United States Grain Corporation v. Phillips

Decision Date19 February 1923
Docket NumberNo. 290,290
Citation261 U.S. 106,67 L.Ed. 552,43 S.Ct. 283
CourtU.S. Supreme Court

Mr. Garrard Glenn, of New York City, for plaintiff in error.

[Argument of Counsel from page 107-108 intentionally omitted] Mr. H. N. Whitehouse, of New York City, for defendant in error.

[Argument of Counsel from page 108 intentionally omitted] Mr. Justice HOLMES delivered the opinion of the Court.

This is a suit to recover fifty-two thousand dollars, being one per centum of the value of gold carried from Constantinople to New York upon the steamship Laub, a destroyer in the Navy, of which the plaintiff, the defendant in error, was commanding officer at the time. There was a trial in the District Court in which, after the evidence was in, both sides moved for the direction of a verdict and the Court directed a verdict for the defendant. The judgment was reversed by the Circuit Court of Appeals, 279 Fed. 244, and the facts not being in dispute, judgment was ordered for the plaintiff on motion of the defendant in order to secure an earlier review here.

By Rev. Sts. § 1624 (Comp. St. § 2961 et seq.), establishing Articles for the Government of the Navy, in article 8, subd. 13 (Comp. St. § 2969), the receiving on board of gold, silver, or jewels, and the demand of compensation for carrying them are excepted from the general prohibition there contained. Article 1510 of the Navy Regulations (1913) provides that when gold, etc., shall be placed on board any ship for freight or safe keeping the commanding offic r shall sign bills of lading for the amount and be responsible for the same; that the usual percentage shall be demanded from the shippers, one-fourth of which goes to the commander in chief if he signifies to the commander of the ship in writing that he unites with the latter in the responsibility for the care of the treasure. In that case the commander of the ship gets one-half, otherwise two-thirds. By Rev. Sts. § 1547 (Comp. St. § 2805), the Regulations adopted with the approval of the President, as the foregoing was, shall be recognized as the Regulations of the Navy, 'subject to alterations adopted in the same manner.' The plaintiff founds his claim upon these laws and rules. Naturally, therefore, he does not question the defendant's right to bring the case to this Court. Act of March 3, 1911, c. 231 (Judicial Code) §§ 241, 128 (Comp. St. §§ 1218, 1120); Spiller v. Atchison, Topeka & Santa Fe Ry. Co., 253 U. S. 117, 121, 40 Sup. Ct. 466, 64 L. Ed. 810; Howard v. United States, 184 U. S. 676, 681, 22 Sup. Ct. 543, 46 L. Ed. 754.

The defendant, although in form a trading corporation organized under the laws of Delaware, was formed in pursuance of an Executive Order dated August 14, 1917, as an agency to enable the United States Food Administration to buy, store and sell wheat, among other things. The stock, except the shares necessary to qualify seven directors, was all subscribed for and owned by the United States. Even the directors' shares were held by the United States, endorsed in blank. The stock ultimately was $500,000,000. By an Executive Order of June 21, 1918, the defendant was designated an agency of the United States under the control of the United States Food Administrator, Mr. Hoover, to buy, hold and sell wheat. These orders were issued under the war powers conferred upon the President by the Act of August 10, 1917, c. 53, 40 Stat. 276 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115 1/8e-3115 1/8r). A later Act of February 25, 1919, c. 38, 40 Stat. 1161 (Comp. St. Ann. Supp. 1919, § 7706a), made a large appropriation to furnish foodstuffs for the relief of populations outside of Germany, German-Austria, Hungary, Bulgaria, and Turkey, etc. This was carried out by an Executive Order of March 1, to the effect that the furnishing should be conducted under the direction of Mr. Hoover, who was authorized to establish the American Relief Administration to that end, and particularly to employ the Food Administration Grain Corporation as an agency for transporting and distributing foodstuffs and supplies to the populations requiring relief. Finally, an Act of March 4, 1919, c. 125, 40 Stat. 1348 (Comp. St. Ann. Supp. 1919, §§ 3115 1/8kk[1]-3115 1/8kk[7]), to protect the United States against undue enhancement of its liabilities under its guaranties of the prices of wheat, etc., authorized the President to make necessary orders and to utilize any department or agency of the Government including the Food Administration Grain Corporation. Pursuing this Act, on May 14, 1919 the President authorized the defendant to buy and sell wheat of the crops of 1918 and 1919, and reciting that the defendant was formed as an agency of the United States and that its functions would be substantially complete on June 30, 1919, ordered it to close its books and make a complete report as of that date, change its name to that which it now bears, and to perform such duties thereafter as the President might direct.

We mention these details to show that the defendant although in form a private corporation and liable to be sued as such, was organized and owned by the United States as an agency for public service, was not engaged in ordinary merchandising, but under Mr. Hoover's directions was performing public functions arising out of the war and its sequels. The Western Maid, 257 U. S. 419, 432, 42 Sup. Ct. 159, 66 L. Ed. 299. This being its relation to the Government it made a contract with Bulgaria for the sale of wheat under which Bul aria forwarded the gold in question by a naval vessel of the United States to Constantinople for the defendant. On August 8, 1919, Admiral Knapp, the ranking naval officer of the United States in South European waters, cabled to the Secretary of the Navy that the...

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