1. A steamship company being in financial straits, its
stockholders (respondents here) entered into a contract with the
Maritime Commission, pursuant to which they delivered their common
stock, endorsed in blank, to the Commission, which released
respondents from certain obligations, granted an operating subsidy
and made a loan to the company, and obtained an additional loan for
it from the Reconstruction Finance Corporation. After the company
had fully paid all its indebtedness to the United States,
respondents demanded the return of the stock, claiming that it had
been pledged as collateral for a debt which had been paid. The
Commission refused, and offered the stock for sale. Respondents
sued the individual members of the Commission (petitioners here) in
a district court, praying that they be restrained from selling the
stock, and
Page 330 U. S. 732
directed to return it to respondents. The district court, on its
own motion, dismissed the complaint with prejudice, holding that
the suit was against the United States.
Held: the district court had jurisdiction to determine
its jurisdiction by proceeding to a decision on the merits. Pp.
330 U. S.
734-739.
(a) The allegations of the complaint, if proved, would establish
that petitioners are unlawfully withholding respondents' property
under the claim that it belongs to the United States, since that
conclusion would follow if either of respondents' contentions were
established: (1) that the Commission had no authority to purchase
the stock or acquire it outright; or (2) that, even though such
authority existed, the contract resulted not in an outright
transfer, but in a pledge of the stock. Pp.
330 U. S.
735-736.
(b) If the allegations of the complaint are true, the stock
never was the property of the United States, and is being
wrongfully withheld by petitioners, who acted in excess of their
authority as public officers and are answerable personally for
their actions.
United States v. Lee, 106 U.
S. 196. Pp.
330 U. S.
736-739.
(c) While a judgment on such a claim would not be
res
judicata against the United States, because it cannot be made
a party to the suit, the courts have jurisdiction to resolve the
controversy between those who claim possession.
Id. Pp.
330 U. S.
736-737.
2. Pursuant to Rule 25(d) of the Federal Rules of Civil
Procedure, the Solicitor General moved to substitute as defendants
the new members of the Commission for those who are no longer
members. This Court added the new members as petitioners
defendants, and dismissed as to a deceased member, but reserved
decision as to the other former members.
Held: these questions not having been briefed or argued
here, and there being a possibility that the present record may not
present all the facts necessary for disposition of the motions, the
order of substitution is vacated, in order that the district court,
on remand of the case, may pass on the motion unembarrassed by any
action here. P.
330 U. S.
739.
81 U.S.App.D.C. 28, 154 F.2d 307, affirmed.
A District Court dismissed a suit against the individual members
of the Maritime Commission on the ground that it was a suit against
the United States. The United States Court of Appeals for the
District of Columbia reversed. 81 U.S.App.D.C. 28, 154 F.2d 307.
This Court granted certiorari. 329 U.S. 700.
Affirmed, p.
330 U. S.
739.
Page 330 U. S. 733
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
Petitioners are present and former members of the United States
Maritime Commission. Respondents are stockholders of Dollar
Steamship Lines, Inc., Ltd. (Dollar of Delaware), whose corporate
name was changed to American President Lines, Ltd., subsequent to
the execution in 1938 of a contract out of which the present
litigation arises. By 1937, Dollar of Delaware was in difficult
financial straits. The problems confronting it and the various
steps taken to remedy the situation need not be recapitulated here.
[
Footnote 1] It is sufficient
for purposes of the various questions presented by this case to say
that the Commission and respondents entered into a contract in 1938
by which respondents delivered their common stock in Dollar of
Delaware, endorsed in blank, to the Commission, and the Commission
released some of respondents from certain obligations and agreed to
grant Dollar of Delaware an operating subsidy and to make a loan to
it and to obtain for it another loan from the Reconstruction
Finance Corporation.
Page 330 U. S. 734
The subsidy was granted, and the loans were made. By 1943,
American President Lines, Ltd., had fully paid all indebtedness due
the United States. Respondents thereupon demanded return of their
shares of stock from the then members of the Commission, claiming
that the shares had only been pledged as collateral for a debt
which had been paid. The members of the Commission refused to
surrender the shares, claiming that they had not been pledged under
the 1938 contract, but transferred outright. Acting on that theory,
the Commission had indeed offered the shares for sale, and had
under consideration substantial offers to purchase them.
