1. A suit by one who had obtained lawful possession of a fleet
of boats belonging to the United States, under a lease or charter
for a term of years executed by the Chief of Engineers by direction
of the Secretary of War, to enjoin the latter official and an army
officer from wrongfully and forcibly taking possession of the boats
in pursuance of an alleged conspiracy between them, and to require
the defendants to restore some of the boats already so taken, is
not a suit against the United States, and the United States is not
a necessary party.
Philadelphia Co. v. Stimson,
223 U. S. 605,
followed.
Wells v. Roper, 246 U.
S. 335, distinguished. P.
271 U. S.
544.
2. A stipulation in a lease authorizing the lessor to terminate
the lease and retake the property if, in his judgment, the lessee
is not complying with his obligations under the contract is valid,
and, in the absence of bad faith, the lessor's judgment on the
question of compliance is conclusive. P.
271 U. S.
547.
3. In a suit by a lessee to enjoin threatened retaking of leased
property, where it appeared, on motion for a preliminary
injunction, that the defendant had actually taken the property from
the plaintiff's possession, but also, upon a full showing, that he
had a clear right to retake it under the lease,
held that
plaintiff was not entitled to a temporary injunction restoring the
possession
pendente lite, even though the retaking had
been accomplished through a wrongful show of force and was timed to
avoid an injunction. P.
271 U. S.
548.
7 F.2d 838 affirmed.
Page 271 U. S. 537
Certiorari to a decree of the circuit court of appeals which
reversed a decree of temporary injunction rendered by the district
court in a suit by Goltra to enjoin the Secretary of War and an
army officer from seizing from his possession certain boats and
barges which had been leased to him by the Chief of Engineers,
acting for the United States by direction of the Secretary. The
bill also prayed restoration of part of the boats already taken,
and the remainder were taken before the hearing. The decree
commanded restoration of plaintiff's possession, and enjoined
further interference during the suit.
See also Ex parte United
States, 263 U. S. 389.
Page 271 U. S. 538
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
*
This was a suit in equity brought in the United States District
Court for the Eastern District of Missouri, and reaches here from
the Circuit Court of Appeals for the
Page 271 U. S. 539
Eighth Circuit by certiorari. The general purpose of the bill
filed by Edward F. Goltra, petitioner here, was to enjoin the
seizure of a fleet of towboats and barges on the Mississippi River
which had been held by him as lessee. It charged that the Secretary
of War, the Chief of Engineers, and Col. T. Q. Ashburn, Chief
Inland and Coastwise Waterways Service, were engaged in a
conspiracy unlawfully to deprive him of the boats. He sought to
enjoin the threatened seizure of them and to have those of them
which had already been taken restored to his possession.
The lease to Goltra was made May 28, 1919, by Gen. Black, Chief
of Engineers, as the lessor, by direction of the Secretary of War,
acting for the United States. It leased 19 barges nearing
completion and 3 or 4 towboats not yet constructed for a term of
five years from the date the first towboat or barge was delivered
to the lessee. The lessee covenanted to operate as a common carrier
the whole fleet on the Mississippi river and its tributaries for
the period of the lease and of any renewals thereof, transporting
iron ore, coal, and other commodities at rates not in excess of the
prevailing rail tariffs, and at not less than the prevailing rail
tariffs without the consent of the Secretary of War. The lessee was
to pay all operating expenses of the fleet and to maintain during
the term each towboat and barge of the fleet in good operating
condition, to the satisfaction of the lessor. The salvage earned by
any of the fleet was to be for the benefit of the United States,
after deducting expenses. The net earnings above operating expenses
and maintenance for each ton of cargo were to be turned over by the
lessee to the Secretary of War every 90 days, for deposit to his
credit in the Treasury, until the net earnings equaled the full
amount of the cost of the several vessels, plus interest on the
cost of 4 percent per annum, and
Page 271 U. S. 540
then for deposit in St. Louis banks, to be held for the
fulfillment of the terms of the lease. The lessee was to keep
accurate detailed accounts of all tonnage moved, and all moneys
received, and his operating expenses, subject to the inspection of
the lessor or his representatives, and the overhead expenses were
to be subject to the approval of the lessor, and any items objected
to were to be referred to the Secretary of War, whose decision was
to be final. Within three months prior to the expiration of the
lease, or of any period of renewal, or sooner, if so desired by the
lessee, a board was to appraise the value of the fleet, and the
lessee was given the option of purchasing the fleet by the fund
from the net earnings and by 15 promissory notes running for 15
years, the title of the property to remain in the United States
until the payment of the whole of the purchase price of the
property.
