1. Pursuant to the First and Second Renegotiation Acts, the
Secretary of War and the War Contracts Adjustment Board,
respectively, determined that appellant had realized excessive
profits during two years on subcontracts under which it had
supplied parts to contractors manufacturing war equipment for the
Army, and the Under Secretary of War directed certain of
appellant's customers to withhold and pay into the Treasury sums
due appellant equal to such excessive profits (less tax credits)
for the second of the years in question. After petitioning the Tax
Court for redetermination and while such proceedings were pending,
appellant sued in a federal district court for a declaratory
judgment that the Renegotiation Acts are unconstitutional and for
an injunction against further proceedings thereunder.
Held:
(a) The suit is premature, since appellant had not exhausted its
administrative remedy before the Tax Court. Pp.
331 U. S.
764-774.
(b) The district court had no jurisdiction in equity, since
appellant had a complete remedy at law by actions against the
contractors to which it had supplied the parts. Pp.
331 U. S.
774-781.
2. Mere suggestions of claim for relief raising serious
constitutional questions are not to be entertained upon dubious
presentations or, most certainly, when the presentation reasonably
may be taken as not intended to put them forward squarely and
inescapably. P.
331 U. S.
763.
3. The doctrine of exhaustion of administrative remedies
requires not merely the initiation of prescribed administrative
procedures; it requires pursuing them to their appropriate
conclusion and awaiting their final outcome before seeking judicial
intervention. P.
331 U. S.
767.
4. Where Congress has clearly commanded that administrative
judgment be taken initially or exclusively, the courts have no
lawful function to anticipate the administrative decision with
their own, whether or not, when it has been rendered, they may
intervene either in presumed accordance with Congress' will or
because, for constitutional reasons, its will to exclude them has
been exerted in an invalid manner. P.
331 U. S.
767.
Page 331 U. S. 753
5. By providing in the Renegotiation Acts for administrative
determinations of excessive profits by the War Contracts Price
Adjustment Board and for redeterminations
de novo by the
Tax Court, Congress intended to secure uniformity of administrative
policy and disposition, expertness of judgment, and finality of
determination at least of those things which Congress intended to
and could commit to such agencies for final decision. Pp.
331 U. S.
767-768.
6. Congress intended the Tax Court's functions with respect to
redetermination of excessive profits under war contracts not only
to be put in motion, but to be fully performed, before judicial
intervention at the instance of one in appellant's position, even
though constitutional questions are raised. P.
331 U. S.
771.
7. Where Congress clearly intended to require administrative
determination, either to the exclusion of judicial action or in
advance of it, a strong showing is required, both of inadequacy of
the prescribed procedure and of impending harm, to permit
short-circuiting the administrative process -- especially in the
case of wartime legislation resting, at least in part, on war
powers. Pp.
331 U. S.
773-774.
8. Appellant subcontractor has an adequate remedy at law by
suits upon its contracts against its customers; since such suits
are not forbidden expressly or impliedly by the Renegotiation Acts,
they are not made dependent upon completion of the Tax Court
proceedings, and there appears to be no reason why every question
of constitutionality raised in this suit could not be presented and
determined in such a suit. Pp.
331 U. S.
775-777.
9. Appellant's allegations that it would suffer irreparable
injury as a result of the withholding of the funds due from its
customers are insufficient to sustain the intervention of a court
of equity, particularly to avoid or anticipate the congressionally
authorized proceeding. Pp.
331 U. S. 777-778.
10. Nor, on the facts of this case, is the showing made
concerning multiplicity of suits sufficient to justify intervention
of a court of equity or the substitution of its extraordinary
relief for what appears to be a dull, adequate, and completely
available remedy at law. Pp.
331 U. S.
778-781.
62 F. Supp. 520 affirmed.
While proceedings were pending in the Tax Court for
redetermination of excessive profits determined by the Secretary of
War and the War Contracts Price Adjustment Board to have been
realized by a subcontractor on production of war equipment, the
subcontractor sued in
Page 331 U. S. 754
a Federal District Court for a declaratory judgment that the
Renegotiation Acts are unconstitutional and for an injunction
against further proceedings thereunder. The District Court
dismissed the suit. 62 F. Supp. 520. On appeal to this Court,
affirmed, p.
331 U. S.
781.
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
This case is the fourth in a series seeking here a determination
of the invalidity, on constitutional grounds, of the First and
Second Renegotiation Acts [
Footnote
1] and allied legislation.
In
Coffman v. Breeze Corporations, 323 U.
S. 316, and in
Alma Motor Co. v. Timken-Detroit Axle
Co., 329 U. S. 129, the
Royalty Adjustment Act [
Footnote
2] was attacked. The Alma Motor case was remanded to the
Circuit Court of Appeals for a determination of the Act's
applicability. The suit in the
Coffman case was by a
patent owner to restrain his licensees from paying accrued
royalties to the Government pursuant to the Act's provisions. We
held
Page 331 U. S. 755
that the complaint had been rightly dismissed for want of equity
jurisdiction, since the plaintiff had an adequate remedy at law by
suit against its licensees, and also for want of a justiciable case
or controversy.
In
Mine Safety Appliances Co. v. Forrestal,
326 U. S. 371, a
government contractor challenged the Renegotiation Acts. [
Footnote 3] The complaint sought to
enjoin the Secretary of the Navy from taking action
"which would stop payment by the government of money lawfully in
the United States Treasury to satisfy the government's, and not the
Secretary's, debt to the appellant."
326 U.S. at
326 U. S. 374.
Accordingly, we held that the Government was an indispensable
party. Since it neither had been joined in the suit nor had
consented to be sued in such a proceeding, it followed that the
complaint had been properly dismissed.
In one other case,
Macauley v. Waterman S.S.
Corporation, 327 U. S. 540,
constitutionality was not involved, but coverage of the
Renegotiation Acts was put in issue. The suit was brought in a
District Court for a declaratory judgment and to restrain further
renegotiation proceedings affecting the specified contracts. The
contractor had not sought a decision on coverage from the Tax
Court. We held that the Tax Court has power to decide such
questions in the proceedings authorized by § 403(e)(1) of the
Second Renegotiation Act. Hence, under the authority of
Myers
v. Bethlehem Shipbuilding Corp. 303 U. S.
41, the complaint in the
Waterman case also was
held rightly to have been dismissed, in this instance for the
plaintiff's failure to exhaust its administrative remedy.
Now the Aircraft & Diesel Equipment Corporation seeks a
declaratory judgment that the First and Second Renegotiation Acts
are unconstitutional on various grounds. Injunctive relief also is
asked. And, in addition
Page 331 U. S. 756
to the constitutional questions, determination is sought of
issues of coverage and other matters.