Thereupon, respondents instituted the present suit in the
District Court for the District of Columbia,
see 11
D.C.Code, §§ 301, 305, 306, claiming that petitioners were
unlawfully in possession of respondents' stock and illegally
withholding it. The prayer was that petitioners be restrained from
selling the shares and be directed to return them to respondents.
Respondents moved for a preliminary injunction. Petitioners
submitted affidavits opposing the motion. After a hearing, the
District Court, on its own motion, dismissed the complaint with
prejudice, holding that the suit was against the United States. The
Court of Appeals reversed. 154 F.2d 307. The case is here on a
petition for a writ of certiorari which we granted because of the
importance of the question presented. [
Footnote 2]
First. The facts asserted in the affidavits support the
view that the 1938 contract called for the outright transfer of the
shares, not for their pledge. But we put the affidavits to one side
for two reasons. In the first place, the function of the affidavits
was to oppose the motion for a
Page 330 U. S. 735
preliminary injunction. The case had not been submitted for
decision on the merits. Issue, indeed had not yet been joined. And
the ruling of the District Court, as we read it, was based on the
premise that, since the Commission had the right to make the
contract, the suit was against the United States. [
Footnote 3] Hence, we do not think the
District Court in fact relied on the affidavits in dismissing the
complaint. In the second place, although, as a general rule the
District Court would have authority to consider questions of
jurisdiction on the basis of affidavits as well as the pleadings,
[
Footnote 4] this is the type
of case where the question of jurisdiction is dependent on decision
of the merits.
The allegations of the complaint, if proved, would establish
that petitioners are unlawfully withholding respondents' property
under the claim that it belongs to the United States. That
conclusion would follow if either of respondents' contentions was
established: (1) that the Commission had no authority to purchase
the shares or acquire them outright; or (2) that, even though
Page 330 U. S. 736
such authority existed, the 1938 contract resulted not in an
outright transfer, but in a pledge of the shares.
If respondents are right in these contentions, their claim rests
on their right under general law to recover possession of specific
property wrongfully withheld. At common law, their suit as pledgors
to recover the pledged property on payment of the debt would sound
in tort. [
Footnote 5]
If viewed in that posture, the case is very close to
United
States v. Lee, 106 U. S. 196.
That was an action in ejectment to recover possession of a tract of
land. The defendants were military officers who, acting under
orders of the President, took possession of the land and converted
one part into a fort and another into a cemetery. For the
lawfulness of their possession they relied on a tax sale of the
property to the United States. On the trial, it was held that the
claim of the plaintiffs to the land was valid, and that the
defendants were wrongfully in possession. The Court affirmed the
judgment over the objection that the suit was one against the
United States. It held that the assertion by officers of the
Government of their authority to act did not foreclose judicial
inquiry into the lawfulness of their action; that a determination
of whether their "authority is rightfully assumed is the exercise
of jurisdiction, and must lead to the decision of the merits of the
question." 106 U.S. at
106 U. S. 219.
It further held that, while such an adjudication is not
res
judicata against the United States, because it cannot be made
a party to the suit, the courts have jurisdiction to resolve the
controversy between those who claim possession. And it concluded
that an agent or officer of the United States who acts beyond his
authority is answerable for his actions.
And see Philadelphia
Co. v. Stimson, 223 U. S. 605,
223 U. S.
619-620;
Sloan Shipyards Corp. v. United States
Fleet Corp., 258 U. S. 549,
258 U. S.
567.
Page 330 U. S. 737
Where the right to possession or enjoyment of property under
general law is in issue, and the defendants claim as officers or
agents of the sovereign, the rule of
United States v. Lee,
supra, has been repeatedly approved.
Cunningham v. Macon
& Brunswick R. Co., 109 U. S. 446,
109 U. S. 452;
Tindal v. Wesley, 167 U. S. 204;
Smith v. Reeves, 178 U. S. 436,
178 U. S. 439;
Scranton v. Wheeler, 179 U. S. 141,
179 U. S.
152-153;
Philadelphia Co. v. Stimson, supra,
pp.
223 U. S.
619-620;
Goltra v. Weeks, 271 U.
S. 536,
271 U. S. 545;
Ickes v. Fox, 300 U. S. 82,
300 U. S. 96;
Great Northern Life Ins. Co. v. Read, 322 U. S.