Section 8 of the lease, the important provision in this case,
reads as follows:
"The lessor reserves the right to inspect the plant, fleet, and
work at any time to see that all the said terms and conditions of
this lease are fulfilled, and that the crews and other employees
are promptly paid, monthly or oftener, and noncompliance, in his
judgment, with any of the terms or conditions, will justify his
terminating the lease and returning the plant and said barges and
towboats to the lessor, and all moneys in the Treasury or in bank
to the credit of the Secretary of War shall be deemed rentals
earned by and due to the lessor for the use of said vessels."
There was a supplemental agreement in 1921, approved by the
Secretary of War, made by Lansing H. Beach, the Chief of Engineers,
who had then succeeded Chief of Engineers Black. This made
provision for the construction of additional facilities for the use
of the fleet and brought them within the terms of the original
contract.
The bill set out that there was delay in the construction and
delivery of the fleet, and that both parties after
Page 271 U. S. 541
the war found difficulty in performing their undertakings; that,
after the making of the lease, the plaintiff had secured a good
many contracts for the shipment of commodities of different kinds
-- of oil from New Orleans to Illinois, coal from Kentucky to St.
Louis and Manganese from New Orleans to St. Louis; that the rate
which he arranged for was 80 percent of the prevailing rail rate;
that, when he applied to the Secretary of War, he could not obtain
permission to transport some of his commodities at a proper rate;
that conditions were imposed requiring the consent of officers in
charge of the Mississippi Warrior, another enterprise of the
government, to Goltra's rate, and that, by reason thereof, it was
impossible for him to operate as a common carrier; that, by the
acts of the Secretary of War, the plaintiff was wrongfully
prevented by the lessor from carrying out the terms and conditions
of the contract; that John W. Weeks and T. Q. Ashburn, named as
defendants, acting in combination, wrongfully undertook to declare
the contracts terminated, and on March 3, 1923, demanded from the
plaintiff the immediate possession of the boats without warrant of
law, and wrongfully and unlawfully threatened to take them by
force, caused some of the towboats and barges to be actually
seized, and were threatening to take them all, and that, unless
restrained would do so; that the plaintiff had no adequate remedy
at law for the redress of the wrongs complained of. He therefore
asked a temporary restraining order to be granted immediately, and
a restoration of the fleet to him, and a rule on the defendants to
show cause why a temporary injunction should not issue. A rule to
show cause was issued on March 25, 1923, on defendant.
It appeared that the whole fleet had been taken over by Col.
Ashburn under an order of the Secretary of War. The taking over was
on Sunday, and there was a purpose on the part of Col. Ashburn,
anticipating an
Page 271 U. S. 542
injunction, to remove such of the fleet as was in St. Louis
across the river, to be out of the jurisdiction of the Missouri
district court. All of the defendants filed returns to the rule,
setting out defenses. A hearing was had on the motion for a
temporary injunction, evidence was taken, and the district court
found that the fleet had been improperly seized and should be
restored to the plaintiffs, and the defendants be enjoined from any
attempt to resume possession until a final hearing of the case.
The defendants the sought a writ of prohibition out of this
Court to prevent the further consideration of the cause by the
district court.
Ex parte United States, 263 U.
S. 389. The leave to file a petition for prohibition was
denied on the ground that the remedy by appeal from the district
court was adequate.
