WALSH CONST. CO. v. DAVIS

Joe E. Brown, United States Attorney, and Swep S. Taylor, Assistant United States Attorney, for appellants.

Was the Federal Public Housing Authority amenable to suit in the state court of Mississippi? The question, as we see it, is a limited one. There is not before the court the broad question of whether the Federal Public Housing Authority is a suable entity under any circumstances; the sole question here is whether this court has jurisdiction to sustain an action against the Federal Public Housing Authority arising out of its activities in this particular case, that is, as a procuring agency for the Foreign Economic Administration in the performance of its functions under the Lend-Lease Act (22 U.S.C. sections 411 et seq.). We respectfully submit that this court is without jurisdiction in this case for the reason that the Congress has not consented to the maintenance of an action against the Federal Public Housing Authority, arising out of the functions here exercised.

1. It is elementary that the United States or its agencies cannot be sued in any court without the consent of the Congress, and when that consent is given, then only in strict accordance with the limitations of that consent. Tempel v. United States, 248 U.S. 121; Langford v. United States, 101 U.S. 341; Jones v. United States, 131 U.S. 1; North Dakota-Montana Wheat-Growers' Association v. United States, 66 F.2d 573 (CCA 8); Thomason v. Works Progress Administration, 138 F.2d 342; Kennedy v. Public Works Administration, 23 F. Supp. 771. Therefore, unless there can be found the consent of Congress to the maintenance of this action, the case must fall for want of jurisdiction. Moreover, even if the Congress had consented to certain types of actions against the Federal Public Housing Authority, it does not follow that any action may be maintained against it. The United States itself is suable under the provisions of the Tucker Act, 28 U.S.C. § 41 (20), but there is no jurisdiction to maintain actions against the United States in cases not falling strictly within the terms of that Act. United States v. Sherwood, 312 U.S. 584; Lynn v. United States, 110 F.2d 586 United States v. Jones, 131 U.S. 1; United States v. Michel, 282 U.S. 656. We know of no Congressional enactment expressly authorizing actions of any kind against the Federal Public Housing Authority, and we believe, no Congressional enactment can reasonably be construed impliedly to authorize the maintenance of an action against it in the circumstances of this case.

2. At the outset, it should be observed that the Federal Public Housing Authority is not a government corporation. Nor was it created by the Congress. The Federal Public Housing Authority was established by the President of the United States by the promulgation of Executive Order 9070 of February 24, 1942 (7 F.R. 1529), pursuant to the First War Powers Act, 1941 (50 U.S.C. App. secs. 601 et seq.). That Executive Order established a National Housing Agency composed of three main constituent units — namely, the Federal Housing Administration, the Federal Home Loan Bank Administration and the Federal Public Housing Authority. The functions, powers and duties of many preexisting agencies concerned with housing problems were consolidated in the National Housing Agency, and primary responsibility for certain of those functions and duties was placed in each of these constituent units, subject to the general supervision of the National Housing Agency. Under the Executive Order, the Federal Public Housing Authority was the recipient of many functions and duties. It inherited, among others, certain functions of the Federal Works Administrator, the War Department, the Navy Department, and the Farm Security Administrator, none of which, as is well-known, could be sued. Contracts entered into by those agencies were contracts of the United States itself, and, in proper cases, actions in the federal courts could be maintained against the United States under the Tucker Act, or in the Court of Claims. It also inherited the function of the United States Housing Authority, a suable corporation created by the Act of September 1, 1937 (42 U.S.C. § 1403, 1405). It should be emphasized that the Federal Public Housing Authority is not merely the successor of the United States Housing Authority. Its succession to the functions of that corporation was merely one of the numerous duties and functions conferred upon it by the President.