The defendants, appellees here, consist of the members of the
War Contracts Price Adjustment Board, the Secretary of War, and the
Under Secretary of War. [
Footnote
4] Pursuant to the statutory requirement, 50 Stat. 751, 752, 28
U.S.C. § 380a, a district court of three judges was especially
convened. After hearing, the complaint was dismissed. [
Footnote 5] One ground for this action
was that the suit is premature, since proceedings were pending and
undetermined in the Tax Court, pursuant to appellant's
applications, for redetermination of its allegedly excessive
profits for 1942 and 1943. [
Footnote 6] The court also held that it was without
jurisdiction in equity, since, in its view, adequate remedy at law
was available to Aircraft. Probable jurisdiction of the appeal was
duly noted here. [
Footnote
7]
We think the District Court correctly dismissed the complaint,
and for the reasons stated as grounding its action. The issues
expansively include almost all comprehended in the causes
previously determined here. But the case reaches this Court in a
posture differing in some substantial
Page 331 U. S. 757
respects from that characterizing any of those proceedings.
Hence, it becomes necessary to set forth with some particularity
the facts and controlling issues.
I
Appellant is in the business of manufacturing diesel fuel
injection equipment and precision parts, and aircraft precision
parts. Its manufacturing activities, insofar as material, [
Footnote 8] were carried on under
subcontracts with government contractors. The contractor, in turn,
furnished the completed aircraft or engines to the United
States.
Pursuant to the First Renegotiation Act, the Secretary of War,
acting though his delegate the Under Secretary of War, determined
on October 27, 1943, that, during the fiscal year ended November
30, 1942, appellant had realized excessive profits (less tax
credits) amounting to $204,000. On April 29, 1944, the Under
Secretary directed appellant's customers to withhold this sum from
appellant. Thereafter, it filed a petition with the Tax Court
[
Footnote 9] for a
redetermination of the alleged excessive
Page 331 U. S. 758
profits. Nevertheless, on July 19, 1944, the Under Secretary
further directed appellant's customers to pay the $204,000 into the
Treasury of the United States, and this direction was obeyed.
[
Footnote 10]
Following the fiscal year ended November 30, 1943, renegotiation
proceedings were instituted under the Second Renegotiation Act. On
January 11, 1945, the Under Secretary of War, as delegate of the
War Contracts Price Adjustment Board, entered an order determining
that appellant had realized excessive profits of $1,265,000.
Deduction of tax credits reduced this amount to approximately
$270,000. Appellant again filed a petition for redetermination with
the Tax Court. [
Footnote 11]
Then followed this suit.
The amended complaint is too lengthy for detailed summarization
in this opinion. Apart from allegations going to constitutionality
and coverage, including asserted defects in the renegotiation
procedures followed, [
Footnote
12] the
Page 331 U. S. 759
complaint sought to establish jurisdiction in the District
Court, equitable in character, by showing the inadequacy of all
available legal or other remedies. These included the pending Tax
Court proceedings, possible suit in the Court of Claims following
completion of the Tax Court's determination, and actions at law
against appellant's customers, contractors with the Government to
recover the amounts said to be due under their various
contracts.
In particular, it was alleged that, notwithstanding the pendency
of the Tax Court proceedings, the Board and the Secretary or his
delegates were taking steps to prevent Aircraft's customers from
paying over to it moneys owing on contracts aggregating $270,000
and claimed to be due the Government as excessive profits. The
complaint alleged further that the Board and the Secretary were
threatening to direct Aircraft's customers to pay these sums into
the Treasury, [
Footnote 13]
and that, unless they were restrained,
Page 331 U. S. 760
such payment would be made, to appellant's irreparable injury.
[
Footnote 14] No direct
relief was asked, by way of judgment or decree, for refund of the
$204,000 collected by the Government from appellant's customers,
pursuant to the First Renegotiation Act, as excessive profits
realized in 1942. It was suggested, however, that if that Act
should be found invalid and the Second Act sustained, [
Footnote 15] the Government should
be permitted to collect only the difference between $270,000, the
amount determined to be excessive profits for 1943, and the
$204,000 collected for 1942. The suggestion, of course, if
formally
Page 331 U. S. 761
made, would be substantially a claim against the Government by
way of setoff of the latter amount.
Cf. Mine Safety Appliances
Co. v. Forrestal, supra.
The Government has contested each of appellant's claims. But its
primary contentions have been aimed at Aircraft's jurisdictional
showing. It argues that the suit, in substance and legal effect, is
one against the United States, to which there has been no
governmental consent,
cf. Mine Safety Appliances Co. v.
Forrestal, supra; that the suit is premature, because the Tax
Court proceedings have not been completed and, until this has been
done, Aircraft will not have exhausted its administrative remedy,
cf. Macauley v. Waterman S.S. Corporation, supra; that the
Tax Court has been given exclusive jurisdiction in renegotiation
matters, and that, in any event, there is no jurisdiction of an
equitable character in the District Court to afford the relief
appellant seeks, since it has an adequate remedy at law by suit
upon its contracts to recover any amounts due from its customers,
in which all questions of constitutionality may be determined.
Cf. Coffman v. Breeze Corporation, supra.
In the latter connection appellee Hirsch, as chairman of the
Board, has filed an affidavit admitting that he and the other
appellees, unless restrained, will take steps, as appellant
alleges, to prevent payment of the $270,000 by its customers to it,
and also to secure payment of that sum into the Treasury. The
affidavit sets forth, however, that direction for payment will not
be required or made as to more than two or three of appellant's
customers, and, in the event this does not result in payment of the
full amount, the Government will proceed to collect whatever may
remain by suit against appellant.
Aircraft, on the other hand, both in the amended complaint and
by the supporting affidavit of its president, alleged that no such
sum as $270,000 was owing to it from, or could be collected by
direction to, any two or three of
Page 331 U. S. 762
its customers. Rather, it was set forth that collection of any
such amount could be made only by direction to some sixteen or more
customers. And, on the same basis, it is asserted that Aircraft's
remedy by suit against its customers would require institution of
numerous actions in different jurisdictions, resulting in expense
and delay, as well as loss of goodwill and incurring the continued
risk of the customers' solvency. [
Footnote 16] Accordingly, Aircraft claims that
jurisdiction in equity is conferred upon the District Court both by
reason of the multiplicity of suits involved in asserting the legal
remedy by actions against its customers and because of the
injurious consequences which would follow from pursuing that
course.