The evidence shows that, in March, 1921, Goltra applied to have
his rates as a common carrier fixed at 80 percent of the prevailing
rail rates, and he was allowed from that time on until March, 1922,
to make those rates. In March, 1922, the Secretary of War notified
him that he could not approve any operation on the lower
Mississippi entering into competition with the government
Mississippi Warrior line, and that he could not approve an 80
percent rate there. In April, 1922, Goltra objected to the
limitation, saying that he had obligated himself to transport coal
from Kentucky and manganese and oil from New Orleans at this rate.
Thereupon the Secretary of War advised him that the rate on the
lower Mississippi must be raised from 80 percent to 100 percent of
the rail tariffs for the future, thus allowing him to complete the
contracts of transportation already entered into, of which he had
written. By letter of May 25, 1922, he was allowed a rate not less
than 80 percent of the rail rates for many different commodities.
The Secretary assured him that, if he decided to operate his boats
on
Page 271 U. S. 543
the upper Mississippi, he was authorized to carry all
commodities at not less than 80 percent, and that the officers of
the Warrior Service had been instructed to cooperate with him to
the fullest extent in making his fleet a success.
After a year, on March 13, 1923, the Secretary of War, in view
of the little use he had made of the fleet, sent the following
notice to Goltra:
"Pursuant to the right reserved in paragraph supplement thereto
dated May 26, 1921, between you and the United States for the
operation as a common carrier of a fleet of 4 towboats and 19
barges, and the erection of unloading facilities, you are hereby
notified that, in my judgment, you have not complied with the terms
and conditions of said contract in that you have failed to operate
the said towboats and barges as a common carrier, and in other
particulars."
"I therefore declare the said contract and the supplement
thereto terminated. You are hereby directed, upon the receipt of
this notice, immediately to deliver possession of the said towboats
and barges, and any unloading facilities erected pursuant to the
supplemental contract, and paid for by funds of the United States,
to Col. T. Q. Ashburn, Chief Inland and Coastwise Waterways
Service, who will deliver this notice, and who is instructed and
authorized to receive and receipt for the property herein
mentioned."
April 27, 1923, the Chief of Engineers sent a similar letter to
Goltra. Goltra acknowledged receipt of the Secretary's letter, but
protested against the action.
The circuit court of appeals reversed the action of the district
court in restoring the fleet to Goltra and enjoining the
defendants, and held that the motion to dismiss and to quash the
temporary restraining order should have been granted, on the ground
that the United States was a necessary party and could not be sued
in such an action.
Page 271 U. S. 544
We cannot agree with the circuit court of appeals that the
United States was a necessary party to the bill. The bill was
suitably framed to secure the relief from an alleged conspiracy of
the defendants without lawful right to take away from the plaintiff
the boats of which by lease or charter he alleged that he had
acquired the lawful possession and enjoyment for a term of five
years. He was seeking equitable aid to avoid a threatened trespass
upon that property by persons who were government officers. If it
was a trespass, then the officers of the government should be
restrained, whether they professed to be acting for the government
or not. Neither they nor the government which they represent could
trespass upon the property of another, and it is well settled that
they may be stayed in their unlawful proceeding by a court of
competent jurisdiction, even though the United States, for whom
they may profess to act, is not a party and cannot be made one. By
reason of their illegality, their acts or threatened acts are
personal, and derive no official justification from their doing
them in asserted agency for the government. The point is fully
covered by
Philadelphia Co. v. Stimson, 223 U.
S. 605. In that case, the complainant owned an island in
the Ohio River around which the duly authorized officers of
Pennsylvania had located a harbor line, which by statute was
declared to be forever firm and stable. The Secretary of War
changed the harbor lines in such a way as to cross the
complainant's land within the state harbor line which had never
been, as complainant alleged, part of the navigable waters of the
United States. The bill averred that the Secretary of War proposed
to institute criminal prosecutions with heavy penalties against
complainant for his proposed erection of buildings on his own land.
It was objected on demurrer that this was a suit against the United
States, and must be dismissed for lack of its presence as a party.
