 121 F.2d 631, the court held a post exchange was a "federal instrumentality" and not subject to a South Carolina license tax. In Borden v. United States, 116 F.Supp. 873, 126 Ct.Cl. 902, it was held that the United States could not be sued on a contract of employment signed by the Army Exchange Service since it was an agency of the United States under the holding in the Johnson case, and could not be sued on a contract without its consent. In Edelstein v. South Post Officers Club, D.C., 118 F.Supp. 40, an Army Officers Club was sued for breach of contract and the court held: "This action must be dismissed as a suit against an agency of the United States to which the United States has not consented."

The government has relied heavily upon two cases: Faleni v. United States, D.C., 125 F.Supp. 630, and Keane v. United States, 4 Cir., 272 F. 577. In the Faleni case the plaintiff was a civilian employee of the Ship Service Department, the navy equivalent of post exchange. She alleged injury as result of negligence of an employee of the United States, and sued the United States under the Federal Tort Claims Act. The government filed a motion to dismiss taking the position (contrary to its position in the instant case) that the plaintiff was an employee of an instrumentality or agency of the United States and her only resort was to the Workmen's Compensation Insurance procured by the Ship Service. The district court denied the government's motion to dismiss, holding that the plaintiff was not an employee of the United States, the Ship Service not being a "Federal agency." The Johnson case was interpreted as standing only for the proposition that instrumentalities of the government cannot be taxed by the States. The court also relied upon the fact that the plaintiff was not paid from government appropriated funds, because the Ship Service pays its own obligations and carries its own insurance. In the Johnson case, 316 U.S. at page 484, 62 S.Ct. at page 1170, the court refutes this statement:

"Congressional recognition

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