Court Opinion

ID: 9693836
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:02:57.104812+00
Date Added: 2024-06-11T12:08:18.760403
License: Public Domain

WHITAKER, Judge
(concurring in part and dissenting in part).
I agree that under all the circumstances this plaintiff was not guilty of-negligence and, therefore, that the amount he claims should not have been deducted from his pay; but I do not agree that he has no right of action to recover it.
The majority recognize that he should have a right of action,1 but they feel compelled to hold that he has not by the decision of the Supreme Court in Standard Oil Co. v. Johnson, 316 U.S. 481, 62 S.Ct. 1168, 86 L.Ed. 1611, and by previous decisions of our own court and of other courts. I do not feel so compelled.
This man sues on a contract he had with the Army Exchange Service. This Service was established by the Army under Army regulations promulgated under congressional authority; it was run by the Army and for the benefit of the Army. No individual and no organization other than the Army was entitled to any part of its profits; and no individual nor any organization other than the Army exercised any dominion and control oyer it. All of its activities were under the direction and control of the Army.
Of the status of Army exchanges the Supreme Court in Standard Oil Co. v. Johnson, supra, said, in conclusion:
“From all of this, we conclude that post exchanges as now operated are arms of the government deemed by it essential for the performance of governmental functions. They are integral parts of the War Department, share in fulfilling the duties entrusted to it, and partake of whatever immunities it may have under the constitution and federal statutes.
* * *»
The business of the Army Exchange Service is a business of tremendous magnitude; its contracts run into millions of dollars a year, and yet it is said that no contractor has a right of action against it or any one else on any of these contracts.
That just cannot be.
I agree that the Army Exchange Service is not a separate entity capable of suing or being sued. It is a part of the Army, and hence, it is the Army that is liable on contracts entered into by it. But of course the Army is not a separate entity; it is a part of the Government of the United States; and, hence, it is the United States that is liable.
The United States is liable because the contracts of the Army Exchange Service were made for the benefit of the United States. They were made to promote the *879welfare of the members of its military forces, to improve the Army mess, to contribute to the mental and physical improvement of the military personnel, and to aid in the enforcement of good order and discipline and to increase the efficiency of the Army by providing entertainment and pleasure for its members.
Not only were its contracts made for the benefit of the United States, they were authorized by the Congress of the United States. The Supreme Court in Standard Oil Co. v. Johnson, supra, said:
“On July 25, 1895, the Secretary of War, under authority of Congressional enactments (16 Stat. 315, 319; 18 Stat. 337) promulgated regulations providing for the establishment of post exchanges (G.O. 46, Hdqrs. of the Army). These regulations have since been amended from time to time and the exchange has become a regular feature of Army posts. That the establishment and control of post exchanges have been in accordance with regulations rather than specific statutory directions does not alter their status, for authorized War Department regulations have the force of law (United States v. Eliason, 16 Pet. 291, 302, 10 L.Ed. 968; Gratiot v. United States, 4 How. 80, 117-118, 11 L.Ed. 884).
“Congressional recognition that the activities of post exchanges are governmental has been frequent. Since 1903 (32 Stat. 927, 938), Congress has repeatedly made substantial appropriations to be expended vender the direction of the Secretary of War for construction, equipment, and maintenance of suitable buildings for post exchanges. In 1933 and 1934, Congress ordered certain moneys derived from disbanded exchanges to be handed over to the Federal Treasury (47 Stat. 1571, 1573; 48 Stat. 1224, 1229, 31 U.S. C.A. §§ 725g to 725k. See Hearings, House, War Department Appropriation Bill, 1934, 72d Cong., 2d Sess., 648). * * *”
The contracts having been made for and on behalf of the United States and under regulations authorized by Congress, how can it be doubted that the United States is liable on them, since long ago Congress authorized suits against the United States on express or implied contracts? (Sec. 1491 of 28 U.S.C.)
The only possible excuse for saying the United States is not liable on these contracts is the following provision in the Army Regulations, AR 210-65, as issued on June 12, 1945:
“Exchange contracts are solely the obligation of the exchange. They are not Government contracts and the distinction between exchange contracts and Government contracts will be observed and clearly indicated at all times. * * * [Army Exchanges, section I, 35 h. (1).]”
Army regulations say exchange contracts are not government contracts, and, yet, the Supreme Court says that exchanges are “arms of the government,” as, indeed, it must be said, especially since Congress makes appropriations for their support and maintenancé, and exercises control over their funds, as the Supreme Court pointed out in the case cited.
By what authority does the Army say that their contracts are not government contracts ? Congress has not authorized it to do so. It authorized it to set up exchanges, but Congress did not authorize it to set aside a prior Act of Congress making the Government liable to suit on its contracts, express or implied. The quoted Army regulation is in derogation of the Act of Congress, giving consent to suit on its contracts. .It is, therefore, invalid. The Army cannot set aside an Act of Congress.
I must confess that the italicized portion of the quotation from the cited case in the opinion of the majority lends some support to the assertion of validity of the Army regulation, but I point out that the question presented to us here was not present in Standard Oil Co. v. Johnson, *880supra, where this language was used. The question there was whether or not a post exchange was a department of the Government of the United States. The State of California had levied a tax on gasoline sold to United States Army-post exchanges in California. The Supreme Court held that the tax was invalid because the Act made the tax inapplicable to fuel sold to “the government of the United States or any department thereof”, and because a post exchange was a department of the Government. The question of the liability of the United States on the contracts of post exchanges was not presented to the Supreme Court in that case.
The italicized portion of the quotation was said only incidentally, in the course of describing the operations of the exchange. The Court did not mean to pass on the question of whether or not the Government was liable on the obligations of the exchange. That is the question with which we are confronted in this case. When that ease is presented to the Supreme Court, I am satisfied that it will not hold that the Government is not liable.
The situation today under the Army Exchange Service is not at all comparable with the situation presented to this court in Kyle v. United States, 46 Ct.Cl. 197. Indeed, a post exchange was not there involved at all. What was there involved was a “post or company fund.” The opinion shows that the accumulations in this fund arose “principally from an economical administration of post domestic affairs, voluntary contributions, and an inconsequential tax upon the post trader.” A great many military organizations, if not all, maintain a company or post fund, which is something entirely separate and distinct from a post exchange. I do not think that case and the one presented to us here are at all comparable.
In the case of Bleuer v. United States, supra, the court had before it an officers’ mess. The court’s opinion shows Congress had expressly prohibited officers’ messes from paying civilian employees out of appropriated funds. In other words, if the officers wanted service over and above what was provided by Congress for their mess, they had to pay for it individually. The court of necessity held that the United States was not liable in that case.
Judge Bryan in Edelstein v. South Post Officers’ Club, supra, decided April 25, 1951, in a one-page memorandum opinion, held the United States was immune from suit for obligations of an officers’ club. He relied on the Army Regulations, but, as I have pointed out above, I do not think the Army Regulations are controlling.
We all agree somebody owes this plaintiff the money he claims; he worked for it and he is due it. The Army Exchange Service says it cannot be sued, and that is right. If the United States is successful in maintaining its claim that it also cannot be sued, the plaintiff is wholly without a remedy. The money is owing to him, but nobody can be made to pay it. Congress did not mean for this to happen. It said so when it gave its consent to be sued on its contracts.
I respectfully dissent.

. Among other things, the majority opinion says: “For the Army to contend and to provide by regulation that it is not liable since it did not act in its official capacity would be like a man charged with extra-marital activity pleading that whatever be may have done was done in his individual capacity and not in his capacity as a husband.”