Court Opinion

ID: 4120374
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:47:10.952576+00
Date Added: 2024-06-11T09:20:56.821313
License: Public Domain

December 6, 1978

78-64 MEMORANDUM OPINION FOR THE ASSISTANT
      ATTORNEY GENERAL, CIVIL DIVISION
      National Aeronautics and Space Agency—Disposition
      of Items Carried by Astronauts on Space Flights

   This responds to the inquiry of the National Aeronautics and Space Agency
(NASA) General Counsel, which you forwarded to us, concerning the
disposition of postal covers that several astronauts, acting with or without
authorization, took on space flights and now held by NASA or the National
Archives as custodian.1 We conclude:
     (1) With respect to postal covers the Apollo 15 astronauts took to the
          moon, a claim to the covers by NASA exists only with respect to
          those given by a third party to Astronaut Worden and taken by
          him to the moon for a commercial purpose.
     (2) Should an astronaut sell a souvenir item authorized by NASA to
          be transported into space as a personal memento, an action by
          NASA in quasi-contract would lie for recovery of the astronaut’s
          profits from the sale.
                                   I. Summary
   The postal covers taken to the moon in July 1971 by the Apollo 15
astronauts and now in NASA’s custody can be considered from the standpoint
of three separate categories: Covers the astronauts purchased and took to the
moon as mementos; covers they purchased or that were given to them by third
parties, but not for commercial purposes, and subsequently transported with
authorization; and covers given to Astronaut Worden that were intended for
commercial exploitation. With respect to the Worden covers, his acceptance of
the covers and failure to disclose to NASA their source and intended use
resulted in a breach of fiduciary obligation to NASA that would, in the eyes of a
court, render Worden a trustee on behalf of NASA.

  'References in (his memorandum to covers “ in NASA’s custody” pertain to covers in the actual
possession of NASA or the National Archives.
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    We further conclude that any sale of covers or other souvenirs by the
 astronauts would constitute a form of unjust enrichment on the basis of which a
 claim in quasi-contract for the proceeds of the sale could lie. The prospect of
 such an action, which could not be used to retain the Worden covers
 themselves, might even in his case be the preferable means of discouraging
 commercial use of the covers because of uncertainties in applying a theory of
 fiduciary obligation to the facts presented.
                                  II. The Facts
   NASA, through Donald Slayton, then its assistant director for flight crew
operations, published regulations on August 18, 1965, permitting astronauts on
 space flights to take with them into space up to 8 ounces each of personal
 mementos, subject to Slayton’s approval and the approval of the mission
director for each flight. No declaration as to the source or intended use of any
 memento was required under this procedure. Among the items routinely
approved and carried on subsequent space flights were a variety of postal
covers— decoratively printed envelopes bearing stamps and special can­
cellations—that are popular philatelic souvenirs. For example, 279 such covers
were carried, with approval, on Apollo flights 11, 13, and 14.
   After the flight of Apollo 15, because of events detailed below, NASA asked
its astronauts to turn over to it postal covers and other souvenir property
pending an appraisal of the legal issues discussed in this memorandum.
Although the discussion that follows applies to all such souvenirs, NASA has
investigated only the facts surrounding the acquisition, transport, and disposi­
tion of the Apollo 15 souvenirs. Consequently, this memorandum will focus on
those facts as garnered from memoranda describing the investigations into
Apollo 15 by NASA, the U.S. Postal Service, and the Senate Committee on
Aeronautical and Space Sciences.
   On Apollo 15, astronauts David Scott, James Irwin, and Alfred Worden
carried with them a total of 642 covers: 398 covers carried by Scott without
prior authorization; 144 covers carried, with authorization, by Worden that
were given to him by F. Herrick Herrick, a stamp collector and former film
director; and 100 covers carried, with authorization, by the three astronauts to
be used as gifts or mementos.