3. As this court is already aware, the Federal Public Housing Authority was not exercising in this case any function or duty of the United States Housing Authority. Indeed, it was not exercising any of the functions inherited under Executive Order 9070. In this case the Federal Public Housing Authority was functioning on behalf of the Foreign Economic Administration, which itself was the alterego of the President, in the performance of its functions under the Lend-Lease Act. A more detailed explanation may be helpful here. Section 3 of the Lend-Lease Act, 55 Stat. 31, 22 U.S.C. App. sec. 412, provides that:

"(a) Notwithstanding the provisions of any other law, the President may, from time to time, when he deems it in the interest of national defense, authorize the Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government — (1) To manufacture . . . or otherwise procure, to the extent to which funds are made available therefor, or contracts are authorized from time to time by the Congress, or both, any defense article for the government of any country whose defense the President deems vital to the defense of the United States. (2) To sell, transfer title to, or otherwise dispose of, to any such government any defense article. . . ."

Section 9 of the Lend-Lease Act ( 42 U.S.C. § 418) authorized the President to make rules and regulations to carry out the Act and to exercise any power or authority conferring on him "through such department, agency or officer as he shall direct." Thereafter, on October 28, 1941, by Executive Order 8926, (16 F.R. 5519) the President established the Office of Lend-Lease Administration in the Executive Office of the President, and conferred upon it his powers under Lend-Lease Act. And, on September 25, 1943, the President, by Executive Order 9380 (8 F.R. 13081), established the Foreign Economic Administration and transferred the functions, powers, and duties of the Lend-Lease Administration to the Foreign Economic Administration.

Therefore, under the Lend-Lease Act and the Executive Orders issued thereunder, the Foreign Economic Administration was empowered to authorize the Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government to procure any defense article for any country whose defense was deemed vital to the defense of the United States.

It was pursuant to this chain of authority that the Federal Public Housing Authority in this case was authorized and directed by the Administrator of the Foreign Economic Administration to procure for it, as its agent the temporary emergency houses which had been requisitioned by the United Kingdom. The exchange of correspondence between the Administrator of the Foreign Economic Administration and the Commissioner of the Federal Public Housing Authority is already before this court. The funds available for the performance of the contract entered into with the Walsh Construction Company were funds of the Foreign Economic Administration, allocated to the Federal Public Housing Authority. This was the usual situation of an agent put in funds to carry on the business of its principal.

4. It seems clear from the foregoing that the Federal Public Housing Authority in this case was exercising functions and powers on behalf of the President of the United States and of the Foreign Economic Administration and that in the exercise of such functions it cannot be sued. The procurement of the houses here involved could have been delegated to the Secretary of War, and certainly it could not be maintained that the War Department would have been suable by virtue of any contract entered into. The obligation would have been that of the United States itself, and in a proper case an action would lie against the United States under the Tucker Act ( 28 U.S.C. § 41 (20)). That the Federal Public Housing Authority in this case did not conceive that it had authority to enter into the contract here involved as a contracting party and in its own name is evidenced by the fact that the contract was entered into by "the United States of America" and not by the Federal Public Housing Authority. The obligation in this case, if any, is the obligation of the United States, and the Federal Public Housing Authority cannot be sued thereon. See Hodgson v. Dexter, 1 Cranch 345, 362.

The argument that this court has jurisdiction to maintain this action against the Federal Public Housing Authority apparently proceeds on the notion that the Federal Public Housing Authority is a governmental corporation which can sue and be sued. That this is the theory is apparent from the declaration itself which in paragraph 2 described the Federal Public Housing Authority as "a public corporation organized by the Congress and owned and controlled by the United States Government." But we have already laid bare plaintiff's obvious misconception. It is apparent that plaintiff is confusing the Federal Public Housing Authority with the United States Housing Authority, which is a Government corporation which can sue and be sued in its own name. 42 U.S.C. § 1405 (b). Whether the Federal Public Housing Authority can be sued in a case involving the exercise of functions inherited from the United States Housing Authority, this court need not now decide. But, at the very least, it cannot be sued on a contract entered into by the United States in relation to which it was merely a contracting agent. It must be remembered that it was in 1937 that the United States Housing Authority was created by Congress and that it was in 1937 that consent to suits against that Corporation was given by the Congress. It is hardly reasonable to assume that the Congress in 1937 consented to suits against another not yet existing agency on all of its transactions and in no way related to the functions of that corporation, merely because years later that new agency, not a corporation and in reference to whom Congress has never spoken, might as one of its functions, continue the work of the corporation. That, we suggest, is extending Congressional consent to unwarranted extremes. Moreover, there is nothing in the First War Powers Act, 1941 (50 U.S.C. App. sections 601 et seq.) evidencing any intent of Congress to permit the President, in his consolidations of Government agencies, to waive at will govermental immunity and to permit actions to be instituted anywhere against newly created agencies on what are essentially and traditionally obligations of the United States itself. The waiver of governmental immunity is not to be lightly imputed, and statutes relaxing governmental immunity from suit are always to be strictly construed. United States v. Sherwood, 312 U.S. 584, 590; United States v. Michel, 282 U.S. 656; Price v. United States, 174 U.S. 373.

