1. Upon applications within the War Minerals Relief Acts of
October 5, 1918, and March 2, 1919, allowance on account of
purchase of equipment and machinery, or salaries paid to executive
officers of the claimant corporation who were its only
stockholders, or payment for legal services, are not inhibited a a
matter of law, and it is for the Secretary of the Interior to
determine, as a matter of fact, whether and to what extent such
allowances would be just and equitable in the peculiar facts of the
case.
Wilbur v. Vindicator Co., 284 U.
S. 231. P.
288 U. S.
100.
2. Under the Act of February 13, 1929, the Secretary of the
Interior may be required by mandamus to reconsider on the facts
allowance claimed under the War Minerals Relief Act which he is
shown to have rejected in the erroneous belief that, because of
their nature, they were not permitted by the law. P.
288 U. S.
101.
61 App.D.C. 212, 59 F.2d 887, affirmed.
Certiorari to review the affirmance of a judgment in mandamus
requiring the Secretary of the Interior to proceed with the
adjustment of a claim under the War Mineral Relief Act.
Page 288 U. S. 98
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
The Act of February 13, 1929, c. 182, 45 Stat. 1166,
provides:
"
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That any
claimant who has heretofore filed with the Secretary of the
Interior within the time and manner provided by existing law a
claim under said Acts generally known as the War Minerals Acts
(Fortieth Statutes, page 1272, and its amendments) may within one
year from the date of the passage and approval hereof petition the
Supreme Court of the District of Columbia to review the final
decision of the Secretary of the Interior upon any question of law
which has arisen or which may hereafter arise in the adjustment,
liquidation, and payment of his claim under said Acts, but the
decision of the Secretary of the Interior on all questions of fact
shall be conclusive and not subject to review by any court."
Proceeding under the quoted provision, respondent corporation
presented a petition to the Supreme Court, February 18, 1929, which
alleged that, while endeavoring to develop supplies of pyrites, it
suffered allowable losses through expenditures for salaries of
executive officers, for taxes, for legal services, also by
depreciation of property taken over upon request of the Department
and that the Secretary had erroneously decided as matter of law
that it was not entitled to reimbursement therefor. The prayer
asked review and determination of points of law upon which the
Secretary's decision turned and a writ of mandamus directing him to
take jurisdiction and allow whatever he might ascertain upon the
facts to be just and equitable.
March 15, 1929, the Secretary made a commendably frank response
to the rule to show cause. He admitted
Page 288 U. S. 99
disallowance of the specified items
"as shown by copies of the various decisions of the Secretary of
the Interior and recommendations of the War Minerals Relief
Commissioners marked, respectively, Exhibits A, B, C, D and E,
attached to the response,"
which "are hereby referred to and made a part hereof." And he
further said:
"Under the act of February 13, 1929, Public No. 728, 70th
Congress, this Court is vested with jurisdiction to review such
questions of law as may have been decided in the disposition of
petitioner's said claim by the Secretary of the Interior, and
respondent makes no objection to, but on the other hand invites, a
review of such questions. The petition for review presents the sole
question for which petitioner prays a review herein, and it is
assumed that the Court will confine its review to the single
question raised."
On the same day, a demurrer to the response was interposed.
September 24, 1929, by permission of the court, the Secretary
withdrew the original response and presented a substituted answer.
The order permitting this appears in the margin.
*
Page 288 U. S. 100
The writings designated "Exhibits A, B, C, D and E," by the
original response were attached to the substituted answer. They
show departmental action relative to the matter in controversy,
June 5, 1919, August 8, 1919, October 15, 1919, September 22, 1922,
and September 28, 1922. Nothing affirmatively points to other
important action.
Exhibit "D" -- "Memorandum" by Assistant Commissioner Briar --
recommends rejection of all the contested items and states the
reasons therefor. Secretary Fall -- Exhibit E (September 28, 1922)
-- accepted this recommendation and made the suggested award.