This Court declined to yield to the contention as a ground
Page 271 U. S. 545
for dismissing the bill. The ruling is so comprehensive, and
refers to so many authorities, and is so apt, that we quote the
language at pages
223 U. S.
619-620:
"If the conduct of the defendant constitutes an unwarrantable
interference with property of the complainant, its resort to equity
for protection is not to be defeated upon the ground that the suit
is one against the United States. The exemption of the United
States from suit does not protect its officers from personal
liability to persons whose rights of property they have wrongfully
invaded.
Little v. Barreme, 2 Cranch
170;
United States v. Lee, 106 U. S.
196,
106 U. S. 220-221;
Belknap v. Schild, 161 U. S. 10,
161 U. S.
18;
Tindal v. Wesley, 167 U. S.
204;
Scranton v. Wheeler, 179 U. S.
141,
179 U. S. 152. And in case
of an injury threatened by his illegal action, the officer cannot
claim immunity from injunction process. The principle has
frequently been applied with respect to state officers seeking to
enforce unconstitutional enactments.
Osborn v. Bank of United
States, 9 Wheat. 738,
22 U. S.
843,
22 U. S. 868;
Davis v.
Gray, 16 Wall. 203;
Pennoyer v.
McConnaughy, 140 U. S. 1,
140 U. S.
10;
Scott v. Donald, 165 U. S.
107,
165 U. S. 112;
Smyth v.
Ames, 169 U. S. 466;
Ex parte
Young, 209 U. S. 123,
209 U. S.
159-160;
Ludwig v. Western Union Telegraph Co.,
216 U. S.
146;
Herndon v. C., R.I. & P. Ry. Co.,
218 U. S.
135,
218 U. S. 155;
Hopkins
v. Clemson College, 221 U. S. 636,
221 U. S.
643-645. And it is equally applicable to a federal
officer acting in excess of his authority, or under an authority
not validly conferred.
Noble v. Union River Logging R.
Co., 147 U. S. 165,
147 U. S.
171-172;
School of Margnetic Healing v.
McAnnulty, 187 U. S. 94."
"The complainant did not ask the court to interfere with the
official discretion of the Secretary of War, but challenged his
authority to do the things of which complaint was made. The suit
rests upon the charge of abuse of power, and its merits must be
determined accordingly; it is not a suit against the United States.
"
Page 271 U. S. 546
It is sought to avoid the application of this to the present
case by reference to the later case of
Wells v. Roper,
246 U. S. 335. We
think it clearly distinguishable. Wells had a contract with the
Postmaster General, acting for the United States, by which Roper
agreed for four years to furnish, for use in collecting and
delivering the mail, automobiles and chauffeurs at a stipulated
compensation. One provision of the contract was that any or all of
the equipments contracted for might be discontinued at any time
upon 90 days' notice by the Postmaster General. Later, Congress
authorized that official, in his discretion, to use an
appropriation to buy and maintain automobiles for operating an
experimental combined screen wagon and city collection and delivery
service, and, in order to do this, he deemed it necessary to
discontinue the service of the plaintiff, and gave the latter
seasonable notice of the cancellation of the contract. The suit was
a bill in equity to enjoin the Postmaster General from annulling
the contract and interfering between the United States and the
plaintiff in the performance and execution of the contract. The
bill was dismissed on the ground that it was a suit against the
United States. That which the bill sought to restrain was not a
trespass upon the property of the plaintiff. The automobiles of the
plaintiff were not to be taken away from him by the government
officer. What the officer was doing was merely exercising the
authority intrusted to him by law for the benefit of the government
in annulling a contract which involved no change of possession or
title to property. To enjoin the officers' action was, in effect,
enforcement by specific performance of a contract against the
United States. It was an affirmative remedy sought against the
government which, though in form merely restrictive of an officer,
was really mandatory against the sovereign. The difference between
an injunction against the illegal seizure of property lawfully
possessed and against the cancellation of a contract which involved
no change of possession is manifest.
Page 271 U. S. 547
As the United States was not a necessary party to the bill, the
action of the circuit court of appeals in dismissing the bill and
quashing the injunction for lack of its presence as such cannot be
sustained.
