Court Opinion

ID: 8916361
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:14:09.75297+00
Date Added: 2024-06-11T17:09:01.558941
License: Public Domain

MEANOR, District Judge,
dissenting.
Part I of the majority opinion quite adequately sets forth the facts and I need not repeat them. I cannot, however, accept the majority’s conclusion that the government is estopped from claiming reimbursement for the overpayment made here. I recognize that this ease has sympathetic overtones.1 However, if there is any basis for estopping the government — an action that the Supreme Court has never expressly taken 2 — this case does not provide it.
It is true that, particularly in the last decade, the federal judiciary has increasingly applied estoppel against the govern*629ment.3 I do not believe, however, that the government may be estopped where the estoppel would render to the opponent a benefit to which he was never substantively entitled. It may be that a valid estoppel can lie where affirmative government misconduct 4 induces a procedural default, thus depriving one of a substantive entitlement.5 It may also be that the doctrine of estoppel properly can be used where affirmative government misconduct induces action which thereafter prevents one from qualifying for a substantive entitlement.6 But I do not believe the government can be es-topped where the result would be to give a benefit to which there never was any entitlement.
For me, Federal Crop Insurance Corp. v. Merrill7 is controlling. Respondents there applied to the petitioner federal agency for crop insurance on 460 acres of spring wheat, 400 acres of which was to be reseeded winter wheat. Respondents were advised that the entire crop was insurable and the insurance was issued. The entire crop was later destroyed by drought, and respondents learned that valid regulations precluded crop insurance for reseeded wheat. In refusing to estop the government from denying liability the Supreme Court stated:
Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority. The scope of this authority may be explicitly defined by Congress or be limited by delegated legislation, properly exercised through the rule-making power. And this is so even though, as here, the agent himself may have been unaware of the limitations upon his authority.8
The Court further stated that the limitation on insurance coverage was pursuant to valid regulations, and that all persons are charged with knowledge of rules and regulations in the Federal Register.9
*630The facts of Merrill parallel those here. In both cases erroneous representations were made by government agents; in both cases there was reliance; and in both cases damage was incurred because of that reliance. Finally, in both cases there never was any entitlement to secure a benefit from the government. The only difference between Merrill and this case is that here the plaintiffs have received the funds in dispute, whereas in Merrill the insurance proceeds never were paid. I can think of no way in which this factual difference can lead to a principled distinction. It is also important to note that in Merrill the Court noted “the duty of all courts to observe the conditions defined by Congress for charging the public treasury.”10
The Supreme Court has never, except perhaps in one instance, countenanced the use of estoppel against the government. Moser v. United States11 may be analyzed as a case in which an estoppel was applied against the government, although the Court did not rely on the doctrine. Moser, a Swiss citizen residing in the United States, applied during World War II for exemption from military service pursuant to a treaty between the United States and Switzerland. By statute it was provided that a claim of exemption from military service prevented such a claimant from becoming a citizen of the United States. The usual form on which such an exemption was claimed stated explicitly that the claim would bar the claimant from obtaining citizenship. The Swiss legation, however, took the position that such a bar from citizenship was inconsistent with the rights under the treaty. The State Department, together with Selective Service Headquarters and the Swiss legation, worked out a revised form which omitted reference to debarment from citizenship. Moser, who had claimed the exemption, was later granted citizenship after the district court explicitly found that, had he known his claim of exemption from military service would debar him from citizenship, he would have elected to serve in the armed forces of the United States. The Supreme Court upheld the grant of citizenship on the ground that Moser had not made an intelligent waiver of his right to obtain citizenship. The Court, however, expressly disclaimed reliance on an estoppel theory. Nevertheless, many courts and commentators believe that the Moser Court was in reality applying estoppel principles.12 I believe the result in Moser to be correct, regardless of whether a waiver or estoppel theory is relied upon. In Moser, the Swiss citizen could easily have become an American citizen had he not claimed the exemption. Thus, the government misconduct induced action on the part of the Swiss citizen which prevented him from qualifying for a substantive entitlement. In this respect, Moser differs from Federal Crop Insurance in that the respondent in the latter case had no substantive entitlement and was not deprived of qualifying for one.
One recent case is particularly instructive in analyzing the issue of government estoppel. In Hansen v. Harris,13 the claimant became eligible for social security benefits in June of 1974. The claimant failed to file a written application, however, because a Social Security Field Representative supplied her with misinformation; and did not urge her to file a written claim. The Court of Appeals for the Second Circuit held that the government was estopped from denying benefits in view of the government’s misconduct. The court began its analysis with the proposition that “[t]he Government may sometimes be estopped from enforcing its rules, based on the conduct of its agents.”14 *631The court went on to distinguish between procedural requirements and substantive eligibility for the program in question. Thus, the question becomes whether “[i]t would fulfill the fundamental legislative goal to grant appellee the benefits she seeks.”15 Because the appellee was found to be substantively entitled to the benefits, the court of appeals held the government estopped from denying benefits. The court limited its holding to cases where “(a) procedural not a substantive requirement is involved and (b) an internal procedural manual or guide or some other source of objective standards of conduct exists and supports an inference of misconduct by a Government employee.”16 In his dissenting opinion, Judge Friendly indicated that Federal Crop Insurance mandated a holding that the federal government can rarely be estopped. Judge Friendly stated that to estop the government means that the door to the federal fisc is held wide open, and that government agents will have to follow every regulation to the last detail. As for the substance/procedure distinction, Judge Friendly found the argument to be hollow. Judge Friendly believed that all conditions on receiving benefits are substantive “in the sense that ... they significantly affect the result, not ‘merely the manner or means by which a right to recover ... is enforced.’ ”17
In Schweiker v. Hansen,18 the Supreme Court reversed the court of appeals in a per curiam opinion. The Court began its opinion by stating that it agreed with Judge Friendly, who, it must be remembered, stated that the government should rarely be estopped. The Court stressed “ ‘the duty of all courts to observe the conditions defined by Congress for charging the public treasury.’ ”19 The Court found that the government agent’s failure to comply with the Claims Manual by not recommending that the claimant file a written application did not constitute affirmative misconduct. As for the substance/procedure distinction, the Court stated:
Finally, the majority’s distinction between respondent’s “substantiv[e] eligibility]” and her failure to satisfy a “procedural requirement” does not justify estopping petitioner in this case. Congress expressly provided in the Act that only one who “has filed application” for benefits may receive them, and it delegated to petitioner the task of providing by regulation the requisite manner of application. A court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits.20
It is important to note that the Court did not reject the substance/procedure distinction. The Court merely stated that under the facts of this case, the substance/procedure distinction did not warrant estopping the government. The claimant, however, could be said to have had a substantive entitlement to benefits in 1974. The claimant was deprived of those benefits because of the misrepresentations of the government. What the Supreme Court seems to be saying, however, is that the requirement that the application be written is substantive, not procedural, and that the claimant had no substantive entitlement because a written application was never filed. This was the position adopted by Judge Friendly. As far as the instant case is concerned, however, the Supreme Court opinion supports my analysis. The Hansen opinion in no way casts doubt upon my theory that where there is no substantive entitlement, the government cannot be estopped. Indeed, in Hansen, the Court found no substantive entitlement, and therefore did not *632estop the government. What the Hansen Court in reality does is to define when there is a substantive entitlement. I stated earlier that a valid estoppel may lie where affirmative government misconduct induces a procedural default, thus depriving one of a substantive entitlement, or where affirmative government misconduct induces action which thereafter prevents one from qualifying for a substantive entitlement. The Hansen opinion casts doubt upon whether procedural defaults can be the basis of governmental estoppel where the default was caused by government misrepresentations. Hansen seems to indicate that such defaults act to deprive the claimant of any substantive entitlement. In any case, resolution of this issue must await another day. In the instant case there can be no doubt that the appellant never had any substantive entitlement. Under Federal Crop Insurance and Hansen, I believe that the government clearly cannot be estopped.
The issue of government estoppel has been considered by numerous courts of appeal. The majority relies heavily upon two cases in particular. In Corniel-Rodriguez v. Immigration & Naturalization Service,21 the petitioner applied for a special immigrant visa, and the United States consulate in Santo Domingo issued such a visa on August 17, 1967. Once in the United States, deportation proceedings were commenced, however, because petitioner had been married three days before her departure from the Dominican Republic. A provision of the Immigration and Nationality Act provides that the exemption for children of special immigrants22 is unavailable if the alien is married at the time of application for the visa or at the time of admission into the United States.23 A valid regulation states: “The consular officer shall warn an alien [issued a visa as a child], when appropriate, that he will be inadmissible as such an immigrant if he is not unmarried at the time of application for admission.”24 Contrary to this regulation, the United States consulate did not advise petitioner of the consequences of marriage before entry into the country. So as to avoid a “manifest injustice,” the Court of Appeals for the Second Circuit estopped the government from deporting the petitioner.
In Brandt v. Hickel,25 appellants submitted a non-competitive oil and gas lease offer to the Los Angeles office of the Bureau of Land Management. Because the issuance of leases is prohibited where the offer form designates unequal interests, the offer was rejected. Appellants were given the right to substitute within thirty days new order forms eliminating any reference to unequal interests without losing their priority. Because of this promise, appellants did not appeal the decision of the Bureau of Land Management. In reality, the promise that appellants would not lose their priority was not authorized by statute or regulation. The court of appeals held that the “crucial misstatement” in the official decision of the Bureau of Land Management was sufficient to estop the government. Thus, appellants were granted a right to appeal from the land office decision, and were thereby entitled to attempt to preserve their priority.
In discussing the above cases, the majority concentrates on the fact that there was affirmative misconduct and that equitable considerations mandated estopping the government. The majority, however, fails to acknowledge that in both these cases the appellants had a substantive entitlement.26 In Corniel-Rodriguez, the petitioner had a right to become an American citizen. Petitioner was deprived of this right by the government’s failure to warn as to the consequences of marriage before entry into the country. In Brandt, appellants had a right to appeal the decision of the Bureau of Land Management. This right was lost, however, because of affirmative misrepre*633sentation on the part of the government. The majority states: “We find that Travelers’ authorized and erroneous advice to CHS is analogous to that of the Land Manager in Brandt v. Hickel, supra, which the court in that case found to be “so closely connected to the basic fairness of the administrative decision making process that the government may be estopped from disavowing the misstatement.”27 Fairness may have dictated that the government be es-topped in Brandt. Fairness does not dictate that the government be estopped where, as in the instant case, the appellant never had any substantive entitlement to the benefits. Where no substantive entitlement exists, to estop the government amounts to no more than a court authorized raid on the public treasury. Thus, the cases relied upon by the majority provide no support for ,the notion that the government should be es-topped where no substantive entitlement exists. It is true that there are some cases where the courts have estopped the government even though no substantive entitlement existed.28 In my opinion, courts which have so held are simply wrong.
As stated earlier, I believe that the outcome in this case is controlled by Federal Crop Insurance. It seems to me that Federal Crop Insurance was recently reaffirmed by the Supreme Court in Schweiker v. Hansen. In Hansen, the Court expressly agreed with the position taken by Judge Friendly in his dissenting opinion in the court of appeals. In his dissent, Judge Friendly adhered strictly to the precepts of Federal Crop Insurance. Indeed, Judge Friendly was of the opinion that the government should rarely be estopped. Although the Court in Hansen approved Judge Friendly’s position, it is doubtful whether it meant to go as far as to say that the government can never be estopped, in view of the fact that the Hansen Court went on to find that no affirmative misconduct was involved.29 Nevertheless, Hansen indicates that the Supreme Court views government estoppel with disfavor, and certainly provides no support for the majority opinion. Appellant in the instant case had no substantive entitlement, and thus under Federal Crop Insurance and Hansen the government cannot be estopped.
For the foregoing reasons, I respectfully dissent.30