47,
322 U. S. 50-51.
That rule is applicable here, although we assume that record title
to the shares is in the Commission. In
United States v. Lee,
supra, record title of the land was in the United States and
its officers were in possession. The force of the decree in that
case was to grant possession to the private claimant. Though the
judgment was not
res judicata against the United States,
p.
106 U. S. 222,
it settled as between the parties the controversy over possession.
Precisely the same will be true here if we assume the allegations
of the complaint are proved. For, if we view the case in its
posture before the District Court, petitioners, being members of
the Commission, were in position to restore possession of the
shares which they unlawfully held.
We do not trace the principle of
United States v. Lee,
supra, in its various ramifications. Cases on which
petitioners rely are distinguishable. This is not an indirect
attempt to collect a debt from the United States by preventing
action of government officials which would alter or terminate the
contractual obligation of the United States to pay money.
See
Wells v. Roper, 246 U. S. 335;
Mine Safety Co. v. Forrestal, 326 U.
S. 371. It is not an attempt to get specific performance
of a contract to deliver property of the United States.
Goldberg v. Daniels, 231 U. S. 218. It
is not a case where the sovereign
Page 330 U. S. 738
admittedly has title to property and is sued by those who seek
to compel a conveyance or to enjoin disposition of the property,
the adverse claims being based on an allegedly superior equity or
on rights arising under Acts of Congress.
Cunningham v. Macon
& Brunswick R. Co., supra; Minnesota v. Hitchcock,
185 U. S. 373;
Oregon v. Hitchcock, 202 U. S. 60;
Naganab v. Hitchcock, 202 U. S. 473;
Louisiana v. Garfield, 211 U. S. 70;
Morrison v. Work, 266 U. S. 481.
And see Stanley v. Schwalby, 162 U.
S. 255,
162 U. S.
271-272.
We say the foregoing cases are distinguishable from the present
one, though as a matter of logic it is not easy to reconcile all of
them. But the rule is based on practical considerations reflected
in the policy which forbids suits against the sovereign without its
consent. The "essential nature and effect of the proceeding" may be
such as to make plain that the judgment sought would expend itself
on the public treasury or domain, or interfere with the public
administration.
Ex parte New York, 256 U.
S. 490,
256 U. S. 500,
256 U. S. 502.
If so, the suit is one against the sovereign.
Mine Safety Co.
v. Forrestal, supra, p.
326 U. S. 374.
But public officials may become tortfeasors by exceeding the limits
of their authority. And where they unlawfully seize or hold a
citizen's realty or chattels, recoverable by appropriate action at
law or in equity, he is not relegated to the Court of Claims to
recover a money judgment. The dominant interest of the sovereign is
then on the side of the victim, who may bring his possessory action
to reclaim that which is wrongfully withheld.
It is in the latter category that the pleadings have cast this
case. That is to say, if the allegations of the petition are true,
the shares of stock never were property of the United States, and
are being wrongfully withheld by petitioners, who acted in excess
of their authority as public officers. If ownership of the shares
is in the United States, suit to recover them would, of course, be
a suit against the
Page 330 U. S. 739
United States. But if it is decided on the merits either that
the contract was illegal or that respondents are pledgors, they are
entitled to possession of the shares as against petitioners,
though, as we have said, the judgment would not be
res
judicata as against the United States.
See United States
v. Lee, supra, p.
106 U. S.
222.
We intimate no opinion on the merits of the controversy. We only
hold that the District Court has jurisdiction to determine its
jurisdiction by proceeding to a decision on the merits.
Second. Motions were made by the Solicitor General to
substitute as defendants the new members of the Commission for
those who are no longer members. [
Footnote 6] We added the new members as
petitioners-defendants, and dismissed as to a deceased member, but
reserved decision as to the other former members. 329 U.S. 700. A
majority of those joining in this opinion are of the view that it
is more appropriate that both motions be considered by the District
Court. The questions have not been briefed or argued here.
Moreover, the present record may not present all the facts
necessary for disposition of the motions. Accordingly, we vacate
the order of substitution which we entered, so that the District
Court may, on remand of the cause, pass on the motions
unembarrassed by any action here.
The judgment of the Court of Appeals is
Affirmed.