Cases like Keifer and Keifer v. R.F.C., 306 U.S. 381 and F.H.A. v. Burr, 309 U.S. 242, are not in point. In the Keifer case, the question was whether a government corporation could be sued in tort, and in the Burr case, the court was dealing with a government agency which was expressly authorized by Congress to sue and be sued. Here we have, not a corporation, but an executive agency, established by the President, exercising no corporate functions of any kind and against whom no actions have been authorized. It was acting merely as a contracting officer for the President and the Foreign Economic Administration in entering into a contract of the United States of America. The Congress, in the Tucker Act, 28 U.S.C. § 41 (20), has already spoken on how a contractual liability of the Government may be enforced in a suit against the United States in the federal courts alone. See United States v. Shaw, 309 U.S. 495. Neither the President nor any other Government official can consent to suits on Government obligations in any other manner or in any other court. Cf. Minnesota v. United States, 305 U.S. 382, 388-389. Stanley v. Schwalby, 162 U.S. 255, 269-270. And, as previously pointed out, the consent of Congress to suits against the United States Housing Authority arising out of the activities of that corporation cannot be deemed consent to suits against the Federal Public Housing Authority in any court, particularly on obligations of the United States itself arising out of transactions foreign to any functions of the United States Housing Authority.

Any reference to the Government Corporation Control Act (Act of December 6, 1945, Public Law 248, 79th Congress) is irrelevant to the issue here involved. That Act merely provides annual scrutiny and current financial control by the Congress of the financial transactions of Government corporations through the regular fiscal agencies of the Government. It provides for a systematic procedure for consideration and action on their contemplated programs in the form of business-type budgets to be included in the annual budget submitted by the President, and through a commercial-type audit and report to the Congress by the Comptroller General on their compliance with Congressional directives and restrictions. Obviously, to the extent that the Federal Public Housing Authority exercises functions of Government corporations, it is included in the Act. Prior to the enactment of the Government Corporation Control Act all the functions of the Federal Public Housing Authority, except the corporate functions administered by it, were and still are subject to audit by the General Accounting Office of the United States. All that the Act accomplished in regard to the Federal Public Housing Authority is that it placed the heretofore excepted corporate functions administered by the Authority under similar but less strict audit and budgetary control. But it is clear that the Act has nothing to do with suability of immunity from suit of the Federal Public Housing Authority in its non-corporate activities or in its activities for which it would not otherwise be suable.

5. Appellants, in further support of their position herein, would show that it was and is the intent of the Congress of the United States that the Federal Public Housing Administration, should be sued generally only with respect to the functions of the United States Housing Authority, and in support of this, appellants would respectfully cite the Housing Act of 1948, being House Record 6959, as passed at the 80th Congress, wherein Section 502, paragraph (b) thereof, provides: "The Public Housing Administration shall sue and be sued only with respect to its functions under the United States Housing Authority Act of 1937, as amended, and Title 2 of Public Law 671, 66th Congress, approved June 28, 1940, as amended. It would therefore conclusively appear that it was and is the intent of Congress under the vesture of the duties and responsibilities for the reorganization, and under the War Powers Act, that the general immunity of the United States should not be waived, but that the immunity should only be waived with respect to certain specified acts, as clearly indicated from the wording of the above statute.