II
We do not find it necessary to undertake determining the
threshold question whether the suit is one against the United
States. Were the issue squarely presented as a formal claim for
refund or setoff concerning the $204,000 collected by the
Government for 1942, the case in that aspect would be very close to
Mine Safety Appliances Co. v. Forrestal, supra. [
Footnote 17]
We do not tarry, however, to consider further this feature of
the case, since the absence of formal and specific claim in the
nature of setoff or otherwise indicates, we
Page 331 U. S. 763
think, a strategic decision to avoid the difficulties which
would follow upon its definite and unequivocal assertion, on the
score of the nature of the suit as being one in fact and function
against the Government. Something more than a mere suggestion of
claim or relief is required to bring into play judicial power of
affording remedy, especially when it appears there may be good
reason deliberately accepted for going no further. This is
reinforced when the suggestion, if acted on, would involve the
Court in decision of serious constitutional questions. They are not
to be entertained upon dubious presentations or, most certainly,
when the presentation reasonably may be taken as not intended to
put them forward squarely and inescapably.
Cf. Rescue Army v.
Municipal Court, 331 U. S. 549;
Alma Motor Co. v. Timken-Detroit Axle Co., 329 U.
S. 129. Accordingly, we put to one side the lengthy
allegations concerning the 1942 determination, and confine our
consideration to the issues relating to the redetermination made
for the fiscal year of 1943.
These also, the Government urges, substantially are effective to
make the suit one against the Government, to which it has not
consented. And for this view likewise it relies upon the
Mine
Safety decision, as well as others. [
Footnote 18] Appellant undertakes to distinguish the
cases upon the basis that, in the Mine Safety case, the official
action sought to be enjoined was conduct effective to stop the
payment of funds out of the Treasury, whereas here, the analogous
conduct affects no funds in the Government's actual possession, but
seeks only to touch moneys held by third persons for appellant's or
the Government's account. The difference, it is urged, is between
action affecting only the withholding of government moneys and
action effective to bring about collection from third persons of
moneys claimed to be due to the Government.
Page 331 U. S. 764
That difference indeed may be substantial. But we do not decide
whether it is sufficient to enable the appellant to avoid the
difficulty presented of foreclosing the Government's claim by a
suit brought only against its officials, essentially as
trespassers, [
Footnote 19]
without joining the Government itself. In other words we do not
determine whether the suit is, in legal effect, one against the
Government, since, in our opinion, the other grounds going to the
District Court's jurisdiction are adequate to sustain its dismissal
of the cause.
Ordinarily, of course, issues relating to exhaustion of
administrative remedies, as a condition precedent to securing
judicial relief and to the existence of jurisdiction in equity, are
either separate or separable matters, to be treated as entirely or
substantially distinct. The one, generally speaking, is simply a
condition to be performed prior to invoking an exercise of
jurisdiction by the courts. The other goes to the existence of
judicial power in the basic jurisdictional sense. In this case,
however, the exhaustion problem and that of equity jurisdiction are
closely -- indeed, inseparably -- related. And both are colored by
the relevant specific provisions of the Renegotiation Acts -- more
particularly the Second, since it alone provides for Tax Court
redetermination. [
Footnote
20]
Page 331 U. S. 765
In
Macauley v. Waterman S.S. Corporation, supra, we
were called upon to consider the relation between the Tax Court
proceedings, as provided by § 403(e)(1), and judicial proceedings
instituted in the district or other courts of the United States in
regard to renegotiation matters. Section 403(e)(1) authorizes "any
contractor or subcontractor aggrieved by an order of the Board
determining the amount of excessive profits received or accrued by"
him to file a petition for redetermination with the Tax Court
within ninety days after notice of the order is mailed. [
Footnote 21] The section then
provides:
"Upon such filing, such court shall have exclusive jurisdiction,
by order, to finally determine the amount, if any, of such
excessive profits received or accrued by the contractor or
subcontractor, and such determination shall not be reviewed or
redetermined by any court or agency."
The section expressly states that the proceeding "shall not be
treated as a proceeding to review the determination of the Board,
[
Footnote 22] but shall be
treated as a proceeding
de novo." And the Tax Court is
given the same powers and duties, "insofar as applicable,"
respecting "the contractor, the subcontractor, the Board and the
Secretary, and the respect of the attendance of witnesses and the
production of papers," together with other procedural matters, as
the court has under specified sections of the
Page 331 U. S. 766
Internal Revenue Code in redetermining a deficiency in taxes.
Moreover, § 403(e)(1) commands: "The filing of a petition under
this subsection shall not operate to stay the execution of the
order of the Board under subsection (c)(2)."
In the
Waterman case, taking account of these
provisions, we said:
"The legislative history of the Renegotiation Act, moreover,
shows that Congress intended the Tax Court to have exclusive
jurisdiction to decide questions of fact and law, [
Footnote 23] which latter include the issue
raised here of whether the contracts in question are subject to the
Act."
327 U.S. at
327 U. S. 544.
"To grant the injunction sought," the opinion continued,
"the District Court would have to decide this issue in the first
instance. Whether it ever can do so or not, it cannot not now
decide questions of coverage when the administrative agencies
[
Footnote 24] authorized to
do so have not yet made their determination. Here, just as in the
Myers case, the administrative process, far from being
exhausted, had hardly begun. The District Court consequently was
correct in holding that it lacked jurisdiction to act."
Id. 327 U.S. at
327 U. S.
544-545.
The
Waterman case differed from this one in three
respects. There, the appellant had "hardly begun" the
administrative process, while here, Aircraft has done all that it
can do. The Waterman Corporation had contracted directly with a
government agency, the Maritime Commission. Here, the appellant is
a subcontractor, a difference of some importance in the matter of
jurisdiction in equity later to be noted. The
Waterman
case, as we
Page 331 U. S. 767
have said, raised only questions of coverage, not issues of
constitutionality. Here, both types of question are presented. On
the other hand, the cases are substantially identical in the nature
of the relief sought. Each complaint asked for a declaratory
judgment upon the legal issues and for injunctive relief
restraining further action looking toward application of the Act's
provisions.
We do not think the differences mentioned are sufficient to
distinguish the cases for purposes of applying the exhaustion rule.
Certainly no such effect can be derived from the fact that, in the
Waterman case, the plaintiff had not begun the
administrative process, while here, Aircraft has gone as far as it
can. The doctrine, wherever applicable, does not require merely the
initiation of prescribed administrative procedures. It is one of
exhausting them -- that is, of pursuing them to their appropriate
conclusion -- and, correlatively, of awaiting their final outcome
before seeking judicial intervention.
The very purpose of providing either an exclusive or an initial
and preliminary administrative determination is to secure the
administrative judgment either, in the one case, in substitution
for judicial decision or, in the other, as foundation for, or
perchance to make unnecessary, later judicial proceedings. Where
Congress has clearly commanded that administrative judgment be
taken initially or exclusively, the courts have no lawful function
to anticipate the administrative decision with their own, whether
or not, when it has been rendered, they may intervene either in
presumed accordance with Congress' will or because, for
constitutional reasons, its will to exclude them has been exerted
in an invalid manner. To do this not only would contravene the will
of Congress as a matter of restricting or deferring judicial
action. It would nullify the congressional objects in providing the
administrative determination. In this case, these include securing
uniformity
Page 331 U. S. 768
of administrative policy and disposition, [
Footnote 25] expertness of judgment, and
finality in determination at least of those things which Congress
intended to and could commit to such agencies for final
decision.