Coming now to the merits, however, we think that the district
court erred in granting the temporary injunction because, on the
facts disclosed, the lease was finally terminated by the decision
of the Secretary of War and the Chief of Engineers, communicated to
Goltra under § 8 of the contract. It is very clear that, under that
section, Goltra agreed that the lease should be terminated and that
the plant and barges returned to the lessor if the lessor decided
that, in his judgment, there had been noncompliance with the terms
and conditions of the lease. It appears from the evidence that,
during the season from July 15, 1922, when Goltra got the boats,
they were not in use, but were tied up, except for the
transportation of two comparatively small cargoes. The bill itself
admits that Goltra did not fulfill his covenant to operate as a
common carrier. He says he was prevented from doing so by the
Secretary's refusal to give him the rates he wished. The contract
expressly forbade rates exceeding the prevailing rail rates and
forbade rates less than the rail rates except by consent of the
Secretary.
The stipulation that the lessor, the Chief of Engineers, could
terminate the lease if, in his judgment, Goltra was not complying
with the obligations of the contract did not require for its
exercise that the Chief of Engineers, or the Secretary, should hold
a court and have a hearing to determine the question of compliance.
Goltra was given a notice March 4th of the termination. He answered
March 8th, but he tendered no facts upon which either the Secretary
or the Chief of Engineers could base any different conclusion from
that already reached from the failure of Goltra to fulfill his
obligations. Both the
Page 271 U. S. 548
Secretary and the Chief of Engineers were fully advised of what
Goltra did and did not do under the contract.
The cases leave no doubt that such a provision for termination
of a contract is valid unless there is an absence of good faith in
the exercise of the judgment. Here, nothing of the kind is shown.
Such a stipulation may be a harsh one, or an unwise one, but it is
valid and binding if entered into. It is often illustrated in
government contracts in which the determination of a vital issue
under the contract is left to the decision of a government officer.
Kihlberg v. United States, 97 U. S.
398;
Sweeney v. United States, 109 U.
S. 618;
United States v. Gleason, 175 U.
S. 588;
United States v. Mason & Hangar
Co., 260 U. S. 323;
United States v. Hurley, 182 F. 776;
Martinsburg R.
Co. v. March, 114 U. S. 549.
Nor does the circumstance that, as in this case, the lessor
whose judgment is to prevail is a party to the contract alter the
legal result. Of course, the Chief Engineer is not the real party
in interest. He is a professional expert, as such was designated as
lessor, and is really acting only as an agent for the government.
But, even if this were a stipulation between private individuals,
judgment of one of the parties on such an issue would be, in the
absence of bad faith, conclusive. There are many cases where the
contract makes the satisfaction of one of the parties in respect to
compliance the condition precedent to fulfillment, and good faith
is all that is required to justify rejection of work or product
tendered. Some of them present a convincing analogy to the case. In
Magee v. Scott & Holston Lumber Co., 78 Minn. 11, the
defendant made a contract with a Duluth tug owner to tow 7,000,000
feet of saw logs to its mill at Duluth from the north shore of Lake
Superior. The contract contained a provision that, in case the
services should not be satisfactory, the defendant reserved the
privilege of terminating the contract at any time. The defendant
terminated
Page 271 U. S. 549
the contract because of plaintiff's delay. The evidence being
clear that the decision was honest, the court directed a verdict,
and the action was sustained by the supreme court.
Much has been said on behalf of the government with reference to
the special power of a government officer to act in such a case and
without judicial assistance forcibly to repossess himself of
government property, which we might find it difficult to agree with
but which it is unnecessary for us to consider. Our conclusion is
based on the law as it is administered between private persons.
Col. Ashburn took possession without notification to Goltra other
than that which had been communicated to him by the Secretary of
War terminating the contract, and it is clear from the evidence
that Col. Ashburn was anxious to take possession of the property
before a writ of injunction could be sued out by Goltra, and that
he sought to take the fleet out of the jurisdiction of the court
where he feared the injunction. He was not directed to make the
seizure by the Secretary of War against the opposition of Goltra,
but in such case he was directed to resort to legal proceedings. He
stands upon the statement that he took possession without violence,
and therefore was rightly in possession when the order of the court
was served. He took possession, whether he took it violently or
not. Concede that he did it with a show of force which was
coercive. Concede that it was seizure without process, and wrong.