6. In conclusion, it should be emphasized that for this court to uphold the plea to the jurisdiction over the Federal Public Housing Authority is not to place the Government of the United States beyond the law. We make no such contention. This case involves a contractual obligation of the United States. The Congress has long since provided remedies against the United States in proper cases in the Court of Claims and in the federal district courts. See 28 U.S.C. § 41 (20) and 28 U.S.C. § 250. We ask merely that this court permit the United States to defend itself in the forum where Congress has said actions against the United States should be brought.

The cross appellants urge that the trial court was in error in reducing the attorney's fee as found in this Special Master's report. In reply thereto the appellants would respectfully urge that the Chancellor has the duty and the right to review the finding made by the Master and, if as in the instant case all other things and amounts were properly adjudged, the right to reduce any items which were against the equity and good conscience of his court.

Wherefore, we submit that the Chancellor was within his powers and duties in reducing the attorney's fee, if in his opinion the same were unreasonable.

D.E. Breland, Dixon L. Pyles, and B.B. McLendon, for appellees.

Appellants argue in their brief under Point I that the Federal Public Housing Authority is not suable on matters arising out of its activities in this particular case, because appellant says the activities were as a procuring agency for the Foreign Economic Administration in the performance of its function under the Lend-Lease Act. (22 U.S. Code section 411 et seq.) Appellants cite several United States Supreme Court decisions all of which as we understand them are not in point. They all being cases where suits were filed against the United States Government and not a corporation owned or controlled by the United States Government. United States Housing Authority was created by Title 42, Section 1403 (a) as follows: "There is hereby created in the Department of the Interior and under the general supervision of the Secretary thereof a body corporate of perpetual duration to be known as the United States Housing Authority, which shall be an agency and instrumentality of the United States." Section 1405 (b), Title 42 U.S.C.A. provides as follows: "The Authority shall sue and be sued in its own name, and shall be represented in all litigated matters by the Attorney General or such attorney or attorneys as he may designate."

The Contract Settlement Act of 1944 Public Law 395, Section 13 (b) (a) provides for suits on terminated war contracts against any corporation owned or controlled by the United States, and that the suit shall be brought against any such corporation in any court of competent jurisdiction in accordance with existing law.

The case of Keifer and Keifer v. Reconstruction Finance Corporation, etc., 306 U.S. 381, decided February 27, 1939, was a suit against the Regional Agricultural Credit Corporation and on the question of whether it was immune from suit. Congress had authorized the Reconstruction Finance Corporation to create Regional Agricultural Corporations in any of the twelve Federal Land Bank districts — each to have three million dollars paid up capital stock subscribed by the Reconstruction Finance Corporation. Regional Agricultural Credit Corporation was chartered and entered into its duties to make loans, etc., and was sued in tort for damage to live stock. We quote the following excerpts from the court's opinion. "Therefore, the government does not become the conduit of its immunity in suits against its agents or instrumentalities merely because they do its work, (citing authorities) . . . For more than a hundred years corporations have been used as agencies for doing work of the Government."

"(5) Congress may, of course, endow a governmental corporation with the government's immunity. But always the question is: Has it done it? (citing authorities) This is our present problem: Has Congress endowed Regional with immunity in the circumstances which enveloped its creation? It is not a textual problem; for Congress has not expressed its will in words. Congress may not even have had any consciousness of intention. The congressional will must be divined, and by a process of interpretation which in effect is the ascertainment of policy imminent not merely in the single statute from which the rights and responsibilities of Regional, but in a series of statutes utilizing for governmental purposes and drawing significance from dominant contemporaneous opinion, regarding the immunity of governmental agencies from suit."

