Lichter v. United States
334 U.S. 742 (1948)

Annotate this Case

U.S. Supreme Court

Lichter v. United States, 334 U.S. 742 (1948)

Lichter v. United States

No. 105

Argued November 20-21, 1947

Decided June 14, 1948*

334 U.S. 742

Syllabus

1. The Renegotiation Act is constitutional on its face as authority for the recovery by the United States of "excessive profits" (less tax credits) realized by private parties in the circumstances of these cases on subcontracts for war goods in time of war with contractors who were also private parties -- even in the absence of contractual provisions for the renegotiation of such profits and even as applied to contracts entered into prior to the enactment of the Act, provided final payments had not been made pursuant to such contracts prior to the date of enactment of the original Act. Pp. 334 U. S. 746, 334 U. S. 753-793.

2. The power of Congress to authorize the recovery of such excessive profits is included in the broad scope of the war powers expressly granted to Congress by the Constitution. Pp. 334 U. S. 753-772.

(a) In time of war, Congress unquestionably has the fundamental power to conscript men and to requisition properties necessary and proper to enable it to raise and support armies. Pp. 334 U. S. 756, 334 U. S. 765.

(b) The Renegotiation Act was a law "necessary and proper" for carrying into execution the war powers of Congress, and especially its power to raise and support armies. Pp. 334 U. S. 757-765.

(c) Not only was it "necessary and proper" for Congress to provide for the production of war supplies in the successful conduct of the war, but it was well within the outer limits of the constitutional discretion of Congress and the President to do so under the terms of the Renegotiation Act in a manner designed to eliminate excessive private profits. See United States v. Bethlehem Steel Corp.,315 U. S. 289, 315 U. S. 305. Pp. 334 U. S. 763-765, 334 U. S. 769.

(d) The plan for renegotiation of profits realized by private parties on contracts for production of war goods -- chosen by

Page 334 U. S. 743

Congress as an alternative to mobilization of the productive capacity of the nation into a governmental unit on the totalitarian model -- symbolized a free people united in reaching unequalled productive capacity and yet retaining the maximum of individual freedom consistent with a general mobilization of effort. Pp. 334 U. S. 765-772.

3. The authority granted for administrative determination of the amount of "excessive profits," if any, realized on war subcontracts was a constitutional definition of administrative authority, and not an unconstitutional delegation of legislative power. Pp. 334 U. S. 774-787.

(a) A constitutional power implies a power of delegation of authority under it sufficient to effect its purposes. Pp. 334 U. S. 778-783.

(b) The administrative practices developed under the Act demonstrated the definitive adequacy of the term "excessive profits" as used in the Act. P. 334 U. S. 783.

(c) In the light of the purpose of the Act and its factual background, the statutory term "excessive profits" was a sufficient expression of legislative policy and standards to render it constitutional. Pp. 334 U. S. 783-786.

(d) The methods prescribed and the limitations imposed by Congress on the contemplated administrative action help to sustain its constitutionality. Pp. 334 U. S. 786-787.

4. The war powers of Congress and the President are only those which are to be derived from the Constitution, but the primary implication of a war power is that it shall be an effective power to wage war successfully. P. 334 U. S. 782.

5. While the constitutional structure and controls of our Government are our guides equally in war and in peace, they must be read with the realistic purposes of the entire instrument fully in mind. P. 334 U. S. 782.

6. It is not necessary that Congress supply administrative officials with a specific formula for their guidance in a field where flexibility and the adaptation of the congressional policy to infinitely variable conditions constitute the essence of the program. P. 334 U. S. 785.

7. The collection of renegotiated excessive profits on a war subcontract is not in the nature of a penalty, and is not a deprivation of a subcontractor of his property without due process of law in violation of the Fifth Amendment. Pp. 334 U. S. 787-788.

8. The Government was entitled to recover excessive profits (less tax credits) from each of the subcontractors in these cases, whether they arose from contracts made before or after the passage of the Act, provided final payments had not been made pursuant to such contracts prior to the date of the original Act -- even though

Page 334 U. S. 744

they arose out of contracts between private parties, and not out of contracts made directly with the Government itself. Pp. 334 U. S. 747-753, 334 U. S. 788-789.

9. In a suit by the Government under the Act to recover excessive profits administratively determined to have been realized by subcontractors under war contracts in the circumstances of these cases, subcontractors who failed to make timely application to the Tax Court for redetermination of the amount of such excessive profits do not have the right to raise questions as to the coverage of the Act, as to the amount of excessive profits adjudged to be due from them, or as to other comparable issues which might have been presented by them to the Tax Court upon a timely petition for a redetermination. Pp. 334 U. S. 753-754, 334 U. S. 789-793.

(a) The statute and the course of action taken afforded procedural due process to the subcontractors in these cases. P. 334 U. S. 791.

(b) The statutory provision for a petition to the Tax Court was not, in any of these cases, an optional or alternative procedure; it provided the only procedure to secure a redetermination of the excessive profits which had been administratively determined to exist. P. 334 U. S. 792.

(c) Failure of the subcontractors in these cases to exhaust that procedure has left them no right to present such issues in this Court. P. 334 U. S. 792.

160 F.2d 329; 159 F.2d 73; 160 F.2d 103, affirmed.

The cases are stated concisely in the opinion, with citations to the decisions below, pp. 334 U. S. 746-753. Affirmed, p. 334 U. S. 793.

Page 334 U. S. 745

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