. In Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947), the Supreme Court recognized that it was dealing with a case which involved sympathetic overtones. Indeed, the Court stated that “[t]he case no doubt presents phases of hardship.” Id. at 383, 68 S.Ct. at 2. Nevertheless, the Court was not moved by this factor, and held that the government should not be estopped. Id. at 386, 68 S.Ct. at 4. I believe that the majority in the instant case has been snared by the trap which the Court in Merrill managed to avoid. The majority has allowed emotion and ideology to enter into its decision. I am convinced that if this case involved a defense contractor who worked on a cost plus basis, and who claimed a right to retain seven million dollars, as opposed to the seventy thousand dollars involved in the instant case, the majority would never countenance government estoppel. In short, I believe that the majority was influenced by the fact that it approves the social program involved. This sort of reasoning results in ad hoc decision-making which more appropriately is left to Congress.

. The issue of government estoppel has arisen in six Supreme Court cases: Immigration & Naturalization Serv. v. Miranda,-U.S.-, 103 S.Ct. 281, 74 L.Ed.2d 12 (1982); Schweiker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981); United States Immigration & Naturalization Serv. v. Hibi, 414 U.S. 5, 94 S.Ct. 19, 38 L.Ed.2d 7 (1973); Montana v. Kennedy, 366 U.S. 308, 81 S.Ct. 1336, 6 L.Ed.2d 313 (1961); Moser v. United States, 341 U.S. 41, 71 S.Ct. 553, 95 L.Ed. 729 (1951); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947). In none of these cases has the Supreme Court expressly estopped the government.

. E.g., Corniel-Rodriguez v. Immigration & Naturalization Serv., 532 F.2d 301 (2d Cir.1976); Brandt v. Hickel, 427 F.2d 53 (9th Cir.1970); Walsonavich v. United States, 335 F.2d 96 (3d Cir.1964).

