Source: https://supreme.justia.com/cases/federal/us/263/39/
Timestamp: 2019-04-26 15:47:35+00:00

Document:
1. In a suit in the United States District Court for the Canal Zone to restrain the Governor and other officials of the Panama Canal from carrying out an order of the President, upon the ground that plaintiffs will thereby be deprived of personal or property rights contrary to the federal laws and Constitution, an objection that the suit is in effect against the United States does not raise a question of the jurisdiction of the trial court as a federal court reviewable directly by this Court under Jud.Code, § 238, as amended January 28, 1915. P. 263 U. S. 41.
2. The Act of September 21, 1922, providing that review by the Circuit Court of Appeals, Fifth Circuit, of judgments of the District Court for the Canal Zone shall include all questions of jurisdiction, was expressly inapplicable to cases then pending in the former court, and, by implication, does not affect a case which had passed through that court and was pending here on appeal from its judgment at the date of the act. P. 263 U. S. 42.
"That all laws, orders, regulations, and ordinances adopted and promulgated in the Canal Zone by order of the President for the government and sanitation of the Canal Zone and the construction of the Panama Canal are hereby ratified and confirmed as valid and binding until Congress shall otherwise provide"
orders and regulations such as those allowing free quarters, fuel, electric current, water, etc., to government employees. P. 263 U. S. 43.
4. Under the Act of March 4, 1907, debts owing the government of Panama by government employee were deductible from their pay. P. 263 U. S. 49.
Appeal from a decree of the circuit court of appeals affirming a decree of the United States District Court for the Canal Zone which dismissed the bill in a suit of a government employee in the Zone to restrain the Governor and other officials of the Canal from effectuating an order of the President making them chargeable with rent, fuel, etc.
This was a complaint filed in the United States District Court for the Canal Zone by Harvey McConaughey, in behalf of himself and of all other government employees occupying government quarters in the Zone, against the Governor, Auditor, and Paymaster of the Panama Canal charging that the defendants were about to make a charge against complainants for rent, fuel, electric current, water, and services in connection with their quarters on and after January 1, 1922, and, in case of nonpayment, to deduct the same from their lawful pay or to oust them from their quarters, all in pursuance of and compliance with an order of the President of December 3, 1921, issued without legal authority and invalid because in conflict with the Constitution and laws of the United States.
The defendants made a motion to quash the order to show cause which had been issued against them and to dismiss the bill because the case was one in effect against the United States, and because it sought to control the executive discretion vested by law and the Constitution in the President and his subordinates. The court sustained the motion, finding that the order of December, 3, 1921, was within the legal authority of the President, and, under that order, the defendants had the discretion to adopt the regulations, enforcement of which it was sought in the bill to enjoin.
An appeal was taken to the Circuit Court of Appeals for the Fifth Circuit under § 9 of the Act of Congress of August 24, 1912, c. 390, 37 Stat. 560, 566. A motion to dismiss the appeal was made in the circuit court of appeals on the ground that it was based solely on a question of jurisdiction, and therefore should have come directly to this Court on a certificate of jurisdiction under § 238 of the Judicial Code as amended January 28, 1915, c. 22, 38 Stat. 804. The circuit court of appeals held that the case did not present a question of jurisdiction of the district court within § 238, that that section applied only to a question of the court's jurisdiction of the parties or subject matter as a federal court, and that no such issue had been raised here.
"This Court has had frequent occasion to determine what is meant in the statute providing for review of cases in which the jurisdiction of the court is in issue, and it has been held that the statute means to give a review not of the jurisdiction of the court upon general grounds of law or procedure, but of the jurisdiction of the court as a federal court."
See also Louisville Trust Co. v. Knott, 191 U. S. 225; Bache v. Hunt, 193 U. S. 523.
By the Act of September 21, 1922, c. 370, 42 Stat. 1004, 1006, amending § 9, it is provided that review by the circuit court of appeals of the judgments and decrees of the District Court of the Canal Zone shall include all questions of jurisdiction, thus making § 238 of the Judicial Code thereafter inapplicable to cases coming up from that court. The amendment, however, by its terms, did not affect cases then pending in the court of appeals, and provided that they were to be disposed of as if it had not been enacted. The present case was pending in this Court at the time, and we cannot suppose, in view of the saving clause as to cases which had reached the circuit court of appeals, that the act was intended to have any effect upon cases which had passed through the circuit court of appeals and had been lodged here. We must deal with this case, therefore, as if the amendment of September 21, 1922, had not been passed. Under either statute, however, the whole case is before us on the sufficiency of the complaint presented below by the motion of the defendants to dismiss it.
"Whenever practicable and in the best interest of the service, an employee will be provided with such quarters on the Isthmus as may be available from time to time,"
and that thereafter, by proper orders, free fuel, electric current, and other service were allowed to employees in government quarters.
