Court Opinion

ID: 9448213
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:25:54.452371+00
Date Added: 2024-06-11T17:31:19.632171
License: Public Domain

BLACKMUN, Circuit Judge
(dissenting).
I must dissent. While this case is a close and troublesome one for me, and while the challenged dispensation is a *447gratuity1 made under emergency conditions, I think it strange that the United States, under the statutes and regulations here involved, is to be denied any opportunity whatsoever to test the validity of the disposal of government property by a local committee subject to local pressures in a situation so questionable that someone asked the committee to make a second investigation. I can concede perhaps that the Congress possesses the power so to foreclose the government but I am not convinced that that power has been exercised here.
One begins with the obvious fact that this is a lawsuit instituted by the United States for reimbursement. It is not a proceeding for review of a county committee’s action. Usually, in this situation, certain firmly established principles govern:
1. The United States, by appropriate action and wholly apart from statute, may recover government funds which its agents have wrongfully, erroneously or illegally paid. This “right to recover funds, from a person who received them by mistake and without right, is not barred unless Congress has ‘clearly manifested its intention’ to raise a statutory barrier” (footnote omitted). United States v. Wurts, 303 U.S. 414, 415-6, 58 S.Ct. 637, 638, 82 L.Ed. 932; United States v. Sanborn, 135 U.S. 271, 281, 10 S.Ct. 812, 34 L.Ed. 112; Stone v. United States, 8 Cir., 286 F.2d 56, 58-9.
2. The government is not bound by the acts of its agent which are beyond the limits of his authority; persons dealing with that agent are charged with notice of his agency’s limitations. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10; Farm Security Administration v. Herren, 8 Cir., 165 F.2d 554, 564, certiorari denied 333 U.S. 875, 68 S.Ct. 904, 92 L.Ed. 1151; Stone v. United States, supra, at page 58 of 286 F.2d.
3. “Men must turn square corners when they deal with the Government”. Rock Island, A. & L. R. R. Co. v. United States, 254 U.S. 141, 143, 41 S.Ct. 55, 56, 65 L.Ed. 188; Merrill, supra, at page 385 of 332 U.S., at page 1 of 68 S.Ct.
Also, one may assume and conclude here:
1. That the delegation of authority by the Secretary to the FHA and the placement upon the county committees of responsibility for certification were'proper.
2. That the regulations in question, 6 C.F.R. Part 388, 19 F.R. 5199 (revoked December 11, 1957, 22 F.R. 9877), were valid.
3. That the appearance of the regulations in the Federal Register gave legal notice of their content to all affected thereby. 44 U.S.C.A. § 307; Federal Crop Ins. Corp. v. Merrill, supra, at page 385 of 332 U.S., at page 1 of 68 S.Ct.; Kempe v. United States, 8 Cir., 151 F.2d 680, 684.
4. That these regulations have “the force and effect of law”. Maryland Casualty Co. v. United States, 251 U.S. 342, 349, 40 S.Ct. 155, 158, 64 L.Ed. 297; F. T. Dooley Lumber Co. v. United States, 8 Cir., 63 F.2d 384, 386, certiorari denied 290 U.S. 640, 54 S.Ct. 58, 78 L.Ed. 556; Jones v. United States, 8 Cir., 189 F.2d 601, 603.
5. That the regulations are binding upon the FHA as well as upon others. Chapman v. Sheridan-Wyoming Co., 338 U.S. 621, 629, 70 S.Ct. 392, 94 L.Ed. 393; *448United States ex rel. Aecardi v. Shaughnessy, 347 U.S. 260, 267, 74 S.Ct. 499, 98 L.Ed. 681; School District 2 Fractional etc. v. United States, 6 Cir., 229 F.2d 681, 686.
6. That agency action which substantially violates agency regulations “cannot stand”. Service v. Dulles, 354 U.S. 363, 388-389, 77 S.Ct. 1152, 1 L.Ed.2d 1403; United States ex rel. Accardi v. Shaughnessy, supra.
The foregoing propositions, taken together, would seem to me to dispose of this case and to require a reversal of the summary judgment against the government.
The majority, the trial court and the defendant, however, would reach out for and bring into play the provisions of the Administrative Procedure Act of June 11, 1946, c. 324, 60 Stat. 237, as amended, 5 U.S.C.A. §§ 1001 to 1011, and would regard the county committee’s decision as a non-reviewable agency action. Presumably, although it did not cite United States v. Wurts, supra, and the principle it establishes, the trial court must have felt, as the majority obviously do, that this Act provides the “statutory barrier” which Wurts regards as the exception to its rule.
I have emphasized that this is not a proceeding directly to review an administrative order and thus is not one to which § 1009 of 5 U.S.C.A. literally applies. Tempting as it is, this case need not be decided on the procedural distinction between a petition for review and an action to recover benefits. Neither does it need to be decided on the ground that the FHA national office determination in March 1955 of the defendant’s ineligibility precludes the defendant from now taking issue with this conclusion as a matter of defense. Those questions could be left for the future.2 Assuming that this lawsuit, for present purposes, is the equivalent of a review proceeding, one is taken directly into the broadly controversial area3 of the Administrative Procedure Act4 and is compelled to measure its impact upon the facts of this case.
