New York Technical Institute of Maryland v. Limburg

• Decision Date: 30 November 1949
• Docket Number: No. 4564.,4564.
• Citation: 87 F. Supp. 308
• Parties: NEW YORK TECHNICAL INSTITUTE OF MARYLAND, Inc. v. LIMBURG et al.
• Court: U.S. District Court — District of Maryland

87 F. Supp. 308

NEW YORK TECHNICAL INSTITUTE OF MARYLAND, Inc. v. LIMBURG et al.

No. 4564.

United States District Court D. Maryland, Civil Division.

November 30, 1949.

Eli Frank, Jr., Baltimore, Md., Howard H. Conaway (Frank, Skeen & Oppenheimer), Baltimore, Md., for plaintiff.

Bernard J. Flynn, U. S. Atty., Baltimore, Md., C. Ross McKenrick, Asst. U. S. Atty., Baltimore, Md., D. Vance Swann, Atty., Dept. of Justice, Washington, D. C., Richard N. Ivins, Atty., Dept. of Justice, Washington, D. C., Edward E. Odom, Sol., Veterans Administration, Washington, D. C., George P. Hughes, Associate Sol., Veterans Administration, Washington, D. C., David A. Turner, Asst. Associate Sol., Veterans Administration, Washington, D. C., Arthur C. Carley, Atty., Veterans Administration, Washington, D. C., for defendants.

CHESNUT, District Judge.

This case arises under the Servicemen's Readjustment Act of June 22, 1944, as amended, 38 U.S.C.A. §§ 701(f), 697(a) and 705. Among other benefits for veterans, it authorized the Administrator to enter into contracts or agreements with private or public agencies for education and vocational rehabilitation of veterans. The Administrator was also authorized to make regulations. Veterans' Regulation Numbered 1(a) Part VIII, § 9, 58 Stat. p. 290, 38 U.S.C.A. note following section 743. Pursuant thereto he published a regulation effective July 1, 1948,¹ and later amended December 22, 1948 which, so far as material to this case, provided in effect that if the school was established subsequent to June 22, 1944 (the date of enactment of the Servicemen's Act) and had in its enrollment of students in a particular course a majority of veterans, the tuition charged to be paid by the government for the veterans must be determined as the result of negotiation of a contract between the Administrator or his Deputies and the school, after the submission by the school of cost data; and the contract rates should not exceed the rates determined by the Veterans Administration to be fair and reasonable.

The plaintiff in this case was a school operating in Baltimore City for vocational training. In 1948 it had an enrollment of 1,500 students, 1,495 of whom were veterans. On June 18, 1948 it wrote to the Manager of the Baltimore Regional Office of the Veterans Administration submitting certain data with regard to the date of its organization, and requesting a ruling that the regulation in question did not apply to it and therefore it was not obliged to submit cost data as the basis for negotiation of a contract prescribing its tuition rates, but was entitled to charge its previous customary prevailing rates because, as it alleged, it had been operating in Baltimore since 1942. On July 29, 1948 the then Chief of the Training Facilities Section of the Baltimore Office replied to the effect that the regulation did not apply to the plaintiff; but a very few days thereafter this ruling was rescinded by the Acting Chief of Vocational Rehabilitation of the Regional Office, and in further correspondence the later position was maintained by the Regional Manager after additional evidence had been submitted by the school. Thereafter the plaintiff appealed to the Central Office of the Veterans Administration in Washington and, under date of October 20, 1948, it was finally advised by A. H. Monk, Director Training Facilities Service for Vocational Rehabilitation and Education (to whom authority had been delegated by the Administrator), that after full consideration of all the evidence submitted the Veterans Administration ruled that the plaintiff was "a new school established subsequent to June 22, 1944" and was therefore subject to the regulation. The opinion was based upon the stated grounds (1) that the New York Technical Institute, a privately owned institution established prior to June 22, 1944, ceased operations as an educational institution in 1944; and (2) that the New York Technical Institute of Maryland, Inc., which was established in May, 1946 is legally a new institution by virtue of its incorporation, name and acquisition of new facilities for educational purposes. There was also included in the letter a statement that if the plaintiff decided to submit cost data and negotiate a contract there might be included in the contract a provision to the effect that if the regulation was held invalid in a then pending litigation in Washington "or in any similar suit filed during the term of this contract" the rates payable under the contract should be those in effect as to all students as of July 1, 1948. Thereafter the plaintiff entered into a contract with the Veterans Administration as required by the regulation providing for rates of tuition, as I understand it, less than those in effect on July 1, 1948 and therefore unsatisfactory to the plaintiff.