   A. The Unauthorized Covers. The astronauts agreed to carry 400 specially
cacheted covers at the suggestion of Horst Walter Eiermann, a German
businessman, who, in turn, was acting on behalf of a German stamp dealer,
Hermann Sieger.2 The parties agreed that the astronauts would sell 100 covers
to Eiermann for approximately $200 each and keep the remaining covers for
their own use. The covers were designed by Scott, ordered from a commercial
printing company, and paid for by the astronauts.3 Before ordering the
  2The astronauts agreed originally to carry covers to be supplied to them by Sieger, through
Eiermann. Instead, the astronauts prepared the covers themselves.
  3In addition to the covers to be taken to the moon, the astronauts ordered between 800 and 1,000
cacheted envelopes to be autographed on earth and distributed as flight souvenirs.
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envelopes, Scott submitted his cachet design to Harold Collins, chief of the
Kennedy Space Center Mission Support Office.
   During the early morning of July 26, 1971, the Apollo 15 launch date,
Collins, through a previous arrangement with Forrest Rhodes, chief of the
Kennedy Space Center mail and distribution section, carried several hundred
envelopes to the center’s post office. Ten-cent stamps, purchased by the
astronauts, were affixed to each cover, and the covers were'canceled. Collins
then delivered the covers to astronaut quarters.
   James Smotherman, who was in charge of Apollo 15 flight support and
responsible, among other things, for packaging the astronauts’ personal items,
instructed two assistants to vacuumpack the envelopes for transportation. He
neglected to list the covers on Scott’s “ personal property preference list”
because he confused the covers in question with another set of covers that had
been listed and approved for transport earlier. Scott had not attempted to secure
approval for the Eiermann covers; however, neither he nor either of the other
astronauts instructed anyone not to list the covers, and Scott apparently made
no attempt to conceal from NASA personnel the fact of the covers’ existence.
After packaging, the coveri were given to Scott, who carried them aboard
Apollo 15 in a pocket of his spacesuit.
   Following the recovery of Apollo 15 and while aboard the recovery ship,
U.S.S. Okinawa, the Apollo crew, with assistance from Okinawa crew
members, affixed to the envelopes twin 8-cent “ Space Achievement” postage
stamps that the astronauts had paid for, and had the envelopes date-stamped in
the ship’s post office. During their flight home from Hawaii, the astronauts
signed 100 covers, on the back of each of which appeared a notarized,
typewritten certification that the covers had been landed on the moon. Later
Scott mailed the 100 covers to Eiermann in Stuttgart, Germany.
   Eiermann subsequently delivered the covers to Sieger, who retained 1, sold
the remaining 99, and transferred DM 30,500 (roughly $10,000) to each of
three bank accounts he had opened for the astronauts. The 99 covers sold for a
total of approximately $150,000.
   The astronauts, after receiving bankbooks for their German accounts, called
Eiermann to inform him that they had decided to accept no money for the
covers, and transmitted powers of attorney to enable him to close the accounts.
They accepted his alternative offer of stamp collections for their children, but
several months later, they also declined this offer.
   Upon learning of the existence of the unauthorized covers. NASA, on June
30, 1972, impounded the 298 covers remaining in the astronauts’ possession.
(Despite the astronauts’ plan to carry 400, 298 appears to be the number of
covers actually carried.) The covers now in the National Archives’ custody
represent only the unauthorized covers the astronauts intended to keep for their
own use.
   Because of their actions, each astronaut was reprimanded; two were assigned
to new positions, and one retired.
   B. The Worden Covers. Worden carried with him, with authorization, 144
covers supplied by Herrick, who had had the covers designed and printed
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through a New York advertising executive. Herrick paid for the envelopes,
stamps, and printing, and for printed cards that were placed in the envelopes.
Worden did not tell NASA, prior to flight of Apollo 15, of the source of the
covers.
   Both Herrick and Worden denied any agreement between them to compen­
sate Worden for carrying the covers, and Worden has apparently received no
money from the sale of any of them. However, Herrick did counsel Worden,
prior to the flight, that taking such souvenirs to the moon would be a wise
 investment because of their value to stamp collectors.
