Court Opinion

ID: 9643922
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:43:39.794248+00
Date Added: 2024-06-11T18:11:05.612405
License: Public Domain

BUFFINGTON, Circuit Judge
(dissenting).
Being of opinion that the decree of the court below, if it were enforced by a final decree, would in substance and reality be a control of the executive branch of the government by the judicial, I respectfully 'note my dissent. In doing so I shall not discuss the far-reaching questions involved, but coniine myself to a statement of the pertinent documentary facts, from which, as it seems to me, the warrant for this dissent sufficiently appears.
By his letter to Herbert Hoover, United States Eood Administrator, on July 8, 1918, Woodrow Wilson, President of the United States, authorized and directed him to proceed to incorporate the United States Sugar Equalization Board, with the powers set out in a submitted certificate of incorporation. The letter further directed: “All of the capital stock is to be held by the United States except for qualifying directors. * * * Any outstanding stock standing m the name of the United States shall bo voted by you or by sueh person as you see fit to appoint your agent for this purpose.” The described certificate was for a Delaware corporation, authorized “to purchase, or otherwise acquire, manufacture, sell or otherwise dispose of, store, handle and otherwise deal in and with raw and refined cane and beet sugar, syrups, molasses and other commodities, and to do all acts and things necessary, expedient or incidental to the efficient conduct of said business, within or without the state of Delaware,” and also “to ex-*988ereise all powers which may he delegated to it by the President of the United States.”
In becoming a stockholder in this Delaware corporation, the government placed itself on a stockholder’s status, and imparted to it none of the attributes of sovereignty. In that respect, Chief Justice Marshall said in United States Bank v. Planters’ Bank, 9 Wheat. 904, 6 L. Ed. 244: “The government, by becoming a corporator, lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter.” It therefore follows that the relations -of the corporation and the government were simply those existing between a corporation and its stockholders, with the added charter provision that the corporation was “to exercise all powers which may be delegated to it by the United States.”
Practically the only business the corporation did was the purchase and sale of the entire Cuban raw sugar crops of 1918 and 1919, and by December, 1919, its work was done. On December 31, 1919, the McNary Act (Comp. St. Ann. Supp. 1923, p. 1034) was passed, by which the President was authorized to continue the operation of the board.
On January 3, 1920, President Wilson decided not to exercise the authority so conferred on him to authorize.' a continuance, and so informed the corporation board, which on January 16, 1920, replied thereto, to the President, that, “in view of the decision from the White House, the members of the board conclude that there are no further duties for it to perform, except to proceed with the liquidation of its affairs in preparation for a dissolution. The board is acting accordingly.” This proposed course of liquidation the President approved on January 30, 1920, in a letter stating “that, in view of all the circumstances, it seems proper that you proceed with the liquidation of the affairs of the United-States Sugar Equalization Board as suggested.”
In view of the fact that the United States was the sole owner of the corporation’s stock, and that by its charter it was “to exercise all powers which may be delegated to it by the President of the United States,” it would seem that the course thus directed by President Wilson of liquidating its affairs became the administrative duty of this board, and this liquidation they have proceeded with under the directions of President Wilson — and not otherwise ordered by his successors in the presidency — until the board was otherwise ordered by the District Court of Delaware in the case now before us. Such order of that court arose in this way. On February 23, 1923, a joint resolution of the Senate and House became effective by the omission of President Harding to return it which provided:
“Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, that the President' is authorized to require the United States Sugar Equalization Board (Incorporated) to take over from the corporation P. De Ronde & Company (Incorporated) a certain transaction entered into and carried on by said corporation at the request and under the direction of the Department of Justice, which transaction involved the purchase in the Argentine Republic, between the 15th day of June, 1920, and the 22d day of June, 1920, of five thousand ' tons of sugar, the importation thereof into the United States and the distribution of a portion of the same within the United States and to require the said United States Sugar Equalization Board (Incorporated) to dispense [dispose?] of any of said sugar'so imported remaining undisposed of and to liquidate and adjust the entire transaction, .paying to the corporation aforesaid such sum as may be found by s>id board to represent the actual loss sustained by them in said transaction, and for this purpose the President is authorized to vote or use the stock of the corporation held by him, or otherwise exercise or use his control over the said United States Sugar Equalization Board and its directors, and to continue the said corporation for such time as may be necessary to carry out the intention of this joint resolution.”
On March 5, 1923, President Harding wrote to the,board as follows:
“Washington, March 5, 1923.
“My Dear Mr. Zabriskie:
“As you are doubtless aware, the Congress recently authorized the President to make settlement of the claims of P. De Ronde & Co. and the American Trading Company by the United States Sugar Equalization Board. I am inclosing to you herewith copies of the resolutions enacted by Congress. I have assumed that the claim of the American Trading Company needs no further investigation, because I have your letter recommending the approval of the bill authorizing its settlement. You did not *989speak favorably concerning the De Ronds claim. I am writing, therefore, to direct that the board make a very careful inquiry into the worthiness of this claim,, with a view to reporting to me concerning the same, if possible, about April loth. I am not dired ing the board to take over from the De Ronde corporation the transaction referred to in the resolution by the Congress. If a settlement of this claim is to be made, 1 very much desire to negotiate the payment of certain obligations owing to the Emergency Fleet Corporation by P. De Monde and Company. Such an executive order as is requisite for the settlement of the approved claim of the American Trading Company I will be glad to have you submit to me for my signature.