". . . In spawning these corporations during the past two decades Congress has uniformly included amenability to law. Congress has provided for not less than forty of such corporations, discharging governmental functions, and without exception the authority to-sue-and-be-sued was included[3] (footnote 3 lists the numerous corporations performing governmental functions and which may sue and be sued. Among them is United States Housing Authority (50 Stat., 888, 889, 890, 42 U.S.C.A. Paragraph 1401 et seq.) Such a firm practice is partly an indication of the present climate of opinion which has brought governmental immunity from suit into disfavor, partly it reveals a definite attitude on the part of Congress which should be given hospitable scope.[4]"

The case of Federal Housing Administration v. Burr, 309 U.S. 242, involved the question of whether or not the Federal Housing Administration was subject to garnishment and the court held that it was, and we quote the following short excerpt from the court's opinion. "As indicated in Keifer and Keifer v. Reconstruction Finance Corporation, supra, we start from the premise that such waiver by Congress of government immunity in case of such Federal instrumentalities should be liberally construed . . ."

The case of National Housing Agency et al. v. Orton, 202 S.W.2d 243, was decided by the Court of Civil Appeals of the state of Texas on April 25, 1947. The writer of the opinion in that case evidently made considerable research on the authorities pertaining to the subject matter and wrote a very illuminating and exhaustive opinion. From that opinion we learn that the Nationla Housing Agency is composed of three constituent units as created by Executive Order 9070 on February 24, 1942. We quote the following from the court's opinion in the case. "Our determination whether Federal Public Housing Authority is the same agency as United States Housing Authority, is controlled by the provisions of paragraph 3 of Executive Order 9070, which we have underlined above. The language to which we refer means that Federal Public Housing Authority is the same agency as United States Housing Authority for, to say that United States Housing Authority is to `be administered as Federal Public Housing Authority' is only another way of say that United States Housing Authority shall be operated as Federal Public Housing Authority, and this necessarily means Federal Public Housing Authority is only another name for United States Housing Authority.

The effect is but to show in the main, the continued existence of the corporation and its temporary transfer into National Housing Authority from the Federal Works Agency (into which it had been transferred from the Department of Interior) and to show that the National Housing Administration was vested with supervisory powers formerly exercised by the Federal Works Administrator and still earlier by the Secretary of the Interior. Executive Order 9070, of course, delegated new functions to United States Housing Authority and temporarily gave a new title to United States Housing Authority and one to its administrator, but the corporation seems unchanged in substance.

There is some authority for our construction of Executive Order 9070. Congress placed the same construction on that order in enacting the Government Corporation Control Act of December 6, 1945, being Title 31 U.S.C.A. section 841 to 869, inclusive. The act regulates both wholly owned and mixed ownership government corporations, and in section 856, Title 31 U.S.C.A. the term `wholly owned Government Corporation' is defined by listing the particular corporations which Congress intended to regulate by the statute. Among the `wholly owned Government Corporations' so listed is the following: `Federal Public Housing Authority (or United States Housing Authority) and including Public Housing Projects financed from appropriated funds and operation thereof.' This constitutes a positive recognition by Congress of three facts: (1) that Federal Public Housing Authority is a corporation; (2) that Federal Public Housing Authority and United States Housing Authority are one and the same corporation (they necessarily must be, if Federal Public Housing Authority is a wholly owned government corporation, as Congress believe it to be; and (3) that Federal Public Housing Authority (United States Housing Authority) is administering certain public housing projects. These are the facts, of course, which plaintiff charges against appellants here and which appellants deny.

In addition to the Government Corporation Control Act, we note that in certain litigation apparently under control of the Washington Office of the Attorney General, Federal Public Housing Authority has formally stipulated that it constitutes the same agency as United States Housing Authority. See Federal Public Housing Authority v. Guckenberger, 143 Ohio Stat. 251, 55 N.E.2d 265, by the Supreme Court of Ohio, reversed by the Supreme Court of the United States at 323 U.S. 329, 65 S.Ct. 280, 89 L.Ed. 274."