The item based on purchase price of equipment and machinery was
rejected because "to allow for its purchase would be in fact to
allow for the purchase of property." The Secretary's decision
rested upon an erroneous conclusion as to a point of law which
arose in the adjustment of respondent's claim. His view of the law
thus announced, and long held by the Department, met disapproval in
Wilbur v. Vindicator Consolidated G. M. Co., 284 U.
S. 231. The respondent was and is entitled to an
adjustment of this and other items as the Secretary "shall
determine to be just and equitable" under the law as here
construed.
Payments for salaries to the officers, who were also
respondent's sole stockholders, were disallowed upon the view that,
as matter of law, recovery on account of them would amount to
forbidden profits to owners. Whether the sole stockholders of a
corporation, acting as officers and managers, should be allowed
anything by way of salary or compensation depends on the peculiar
facts of each case. There is no positive legal inhibition; it is
not matter of law.
Page 288 U. S. 101
The Briar report does not state why the item for legal services
was disallowed -- whether because of some undisclosed facts or upon
some theory of the law. The latter appears the more probable.
Certainly it cannot be said that any rule of law inhibited payment
necessary or proper for legal services.
Here petitioner presents no objection to the ruling below
concerning taxes.
Counsel for respondent correctly states the issue presented to
the trial court:
"Are the losses suffered for expenditures for the items involved
here within the provisions of the Act of October 5, 1918, as
amended and supplemented by the Act of March 2, 1919?"
And,
"with the issue as stated, the only showing required is that a
claim for such losses was made and that such claim was disallowed
because of the belief of the petitioner that the law did not permit
such allowance."
The record discloses that the Secretary's action was based upon
improper construction and application of the law. The matter must
go back for final adjustment upon consideration of the facts.
We have not overlooked the argument submitted for petitioner
that the five exhibits above referred to were not parts of the
substituted and amended answers. Nor the assertions in these
answers that the items in question were rejected upon consideration
of the facts. The exhibits show what was really done and the
reasons therefor. Conflicting general statements in the answers
must yield. And it seems proper to add that, if these answers had
been more carefully prepared, with purpose to disclose to the court
all relevant facts and circumstances, unnecessary difficulties
would have been avoided.
The final judgment of the Supreme Court recites that the cause
came on to be heard "upon petition as amended and answer thereto as
amended together with Exhibits A, B, C, D, and E to said answer,
and the demurrer,"
Page 288 U. S. 102
etc. The exhibits were correctly treated as parts of the amended
answer. But a requirement that the parties recast the pleadings
would have been proper and helpful.
The petition here for certiorari does not mention the
conflicting view in respect of the exhibits or deal with them as
parts of the record. It failed adequately to advise us concerning
the real situation. But, to avoid possible misunderstanding, it has
seemed best to retain jurisdiction, rather than to dismiss the writ
because improvidently granted.
The judgment of the Supreme Court affirmed by the Court of
Appeals authorized a writ of mandamus directing that the Secretary
of the Interior should treat the disputed items in the respondent's
claim as permissible as matter of law and to proceed with their
final adjustment upon consideration of all the facts. We approve
this action, and affirm the judgment.
Affirmed.
*
"In accordance with the stipulation of counsel for the
respective parties in this case, dated September 2, 1929, and duly
filed herein, it is this, 24th day of September, 1929, adjudged and
ordered:"
"1. That the respondent be and he hereby is permitted to
withdrew from the record the response to the relator's petition for
mandamus heretofore filed by him."
"2. That the respondent be and he hereby is permitted to file
and serve an answer in lieu of said response, and that the
relator's demurrer to said response which is now on file, be
permitted to stand and be considered a demurrer to such
answer."
"3. That the uncertified copies of the findings of the Secretary
of the Interior, of the War Minerals Relief Commission and of the
Assistant Commissioner of War Minerals, which are attached to the
substituted answer to be filed by the respondent in case at law No.
76361, entitled United States of America
ex rel. Chestatee
Pyrites and Chemical Corp. v. Ray Lyman Wilbur, Secretary of the
Interior, may be considered in this case by the court with the same
effect as though they were original papers."
"4. That this case remain in
statu quo upon the docket
of this court until further order of the court."