“Very truly yours,
“(Signed) Warren G. Harding.
“Hon. George A. Zabriskie, United States Sugar Equalization Board, New York City.”
From this letter it will be seen that President Harding expressly stated that he was not directing the board to take over from the De Ronde corporation the transaction referred to in the resolution quoted. From the letter it would seem, also, that the President, before so directing the taking over of the De Ronde matter by the board, desired it “to make careful inquiry into the worthiness of this claim, with a view to reporting to me concerning the same.” It would seem, also, the President had in view that, if “settlement of this claim is to be made,” he desired thereafter “to negotiate the payment of certain obligations owing to the Emergency Fleet Corporation by P. De Ronde & Co.” Apart from this letter and the report of the board made to President Harding on June 15, 1923, after hearing the claimant, “that no moral or other obligation rests upon the government to recompense P. De Ronde & Co. for the loss sustained,” no further action was taken by him.
From this correspondence, four things are clear: First that President Harding in no way suspended or changed the direction of President Wilson to the board on January 30, 3920, to “proceed with the liquidation of the affairs of the United States Sugar Equalization Board as suggested”; second, that President Harding did not then exercise the power conferred on him by the resolution, to wit, “The President is authorized to require;” third, that, before so requiring the board to take over, he desired to be advised of the worthiness of the De Ronde claim; and, lastly, that, if the claim was to be allowed, he desired to include in its settlement certain counterclaims the government, through the Emergency Fleet Corporation, had against the claimant. From the above will be seen that President Harding did not regard the resolution as mandatory upon him to merely formally require the board to take over this De Ronde claim, but, on the contrary, it called on him to examine and decide, before he made the requirement the resolution authorized him to do, and that his conception of his duty under the resolution was not that of the court below, viz.: “That the word ‘authorized,’ as used in the resolution in question is mandatory, means ‘directed,’ and that the resolution conferred no discretionary power whatever upon the President of the United States.”
That President Harding’s conception of his duty as calling on him to exercise discretion was in accord with the time-honored holdings of the Executive Department is evidenced in the opinions of the Attorney General, vol. 8, p. 43, where Caleb Cushing stated: “Hero, first, the President is ‘authorized’ to do certain things. That is a language permissive, not language mandatory, such as continually occurs in the statutes, leaving the performance of the acts, in reference to which the language is employed, at the administrative discretion of the President.” And this construction of the resolution by President Harding, as calling for the exercise of discretionary powers thereunder by the President, is of great present import, for the federal courts, when called upon to construe statutes already construed and acted upon by the departments to which they are addressed, have heretofore adhered to the principles stated in U. S. v. Hermanos y Compania, 209 U. S. 339, 28 S. Ct. 533, 52 L. Ed. 821: “When the meaning of a statute is doubtful, great weight should be given to the construction placed upon it by the department charged with its execution” — and many other eases; Robertson v. Downing, 127 U. S. 607, 8 S. Ct. 1328, 32 L. Ed. 269; United States v. Healey, 160 U. S. 136, 16 S. Ct. 247, 40 L. Ed. 369.
President Harding’s conception of duty under this resolution was followed by President Coolidge. Acting, evidently, on the adverse report made to President Harding by the board on the De Ronde claim, and that “therefore no call upon its resources for this purpose is now contemplated,” President Coolidge, in a letter dated October 6, *9901923, gave final directions as follows: “It seems highly desirable that the board should be completely wound up. I would be glad indeed if you would let me know if its activities should not be terminated and it final resources at once remitted to the Treasury and the board dissolved:”
Without question, this process of liquidation and dissolution ordered by President Wilson on January 3, 1920, unchanged by President Harding, and confirmed by President Coolidge October 6, 1923, would' already have been carried out, had not the board been enjoined by the court below in a bill in equity filed by De Bonde & Co. against it. Can such bill and action be sustained? Prom the foregoing facts, it is clear that no contract relation, express or implied, exists between the defendant company and De Bonde & Co. Whatever was the'duty of President Harding or President Coolidge under the resolution, one thing is certain: Neither of them has ever requested the board “to take oyer from the corporation, P. De Bonde & Co. (Inc.), a certain transaction, and therefore the board is in no default and owes no duty to De Bonde & Co.” If default or omission' to perform has occurred, and the resolution did not call on the board to act until the President required it to do so, it is not the default of the board, but solely the default or omission ' of the President, and he > is not made a party to this bill nor subjected to mandatory process. Under such circumstances, with no contract relationship between the board and the De Bonde Company, with no imposition of any duty upon it by the act of Congress itself, and with no requisition made upon it by the President, whom Congress named as the requisitioner, it is clear there has been no default on the part of this corporation.
Whatever may, or may not, have been Congress’ own power, itself, to require, in express terms, this company to take over the De Bonde transaction, Congress did not do so. Nor did Congress authorize the court to so require the board to take over that transaction. Por its own reasons and in its own way, Congress made the President the requiring power, and did not follow the course the court below has followed, namely, of the company being required to act without the interposition of the President. That is the real situation, and, bluntly speaking, in my judgment, the ease eomes down to this: Congress, by its resolutions, did one of two things; it either authorized the President to exercise discretion before he required the company to act, or it absolutely and unqualifiedly required the President to require. In the former case, the President’s inaction is not a subject of judicial inquiry, and in the latter case, viz. refusal of the President to obey the law, the remedy, under the Constitution, is by congressional impeachment, and not by judicial decree.-