There can be no doubt whatever, in view of the legislative
history, that Congress had each of these ends on view when it
provided for the Tax Court proceedings, as well as for action by
the Board prior to that stage. Indeed, the Board was created in
large part to bring under a single aegis the last stage of informal
renegotiation before the Tax Court action, in order thus to secure
as nearly as possible uniform policy and administration of
renegotiation problems. [
Footnote 26] This policy was followed and reinforced in
the provision for Tax Court redetermination. And that procedure was
chosen deliberately in preference to judicial review in the Court
of Claims or elsewhere, primarily because of the Tax Court's
[
Footnote 27] expertness in
fiscal matters analogous to those arising in connection with
renegotiation
Page 331 U. S. 769
problems, [
Footnote 28]
as well as its essentially judicial procedures and experience.
[
Footnote 29]
It is equally clear that Congress intended to endow the Tax
Court's decisions with a very large degree of finality, as appears
from the very terms of § 403(e)(1), from the whole structure of the
Act, and from the legislative history. [
Footnote 30] The express command of § 403(e)(1) is not
simply that the Tax Court shall have "exclusive jurisdiction, by
order, to finally determine" the amount of excessive profits, if
any. It is also that the determination "shall not be reviewed or
redetermined by any court or agency." This is buttressed by the
prohibition that filing the petition shall not operate to stay
execution of the Board's order under § 403(c)(2). [
Footnote 31] And not irrelevant to the
statute's general policy of finality are the provisions making the
Board's determinations final if the petition for Tax Court
redetermination is not filed in the specified time, and those of
the Secretary or his delegates final if similar action is not taken
to secure redetermination by the Board. § 403(c)(1).
Page 331 U. S. 770
True, the statute expressly confers rights to follow through the
various stages of the procedure to the end of the Tax Court phase.
Nevertheless, its entire structure indicates the congressional
purpose to have matters of renegotiation promptly and expeditiously
settled, and to accomplish this as far as possible both by informal
negotiations and by introducing the compulsion of finality at every
stage unless each succeeding one is taken as commanded.
At the height of the war, Congress recognized, as did the
procuring agencies, [
Footnote
32] that speed in procurement, and consequently in production
of war materials, outweighed all other considerations normally
applicable. And while renegotiation was a product of that
necessity, rather than a cause, the problems it raised were time
consuming and closely related to pricing difficulties. [
Footnote 33] Often they worked to
hinder and delay the process of procurement. Congress therefore
sought, so far as possible, to relieve the interrelated processes
from the tedious burden of litigation. It did this by writing the
policy of finality into the Act's provisions at each successive
procedural stage, although
Page 331 U. S. 771
saving the right of resort eventually to the Tax Court to those
acting promptly in the prescribed way.
We do not express any opinion -- indeed, we explicitly reserve
decision -- upon the question of the finality of Tax Court
decisions in these matters. But we cannot infer from a statute so
conditioned in background, purpose, terms, and compulsion derived
from the inevitable circumstances of its application that Congress
intended to allow skirting the procedures devised altogether or
partially -- more particularly in any case where following them
could result in no greater loss than the delay and inconvenience
which would flow from inability to seek some other remedy not
dependent upon their completion.
We are not forced in this case, however, to decide whether
Congress intended to give the Tax Court the last word upon all
questions of fact and law, or whether it could do so if that were
surely its purpose. Nor need we become involved in an attempt to
decide what particular questions it might have left, or did leave,
for that body's final and conclusive disposition. For it seems
obvious, in view of the Act's terms, history, objects and the
policies incorporated, that Congress clearly, and at the very
least, intended the Tax Court's functions not only to be put in
motion, but to be fully performed, before judicial intervention
should take place at the instance of one in appellant's
position.
This, indeed, was the ruling of the
Waterman case. And
we do not think the effect of that ruling is exhausted simply
because constitutional questions were not raised there, but have
been put forward in this cause. Nor is it overcome, in our
judgment, by the showing which has been made on this record of
irreparable injury and of the need, as well as the power, of equity
to forestall the complete operation of the congressionally
prescribed procedure.
Page 331 U. S. 772
On the contrary, whatever may be true of other situations,
[
Footnote 34] in this case,
the very fact that constitutional issues are put forward
constitutes a strong reason for not allowing this suit either to
anticipate or to take the place of the Tax Court's final
performance of its function. When that has been done, it is
possible that nothing will be left of appellant's claim, asserted
both in that proceeding and in this cause, concerning which it will
have basis for complaint.
The Tax Court may decide entirely in appellant's favor. Indeed,
if it can sustain there the claims and issues it offers to support
here, that possibility is not an unlikely one. For, apart from the
questions of constitutionality and of the Tax Court's power to
decide them finally or otherwise, [
Footnote 35] appellant has put forward, in both
proceedings, [
Footnote 36]
claims of exemption and noncoverage relating to contracts involving
much larger amounts than the aggregate sums affected by
renegotiation, after deduction of tax credits. [
Footnote 37] And if those claims are well
founded, as to which, of course, we express no opinion, the Tax
Court's determination
Page 331 U. S. 773
of these matters of coverage, which we held in the
Waterman case are initially, at least, for its
disposition, well might render consideration of the constitutional
questions by it unnecessary and this cause moot.
Certainly that possible outcome should not be anticipated,
either here or by the District Court, through a decision in this
case on the constitutional issues.
Rescue Army v. Municipal
Court, 331 U. S. 549. No
more should it be forestalled by decision upon the matters of
coverage.
Macauley v. Waterman S.S. Corporation,
supra.
It is true that the presence of constitutional questions,
coupled with a sufficient showing of inadequacy of prescribed
administrative relief and of threatened or impending irreparable
injury flowing from delay incident to following the prescribed
procedure, has been held sufficient to dispense with exhausting the
administrative process before instituting judicial intervention.
[
Footnote 38] But, without
going into a detailed analysis of the decisions, this rule is not
one of mere convenience or ready application. Where the intent of
Congress is clear to require administrative determination, either
to the exclusion of judicial action or in advance of it, a strong
showing is required, both the inadequacy
Page 331 U. S. 774
of the prescribed procedure and of impending harm, to permit
short-circuiting the administrative process. Congress' commands for
judicial restraint in this respect are not lightly to be
disregarded.