Section 1001(g) widely defines “agency action”5 and 1009(a), (c) and (e) liberally provide 6 for review. This review, *449however, is subject to the initial restrictive phrase of § 1009:
“Except so far as (1) statutes preclude judicial review or (2) agency-action is by law committed to agency discretion”.
The first exception of § 1009 obviously does not apply here and we are concerned only with the second exception which has to do with commitment to agency discretion. Was there such commitment here?
Whether one accepts or refuses the proposal that judicial review of administrative action is the rule, and nonreviewability is the exception which must be demonstrated,7 is, so far as I am concerned, a consideration not too important for this case.
The very regulations before us, § 388.4 and its subdivisions, clearly set forth conditions for an applicant’s eligibility to receive emergency assistance and for his use of the supplies furnished: (1) that the applicant be an established farmer or stockman; (2) that his principal occupation be farming or ranching (as therein defined); (3) that his financial condition be such that he requires assistance under the program; (4) that that assistance be needed in order to maintain his foundation herd and continue his livestock operations; (5) that the fact that prevailing feed prices are not profitable is not sufficient to qualify him; (6) that the assistance be limited to maintenance of foundation herds of cattle, sheep and goats; (7) that the herd consist only of the breeding stock; (8) that the assistance be limited to a 60-day supply after taking into consideration feed on hand and to be produced or otherwise acquired; (9) that dairymen who normally purchase all their feed do not qualify; and (10) that any feed obtained under the Program be used only for feeding the basic herd in the county designated. These conditions, standing alone, suggest comparatively little by way of discretion for the county committee and could not be regarded as encompassing something definitely “committed to agency discretion” within the meaning of § 1009 of the Act.
Section 388.4, however, does not stand alone. Section 388.6(b) commands that the county committee base its decision primarily upon the information supplied by the applicant. But it also permits, or perhaps even charges, the committee to “take into consideration other information, including” (1) “knowledge of the Committeemen concerning the applicant’s operations and finances”; (2) *450knowledge of the committeemen concerning “local conditions”; (3) knowledge of the committeemen concerning “probable duration of the emergency feeding period”; (4) “the general effect of the emergency conditions on the applicant’s ability to meet his future operating expenses”; and (5) “the probable effect of the emergency on the applicant’s income”. It then concludes with the prescription that the committee “will be expected to apply” these “policies in a manner which will result in the impartial certification of applications, and will be expected to take reasonable precautions to see that * * feed is not furnished under this program to” those “who are otherwise able to maintain their foundation herds without such assistance”.
Section 388.6(b) thus presents the county committee with the opportunity to use material which may be deemed to be peculiarly within its knowledge. This does not mean, however, that the 10 conditions listed above are completely and necessarily infected and overlaid by a discretionary area. Thus, here, whether the committee used material within its personal knowledge, or should have used such material, is our question.8 If it has not, or if it has but the situation is one where its peculiar “knowledge” is obviously unjustified (one can suppose, for example, a comparatively small farming operation by a person of vast outside resources), judicial review then is definitely in order.
In the state of this record it is not possible for me to ascertain the basis of the committee’s determination of the defendant’s financial condition and consequent eligibility or to determine whether the committee relied in any degree whatsoever “on their own knowledge”, as the majority suggests. The defendant by its answer as amended, by its motion, and by the supporting affidavit merely asserts ■that the committee had investigated and reinvestigated and had determined eligibility. The defendant in its applications certified that without the requested assistance it would be unable to maintain its basic foundation herd and to continue its livestock operations; the same forms contain the committee’s certification of eligibility in conclusional terms. The government by its answer to the interrogatory merely asserts that the condition as to financial inability was not met.