   The astronauts, following their recovery by the Okinawa, signed, stamped,
and canceled the 144 covers. Of the 144, 16 were reported damaged or
destroyed; Worden gave 28 to friends and sent 100 to Herrick, 70 of which
were given, in turn, to a New York stamp dealer, who sold 10 covers, and, at
Herrick’s request turned 60 covers over to Worden. These 60 covers are now in
the National Archives’ custody.
   C. Other Authorized Covers. Besides the 144 covers taken by Worden,
Irwin and Scott carried an additional 100 authorized covers to be used for
noncommercial purposes. Irwin carried 88 covers as a favor to a fellow
astronaut, whose wife is a stamp collector. All 88 covers are reportedly in her
 possession. Irwin also carried eight covers bearing a shamrock insignia; two
 were given as gifts to Kennedy Space Center employees, and six were retained
by Irwin, plus a single cover bearing a “ First Man on the Moon” stamp and a
 “ Bliss Centennial” 3-cent stamp. Scott carried, with authorization, a 1928
 cover bearing Orville Wright’s signature and two covers furnished by the U.S.
 Postal Service, one of which Scott canceled on the moon and one of which
 remained in the command module. The canceled envelope has been placed on
 public display by the Postal Service.
                                III. Discussion
   We have identified two questions on which NASA seeks the advice of this
Office:
      (1) Whether NASA has any claim to postal covers and other
          souvenirs that astronauts took into space and that are now in
          NASA’s custody;
      (2) The remedies, if any, available to NASA to prevent astronauts or
          former astronauts from profiting from the commercial exploita­
          tion of such souvenirs.
   With respect to the first question as it applies to the Apollo 15 covers that
NASA now holds, any claim by NASA to the covers themselves must rest on a
property interest antedating the flight of Apollo 15, or on some equitable
principle, the breach of which would make the astronauts constructive trustees
for this specific property. Because none of the covers were purchased by public
funds or prepared at public expense, NASA has no legal, as opposed to
equitable, claim. Any claim must rest on a theory of constructive trusteeship.
   At the time of the Apollo 15 flight, it was still routine NASA practice to
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 permit astronauts to take postal covers into space as personal mementos. There
thus appears to be no breach of any equitable or other principle that would
 sustain a claim to any of the 100 covers taken into space, with authorization, by
 Scott and Irwin for noncommercial purposes. That 88 were given to Irwin by
 Astronaut Gordon and his wife does not alter this conclusion because no
 commercial use for the covers appears to have been intended. Nor did Irwin
 profit from his custody of the covers.
    With respect to the 398 covers taken into space by Scott without authoriza­
 tion; three of the astronauts’ actions may be deemed violations of some
 obligation to NASA: Scott’s failure to secure authorization; the astronauts’
 failure to disclose the intended commercial use of 100 of the covers; and the
 astronaut’s facilitation of the commercial exploitation of 100 of the covers. The
 second and third possible breaches of duty, however, would not sustain a claim
 to any of the 298 covers now held by NASA if it is assumed, as the evidence
 seems to indicate, that the astronauts intended to keep them as personal
 mementos. NASA might well have a colorable claim to the one cover retained
 by Sieger, who participated in any violation of duty that the astronauts
 committed. It appears, however, that the 99 other covers have passed to bona
fide purchasers and are beyond NASA’s reach.
    As for the 298 unauthorized covers now in NASA’s possession, the failure
 by Scott to secure authorization for the covers that were not intended for
 commercial use would not be a breach of any equitable principle on which a
 claim to the covers could be based. The violation of regulations appears
 inadvertent—Scott made no effort to conceal his possession of the covers.