MR. JUSTICE BLACK took no part in the consideration or decision
of this case.
[
Footnote 1]
The details of the difficulties, and the steps taken to remedy
them are contained in two reports to Congress by the Commission:
(1) Financial Readjustments in Dollar Steamship Lines, Inc., Ltd.,
dated February 17, 1938; (2) Reorganization of American President
Lines, Ltd., dated April 10, 1939.
[
Footnote 2]
Although the judgment below was not a final one, we considered
it appropriate for review because it involved an issue "fundamental
to the further conduct of the case."
United States v. General
Motors Corp., 323 U. S. 373,
323 U. S.
377.
[
Footnote 3]
The District Court said:
". . . I think . . . that the Commission had the legal right,
and therefore I think it is inescapable that this is a suit against
the United States, and therefore that the complaint must be
dismissed. . . ."
[
Footnote 4]
In passing on a motion to dismiss because the complaint fails to
state a cause of action, the facts set forth in the complaint are
assumed to be true, and affidavits and other evidence produced on
application for a preliminary injunction may not be considered.
Polk Co. v. Glover, 305 U. S. 5,
305 U. S. 9;
Gibbs v. Buck, 307 U. S. 66,
307 U. S. 76.
But when a question of the District Court's jurisdiction is raised,
either by a party or by the court on its own motion, Judicial Code
§ 37, 28 U.S.C. § 80; Fed.R.Civ.P. 12(b), the court may inquire by
affidavits or otherwise, into the facts as they exist.
Wetmore
v. Bymer, 169 U. S. 115,
169 U. S. 120,
121;
McNutt v. General Motors Corp., 298 U.
S. 178,
298 U. S. 184
et seq.; KVOS, Inc. v. Associated Press, 299 U.
S. 269,
299 U. S. 278.
As stated in
Gibbs v. Buck, supra, pp.
307 U. S. 71-72,
"[a]s there is no statutory direction for procedure upon an issue
of jurisdiction, the mode of its determination is left to the trial
court."
[
Footnote 5]
Restatement of the Law of Torts, §§ 223, 237; 3 Street,
Foundations of Legal Liability (1906), p. 160.
[
Footnote 6]
See Federal Rule Civil Procedure, 25(d);
Allen v.
Regents, 304 U. S. 439,
304 U. S.
444-445.
MR. JUSTICE REED, concurring.
As I think this proceeding states a cause of action against the
United States Maritime Commission, I do not
Page 330 U. S. 740
agree with the manner of disposition. No damages are sought
against the petitioners. Relief is sought that can only be obtained
by an order directed against the Commission.
A contract between plaintiffs, Dollar
et al., and the
United States Maritime Commission was attached to the complaint as
an exhibit. The contract was not signed by any individual member of
the Commission, but by the Commission through its duly authorized
special counsel. In the complaint, respondents alleged that they
and their predecessors in interest "caused said shares of stock of
the company to be transferred to the United States Maritime
Commission." They further alleged that they made demand upon the
"Maritime Commission for the return of said stock in July, 1945.
This request was denied by the Maritime Commission in July, 1945."
The ultimate result sought by the complaint was that the
respondents "be directed and ordered by this court to return the
plaintiffs' stock, now in the unlawful possession and custody of
the defendants, to the plaintiffs, the lawful owners." Taken as a
whole, I cannot read the complaint otherwise than as alleging that
title and possession of this stock is now in the United States
Maritime Commission. Although plaintiffs assert possession in the
defendants, the other allegations and the attached contract show
that defendants hold the stock by virtue of their official
positions as members of the Commission. If the basic allegations
were proven, the Commission would be shown to be in possession of
the stock under a claim of right.
If that is the correct interpretation of the complaint, it
follows, of course, that the Maritime Commission is an
indispensable party to this proceeding.