The government relies heavily on Federal Crop Ins. Corp. v. Merrill, 1947, 332 U.S. 380, 68 S.Ct. 1, 2, 92 L.Ed. 10. The Insurance Corporation was an agency within the Department of Agriculture. By appropriate federal legislation it was empowered to insure wheat producers “against loss in yields due to unavoidable causes, including drought” and upon such terms and conditions not inconsistent with the authorizing legislation “as it may determine”. The Corporation issued its regulations and these were duly published in the Federal Register, 10 F.R. 1585, et seq. The regulations, § 414.37 (v), excluded from the definition of the 1945 insured wheat crop “spring wheat which has been reseeded on winter wheat acreage”. The plaintiffs applied for insurance and informed the county committee, acting as agent for the Corporation, that a major portion of their planting was spring wheat reseeded on winter wheat acreage. The committee advised the plaintiffs that the entire crop was insurable. The application, which did not disclose the reseeding, was accepted. That year drought destroyed most of the crop. Liability was then denied by the Corporation. In the subsequent suit before a jury evidence was presented of the plaintiffs’ lack of actual knowledge of the bar of the regulations. The state courts upheld a jury verdict for the plaintiffs on the theory that the agent’s knowledge and representations bound the Corporation. 67 Idaho 196, 174 P.2d *451834. The Supreme Court reversed, pointing out the provision of the regulations, their incorporation in the application by reference, and their conclusiveness upon the plaintiffs.
I cannot agree with the majority’s easy dismissal of Merrill, or with the trial court’s conclusion that the fact situation here is “just contrary” to the situation there. In Merrill, as here, no fraud was asserted. There, as here, the statute was silent and the exclusionary provision was in the regulations. And there, as here, the regulations had been published in the Federal Register with consequent legal notice of their contents. In some respects the fact situation in Merrill is weighted more strongly against the government than in this case: Here there was no misinformation given by the county committee to the applicant; here there are no human “phases of hardship” comparable to the misplaced reliance there upon insurance; and here the defendant possessed actual rather than presumed knowledge of the requirement that it be independently unable to maintain its herd, for that condition was spelled out in the very applications and certifications which the defendant signed.
Merrill turns largely on the nature of the self-evident content of the regulations. In that case, as the trial court here pointed out, at page 379 of 181 F.Supp., a reference to the Federal Register “would have indicated that spring wheat which has been reseeded on winter wheat average was specifically excluded”. But is it correct to say, as the trial court also stated, that here such a reference would have shown only “that the County Committee had been delegated the responsibility of certifying applications and had been granted wide discretion in so doing”? An examination of the Federal Register would have disclosed more than this. It would have shown, specifically, the emphasis in each separate section of Part 388 upon eligibility of an applicant for assistance. It would have shown as requisites for eligibility the 10 conditions outlined above, and it would have shown, thereafter, the delimited area of possible discretion.
I do not derive from Butte, A. & P. Ry. v. U. S., 1933, 290 U.S. 127, 54 S.Ct. 108, 78 L.Ed. 222, the complete comfort which the majority finds. Evidently defense counsel do not either, for they did not cite it. It does provide an analogy, but it is an analogy of thirty years ago; it is one involving an accounting question where administrative “expertise” was more assured in the established Interstate Commerce Commission, which the Court said, at page 142 of 290 U.S., at page 112 of 54 S.Ct., was sitting “as a special tribunal”, than is the case with the county committee here possessed with only questionable “special competence” on matters of financial responsibility and need for assistance; and it is one decided long before the development of extensive administrative procedures and today’s wide concern with the problem of judicial review thereof. Furthermore it, at page 143 of 290 U.S., at page 108 of 54 S.Ct., and Switchmen’s Union of North America v. National Mediation Board, 1943, 320 U.S. 297, 305, 64 S.Ct. 95, 88 L.Ed. 61, stress the lack of statutory provision for review; while we have a similar absence here, we also now have, as has been noted, the Administrative Procedure Act’s emphasis on review unless “committed to agency discretion”.
If there is' a line between Merrill on the one hand and Butte on the other, I must, where there is any doubt, resolve it in favor of the government. And if there are opposing policy considerations between the principle of United States v. Wurts, supra, and that of the Administrative Procedure Act and its § 1009, I must, where there is any doubt, resolve that, too, in favor of the government.
The United States, it seems to me, is entitled to have at least a chance to prove its case with respect to which it promptly took a position in 1955, to prove that merit underlay the requested “reexamination” of this defendant, to show that the committee did not employ material within its personal knowledge or exercise *452“reasonable precautions”, and to show that the situation here was one which fell outside the discretionary area. Whether it can do so is, of course, another matter.