. It is not altogether clear whether affirmative misconduct is required to estop the government, or whether mere negligence will suffice. In Moser v. United States, 341 U.S. 41, 71 S.Ct. 553, 95 L.Ed. 729 (1951), discussed in text infra, the Court upheld a grant of United States citizenship where the foreign citizen was not warned by the United States that by claiming military exemption he would lose his right to become a citizen. Thus, the government’s negligence in failing to warn the foreign citizen prevented the government from denying the person citizenship. Although the Court disclaimed reliance upon an estoppel theory, many believe this to be an estoppel case. See infra note 10. Similarly, in Corniel-Rodriguez v. Immigration & Naturalization Serv., 532 F.2d 301 (2d Cir.1976), the government’s failure to warn was held sufficient to estop the government. Contrary to the majority’s reading of subsequent Supreme Court cases, see majority opinion at 621, I believe that these cases indicate that something more than mere negligence is required before affirmative misconduct will be found. E.g., Schweiker v. Hansen, 450 U.S. 785, 788-89, 101 S.Ct. 1468, 1470-1471, 67 L.Ed.2d 685 (1981) (“we are convinced that Connelly’s conduct — which the majority conceded to be less than ‘affirmative misconduct,’ ... —does not justify the abnegation of that duty”); United States Immigration & Naturalization Serv. v. Hibi, 414 U.S. 5, 8, 94 S.Ct. 19, 21, 38 L.Ed.2d 7 (1973) (“While the issue of whether ‘affirmative misconduct’ on the part of the Government might estop it from denying citizenship was left open in Montana v. Kennedy,... no conduct of the sort there adverted to was involved here”); Montana v. Kennedy, 366 U.S. 308, 314-15, 81 S.Ct. 1336, 1340-1341, 6 L.Ed.2d 313 (1961). See Oki v. Immigration & Naturalization Serv., 598 F.2d 1160, 1162 (9th Cir.1979).

. E.g., Miranda v. Immigration & Naturalization Serv., 638 F.2d 83 (9th Cir.1981) (United States citizenship jeopardized because petitioner married before entering country).

. E.g., Walsonavich v. United States, 335 F.2d 96 (3d Cir.1964) (taxpayer lured into not filing refund claim and claim subsequently barred by statute of limitations).

. 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947).

. Id. at 384, 68 S.Ct. at 3.

. Subsequent cases, however, seem to hold that persons are not held to have knowledge of all statutes and regulations. See, e.g., Moser v. United States, 341 U.S. 41, 71 S.Ct. 553, 95 *630L.Ed. 729 (1951); Corniel-Rodriguez v. Immigration & Naturalization Serv., 532 F.2d 301 (2d Cir.1976).

. 332 U.S. at 385, 68 S.Ct. at 3.

. 341 U.S. 41, 71 S.Ct. 553, 95 L.Ed. 729 (1951).

. E.g., Air-Sea Brokers, Inc. v. United States, 596 F.2d 1008, 1011 (C.C.P.A.1979); K. Davis, Administrative Law Text 345 (3d ed. 1972).

. 619 F.2d 942 (2d Cir.1980), rev’d, Schweiker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981).

. Id. at 947.

. Id. at 948.

. Id. at 949.

. Id. at 957 (Friendly, J., dissenting) (quoting Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945)).

. 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981).

. Id. at 788, 101 S.Ct. at 1470 (quoting Federal Crop Insurance, 332 U.S. at 385, 68 S.Ct. at 3-4).

. Id. 450 U.S. at 790, 101 S.Ct. at 1471-1472.

. 532 F.2d 301 (2d Cir.1976).

. 8 U.S.C. § 1182(a)(14)(1976).

. See id. § 1101(b)(1).

. 22 C.F.R. § 42.122(d) (modified in 1965).

. 427 F.2d 53 (9th Cir.1970).

. Even under the Hansen definition of “entitlement,” it is clear that appellants had substantive entitlements.

. Majority opinion at 623.

. E.g., United States v. Lazy FC Ranch, 481 F.2d 985 (9th Cir.1973); Dana Corp. v. United States, 470 F.2d 1032 (Ct.Cl.1972); United States v. Georgia-Pacific Co., 421 F.2d 92 (9th Cir.1970); Schuster v. Commissioner of Internal Revenue, 312 F.2d 311 (9th Cir.1962).

. Indeed, since Hansen at least one court of appeals has held the government estopped. E.g., Miranda v. Immigration & Naturalization Serv., 673 F.2d 1105 (9th Cir.), rev’d,--U.S. --, 103 S.Ct. 281, 74 L.Ed.2d 12 (1982) (no affirmative misconduct).

. Appellants advance additional arguments in support of reversal. Since the majority does not reach them, I see no necessity for a discussion of them in dissent.