 Further, Slayton has testified that he would have authorized transportation of
 the covers had a request been made. Hearing on Commercialization of Items
 Carried by Astronauts Before the Senate Comm, on Aeronautical and Space
 Sciences, 92d Cong., 2d sess. 59-60 (August 3, 1972) (statement of Donald
 Slayton to the committee in executive session; unpublished transcript). Although
 the weight of the covers, 30 ounces, exceeded the 8-ounce limit established in
 the 1965 regulations, that limit was based on the lesser capabilities of the
 Gemini spacecraft then in use; current proposed NASA regulations would
 permit each astronaut up to 1.5 pounds of souvenirs per flight. 43 F. R. 25693,
 25694 (1978).
    A colorable claim does exist, however, with respect to the 60 covers
 remaining from the 144 given by Herrick to Worden. Although Worden did not
 initiate his dealing with Herrick and did not profit from the sale of any covers,
 his mere acceptance of the covers, the commercial purpose of which is amply
 demonstrated by the evidence, may itself be deemed a breach of Worden’s
 fiduciary obligation of complete loyalty to the interest of NASA, his principal,
 while employed as its agent.
    It is fundamental that an agent owes his principal the loyalty of a fiduciary as
to all matters within the scope of his employment. Restatement of Agency § 13
 (1933). The duty of loyalty that the astronauts owed to NASA was codified in
 “ Standards of Conduct for NASA Employees,” 14 CFR § 1207.735-1 et seq.
 (1977), that were promulgated in October 1967, and governed the conduct.of
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the Apollo 15 astronauts. In relevant part, those regulations prohibited any
commercial exploitation by a NASA employee of his position, 14 CFR
§§ 1207.735-100(e)(l), (2), and (6); 1207.735-201(a) and (b)(2); 1207.735-605(a),
(d); and, in particular, any outside employment that would involve the violation
of Federal regulations, a conflict of interest, the use of NASA’s name in
connection with a privately sold product, or the use of Federal facilities, or any
action that would otherwise reasonably cause unfavorable criticism of NASA or
impair public confidence in the Agency, 14 CFR § 1207.735-303(a)-(d),
(f)-(h). In merely accepting covers from Herrick, in the light of Herrick’s
commercial purposes, Worden arguably violated each of the foregoing regula­
tions; insofar as the regulations reasonably define an astronaut’s obligation of
complete loyalty to his employer, those violations evidence a breach of
fiduciary duty that would result in the imposition of a constructive trust over the
covers themselves for NASA’s benefit.
    In a claim for the imposition of a constructive trust, no actual damage need be
shown:
       It is immaterial that the profit was not made at the expense of the
       beneficiary or principal; it is immaterial that if the fiduciary had not
       made the profit it would have been made and could have been
       retained by someone else. The constructive trust which is imposed is
       based upon the broad principle that a fiduciary must act with an eye
       single to the interest of his beneficiaries. If he were permitted to keep
       a profit made by him in connection with the performance of his duties
       as fiduciary, he would be tempted to consider his own interest and not
       merely that of the beneficiary. He will not be permitted to put himself
       in a position where there is a conflict between his self-interest and the
       interest of the beneficiaries. •
5 Scott, Law of Trusts § 502, at 3555 (3d ed., 1967). See also. United States v.
Carter, 217 U.S. 286 (1910); Byer v. International Paper Co., 314 F. (2d) 831
(10th Cir. 1963); United States v. Bowen , 290 F. (2d) 40 (5th Cir. 1961). The
 “ single-minded devotion” theory of fiduciary obligation has been cited with
approval by courts in suits to recoup profits for the Government that were
reaped by Government employees, who, during the course of their employ­
ment, had engaged in compromising outside activities. United States v. Carter,
217 U.S. 286 (1910); United States v. Podell, 572 F. (2d) 31 (2d Cir. 1978);
 United States v. Drumm, 329 F. (2d) 109 (1st Cir. 1964); United States v.
Bowen, 290 F. (2d) 40 (5th Cir. 1961).
