The opinion of the court was delivered by: MORRIS
The plaintiff brings this suit, on its own behalf and as representative of others similarly situated, in which the relief asked is that they be declared to be the owners of a fund now in the Treasury of the United States, aggregating $1,076,943.75, described in the complaint as the "parity payment fund;" that said fund be paid over to them; and that the defendants be enjoined from making payment or distribution of said fund to any other parties, except to such receiver as may be appointed by this Court to receive said fund. Asking is also made for a preliminary injunction and temporary receiver.
The defendants, individually, and as Secretary of Agriculture of the United States, Treasurer of the United States, and Secretary of the Treasury, respectively, filed motions to dismiss the action on grounds which may be summarized as follows: That the action is in effect one against the United States, and this Court is without jurisdiction because the United States has not consented to be sued herein; that the money, the recovery of which is sought, is in the Treasury of the United States and cannot be withdrawn in the absence of an appropriation, which has not been made, nor has this Court jurisdiction to appoint a receiver for said fund; that this is not a proper class action in that neither the payments nor the contract pursuant to which they were made are alleged to be due to any coercion or compulsion; that the defendants, and each of them, acted solely in their official capacity and were, therefore, agents of the United States, under authority of law, the validity of which is not challenged -- hence, individually, they have no interest or control over the fund in question and are not proper parties in their individual capacities.
The fund came into being as a result of a marketing agreement, entered into between the Secretary of Agriculture and members of the Distilled Spirits Industry, of which the plaintiff is one, which agreement became effective December 10, 1933, and was terminated April 18, 1934. This agreement was made pursuant to Section 8 (2), Title I, of the Agricultural Adjustment Act, approved May 12, 1933, 48 Stat. 31, 34.
It is alleged in the complaint, and therefore admitted by the motion to dismiss, that all parity payments made to the Secretary of Agriculture were deposited in a special account of the Treasury of the United States, designated as "8055, Collections, Distilled Spirits Industry, Parity Payments, Trust Fund," and are now held by the Treasurer subject to the direction and control of defendant Morgenthau in a special account in the Treasury of the United States, designated as a trust fund and entitled "Proceeds Distilled Spirits Industry, Parity Payments."
It is further alleged in the complaint that, although the parity payment fund was required to be used in making rental and benefit payments and other disbursements under the Act with respect to grain, and the Secretary of Agriculture was empowered to provide for such payments and disbursements in such amounts as he deemed fair and reasonable, the Secretary has made no determination either as to the amounts which he deems to be fair and reasonable payments and disbursements to be made out of the parity payment fund, or as to the conditions under which such payments were to be made. It is, therefore, claimed by the plaintiff that, in the absence of such determination, there is no beneficiary entitled to the fund. The plaintiff further asserts that the parity payment fund cannot now be used for the particular purpose specified in the marketing agreement, because (a) the Secretary of Agriculture does not now have legal authority to provide for payments and disbursements in the manner provided in the Act, as amended, at the time the agreement was entered into; (b) the provision for the use of the fund for rental and benefit payments and other disbursements under the Act is void for indefiniteness and uncertainty in that it fails to establish any intelligible means of determining the persons to whom, and the amounts, time and conditions under which the parity payment fund is to be disbursed; (c) all power to disburse the parity payment fund for the purposes specified in the marketing agreement ceased when the marketing agreement was terminated on April 18, 1934; (d) in the event power to disburse the parity payment fund did not cease on April 18, 1934, it was intended that such fund be used for the purposes specified in the marketing agreement within a reasonable time and not thereafter, and that such fund has now been held for more than four years, and a reasonable time for using said fund for the purposes stated has long since elapsed; and (e) the Secretary of Agriculture has abandoned all intention of using the parity payment fund for the purposes specified in the Act and in the marketing agreement.
The complaint avers that the marketing agreement should be construed to mean that, in the event said parity payment fund was not and could not be used for the particular purposes specified in the marketing agreement, said fund, or so much of it as remained, should be paid back by the Secretary of Agriculture to each contributing distiller in proportion to his contribution to said fund, and that, when the Secretary of Agriculture accepted the parity payments from the contributing distillers, he did so upon the condition that he would use the fund for the purposes specified in the marketing agreement, and upon further condition that, if he did not make use of such fund for such purpose, he would repay the money on demand to the distillers who paid it to him. It is insisted that such implied conditions and agreement now attach to the fund and, therefore, constitute a trust for the benefit of the plaintiff and other contributing distillers.
For this Court to grant the relief asked for by the plaintiff, it is necessary that it be determined that the payments made by the plaintiff and other contributing distillers under the marketing agreement were to be used for specified purposes, and for the benefit of designated or ascertainable persons -- in other words, that there exists an express trust with respect to said fund; that such fund has not been, within a reasonable time, or cannot be, used for such purposes, and for the benefit of such persons; and that it was the intention of the parties to the marketing agreement (and would have been so stated in said agreement had the parties contemplated the present situation) that any part of said fund not used for the purposes specified, and for the benefit of the persons indicated, should be returned to the plaintiff and other contributing distillers; and further that the failure to require such return to the plaintiff and other contributing distillers would result in the unjust enrichment of the payee, or such other inequity as could only be remedied by that relief. This, as I understand it, is the fundamental principle underlying the equitable power of declaring a resulting trust.
Obviously, the equitable ownership of the fund in question cannot be settled unless all parties at interest are given an opportunity to be heard. So, at the outset, it must be determined whether or not the United States is a necessary party to these proceedings. If it is not, the Court may proceed to a consideration of the questions, upon the answer to which depends whether the relief asked for shall be granted or denied. If it is, the complaint must be dismissed, as the United States cannot be made a party to these proceedings without its consent, and such consent has not been given.
