Kyer v. United States

• Decision Date: 16 December 1966
• Docket Number: No. 326-64.,326-64.
• Parties: Fritz KYER v. The UNITED STATES.
• Court: U.S. Claims Court

369 F.2d 714 (1966)

Fritz KYER v. The UNITED STATES.

No. 326-64.

United States Court of Claims.

December 16, 1966.

Warren E. Magee, Washington, D. C., for plaintiff; L. Kenneth Say, Fresno, Cal., attorney of record. Lucius Powers, Jr., and Lawrence Kennedy, Fresno, Cal., of counsel.

Edward J. Friedlander, Washington, D. C., with whom was Asst. Atty. Gen., John W. Douglas, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, and COLLINS, Judges.

ON DEFENDANT'S MOTION TO DISMISS THE PETITION

COLLINS, Judge.^*

This is a suit for breach of contract in which recovery is sought for a brokerage commission allegedly due plaintiff for services rendered to an agency of the United States, established and controlled by the Secretary of Agriculture pursuant to authority vested in him by the Agricultural Marketing Agreement Act of 1937.¹

Plaintiff is a broker, licensed to deal in alcohol, wines, and various other distilled spirits. In 1962, he entered into a sales commission contract with the Grape Crush Administrative Committee (hereinafter the "Committee"). Under the terms of the contract, plaintiff was to secure a purchaser for a quantity of industrial alcohol that had been made from surplus grapes and, in consideration therefor, he was to receive a 1-cent-per-gallon commission. It is alleged that a purchaser was located and a sale consummated, but that demand for the commission was refused.

Plaintiff's action was initially commenced in a California State Court, whence, upon petition of the United States Attorney for the Southern District of California, the suit was removed to the appropriate United States district court. Removal was predicated upon 28 U.S.C. § 1442(a) (1) which provides, in pertinent part, for the removal of any civil or criminal action, involving, among others, a suit commenced against any agency of the United States.

Upon removal of the action to the district court, plaintiff was confronted with a motion to dismiss. In a supporting memorandum, the United States Attorney urged that the Committee, as an "* * * integral part of the Department of Agriculture and of the United States * * *," could not be sued eo nomine because Congress had not consented to suit against it. See, e. g., Blackmar v. Guerre, 342 U.S. 512, 72 S.Ct. 410, 96 L.Ed. 534 (1952). It was further contended that suit did not lie against the individual Committee members, named as "John Does," for two reasons. First, it was said that Fed.R.Civ. P. 17 did not authorize suit against "fictitious defendants" and, second, that, under a regulation promulgated by the Secretary, the Committee members were immunized from personal liability on account of any acts of omission or commission within the scope of their Committee work.² Plaintiff's suit was dismissed, with prejudice, for failure to state a claim upon which relief could be granted. Kyer v. Grape Crush Administrative Comm., Civil No. 2508 — ND, S.D.Cal., Order of October 12, 1964. In this present action, plaintiff is again faced with a motion to dismiss.

The Agricultural Marketing Agreement Act of 1937 sought, as its fundamental objective, to effect an orderly exchange of commodities in interstate commerce in order to protect both the interest of the consumer and the purchasing power of the farmer. This goal was to be effected through a series of measures with the authority for their implementation residing in the Secretary of Agriculture (hereinafter the "Secretary"). Among the devices selected was the so-called marketing order.³ Its general purpose was to establish and maintain such marketing conditions for various agricultural commodities, including grapes, as would provide, in the interest of producers and consumers, a controlled flow of such commodities to market during their normal seasons in order to avoid unreasonable fluctuation in supplies and prices.⁴

Congress provided legislative standards for the issuance, composition, and administration of the marketing orders. Thus, it designated the "handlers" (processors or distributors)⁵ as the focal point of the regulatory aspects of the enumerated agricultural commodities⁶ as to which orders could be issued. It charged the Secretary with the responsibility for determining whether, applying stated criteria, a marketing order should be issued⁷ and prescribed various functional features that were to be included in such orders as were issued.⁸ Among such features was one incorporated in the marketing order here involved; that of:

Determining, or providing methods for determining, the existence and extent of the surplus of any such commodity or product, or of any grade, size, or quality thereof, and providing for the control and disposition of such surplus, and for equalizing the burden of such surplus elimination or control among the producers and handlers thereof.⁹

Implementation of the marketing orders was to be achieved through appointment, by the Secretary, of localized agencies such as the Grape Crush Administrative Committee.¹⁰ The Secretary's power under the act included the authority to issue regulations governing the activities of such agencies. Among the duties thus delegated to the Grape Crush Administrative Committee were the following: For each crop year, the Committee was responsible for recommending to the Secretary the quantity of grapes that might be freely sold without marketing restrictions.¹¹ If approved by the Secretary, this recommendation became controlling as to the area covered by the order.¹² In those instances where actual production of grapes exceeded the quantity that the Secretary had determined might be freely sold, the order required that the excess be converted by the handlers into spirituous grape products of a type approved by the Secretary. The order denominated such products as "setaside."¹³ In the present case, the setaside was the industrial alcohol that plaintiff alleges he was authorized to sell for a specified commission.

In pressing his claim here, plaintiff urges its enforceability against the United States on the sole ground that the Committee was an agency thereof and was duly authorized to enter into the contract in issue. Thus, from plaintiff's standpoint, the agency relation establishes the dispositive factor. In response, defendant affirms the Committee's status as an agency of the United State, but rests the disavowal of liability on two grounds: First, that the Committee's authority was limited in scope and specifically did not encompass the right to incur the expenses here sought; and, secondly, that defendant was immune from suit, the Committee being a nonappropriated fund instrumentality.

We hold that, despite compelling equities in his favor, plaintiff's claim cannot be vindicated in this court. Our reasons, independent of any arguments advanced by either party, are the following:

The jurisdiction of this court under the Tucker Act¹⁴ encompasses "any claim against the United States: * * * founded * * * upon any express or implied contract with the United States; * * *." While the terms of this statute are broad, its words must be read in conjunction with and must be regarded as limited by another statute which provides that our judgments are paid only from appropriated funds.¹⁵ Thus, to remain within the framework of our jurisdiction, it is essential that the contract sued on be one which could have been satisfied out of appropriated funds. It is not enough to say, as plaintiff does, that his contract was one to which the United States was a party. To be actionable in this court, that contract must be one which, in the contemplation of Congress, could obligate public monies. G. L. Christian & Associates v. United States, 312 F.2d 418, 425, 160 Ct.Cl. 1, 14, cert. denied, 375 U.S. 954, 84 S.Ct. 444, 11 L. Ed.2d 314 (1963). If Congress has indicated that public funds shall not be involved, we cannot grant the relief requested. And that such is the case here seems to us quite clear.

The Committee with whom plaintiff contracted was neither supported by appropriations nor authorized, in any manner, to obligate such funds. Its financial support derived from two sources — handlers and producers. The former sustained the Committee's general expenses and the latter bore the costs involved in surplus disposals. This self-funding scheme is one that was created by Congress; the applicable statute, 7 U.S.C. § 610(b) (2) (ii), provides:

Each order relating to any other commodity or product issued by the Secretary under this chapter shall provide that each handler subject thereto shall pay to any authority or agency established under such order such handler\'s pro rata share (as approved by the Secretary) of such expenses as the Secretary may find are reasonable and are likely to be incurred by such authority or agency, during any period specified by him, for such purposes as the Secretary may, pursuant to such order, determine to be appropriate, and for the maintenance and functioning of such authority or agency, other than expenses incurred in receiving, handling, holding, or disposing of any quantity of a commodity received, handled, held, or disposed of by such authority or agency for the benefit or account of persons other than handlers subject to such order. The pro rata share of the expenses payable by a co-operative association of producers shall be computed on the basis of the quantity of the agricultural commodity or product thereof covered by such order which

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