On May 24, 1949 the plaintiff filed its suit in the above case in this court. The defendants named are four Regional Officers of the Veterans Administration in Baltimore, serving under appointment from and subject to directions from the Central Office of the Veterans Administration in Washington. The complaint sets out somewhat more fully the developing situation heretofore stated and copies in full the regulation referred to. It alleges as a fact that the plaintiff's school was established prior to June 22, 1944. It does not attack the validity of the regulation but does contend that the plaintiff was not subject to the regulation and that the determination of the Veterans Administration to the contrary was "illegal, discriminatory, arbitrary, capricious and wrongful". The complaint further formally alleges that the plaintiff entered into the contract mentioned because it was coerced to do so in that it had an organized and operating school with facilities and supplies acquired at considerable cost and could not afford to abandon its operations. The complaint does not allege any failure of the Veterans Administration to pay vouchers in accordance with the rates fixed by the contract. While it does not expressly appear in the complaint, it is my understanding that the complaint was filed at the end of the scholastic year and it has been stated by counsel, I believe, that the plaintiff corporation has now dissolved.

It is important to note precisely what the plaintiff prays for in this case. Shortly stated, it is (1) a declaratory decree that the plaintiff's school was established prior to June 22, 1944; and that the plaintiff is not subject to the regulations; (2) that a mandatory injunction be issued against the four defendants (a) directing them to comply with the regulations above mentioned (on the basis contended for by the plaintiff); (b) enjoining them from refusing to make payments to the plaintiff for tuition fees at its rates prevailing on July 1, 1948 before the making of the contracts referred to and (c) restraining them from requiring the plaintiff to enter into unauthorized contracts with the Veterans Administration.

The defendants have filed a motion to dismiss the complaint on the grounds that the court is without jurisdiction to grant the relief prayed for; and because defendants are subordinate officials of the Veterans Administration without authority to take the actions prayed for, and therefore, if the court has jurisdiction at all, the Administrator of Veterans Affairs, who is not joined as a defendant in the suit, is an indispensable party.

After hearing and considering the very helpful oral and written arguments of counsel I have reached the conclusion of law that the motion to dismiss the complaint must be granted for the following reasons: (1) The court does not have the authority to issue the mandamus or mandatory injunction prayed for; (2) the declaratory relief requested is in essence a finding of fact contrary to that made by the Administrative Department and in the particular case is not within the scope of judicial review; (3) if the court otherwise had the authority to review and reverse the Administrative finding of fact, it would be necessary to effectively include among the defendants the Veterans Administrator who is an indispensable party but who has not been sued and apparently could not be sued effectively in Maryland; (4) because the case is in effect a suit against the United States without its consent.

At the outset of the discussion it is well to bear in mind what is the real nature of the plaintiff's complaint and the relief it seeks. In essence it wishes to be paid by the United States for tuition furnished to veterans at a rate higher than that provided for in the contract that it has made. Therefore what it is really seeking to obtain is the payment of a sum of money from the public treasury. Instead of suing the United States in the Court of Claims, or in this court under the Tucker Act, 28 U.S.C.A. § 1346, plaintiff seeks to accomplish its purpose indirectly by asking the court to require subordinate officials of the Veterans Administration to make certain payments of money to it. It should also be noted that the relief prayed for against these subordinate officials is not to enjoin them from doing some positive act which would injure the plaintiff's property or interfere with the exercise of its rights, but the court is asked to order them to do something which they have been instructed not to do by their superior officer in Washington, and which, if done by them, would further benefit the plaintiff.

In my opinion the prayer for declaratory judgment in this case presents an issue which is beyond the scope of judicial review. Sec. 705 provides "All decisions rendered by the Administrator of Veterans' Affairs under the provisions of sections 701-703 * * * of this title * * * or the regulations issued pursuant thereto, shall be final and conclusive on all questions of law and fact, and no other official or court of the United States shall have jurisdiction to review by mandamus or otherwise any such...