If the fund here involved is one in which the United States has no proprietary or possessory rights, and it is only a question as to which of several private parties are now entitled to such fund, it may be said that the United States is not a necessary party. This is the principle decided by the United States Court of Appeals for the District of Columbia in Thompson v. Deal, 67 App.D.C. 327, 92 F.2d 478, which followed a decision of the same Court in Orinoco Co. v. Orinoco Iron Co., 54 App.D.C. 218, 296 F. 965, affirmed by the Supreme Court, sub nomine Mellon v. Orinoco Iron Co., 266 U.S. 121, 45 S. Ct. 53, 69 L. Ed. 199. In Thompson v. Deal, supra, the defendants, while officers of the United States, speaking through the Attorney General of the United States, asserted that, in so far as they handled the fund in controversy, they did so as representing, not the United States, but the individual cotton producers who deposited certificates in the pool, and that the proceeding was in reality "one between individuals who were parties to a purchase and sale transaction." [ 67 App.D.C. 327, 92 F.2d 482.] In the Orinoco case, the Supreme Court, speaking through Mr. Chief Justice Taft, upheld the jurisdiction of the Court in determining a controversy between private parties with respect to a fund paid into the Treasury by a foreign government where the Secretary of the State, having authority of law to direct the Secretary of the Treasury with respect to its payment, had "remitted to the courts" such private parties for a determination of their rights. That opinion quoted with approval the earlier case of Houston v. Ormes, 252 U.S. 469, at page 473, 40 S. Ct. 369, at page 370, 64 L. Ed. 667: "In the present case it is conceded, and properly conceded, that payment of the fund in question to the defendant Sanders is a ministerial duty, the performance of which could be compelled by a mandamus. But from this it is a necessary consequence that one who has an equitable right in the fund as against Sanders may have relief against the officials of the Treasury through a mandatory writ of injunction, or a receivership which is its equivalent, making Sanders a party so as to bind her and so that the decree may afford a proper acquittance to the government. The practice of bringing suits in equity for this purpose is well established in the courts of the District. Sanborn v. Maxwell, 18 App.D.C. 245; Roberts v. Consaul, 24 App.D.C. 551, 562; Jones v. Rutherford, 26 App.D.C. 114; Parish v. McGowan, 39 App.D.C. 184, s.c. on appeal, McGowan v. Parish, 237 U.S. 285, 295, 35 S. Ct. 543, 59 L. Ed. 955. Confined, as it necessarily must be, to cases where the officials of the government have only a ministerial duty to perform, and one in which the party complainant has a particular interest, the practice is a convenient one, well supported by both principle and precedent."
It is, however, well established that, where the United States has any interest, proprietary or possessory, in a fund in its possession, or in the possession of its officers, any proceeding to establish rights in such fund is in effect a suit against the United States, and in which the United States is a necessary party and, therefore, such proceeding cannot be maintained unless the United States has consented to be sued therein. In Haskins Bros. & Co. v. Morgenthau, 66 App.D.C. 178, 85 F.2d 677, 681, it is explicitly stated "* * * that the Secretary of the Treasury and the Treasurer are officers of the United States holding offices established by law; that their duties are to receive and preserve the public money and not to disburse it except conformably to law; that as officers of the United States they have no right or estate in the public money or any other money in the treasury, whether earmarked as a special fund or as part of the general fund of the United States; that they are in effect mandataries of a limited and defined commission;" and further "It is therefore of no moment whether the United States have the use of this money as they do the ordinary revenues of the government or whether the money represents a trust fund created by Congress and earmarked for a specific purpose. In either case it is money in the Treasury of the United States as to which the United States had and have the power of control and disposition." And in that case the earlier one of Richmond, F. & P.R. Co. v. McCarl, 61 App.D.C. 290, 62 F.2d 203, 206, was cited with approval on the point that the authority and duty of the United States with respect to a fund in the treasury does not depend alone upon a pecuniary interest therein. There in was held that moneys paid over to the Interstate Commerce Commission by certain railroads in order to establish a fund which might be used to help weaker lines were clearly moneys which the United States are charged with the duty of conserving, and, while not "public moneys in the sense in which the ordinary revenues of the government are public moneys," are "nevertheless public moneys in the sense that it is a fund which the United States control and which, through an instrumentality of the United States created by Congress, they disburse."
And, indeed, the Court went further in the Haskins case and cited with approval O'Connor v. Rhodes, 65 App.D.C. 21, 79 F.2d 146, to the effect "that funds in the hands of the Comptroller of the Currency belonging to insolvent national banks, and redeposited by him in other banks for safekeeping, were federal funds to which the government of the United States occupied the relation of trustee." With respect to the fund involved in the Haskins case, the Court said: "* * * and, though designated by the Congress as a special fund for the benefit of the Philippine Treasury, it is while in the treasury money as to which the United States, and not appellees, are trustees. And in this view, the conclusion is inevitable that the United States are essential parties in any litigation involving the fund and, they not having consented to be sued, the suit cannot be maintained." And, on the question as to the joinder in those proceedings of officers and agents of the United States in their individual capacity, it is said in the Haskins case: "In the instant case the acts and proceedings which are here sought to be controlled are those which are implied in the inherent duties and functions of the offices of the appellees. Indeed, they are their ordinary duties.Here there is nothing extraneous to the offices; nothing is required ...