. See Professor Jaffe’s answer, with citations, to the sometimes heard suggestion that where government bounty is involved the administrative remedy presumptively excludes judicial review. Jaffe, The Right of Judicial Review II, 1958, 71 Harvard Law Rev., 769, 784-6. He says there, in part,
“It is sometimes suggested that when the United States creates rights against itself, particularly rights to the payment of money, tbe administrative remedy given to enforce tbe right presumptively excludes judicial review; tbe grant, it is said, is a mere ‘privilege’. But there is little or no authority to support such a presumption. The authorities indeed are to the contrary and on principle no such presumption should be entertained. The notion of ‘privilege’ is in this context a perversion of thought and of language.”

. It has been said, with respect to veteran’s benefit cases, that neither the Supreme Court nor this court has passed upon the question whether an agency action which is not subject to direct judicial review may properly be asserted as a matter of defense in an action brought by the government for affirmative relief. United States v. Daubendiek, D.C.N.D. Iowa, 25 F.R.D. 50, 55. The reported cases are in conflict. Among those which derive no comfort in any distinction between direct and indirect attack upon the agency action and therefore do not rely on it are United States v. Crockett, D.C.D.Maine, 158 F.Supp. 460, 462; United States v. Perry, D.C.E.D.N.C., 141 F.Supp. 443; and In re Gregg, 198 Misc. 778, 100 N.Y.S.2d 752. See United States v. Rohde, D.C.D.S.D., 189 F.Supp. 842, 845. Among those which do are United States v. Lawrence, D.C.D.Mont., 154 F.Supp. 454, 457; United States v. Owens, D.C.E.D.Ark., 147 F.Supp. 309, 313; and Gongora v. United States, D.C., 183 F.Supp. 872, 873. The majority opinion necessarily casts doubt upon those cases, among the ones just cited, which permit government recovery in the face of initial adverse administrative determination.

. See tbe Preface to Davis, Administrative Law Treatise, 1958, where he says, among other things:
“ * * * Chaotic law inevitably pushes the treatise writer, if he perseveres, from attempted summary to attempted critique. Reliance on authority gives way to attempted solution of problems. When search for established principle turns out to be futile, the search must be for sound principle.” (Par. Ill)

. Admittedly, Professor Jaffe has said that the Act has “had a negligible effect on the basic right to judicial review”. 71 Harvard L. Rev. 769, supra, at p. 790. Professor Davis in his Treatise has indicated that, with the Act, “the law of reviewability remains unchanged”. Davis, volume 4, § 28.08, p. 33.

. “(g) * * * ‘Agency action’ includes the whole or part of every agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act”.

. “(a) Any person suffering legal wrong because of any agency action, or adverse*449ly affected or aggrieved by such action within the meaning of any, relevant statute, shall be entitled to judicial review thereof.
H« # * * *
“(c) Every agency action made reviewable by statute and every final agency action for which there is no other adequate remedy in any court shall be subject to judicial review.
H: * * * *
“(e) So far as necessary to decision and where presented the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. It shall (A) compel agency action unlawfully withheld or unreasonably delayed; and (B) hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (4) without observance of procedure required by law; (5) unsupported by substantial evidence in any case subject to the requirements of sections 1006 and 1007 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or (6) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court. In making the foregoing determinations the court shall review the whole record or such portions thereof as may be cited by any party, and due account shall be taken of the rule of prejudicial error.”

. See Jaffe, The Right to Judicial Review I, 1958, 71 Harvard L. Rev. 401, 432; Mr. Justice Brennan and others dissenting in Schilling v. Rogers, 363 U.S. 666, 677, 80 S.Ct. 1288, 4 L.Ed. 1478; and Davis, volume 4, § 28.21.

. The presence of some discretion does not defeat reviewability. This is implied by § 1009 (e)’s reference to setting aside agency action for “an abuse of discretion”. And it has been said that “almost every agency action ‘involves’ an element of discretion or judgment”. Homovich v. Chapman, 89 U.S.App.D.C. 150, 191 F.2d 761, 764.