    In Worden’s case it may be that the doctrine of constructive trusteeship does
not apply because (1) the taking of the covers was not within the scope of his
employment, and (2) the benefit conferred on him by Herrick could not
lawfully have been realized by NASA in the absence of Worden’s acts. Scant
case law attempts to analyze these problems directly. Professor Scott discusses
a leading decision by the British House of Lords, holding that the Crown could
recover bribes received by a British army sergeant in Cairo, who enabled a
lorry to pass civilian police without inspection by escorting it through the city
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 while in uniform. Notwithstanding the objections noted above to the imposition
 of a constructive trust and the Crown’s inability to show any loss in this case,
 the Lords held that the Crown was entitled to any profit that the sergeant reaped
 by the use of his uniform and pretended authority. Reading v. Attorney
 General, [1951] A.C. 507, aff g Reading v. The King, [1949] 2 K.B. 232, a ff g
 [1948] 2 K.B. 268 (discussed in 5 Scott, Law of Trusts, § 502 at 3556 (3d ed.
 1967)).
    Similarly, the second circuit recently held that the Government’s complaint
 against a former Congressman, alleging his receipt of unlawful legal fees and
 campaign contributions, was sufficient to state a claim for the imposition of a
 constructive trust on the money he received. United States v.. Podell, 572 F.
 (2d) 31 (2d Cir. 1978); see also, Fuchs v. Bidwell, 31 111. App. (3d) 567, 334
 N.E. 2d 117 (1975), rev’d on other grounds, 65 111. (2d) 503, 359 N.E. (2d)
 158 (1976). The results in both cases are sensible because, despite what would
 have been the respective Governments’ inability to obtain the profits in
question themselves, the balance of equities between the innocent principals
and their wrongdoing agents unquestionably favored the principals.
    Two further uncertainties arise in extending traditional fiduciary principles to
the unusual facts of the Worden case; we conclude, however, although no
 precedent squarely resolves these uncertainties, that, because of the policy
 inherent in the concept of fiduciary obligations neither problem would preclude
a successful suit in equity.
    First, it might be argued that Worden’s disloyal intent notwithstanding,, his
 intent, at the moment he accepted Herrick’s covers, had not yet materialized
into a disloyal act compromising the performance of Worden’s official duties.
Those breaches that courts penalize by the imposition of constructive trusts
 involve acts manifestly in conflict with a trust beneficiary’s interests, or where
the profits unlawfully received represent an apparent incentive for trustees to
perform their duties without full attention to their principals’ interests, e.g.,
acts adverse to the principals’ financial interest, Byers v. International Paper
Co., 314 F. (2d) 831 (10th Cir. 1963); acts that deprive the principal of a
business opportunity, Community Counselling Service, Inc. v. Reilly, 317 F.
(2d) 239 (4th Cir. 1963); County of Lake v. X-PO Security Police Service, Inc.,
27 111. App. (3d) 750, 327 N.E. (2d) 96 (1975); unauthorized exploitation of
information obtained through the purported trustee’s employment, Hunter v.
Shell Oil Co., 198 F. (2d) 485 (5th Cir. 1952); or acts that create the
appearance of a conflict of interest or the possibility that the activity involved
will compromise the employee’s judgment in the exercise of his duties, United
States v. Carter, 217 U.S. 286 (1910); United States v. Podell, 572 F. (2d) 31
(2d Cir. 1978); United States v. Drumm, 329 F. (2d) 109 (1st Cir. 1964).
However, Worden’s act need not have conflicted with his tasks in getting to the
moon and back in order to have constituted a violation of his duty of undivided
loyalty to NASA. His acceptance of the covers from a commercially interested
 party, which, once disclosed, foreseeably compromised his employer’s good
name and reputation, sufficiently conflicted with the interests of NASA so as to
justify the imposition of a constructive trust in this case.