More especially is that true with legislation of this type,
adopted during and to meet the emergency of war and resting at
least in part upon war powers. For, in such cases,
"only if we could say in advance of resort to the statutory
procedure that it is incapable of affording due process to
petitioners could we conclude that they have shown any legal excuse
for their failure to resort to it or that their constitutional
rights have been or will be infringed,"
Yakus v. United States, 321 U.
S. 414,
321 U. S. 435,
a statement implicitly requiring exhaustion, not merely initiation,
of the statutory procedure.
We need not decide in this case, however, whether mere doubt
concerning the adequacy of administrative or other relief would be
sufficient for allowing anticipation of the administrative
determination. For that course is not to be followed if there is
another remedy, not inconsistent with the congressional command,
and of certain character, even though it be neither so expeditious
or convenient as some other sought to be substituted which
circumvents that command. To this, of course, should be added the
further qualification that following the prescribed remedy, upon
the showing made, will not certainly or probably result in the loss
or destruction of substantive rights.
This brings us to consideration of the showing made here in
support of equity's intervention. That showing, we think, when
considered in the light of the foregoing principles and of the
statute's clear purpose and intent, is not sufficient.
Whatever may be the scope allowed generally for equity to
intervene upon the ground of inadequacy of legal remedies where no
explicit congressional command exists for following a prescribed
procedure, the problem when
Page 331 U. S. 775
such a mandate is present is entirely different from one
tendered in its absence. The very fact that Congress has made the
direction must be cast into the scales as against the factors
which, without that fact, would or might be of sufficient weight to
turn the balance in favor of allowing utilization of equity's
resources. That fact itself may be of such weight as to turn the
scales the other way even in situations much more doubtful than the
present one. In short, the so-called general principles governing
the exercise of jurisdiction in equity are not to be taken in such
a case as isolated from all effect of the legislative mandate, or
necessarily or even readily as overriding it.
In the first place, there can be no doubt of the availability,
or indeed of the certainty and effectiveness, of appellant's remedy
at law by suit upon its contracts against its customers claimed to
owe it money under those agreements. Suits of that character are
not forbidden, either expressly or impliedly, by the Renegotiation
Acts. Nor are they made dependent upon completion of the Tax Court
proceedings. [
Footnote 39]
Moreover we know of no reason
Page 331 U. S. 776
why every question of constitutionality which has been raised in
this suit could not be presented and determined in such a suit.
In addition, there is special reason in the statutory provisions
why that course should be followed rather than allowing the present
suit. Appellant is, as we have pointed out, a subcontractor, not a
contractor with the Government. While its suit could be instituted
directly only against the contractor with whom it had dealt,
nevertheless it is hardly conceivable that the Government would
permit the suit to go to final judgment without intervention by it,
or at the least, undertaking the responsibility for making the
defense. For, by § 403(c)(2), [
Footnote 40] it is expressly provided:
"Each contractor and subcontractor is hereby indemnified by the
United States against all claims by any subcontractor on account of
amounts withheld from such subcontractor pursuant to this
paragraph."
In the face of this indemnity, the contractor becomes
substantially a stakeholder as between the Government and the
subcontractor, and the latter's suit against the contractor, if
terminated favorably to the complainant, would obligate the
Government to indemnify or reimburse the contractor for the
liability thus incurred. In effect, the Government has consented to
suit by the contractor in the Court of Claims on account of any
liability the contractor incurs by virtue of lawful payment of the
subcontractor's claims.
Accordingly, there would seem to be no substantial reason for
regarding the suit against the contractor as inherently inadequate
or ineffective for the protection of any rights of the appellant,
including constitutional ones.
Page 331 U. S. 777
In this respect, the case stands identically with
Coffman v.
Breeze Corporations, supra. [
Footnote 41] If any such inadequacy exists, it must be by
virtue of factors extraneous to the nature of the suit itself, and
not present in the
Coffman case.
These appellant seeks to establish in its showing relating to
multiplicity of suits and irreparable injury. Apart from
multiplicity, the showing concerning injury certainly would not be
sufficient to justify eliminating the Tax Court proceeding.
[
Footnote 42] Boiled down,
the allegations come
Page 331 U. S. 778
to appellant's assuming, for the period necessary to secure
either the Tax Court's decision or final judgment in suits against
its customers directed to withhold, the continued risk of their
solvency, without specific allegation that any of them is seriously
so threatened or facts to support such a claim, and to deprivation,
for the same period, of the use of $270,000 directed to be
withheld. [
Footnote 43] We
do not think this showing alone, without regard to multiplicity,
approaches what would be required to sustain the intervention of a
court of equity, particularly in order to avoid or anticipate the
congressionally authorized proceeding.
Nor, in the facts of this case, is the showing made concerning
multiplicity of suits sufficient for that purpose. Appellant's
case, as made in this feature, is that it would be forced to sue
some sixteen "or more" customers, in various and scattered
jurisdictions, with consequent expense of litigation and "resultant
ill feeling and irreparable injury" to goodwill and appellant's
business. On
Page 331 U. S. 779
the other hand stands the affidavit of appellee Hirsch that
direction for withholding and payment into the Treasury will not be
needed or given in more than two or three instances, and, in case
any balance should remain, it will be collected through suit
instituted by the Government.
Whether the District Court accepted one version of the facts or
the other, it found there was no sufficient basis in the claim of
multiplicity to sustain equity's assumption of jurisdiction. We
would not be disposed to override that judgment of the trial court,
turning as much as it may upon questions of fact. [
Footnote 44]
Moreover, it is not apparent -- at any rate, from the
allegations -- why it would be necessary for appellant to sue all
of the sixteen customers, or indeed perhaps more than one of them,
in order to secure a determination of its constitutional rights or
preserve its rights. A single test suit would serve the former
purpose fully, and there are no allegations of fact sufficient to
show that appellant's rights of recourse against others probably
would be lost by awaiting the outcome of such a suit, either
legally through the operation of statutes of limitations or
practically, as we have said, through any probable incidence of
insolvency.
In the absence of either kind of showing, the injury appellant
seeks to avoid by the argument of multiplicity actually comes down,
as we have said, to deprivation of the use of the amount withheld
for the period required for
Page 331 U. S. 780
completion of the Tax Court proceedings or a test suit against a
customer. Whether or not there will be any injury in this limited
respect depends, of course, first, on the outcome of the Tax Court
proceedings, particularly in relation to the matters of coverage;
second, on whether, upon the assumption that those proceedings
sustain the Government's claim as to all or part of the $270,000,
the amount thus found due is finally held, in authorized
litigation, to be due and owing to the appellant or to the
Government. And, as we have also said, if that result should favor
the appellant, the Government's obligation to indemnify the
contractor would be, in effect, indirectly available to appellant
to indemnify it for any loss of the use of the moneys withheld.
[
Footnote 45]
Whatever might be true in other circumstances, this showing as
to the necessity for suing many customers is hardly sufficient to
justify the substitution of equity's extraordinary relief for what
in all the conditions of this case appears to be a full, adequate,
and completely available remedy at law.