From the above authorities it will be manifest that Federal Public Housing Authority is amenable to suit. But appellant says that it is not in this particular case, because it was engaged as a procuring agency for Foreign Economic Authority in performance of its functions under the Lend-Lease Act, supra. In reply to that contention we quote as follows from the said Lend-Lease Act, Section 411, Title 22, U.S.C.A. "As used in Sections 411-419 of this title — (a) the term `defense article' means. . . ." (4) Any agricultural, industrial or other commodity or article for defense . . ."

From Section 412 of said Act we quote the pertinent parts as follows: "(a) Notwithstanding the provisions of any other law, the President may, from time to time, when he deems it in the interest of national defense authorize the Secretary of the Army, the Secretary of the Navy, or the head of any other department or agency of the government (1) to manufacture . . . or otherwise procure . . . any defense article for the government of any country whose defense the President deems vital to the defense of the United States."

We quote all of section 418 of said Lend-Lease Act as follows: "The President may, from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of Sec. 411-419 of this title; and he may exercise any power or authority conferred on him by Sections 411-419 of this title through such department, agency, or officer as he should direct." March 11, 1941 c., 11, 9, 55 Stat. 33.

From Section 421 of said Lend-Lease Act, we quote "The President may, from time to time, when he deems it in the interest of National Defense, authorize the head of any department or agency of the government to enter into contracts for the procurement of defense articles, information, or services for the government of any country whose defense the President deems vital to the defense of the United States . . ."

Appellants say that the procurement of the houses herein involved could have been delegated to the Secretary of War, and certainly it could be maintained that the War Department would have been suable by virtue of any contract entered into. But the fact is that it was not delegated to the Secretary of War, but to a government owned and government controlled corporation which by its own creation was made an agency of the United States Government and which as we have seen above was authorized to sue and be sued. Appellants intimate that this claim would be against the United States itself and that in a proper case the action would lie against the United States under the Tucker Act. ( 28 U.S.C. § 41 (20).

We have demonstrated above that this would not be correct, but in addition thereto we direct the court's attention to the fact that the Tucker Act referred to provides only for suits against the United States Government in amounts not exceeding Ten Thousand Dollars whereas in the case at bar a sum many times greater than that is involved.

We therefore respectfully submit that the Federal Public Housing Authority is amendable to suit and in the state courts of Mississippi.

Cross-appellees assign as error, "The court erred in sustaining exceptions to the Master's report, whereby the attorney's fees were greatly reduced."

Now, it is elementary law that an attorney is not entitled to a fee except pursuant to a contract or a statutory provision. We find that in this case attorneys are entitled to a reasonable fee pursuant to the act under which this suit was brought, being Contract Settlement Act of 1944, Title 41 FCA — Public Contracts — Paragraph 101, Sec. 106 (d) which sets out in full the methods and standards of damages and includes the following: "Reasonable accounting, legal, clerical and other costs and expenses incident to termination and settlement of the terminated war contract." Title 41 FCA, P. 106 (d) (3).

The above statute is the authority upon which the issue of attorney's fee was submitted. The trial court held that the act provided for a reasonable attorney's fee, but saw fit to cut the amount as fixed by the Special Master to $6,000.00, being a reduction of more han 50%. We believe that the Chancellor abused his discretion by such reduction.

The contract act itself, under which this suit was brought, provides for assessment of a reasonable attorney's fee cost incident to the termination and settlement. Part of the fee is assessed upon an amount of $41,898.00, which was recovered prior to the actual filing of the suit. Nevertheless, it was recovered through the efforts and services of the solicitor who made frequent demands, in person, upon the cross-appellees at their home office. The evidence shows that the parties were so unfriendly toward each other that they could not even carry on a conversation, and that it was necessary for the solicitors to separate them and to carry on for the parties. Now, cross-appellees come and assign as error the faithful performance of the solicitor and attempt to deny him the part of the fruits which were recovered through his efforts.

It is useless to extend this brief by citing legal authorities or making further comment, but, in conclusion, we say that the Master's finding of $13,748.00 as a reasonable attorney's fee is supported by all the evidence, and that the sum of $6,000.00, as set and fixed by the Chancellor, is a manifest error which this court should reverse and render final decree or judgment here for cross-appellants.