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   A second question is whether Worden had title to the Herrick covers at the
time they were given to him. For a trust to be imposed with respect to any
property, the disposition of property must constitute profit to the trustee in
violation of his fiduciary duties. Worden or Herrick could conceivably argue
that, assuming a plan to permit Herrick to sell the covers, the covers, at the time
of their transfer to Worden, were only a loan to Worden and that their transfer
alone represented no gain to the astronaut. The facts, however, belie any loan
characterization. Worden was able, apparently without dispute, to dispose of
28 of the covers, of his own accord, as postflight gifts. Further, at Worden’s
request, Herrick secured the return to Worden of 60 unsold covers from the
stamp dealer Siegel. These acts are consistent only with Worden’s ownership of
the covers at the time Herrick delivered them to him.
   An alternative approach that would apply as well to covers in the hands of
other astronauts would be legal action to recover, instead of the souvenirs, any
profits the astronauts might realize from their sale. In the event of a sale, the
relevant case law suggests several theories on which a claim of “ unjust
enrichment” may be based. Under any theory, a claim of unjust enrichment
asserts that profits accrued to the defendant through some wrongful act, and the
defendant should, therefore, be compelled to disgorge his profits. 5 Scott, Law
of Trusts § 462.2 (3d ed. 1967); Second Restatement of Agency § 404A(1958).
Case law and secondary authority suggest three theories under which the
enrichment of the astronauts can be deemed wrongful; the policy considerations
underlying the three theories clearly converge:
   A. Unjust Enrichment Through Violations of Quasi-Contractual Duties.
Regardless of whether those of NASA’s regulations cited above accurately
define the astronauts’ fiduciary obligations, they do represent duly promulgated
regulations that would be violated by the astronauts’ commercial exploitation of
their souvenirs. Official duties imposed by statute or regulation are quasi-
contractual in nature. Cf., Steamship Co. v. Joliffe, 69 U.S. (2 Wall.) 450
(1864); NLRB v. Killoran, 122 F. (2d) 609 (8th Cir. 1941), cert, denied, 314
U.S. 696 (1941); In re Shawsheen Dairy, 47 F. Supp. 494 (D. Mass. 1942)
[per Wyzanski, D.J.]. Where a defendant profits from his violation of a
quasi-contractual obligation, he is liable to the party to whom he owed his duty
for the profits realized.
   B. Unjust Enrichment Through Use of the Principal’s Assets. Whatever
value inheres in souvenirs that were taken to the moon clearly could not have
been realized without the use of NASA’s facilities and equipment. Section 404
of the Second Restatement of Agency (1958) states that where the use of a
principal’s assets is predominantly responsible for producing a profit for the
principal’s agent, the agent is liable, at the principal’s election, for all profits
thus realized.
   C. Unjust Enrichment at NASA's Expense. Under the basic principle of
restitution, one who is unjustly enriched at the expense of another is required to
compensate the other for his loss. Restatement of Restitution § 1 (1937).
However, where the profiteering violates some independent equitable princi­
ple, for example, the obligations of a fiduciary, the measure of restitution will
                                       288
be the entire profit realized by the defendant and not the value of the plaintiffs
loss. Restatement of Restitution, §§ 138, 197 (1937); cf.} Heddendorf v.
Goldfine, 167 F. Supp. 915 (D. Mass. 1958). This theory is essentially the
same as the theory advanced above for the recovery of Worden’s covers, but
views the proceeds of a sale rather than the covers as trust property in the hands
of the astronauts. The application of the theory to recover the profits from any
sale is more straightforward, under these facts, than the attempt to retain the
covers themselves. First, assuming that a breach of duty through such a sale can
be shown, there is no question after a sale as to whether the astronaut in
question has profited from his breach. Second, where an astronaut sells his
souvenirs—creating the possibility that NASA’s name and reputation may be
exploited by private parties for personal gain—a plainer case of a potential
conflict of interests appears than in the case of the initial acceptance of covers
from a private party. This theory, however, can be used to restrain sales by
astronauts only as long as they are employed by NASA; the termination of
employment ends their duty of loyalty to NASA’s interests, and fiduciary
obligations no longer apply.
                                                  Leon U lm an
                                      Deputy Assistant Attorney General
                                                    Office of Legal Counsel

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