The opinion of the court was delivered by: PRETTYMAN
These are three renegotiation cases, one each for the years 1942, 1943 and 1944. The points involved in the first two relate to the existence or amounts of excessive profits. The Government proposes to recover its claim by offsetting the amounts against sums due by it to the plaintiff. Under these circumstances, the cases are controlled by the decisions of the Supreme Court in the Mine Safety and Waterman cases.
They must, therefore be dismissed.
The plaintiff was a subcontractor. In its effort to recover the excessive profits, the Government has proceeded by issuing withholding orders. Section 403(c)(2) of the Act
provides in part that the War Contracts Price Adjustment Board may authorize the Secretary to eliminate excessive profits 'by directing a contractor to withhold for the account of the United States, from amounts otherwise due to a subcontractor, any amount of such excessive profits of such subcontractor; * * * ' Acting under authority of that provision, the Secretary addressed withholding orders to 12 concerns which had, or had had, prime contracts with the Government, and which were also customers of the plaintiff. The plaintiff had, or had had, with each of these 12 concerns a subcontract relating to the matter covered by a prime contract between that concern and the Government.
The withholding orders thus issued directed the addressee to withhold for the account of the United States 'any and all amounts otherwise due or which may become due from you to Lord Manufacturing Company, not in excess of $ 7,000,000.' The features of these orders which are the premises of the present question are (1) that they are not limited to sums due to the plaintiff by the addressees upon subcontracts for Government work, but cover any sums due the plaintiff under any work, commercial as well as Government; and (2) that they are not limited to sums presently due but direct the withholding of all amounts due in the future until the full amount of $ 7,000,000 has been collected. The total amount due from the 12 concerns to the plaintiff at the time the withholding orders were issued was approximately $ 67,000, of which amount some $ 59,000 was due on civilian business. Up to the time of the submission of the case to the court, some $ 167,000 had been covered by the orders. Thus, the withholding orders, if valid, would remain in effect for an indefinite period and would transfer to the Government all amounts due the plaintiff by these concerns on civilian as well as Government business. While the plaintiff's regular customer list numbers over 2,000, the 12 to whom the withholding orders were addressed were the principal customers.
The plaintiff says that the section of the statute above quoted is limited to contractors with the United States and to amounts due subcontractors under contracts with the United States. It, therefore, says that the withholding orders are invalid, because they direct the withholding of amounts due plaintiff under non-Government contracts. The Government concedes that the statute limits the withholding orders to concerns which have, or have had, contracts with the United States, but it says that the orders may cover any amounts due upon any contracts, Government or non-Government, from such concerns to their renegotiated subcontractors.
It is clear, and not disputed, that the Tax Court of the United States has no jurisdiction to determine the validity or propriety of the withholding orders. Its jurisdiction covers the determination of the amount of the excessive profits.
The recovery by the Government of such excessive profits, and the provision of the statute relating to such recovery, are of no concern to the Tax Court. The statute does not designate the forum in which the validity or propriety of the collection procedure can be tested. Obviously, some forum must exist in which those matters can be determined. The Secretary's authority to recover excessive profits is entirely a statutory authority. The right to restrict him to the exercise of his statutory authority must exist somewhere.
There is some merit to the plaintiff's first contention. Undoubtedly customers would dislike being the defendants in law suits in which they had no interest. Moreover, if they obeyed the withholding order and turned over to the Government amounts otherwise due the plaintiff, and the plaintiff recovered in the civil action, these concerns would be compelled to seek recovery from the Government, a complication which they probably would choose to avoid.
The plaintiff's second contention, however, appeals to us as being conclusive of the matter immediately before us. The addresses of the 123 concerns as shown on the withholding orders, indicate that suits against the 12 would have to be brought in seven different district courts (eight different divisions), if they were filed, as presumably they would be, in federal courts. Otherwise, of course, they would be brought in different state courts, probably eight, in five different states.