Coffman v. Breeze
Corporations, supra; Macauley v. Waterman S.S. Corporation,
supra.
Indeed, the argument of multiplicity, with others, was expressly
advanced and rejected in the
Waterman case as ground for
not applying the
Myers rule and for sustaining declaratory
and equitable intervention to circumvent it. After noting the
company's claim, with others, that "it would be subjected to a
multiplicity of suits in order to recover the money due on the
contracts," we there said:
"Even if one or all of these things might possibly occur in the
future, that possibility does not affect the application of the
rule requiring exhaustion of administrative remedies. The District
Court had no power to determine in this proceeding and at this time
issues that might arise
Page 331 U. S. 781
because of these future contingencies."
327 U.S. at
327 U. S.
545.
This case is perhaps even stronger than the
Waterman
case for application of the
Myers rule. For here, the
appellant is a subcontractor retaining what the contractor
complainant did not have in the
Waterman case -- namely, a
completely adequate remedy at law against its customers, buttressed
by the Government's guaranty of indemnity to the contractor for all
liability incurred by him on account of withholding funds allegedly
due the appellant.
In view of that fact, the further one that constitutional issues
are included among those tendered in this case, but were not
presented in the
Waterman case, becomes wholly immaterial.
To countenance short-circuiting of the Tax Court proceedings here
would be, under all the circumstances, but more especially in view
of Congress' policy and command with respect to those proceedings,
a long overreaching of equity's strong arm.
The judgment is
Affirmed.
MR. JUSTICE JACKSON concurs in the result.
MR. JUSTICE DOUGLAS dissents.
[
Footnote 1]
The First Renegotiation Act was contained in § 403 of the Sixth
Supplemental National Defense Appropriation Act, 56 Stat. 226, 245,
as amended 56 Stat. 798, 982, 57 Stat. 347, 57 Stat. 564. The
Second Renegotiation Act appears in the 1943 Revenue Act. 58 Stat.
21, 78, as amended 59 Stat. 294.
[
Footnote 2]
Of October 31, 1942, 56 Stat. 1013, 35 U.S.C. §§ 89-96.
[
Footnote 3]
See note 1
[
Footnote 4]
The War Contracts Price Adjustment Board is created by §
403(d)(1) of the Second Renegotiation Act, 50 U.S.C. App. §
1191(d)(1). The present appellees were substituted by an order of
the District Court as successors in office of the original
defendants.
[
Footnote 5]
62 F. Supp. 520.
[
Footnote 6]
See note 9 The Tax
Court proceedings remain pending and undetermined at the date of
this decision.
[
Footnote 7]
On appellant's application, the District Court enjoined the
defendants, pending determination of the appeal, from taking
further action to enforce the statutes, particularly by notifying
or requiring appellant's customers to pay into the Treasury of the
United States moneys alleged to be due Aircraft under contract
provisions, but claimed by appellees to be payable to the
Government as excessive profits pursuant to the Acts' terms.
Cf. notes
10
13 infra.
[
Footnote 8]
The amended complaint alleges that appellant supplied materials
to the Department of the Navy under one contract made directly
between it and the Government. But it is also alleged that
appellant has been paid in full for these supplies. Apparently,
therefore, the contract and the relation which it created between
appellant and the Government have no bearing upon the issues in
this cause.
[
Footnote 9]
The First Renegotiation Act did not provide for redetermination
by the Tax Court as originally enacted; nor did it specifically
provide for review, by any body, of the determination of excessive
profits.
See Steadman, A Further Legal Inquiry Into
Renegotiation: I (1944) 43 Mich.L.Rev. 1, 12. But Tax Court
redetermination was afforded by the Second Renegotiation Act, and
was made retroactive. 50 U.S.C. App. § 1191(e)(2) provides that it
is available to
"Any contractor or subcontractor . . . aggrieved by a
determination of the Secretary made prior to the date of the
enactment of the Revenue Act of 1943, with respect to a fiscal year
ending before July 1, 1943, as to the existence of excessive
profits."
[
Footnote 10]
The original Act, as amended, provided:
"Upon renegotiation, the Secretary is authorized and directed to
eliminate any excessive profits under such contract or subcontract
. . . (iii) by directing a contractor to withhold for the account
of the United States, from amounts otherwise due to the
subcontractor, any amount of such excessive profits under the
subcontract. . . ."
56 Stat. at 983.
See also note 13
[
Footnote 11]
An earlier petition was dismissed on motion of the United States
because it was filed during the time when the War Contracts Price
Adjustment Board might have initiated a review.
Cf. Macauley v.
Waterman S.S. Corp., 327 U. S. 540.
After dismissal of the earlier petition and before filing of the
later one, appellant had sought redetermination, pursuant to §
403(e)(1) of the Second Renegotiation Act, by the War Contracts
Price Adjustment Board. The Board denied review and adopted the
Under Secretary's redetermination as its own.
[
Footnote 12]
For example, in addition to contentions that the Renegotiation
Acts, as a matter of substantive law, violate Article I, § 1, of
the Constitution in that they constitute unlawful delegations of
legislative power as well as contravene the due process and just
compensation provisions of the Fifth Amendment, the jury trial
provision of the Seventh Amendment, and the Tenth Amendment, it is
said that the order under the Second Renegotiation Act was based in
part at least on information said to have been obtained from
"governmental and other reliable sources" which the appellant has
had no opportunity to examine or rebut.
[
Footnote 13]
Section 403(c)(2) of the Second Renegotiation Act, 50 U.S.C.
App. § 1191(c)(2), provides:
"Upon the making of an agreement, or the entry of an order,
under paragraph (1) by the Board, or the entry of an order under
subsection (e) by The Tax Court of the United States, determining
excessive profits, the Board shall forthwith authorize and direct
the Secretaries or any of them to eliminate such excessive profits
(A) by reductions in the amounts otherwise payable to the
contractor under contracts with the Departments, or by other
revision of their terms; or (B) by withholding from amounts
otherwise due to the contractor any amount of such excessive
profits; or (C) by directing a contractor to withhold for the
account of the United States, from amounts otherwise due to a
subcontractor, any amount of such excessive profits of such
subcontractor; or (D) by recovery from the contractor, through
repayment, credit, or suit any amount of such excessive profits
actually paid to him; or (E) by any combination of these methods,
as in deemed desirable. . . ."