But even so, an injunction looks only to the future. At the
hearing, it was made plain that Goltra was not entitled to the
possession, and the court -- one of equity -- would not go through
the idle form of restoring the property to Goltra by way of
correcting the Colonel's wrong, and then requiring a redelivery to
the lessor.
As it is, the court has taken over the fleet and given it to
Goltra under bond, and the only issue that remains is whether the
injunction and the restoration should be
Page 271 U. S. 550
maintained or the injunction be dissolved and the fleet returned
to the lessor.
On an appeal from a temporary injunction, it often happens that,
where there is a balance of convenience and doubt as to the issue,
the
status quo under the restraining order and the
restoration should be maintained until a final hearing; but, in
this case, in the court hearing it, the issue was fully treated as
if on final hearing. The right of the lessor to take over the fleet
under § 8 of the contract, unless there was fraud in the judgment
of termination by the Chief of Engineers, the lessor, of which we
have found no evidence, is clear. We think, therefore, the
injunction should be dissolved and the fleet restored to the
lessor.
The claim that the petitioner has been deprived of his property
without due process of law has no substance as a reason for
sustaining the temporary injunction appealed from. He has had and
is having due process in this very proceeding, and, on that issue,
the decision must go against him whether the taking possession of
the boats by Col. Ashburn was warranted or not.
If Col. Ashburn committed a breach of the peace, or illegally
injured any person in his taking possession, he is responsible to
proper authority and to the person injured, but that does not
affect the rights of the lessor under this lease, or the
vindication of them in this review.
The reversal of the injunction of the district court by the
circuit court of appeals is affirmed, and the cause is remanded to
the district court for further proceedings in conformity with this
opinion.
* MR. JUSTICE HOLMES announced the opinion, the CHIEF JUSTICE
being absent.
The separate opinion of MR. JUSTICE McREYNOLDS:
Theoretically, everybody in this land is subject to the law. But
of what value is the theory if performances like those revealed by
this record go unrebuked?
Page 271 U. S. 551
An army officer, having inflated himself into judge and
executioner, decided that a fleet of towboats and barges lying in
the Mississippi River at St. Louis ought no longer to remain in the
custody of a private citizen, who held possession of them under a
solemn lease and contract of sale from the United States, and who,
in order to make them operative, had expended upon them $40,000 of
his own money. Then, waiting until a Sunday arrived, he proceeded
to grab the vessels by force and endeavored to run them beyond the
jurisdiction of the court.
Action like that is familiar under autocracies, but the
prevalent idea has been that we live under a better system.
The trial court, after taking an ample indemnifying bond, issued
a temporary injunction requiring that possession of the vessels be
restored and remain as before the seizure until the rights of all
parties could be properly considered and determined. The circuit
court of appeals reversed this interlocutory order, and from its
decree the cause came here by certiorari.
As a fitting climax to the highhanded measures pursued by the
officer, special counsel for the United States appeared at our bar
and gravely announced:
"Where the executive power has pronounced its finding or
judgment within its proper sphere of action, a judicial judgment is
not necessary to the enforcement of the executive one, for the
reason that all the compulsive power of the government is in the
executive department, and may be exercised by it in execution of
its own processes and judgment, just as it is exercised by it in
the execution of judicial process and judgment."
It is easy enough for us to smile at such stuff, but,
unfortunately, the evil effects are not dissipated by gentle
gestures. There should be condemnation forceful enough to prevent
repetition so long as men have eyes to read.
Page 271 U. S. 552
In the circuit court of appeals, Judge Sanborn presented a well
considered dissenting opinion and pointed out that the only
justiciable question before that court was whether or not the order
for the injunction and the record disclosed an unlawful,
improvident, or abusive use of the sound discretion which the trial
judge was required to exercise. 7 F.2d 838, 851.
And see Ex
parte United States, 263 U. S. 389. He
could find no such abuse, and neither can I. The trial court did no
more than the circumstances permitted. We should approve its action
with commendation of the impelling courage and good sense.