Wade v. Stimson

• Decision Date: 10 April 1946
• Docket Number: Civ. 26873.
• Citation: 65 F. Supp. 277
• Parties: WADE et al. v. STIMSON et al.
• Court: U.S. District Court — District of Columbia

65 F. Supp. 277

WADE et al. v. STIMSON et al.

Civ. 26873.

District Court of the United States for the District of Columbia.

April 10, 1946.

John W. Piester, of Detroit, Mich., and Paul B. Elcan, of Washington, D.C., for plaintiffs.

John F. Sonnett, Asst. Atty. Gen., and Edward M. Curran, U. S. Atty., Walker Lowry, Atty., Dept. of justice, and A. Morris Kobrick, Atty., Dept. of Justice, all of Washington, D. C., for defendants.

Before EDGERTON, Associate Justice, United States Court of Appeals, District of Columbia, and BAILEY and LETTS, Associate Justices, District Court of the United States for the District of Columbia, sitting as a statutory three-judge court.

BAILEY, Associate Justice.

This is an action to prevent defendants from enforcing a claim arising under the Renegotiation Statutes and the amendments thereto, 50 U.S.C.A.Appendix § 1191, the contention of the plaintiffs being that the statute is unconstitutional.

The plaintiffs are partners doing business at two locations in Detroit, Michigan. Their business is the precision manufacture of tools, dies, etc., in accordance with the specifications of their customers, to be used in fabricating war materials to be sold to the United States. During 1944 plaintiffs entered into numerous contracts for the construction of these tools, etc. These contracts, however, were not directly with the United States and for the purposes of renegotiation the status of the plaintiffs is that of subcontractors only.

In September, 1944, the Under Secretary of War determined that during the year 1942 the plaintiffs realized excessive profits in the sum of over $400,000 and directed a refund to the United States of this amount, less taxes. Upon the failure of the plaintiffs to make this refund, the government directed prime contractors, doing business with the Government, to withhold for the account of the United States sums otherwise payable to the plaintiffs.

The plaintiffs claim that the renegotiation laws are unconstitutional as applied to them; that in any event they were not subcontractors within the meaning of the Renegotiation Law, and that the question of whether or not they were subcontractors within the purview of the renegotiation statute is a judicial as well as a jurisdictional fact that must be decided by the court. Plaintiffs, nevertheless, have begun proceedings before the Court of Tax Appeals seeking de novo determinations as to whether and in what amount they have realized excess profits subject to recapture under the Renegotiation Act.

We think this case is...