"That all laws, orders, regulations, and ordinances adopted and promulgated in the Canal Zone by order of the President for the government and sanitation of the Canal Zone and the construction of the Panama Canal are hereby ratified and confirmed as valid and binding until Congress shall otherwise provide."
Appellant contends that, as all the regulations of the Commission were authorized by the President, and, unless revoked, were to be taken as confirmed by him, they were by the § 2 just quoted made into an act of Congress, and thereafter could not be revoked or amended save by another act of Congress otherwise providing. Hence it is claimed that the Commission's regulation of April 1, 1907, with its succeeding orders on the same subject, has all the force of an act of Congress, not to be amended by the President, and that, by its terms, all employees are entitled to free quarters and to the other privileges.
The force to be given to this claim depends primarily on the proper construction of § 2 of the Panama Canal Act of 1912, and that needs for its reasonable interpretation a short consideration of its legislative history.
"That, until the expiration of the Fifty-Eighth Congress, unless provision for the temporary government of the Canal Zone be sooner made by Congress, all the military, civil, and judicial powers, as well as the power to make all rules and regulations necessary for the government of the Canal Zone and all the rights, powers, and authority granted by the terms of said treaty to the United States shall be vested in such person or persons and shall be exercised in such manner as the President shall direct for the government of said Zone and maintaining and protecting the inhabitants thereof in the free enjoyment of their liberty, property, and religion. "
Under this act, the President took possession of the Zone and directed that the Canal should be constructed and the Zone governed by him through the Panama Canal Commission under the supervision of the Secretary of War. Letter of President to Secretary of War, May 9, 1904; Executive Order relating to Panama Canal, p. 20; Executive Order dated November 17, 1906 Idem., page 55. A government was organized, a modus vivendi was agreed to with the government of Panama, and the construction of the Canal was carried on. A governor of the Canal was appointed, courts were established, and complete rules and regulations having the force of law were duly adopted and enforced. Law and order were thus maintained, persons violating these regulations were prosecuted and convicted, and the construction of the Canal was much aided by the governmental control exercised by the same body that carried on the great work. A volume of Canal laws thus enacted and a volume of Executive Orders relating to the Canal were published by the Canal authorities.
"Government of the Canal Zone will be continued to be administered in obedience to the laws of the United States in force in that territory, the executive orders heretofore issued, and the laws of the Canal Zone enacted by the Isthmian Canal Commission during the period it was authorized under Act of Congress approved April 28, 1904, to exercise the power of legislation."
"The fact is that today there is no statutory law by authority of which the President is maintaining the government of the Zone. Such authority was given in an amendment to the Spooner Act, which expired by the terms of its own limitation some years ago. Since that time, the government has continued under the advice of the Attorney General that, in the absence of action by Congress, there is necessarily an implied authority on the part of the Executive to maintain a government in a territory in which he has to see that the laws are executed. The fact that we have been able thus to get along during the important days of construction without legislation expressly formulating the government of the Zone, or delegating the creation of it to the President, is not a reason for supposing that we may continue the same kind of government after the construction is finished. The implied authority of the President to maintain a civil government in the Zone may be derived from the mandatory direction given him in the original Spooner Act, by which he was commanded to build the Canal; but certainly, now that the Canal is about to be completed and to be put under a permanent management, there ought to be specific statutory authority for its regulation and control and for the government of the Zone, which we hold for the chief and main purpose of operating the Canal."
"all laws, orders, regulations and ordinances adopted and promulgated in the Canal Zone by order of the President for the government and sanitation of the Canal Zone and the construction of the Panama Canal."
through a Governor of the Panama Canal and such other persons as he may deem competent to discharge the various duties connected with the completion, care, maintenance, sanitation, operation, government, and protection of the Canal and Canal Zone."
In 1914, the President discontinued the Commission and appointed a Governor. On January 15, 1915, he issued an executive order announcing that the policy of furnishing quarters, fuel, and electric current free to all employees was revocable, conferred no vested right upon employees, and its future revocation would not be made the basis for increasing compensation. Ex Order No. 2118, Executive Orders Relating to Panama Canal, Annotated, p. 207. Certainly, after this, the appellant cannot claim that he and those on whose behalf he sues were misled into accepting employment on the faith of the maintenance of these privileges. Six years thereafter, the President made the order here complained of, directing that the changes imposed therein upon employees should be deducted from their pay. The right to deduct from their pay debts owing to the government by Panama employees was expressly conferred by the eighth section of the Act of March 4, 1907, c. 2918, 34 Stat. 1371. The President's order was therefore valid in all respects.
The circuit court of appeals held that the so-called regulation of 1907, in its form and language, was only a declaration of revocable policy, and, on its face, was not a rule capable of being stiffened into binding legislation under § 2 of the Canal Act. We have, however, preferred to put our conclusion on the broader ground that the subject matter of the regulation was not covered by the section.
The motion to dismiss was properly granted by the district court, and its decree was properly affirmed by the circuit court of appeals.

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