[
Footnote 14]
The allegations included the following:
"Notwithstanding the fact that the plaintiff has filed its
petition for redetermination in The Tax Court of the United States
whereby it seeks an orderly determination of the amount, if any, it
may owe to the United States of America, as excessive profits for
its fiscal year ending November 30, 1943, the War Contracts Price
Adjustment Board, purporting to act under the provisions of Section
403(c)(2) of the Renegotiation Act, purposes to direct the
defendant Henry L. Stimson, Secretary of War, or his delegates, to
direct contractors, customers of the plaintiff, to withhold moneys
due to the plaintiff by such contractors for the account of the
United States in amounts determined by it, the War Contracts Price
Adjustment Board, to be due as excessive profits, and Henry L.
Stimson, Secretary of War, or his delegates proposes to follow such
directions of the War Contracts Price Adjustment Board, and further
to direct such contractors to pay such sums of money into the
Treasury of the United States in accordance with the procedure
adopted by Henry L. Stimson, Secretary of War, acting through his
delegate, Robert P. Patterson, in respect of excessive profits
found by him to be due for the fiscal year of the plaintiff ending
November 30, 1942, as heretofore, recited in this complaint, before
The Tax Court of the United States of America shall have made or
shall have had opportunity to make any determination of the
plaintiff's petition for a redetermination of its excessive
profits, if any, for its fiscal year ending 1943."
See also note
42
[
Footnote 15]
The omission from the First Act of various provisions contained
in the Second,
see, e.g., note 9 supra, is alleged to afford basis for
invalidating the former even though the latter may be held
constitutional.
[
Footnote 16]
See note 42
infra.
[
Footnote 17]
Although asserted by way of equitable setoff, the effect of
allowing such a claim would be, as we said in the
Mine
Safety case, to prevent the Secretary from taking certain
action which, though it would not
"stop payment by the government of money lawfully in the United
States Treasury to satisfy the government's, and not the
Secretary's, debt to the appellant,"
nevertheless would amount to "an indirect effort to collect a
debt allegedly owed by the government in a proceeding to which the
government has not consented," 326 U.S. at
326 U. S.
374-375, and to which, as in that case, it has not been
made formally a party.
[
Footnote 18]
Especially
Louisiana v. McAdoo, 234 U.
S. 627;
Belknap v. Schild, 161 U. S.
10;
In re Ayers, 123 U.
S. 443.
[
Footnote 19]
Appellant's claim is that ordering its customers not only to
withhold funds due to it under the contracts but also to pay them
into the Treasury would be, in effect, a "trespass upon its
property" within the rule of
United States v. Lee,
106 U. S. 196;
cf. Land v. Dollar, 330 U. S. 731, and
that execution of such orders would deprive it of vested property
rights, contrary to various constitutional provisions. Since a
decision of the constitutional issues would determine the
Government's right to the funds in any event, the case, like
Land v. Dollar, supra, would seem to be one "where the
question of jurisdiction [as involving the Government's immunity to
suit] is dependent on decision of the merits." 330 U.S. at
330 U. S.
735.
[
Footnote 20]
The provision, however, applies to determinations made prior to
the Act's effective date.
See note 9 supra.
[
Footnote 21]
Otherwise, the Board's order becomes final. § 403(c)(1). The
provision reads:
"In the absence of the filing of a petition with The Tax Court
of the United States under the provisions of and within the time
limit prescribed in subsection (e)(1), such order shall be final
and conclusive, and shall not be subject to review or
redetermination by any court or other agency."
Similarly, a limitation of one year is placed upon "all
liabilities of the contractor or subcontractor for excessive
profits received or accrued" during each fiscal year.
See
§ 403(c)(3).
[
Footnote 22]
See note 11
supra.
[
Footnote 23]
Citing, at 90 Cong.Rec. 1355, the statement of a sponsor in the
House that the Tax Court could decide "all questions of fact and
law. . . ."
See also notes
30 35
infra.
[
Footnote 24]
The Waterman S.S. Corporation not only had failed to file a
petition with the Tax Court, but also had refused to attend
renegotiation conferences with the Board, or to supply information
sought by it.
[
Footnote 25]
See note 26
infra.
[
Footnote 26]
See 89 Cong.Rec. 9928-9929. Previously, the
governmental departments concerned with renegotiation had set up a
central board to effect a "more uniform policy in the determination
of excessive profits," H.Rep. 871, 1st Sess., 75, but there was
dissatisfaction with the board thus voluntarily established,
see 89 Cong.Rec. 9934, and
"insistence in Congress that coordination between the
departments having renegotiating authority under the prior act be
not a matter of voluntary cooperation, but one of statutory
necessity."
Steadman, A Further Legal Inquiry Into Renegotiation: I (1944)
43 Mich.L.Rev. 1, 6.
[
Footnote 27]
See 53 Stat. 158, as amended by 56 Stat. 957, 26 U.S.C.
§ 1100:
"The Board of Tax Appeals (hereinafter referred to as the
'Board') shall be continued as an independent agency in the
Executive Branch of the Government. The Board shall be known as The
Tax Court of the United States, and the members thereof shall be
known as the presiding judge and the judges of The Tax Court of the
United States."
[
Footnote 28]
See H.Rep. 871, 78th Cong., 1st Sess., 77; Steadman, A
Further Legal Inquiry Into Renegotiation: II (1944) 43 Mich.L.Rev.
235, 270;
cf. S.Rep. 627, 78th Cong., 1st Sess., 109;
H.Rep. 1079, 78th Cong., 2d Sess., 83.
[
Footnote 29]
Dobson v. Commissioner, 320 U.
S. 489,
320 U. S. 498;
cf. note 27
[
Footnote 30]
"That court will have exclusive jurisdiction, by an order, to
make a final determination as to whether excessive profits have
been received or accrued, or whether a fair price has been
determined, and The Tax Court's determination may not be reviewed
or redetermined by any other court or agency."
H.Rep. 871, 78th Cong., 1st Sess., 77.
See also 89
Cong.Rec. 9930:
"The committee has provided that any contractor aggrieved by a
determination of excessive profits under the old law, whether he
was cooperative and signed a closing agreement or not, may have a
review of that determination in the Tax Court of the United States
and in the review have all issues, constitutional and otherwise,
decided by the court."
[
Footnote 31]
See note 13
supra.
[
Footnote 32]
The record contains an affidavit made by Robert P. Patterson,
when Under Secretary of War, which reads in part:
"Wartime procurement for the military establishment differs
radically from procurement in times of peace. Speed in production
at once becomes all-important. . . ."
". . . the war procuring agencies cannot use normal methods of
procurement. The pressing need for speed requires the abandonment
of drawn-out negotiation and the careful surveys of all relevant
factors which sound purchasing would otherwise require. Competition
necessarily wanes, and no longer offers an adequate guide to the
prices which should be paid. Above all, the forecasting of costs of
production becomes, in large measure, a matter of informed
guessing, rather than of real cost analysis."
[
Footnote 33]
The Second Renegotiation Act separated the repricing authority
from renegotiation.
See 58 Stat. 92, 50 U.S.C. App. §
1192.