Moreover, the plaintiff would have to protect itself from time to time against the expiration of the statute of limitations upon amounts due it from these concerns during the course of any litigation pursued as a test case to its final conclusion. Such a test case might conceivably last for several years. So that the plaintiff would probably be required to bring several civil actions against each of these concerns in order to protect its rights to recover, if it should eventually succeed in the principal litigation.
We do not think that the United States is an indispensable party to a civil action involving only the statutory power of a named official to pursue a certain method of recovery of sums alleged to be due the United States. The question is solely the statutory power of a particular official to do a particular act. The money involved is not in the possession of the United States. The right of the United States to recover the money is not involved. The question is the exceedingly narrow one of the extent of the statutory power of the particular official, and the meaning of the statutory provision which confers power upon him.
The Government answers the contention as to the multiplicity of suits by asserting that it would intervene in the civil actions brought by plaintiff against these 12 concerns, and would pursue one of the cases to a final conclusion and would deem itself thereafter bound by the decision in that particular litigation. We cannot give weight to the assertion thus made. In the first place, it is not made with such authority and with such concreteness as to form a premise for action of the court. Section 403(c)(4) of the Act
gives the Secretary power to make binding agreements for the elimination of excessive profits and for the discharge of any liability for such profits. But no such agreement is presented for our consideration. The assertion made to us is merely a declaration of present intentions on the part of the Secretary, made by his counsel in court. In the second place, a successor might deny the present Secretary's power to bind the Government irrevocably to such a course of action. If a successor in office should be of opinion that the agreed course of action was improper, it might very well be that he would attempt to pursue such course as he deemed proper. In the third place, it is common knowledge that the Government does not deem itself irrevocably bound by any one decision but, on the contrary, attempts repeatedly to re-litigate equestions upon which it considers an erroneous answer has been reached by the courts. Examples of repeated relitigations of disputed questions are easily found.
In the fourth place, the Supreme Court itself encourages the re-litigation of questions in the different circuits. It expressly recites in its Rules that one of the ordinary bases for a grant of certiorari is a conflict among the Circuit Courts of Appeals,
and the Government frequently relitigates a question in a different circuit when it has once received an adverse decision in one circuit and failed to secure a writ of certiorari in the first case.
That equity has jurisdiction to avoid a multiplicity of suits is an exceedingly practical doctrine. Necessity of litigating the same question between the same parties many times is such a waste, both on the part of the adversaries and on the part of the courts, as to constitute per se inadequacy of remedy.
It seems to us that the legal remedies available to the plaintiff, by way of a multiplicity of actions against different scattered customers, are speculative, inconvenient and inefficient. Plaintiff cannot, we believe, as adequately protects its rights in that piecemeal fashion as it can by a single proceeding in equity
Whether, as an abstract proposition, multiplicity of suits will alone support equity jurisdiction is subject to some differences of opinion. But it is agreed that where the parties to all the possible actions are the same, and all the actions involve the same question of law or fact, equity has power to effect relief.
There is no material difference, so far as the doctrine is concerned, between a case where the parties are the same and one where the actual parties in interest are the same and only nominal parties, stakeholders, are different. The parties at interest here are the plaintiff and the Secretary. The various concerns which are the addressees of the withholding orders and which would be the nominal defendants in the other suggested actions, are bystanders with no real interest. Plaintiff's remedy at law lies in suing one by one these 12 concerns. Such a defendant, being a completely impartial and disinterested stakeholder, could by way of a bill of interpleader in a federal court of equity of proper jurisdiction bring these two real parties at interest together in one suit.
Plaintiff could accomplish the same end by bringing suit in equity against the Secretary directly, even though it might be necessary to name the customer as a co-defendant. Equity abhors circuity of action and will make that party immediately liable who is ultimately liable at law.
Some authority is found for the proposition that one of the requisites of such a bill of peace is that plaintiff first establish his legal right in an action at law. Examination of the cases cited, however, shows either that the relief sought was the quieting of title to real estate
or the enjoining of the collection of an allegedly illegal tax
(both of which instances demand particular caution on the part ...