Pulaski Cab Company v. United States

• Decision Date: 15 January 1958
• Docket Number: No. 328-56,329-56.,328-56
• Citation: 157 F. Supp. 955
• Parties: PULASKI CAB COMPANY v. UNITED STATES. Fred FOSTER and George Morris, Co-Partners, d/b/a Independent Cab Company, v. UNITED STATES.
• Court: U.S. Claims Court

157 F. Supp. 955

PULASKI CAB COMPANY v. UNITED STATES.

Fred FOSTER and George Morris, Co-Partners, d/b/a Independent Cab Company, v. UNITED STATES.

Nos. 328-56, 329-56.

United States Court of Claims.

January 15, 1958.

Robert D. Fitzgibbon, Jr., St. Louis, Mo., Lowenhaupt, Mattingly, Chasnoff, Freeman & Holland, St. Louis, Mo., on the brief, for plaintiffs.

Justin S. Colin, Washington, D. C., with whom was George Cochran Doub, Asst. Atty. Gen., for defendant.

REED, Justice (Ret.) sitting by designation, delivered the opinion of the court:

The plaintiffs, taxicab operators, seek to recover from the United States sums of money paid by them to the Fort Leonard Wood Exchange pursuant to contracts between the parties. Defendant has moved for summary judgment on the ground that no genuine issue of fact is involved and as a matter of law, plaintiffs' petitions must be dismissed. For the legal conclusion to show that there is no jurisdiction in this court, reliance is placed upon this court's opinion in Borden v. United States, 116 F.Supp. 873, 126 Ct.Cl. 902.

The facts as shown by the pleadings and exhibits attached to the defendant's motion are as follows:

On October 16, 1950, plaintiffs Fred Foster and George Morris, doing business as the Independent Cab Company, hereinafter referred to as Independent, entered into a revocable agreement with the Fort Leonard Wood Exchange. This agreement allowed Independent to operate a taxicab service within the confines of Fort Leonard Wood. In return for this privilege Independent agreed to and did pay to the Fort Leonard Wood Exchange, hereafter referred to as Exchange, ten percent of its daily gross receipts. On October 31, 1950, a like agreement was entered into between plaintiff Pulaski Cab Company, Inc. and the Exchange. In addition to what may be termed standard contract provisions, the contracts provided that Exchange could cancel at any time upon giving ten days' notice. Also, Article III (2) (d) of the agreements contained the following language:

"This Agreement is not a United States Government contract but is solely the obligation of the party of the first part Exchange."

On August 9, 1951, the Commanding General of Fort Leonard Wood ordered that the collection of ten percent of the plaintiffs' daily gross receipts by the Exchange be stopped. Accordingly, plaintiffs' contracts were cancelled and new agreements entered into which deleted percentage payments to the Exchange. No question of power to execute the contracts or their validity, in any respect, is raised by this motion for summary judgment.

Plaintiffs did not file a brief or exhibits in opposition to the defendant's motion and apparently concede the correctness of the facts shown therein, including affidavits that the moneys in issue paid under the ten percent arrangement are in the hands of the Exchange.

Plaintiffs have brought this action against the United States to recover amounts paid the Exchange pursuant to the October 16, 1950, and October 31, 1950, agreements claiming that these payments were illegal, coerced (or otherwise there would be no contract), and unauthorized. Therefore, it is asserted the exaction gives rise to an obligation on the part of the United States to make refund. The petitions allege that jurisdiction to determine the claims rests with this court by virtue of section 1491 of Title 28 United States Code (Supp. III, 1952 Ed.), which provides in pertinent part:

"The Court of Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort."

We are of the opinion that plaintiffs must fail in their attempt to invoke the jurisdiction of this court.

In Borden v. United States, supra, this court held that obligations arising out of a contract with a Post Exchange were not liabilities of the United States upon which suit could be brought in this court. That was a suit upon an agreement of employment with the Army Exchange Service, European Theater. The Exchange had withheld the employee's pay because of theft of money, under his charge, for which the court thought the employee was not liable. The case, however, turned on the non-suability of the United States "on a contract of employment which is signed by the Army Exchange Service," 116 F.Supp. at page 877, 126 Ct.Cl. at page 909. This court, relying upon the statement in the case of Standard Oil Co. of California v. Johnson, 316 U.S. 481, 485, 62 S.Ct. 1168, 86 L.Ed. 1611, that the United States assumed none of the financial obligations of the Exchange, held the suit against the United States was improper.

Plaintiffs in this action are faced with the same jurisdictional problem. Their contract was with the Fort Leonard Wood Exchange and not the United States. Under 28 U.S.C. § 1491, suits may be brought in this court only against the United States.

We do not have the Fort Leonard Wood Exchange, the other contracting party in these cases, before the court. The "government does not become the conduit of its immunity in suits against its agents or instrumentalities merely because they do its work." It may endow them with immunity, "but always the question is: has it done so?" Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381, 388-389, 59 S.Ct. 516, 517, 83 L. Ed. 784. Speaking of such an instrumentality it was said in Sloan Shipyards Corp. v. U. S., etc., Fleet Corp., 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762:

"* * * An instrumentality of Government he might be and for the greatest ends, but the agent, because he is agent, does not cease to be answerable for his acts."

The present issue is the liability of the United States. The use of the Post Exchange for the benefit of servicemen rests on the authority granted in 1875 for regulations.¹ Congressional approval of the establishment of the Post Exchange is evident from repeated legislation in their aid.² At the present time the regulations are embodied in Army Regulations 60-10, Exchange Service, General Policies, Sec. II, Par. 17. At the time of the execution of these contracts the governing regulation was SR 60-10-1, Par. 21.

It read as follows:

"e. Contracts involving exchanges are not Government contracts and such distinction will be stated therein."

Such regulation required the inclusion in the contract under consideration of the sentence quoted supra, page 2, to the effect that the Government was not liable. This position follows naturally from the fact that the operation of the Post Exchanges is carried on from non-appropriated funds.

In Standard Oil Co. of California v. Johnson, supra, it was specifically said that "the government assumes none of the financial obligations of the exchange." That may not be a definitive holding that the Government is not liable for the debts of the Exchange but it points in that direction. Upon that issue the cases from courts that have considered phases of the problem of the United States' liability are not agreed. In Faleni v. United States, D.C., 125 F. Supp. 630, it was held that an employee of Ships Service, an activity closely akin to a Post Exchange, was not an employee of the United States. The contrary result was reached in Daniels v. Chanute Air Force Base Exchange, D.C., 127 F. Supp. 920. See also Nimro v. Davis, 92 U.S.App.D.C. 293, 204 F.2d 734.

One case has a comment directly in point for the present litigation. Edelstein v. South Post Officers Club, D.C., 118 F.Supp. 40. There it was said:

"* * * Indeed they are not claims against the United States. The plaintiff contracted with notice of the legal status of the Club, its immunity to suit, and the absence of responsibility of the United States."

It was held in Bleuer v. United States, D.C., 117 F.Supp. 509, 510, that the United States was not liable on contract with a civilian employee of a Commissioned Officers' Open Mess, i. e., a mess to which officers could invite guests. The rationale for the conclusion was that the regulations for Officers' Messes provided:

"9. No civilian employees paid by appropriated funds are authorized for a Commissioned Officers' Mess, Open."

As the plaintiff could not receive compensation from appropriated funds, he could not be paid by the Government "but must look for their compensation entirely to the club funds." The case does not refer to Standard Oil Co. v. Johnson, supra.

Resolution of the issue as to the liability of the United States in this court for obligations of this Post Exchange starts from this basis laid down by the Supreme Court in the Johnson case:

"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

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