See also S.Rep. 627, 78th Cong., 1st Sess.,
37-38.
[
Footnote 34]
See note 38
infra.
[
Footnote 35]
See notes
23
30 supra; cf. Helvering
v. Independent Life Ins. Co., 292 U.
S. 371,
rev'g Commissioner v. Independent Life Ins.
Co., 67 F.2d 470,
aff'g 17 B.T.A. 757;
Stein
Bros. Mfg. Co. v. Secretary of War, 7 T.C. 863.
[
Footnote 36]
A copy of the petition for redetermination filed in the Tax
Court by appellant has been attached as an exhibit to the
complaint.
[
Footnote 37]
Appellant, in its complaint, alleged, for example, that
although, for the fiscal year ending November 30, 1943, its total
sales amounting to $3,548,845.50 were renegotiated,
"only $2,207,574.95, in any event, were subject to
renegotiation; that $1,312,250.07 of its total sales were of
'Standard Commercial Articles' as defined in the Renegotiation Act;
were articles sold under competitive conditions affecting the sale
thereof in a manner which reasonably protected the Government
against excessive prices, and, as such, were not subject to
renegotiation; that $29,020.48 of its total sales were not sold for
the ultimate use of the United States of America or any department,
agency or instrumentality thereof, but were made and sold for
civilian use, and, as such, were not subject to renegotiation."
[
Footnote 38]
Thus, the Court has permitted resort to a federal court of
equity where a state was enforcing confiscatory rates and, by its
law, precluded a stay or supersedeas until the state courts,
"acting in a legislative capacity," had taken final action.
Oklahoma Natural Gas Co. v. Russell, 261 U.
S. 290;
Pacific Telephone & Telegraph Co. v.
Kuykendall, 265 U. S. 196;
Porter v. Investors Syndicate, 286 U.
S. 461. For other decisions holding that a federal court
may exercise its equitable jurisdiction where there is an
inadequate state remedy to correct a constitutional wrong,
see
Hillsborough v. Cromwell, 326 U. S. 620;
Wallace v. Hines, 253 U. S. 66.
The rule has been applied most frequently in respect to state,
rather than federal, administrative action, though, of course, it
is not inapplicable to the latter, notwithstanding the power of
Congress to regulate the jurisdiction and procedure of the federal
courts may present obstacles to its application not present in
state cases.
[
Footnote 39]
It is unnecessary to consider whether, in such a suit, a
district court should find it proper to defer its final decision
until after the Tax Court had made it final redetermination, in
order possibly to avoid the necessity of deciding the
constitutional questions.
Cf. American Federation of Labor v.
Watson, 327 U. S. 582,
327 U. S. 599,
and cases cited. For, even in the event of such action, the court
would have power to preserve, pending the administrative decision,
the
status quo and all rights of the appellant. The
provision in § 403(e)(1) that the filing of a petition with the Tax
Court "shall not operate to stay the execution of the order of the
[War Contracts Price Adjustment] Board" under § 403(c)(2) does not
mean that the courts are deprived of their power to grant stays
where necessary. "Where Congress wished to deprive the courts of
this historic power, it knew how to use apt words. . . ."
Scripps-Howard Radio v. Federal Communications Commission,
316 U. S. 4,
316 U. S. 17. It
did so in the Emergency Price Control Act of 1942, 56 Stat. 23;
see Yakus v. United States, 321 U.
S. 414,
321 U. S. 429,
321 U. S. 437,
using very explicit language. Here, the provision -- literally, at
any rate -- appears to mean only that there shall be no automatic
stay by virtue of filing the petition in the Tax Court.
[
Footnote 40]
The paragraph covers withholding payment pursuant to direction
by the Board to the contractor for the account of the United
States.
See note 13
supra.
[
Footnote 41]
The situation of the licensor in the
Coffman case with
reference to the remedy by suit against its licensees was exactly
the same as appellant's situation here in respect to suit against
its customers, the contractors with the Government. We said as to
the adequacy of that remedy:
"But whether the provisions of the Act be valid or invalid,
appellants show no ground for equitable relief. If valid, they
would be a defense, and appellant would be entitled to no relief
other than that afforded by the suit against the Government
authorized by § 2 of the Act. If invalid, appellant's right to
recover remains unimpaired. The sufficiency of the defense may be
as readily tested in a suit at law to recover the royalties as by
the present suit in equity to enjoin payment of the royalties into
the Treasury. In either case, appellant would receive all the
relief to which it shows itself entitled."
323 U.S. at
323 U. S.
323.
The
Coffman decision stood squarely upon the grounding
of the adequacy of the remedy by suit against the licensees,
although it rested also upon the alternative ruling that there was
no case or controversy. This was for the reason that the appellant
asserted no right to recover the royalties, but asked only a
determination that the Royalty Adjustment Act was unconstitutional
"and, if so found, that compliance with the Act be enjoined, an
issue which appellee . . . declines to contest." This, we said,
made the prayer of the bill "but a request for an advisory opinion
as to the validity of a defense to a suit for recovery of the
royalties." 323 U.S. at
323 U. S.
323-324.
[
Footnote 42]
It is alleged that appellant, unless allowed to maintain this
suit, will be caused unnecessarily to run the risk of impaired
credit or insolvency of customers directed to withhold funds; that
its working capital essential to carrying out its obligations with
contractors and subcontractors would be reduced; that its
operations "will be hampered, and its functions irreparably
damaged, by the reduction of its working capital;" and that it will
be forced either to continue supplying customers directed to
withhold payment, impairing its assets and the interests of
stockholders or, in the alternative, to refuse making such
shipments with the asserted consequence of being unable to continue
in business, "inasmuch as a substantial portion of its market for
its products presently is prime contractors with the United States
and subcontractors thereof."
[
Footnote 43]
Appellant also alleges that it "could not recover interest for
the use of its money" in a suit against the United States in the
Court of Claims, which on other counts it asserts is both
unavailable and inadequate. There is no allegation, however,
concerning interest as not being recoverable in suits against its
customers. And, as we have pointed out above, the statutory
indemnity provided for such contractors is in sufficiently broad
terms to cover interest as well as any other liability incurred by
them through authorized withholding -- a guaranty which certainly
would not preclude recovery of interest by the suit against the
contractors if terminated on the merits in appellant's favor.
[
Footnote 44]
It is perhaps of some significance in this respect that the
complaint contains allegations, though not made in this connection,
relating to both the fiscal years 1942 and 1943 to the effect that
over 80 percent of the dollar value of appellant's total shipments
were made to three private concerns, Fairchild Engine and Airplane
Corporation, General Motors Corporation, Woodward Governor Company,
and the United States Navy. Concerning the shipments to the Navy,
see note 8
[
Footnote 45]
See note 43
supra.