See Commonwealth Trust
Co. v. Smith, 266 U. S. 152,
266 U. S. 159.
No matter how far beyond their statutory powers the members of the
Commission may have acted in contracting with the
Page 330 U. S. 741
respondents or how illegal may be the retention of the
certificates by the Commission under its claim of ownership through
the contract, the transfer to the Commission, as alleged in the
petition, put the title and possession of this property in the
Maritime Commission, and not in the petitioners as individuals. It
may be that the Commission holds the stock wrongfully, but, if so,
it can only be restored to the respondents by an act of the
Commission. Under such circumstances, cases like
United States
v. Lee, 106 U. S. 196, are
inapplicable. In the
Lee case, an action in ejectment was
brought to recover possession of land from officers of the United
States who were wrongfully in possession of the land. That suit was
not brought against the United States to compel the United States
to retransfer title to the complainants or to quiet title in those
who claimed against the United States. In
United States v.
Lee, the officer of the United States could be ejected from
the real property involved without loss of title or right of
possession to the United States. That is not the result in this
case. A piece of paper, the stock certificate, will be taken from
the hands of the Maritime Commission and placed in the hands of
plaintiffs by a court decree if plaintiffs are successful. If the
decree is to be effective, it will require the individual
defendants to transfer the certificates by endorsement of the name
of the Maritime Commission or delivery, if the certificate is still
in the name of the plaintiffs. The situation is as if the United
States had been ordered by the decree in the Lee case to convey
title to and possession of the property to Lee. Plaintiffs do not
here seek damages for past acts of petitioners. Plaintiffs want
property now in the possession of the Maritime Commission, and, to
secure this relief, plaintiffs, I should think, must implead the
Commission. Whether the Maritime Commission holds the property by
title unchallenged by the plaintiffs or challenged by the
plaintiffs
Page 330 U. S. 742
cannot, it seems to me, be determinative as to the necessity of
making the Commission a party.
See Goldberg v. Daniels,
231 U. S. 218.
Cases cited in the opinion of the Court as following the rule of
United States v. Lee are not significant here. Two are
similar cases of ejectment. [
Footnote
2/1] Other cases cited turn on liability of a sovereign to
suits. [
Footnote 2/2] Still others
are those which enjoin an officer from proceeding illegally.
[
Footnote 2/3] In
Goltra v.
Weeks, 271 U. S. 536,
271 U. S. 539,
271 U. S. 549,
there was a suit by a lessee to enjoin officers of the United
States from taking possession of boats leased to the plaintiff by
the Government, and also to return the boats already taken. The
prayer for a return of the property contained the possibility of
the issue here raised, but this Court treated the proceeding as one
to enjoin a threatened trespass.
The present suit is for the return to the plaintiffs of property
held by the Maritime Commission under a contract which the Dollar
interests allege called for a return of the certificates to them on
payment of a debt. Such a suit, it seems to me, is an effort to get
possession of property actually in the possession of the Maritime
Commission. This cannot be done without joining the Maritime
Commission as a party defendant.
See Goldberg v. Daniels,
231 U. S. 218;
Wells v. Roper, 246 U. S. 335;
Morrison v. Work, 266 U. S. 481,
266 U. S. 487;
Mine Safety Co. v. Forrestal, 326 U.
S. 371.
As this appears to me as a suit against the Commission, I would
affirm the judgment of the Court of Appeals, remanding this case to
the District Court. There, the questions
Page 330 U. S. 743
of the suability of the Commission [
Footnote 2/4] and the effect of the Administrative
Procedure Act of June 11, 1946, could be considered. There, the
merits of the controversy could be decided.
[
Footnote 2/1]
Tindal v. Wesley, 167 U. S. 204;
Scranton v. Wheeler, 179 U. S. 141.
[
Footnote 2/2]
Cunningham v. Macon & Brunswick R. Co.,
109 U. S. 446;
Smith v. Reeves, 178 U. S. 436;
Great Northern Life Ins. Co. v. Read, 322 U. S.
47.
[
Footnote 2/3]
Ickes v. Fox, 300 U. S. 82;
Philadelphia Co. v. Stimson, 223 U.
S. 605.
[
Footnote 2/4]
Merchant Marine Act, 49 Stat. 1988, § 207, as amended, 52 Stat.
954, § 2:
"The Commission may enter into such contracts, upon behalf of
the United States, and may make such disbursements, as may, in its
discretion, be necessary to carry on the activities authorized by
this Act, or to protect, preserve, or improve the collateral held
by the Commission to secure indebtedness, in the same manner that a
private corporation may contract within the scope of the authority
conferred by its charter."
Keifer & Keifer v. Reconstruction Finance Corp.,
306 U. S. 381.