French v. War Contracts Price Adjustment Board, 182 F.2d 560 (9th Cir. 1950)

Feeling himself aggrieved, Bert French, a resident of San Pedro, California, within the Ninth Judicial Circuit, has attempted to have this court review a renegotiation decision of the Tax Court holding that he had enjoyed excess profits upon government supplies to the navy for the year 1943. His points are (1) that the service for which he was paid is not covered by the Renegotiation Act, and (2) that he realized no excessive profits. We quote the renegotiation statute in part in the margin.¹ 

The respondent Board has presented a "Motion to Dismiss Petition for Review" claiming (1) that there is no appeal or review provided for the Tax Court's renegotiation decisions and therefore this court has no jurisdiction in the premises, and (2) assuming that this court has jurisdiction it is not the court of proper venue for this proceeding. French resists the motion and takes the negative on both claims.

The United States Court of Appeals for the District of Columbia has decided the jurisdictional point contrary to respondent's view. See United States Electrical Motors v. Jones, 1946, 80 U.S.App.D.C., 329, 153 F.2d 134, and Blanchard Machine Co. v. R.F.C., D.C. Cir., 1949, 177 F.2d 727. In the latter case the court followed the former case although the point was stipulated out of the case. The point arises from the wording emphasized by us in the following sentence which we quote from the Renegotiation Act, 50 U.S.C.A.Appendix, § 1911: "Upon such filing [filing petition for review of the Board's determination] such court [the Tax Court] shall have exclusive jurisdiction, by order, to finally determine the amount, if any, of such excessive profits received or accrued by the contractor or subcontractor, and such determination shall not be reviewed or redetermined by any court or agency."

The court in the cited cases thought the clause of the act which denies "review" and "redetermination" "by any court or agency" refers back to "amount" or "amount, if any" with its meaning limited to the sum found to be excessive profits and does not prohibit review or redetermination on any other basis of error. On the other hand, the board's contention, in effect, is that the specific withholding of every type of review or redetermination by any court or agency goes not only to the accuracy of the figure found as the total of the excessive profits found but to the determination as a judgment, called an order in the Act.

We think the Act prohibits the review absolutely because, (1) the Act affirmatively so provides, (2) if it does not so provide there is no provision in the Act for a review, (3) there is nothing in the provisions of the Tax Court statute which authorizes review or appeal or renegotiation cases from the Tax Court or any other court to the United States Courts of Appeals, (4) there is no general statute authorizing such review. As will be seen the venue provided for the review of Tax Court decisions by the United States Courts of Appeals does not fit the review of renegotiation cases and this fact supports the view that it was not the congressional intent to authorize a review, and, as well, the view that this court does not afford the proper venue for the review sought if, perchance it may be held that a review is in some wise authorized.

It is worthy of note at the beginning of our reasoning to our conclusions expressed in the last above paragraph, that the District of Columbia court in holding that it had jurisdiction to entertain an appeal on a renegotiation case had no difficulty in holding that it had no power to change the "amount, if any," found by the Tax Court. We see in this splinter appeal something less than consistency for it seems to say that even if a large part of the coverage taken as the Tax Court's basis for the "amount" found can be ruled out on appeal, nevertheless the "amount" of excessive profits "if any" cannot be changed or corrected.

Certain it is there is no provision for review or appeal in the Act and the District of Columbia court found its appellate jurisdiction in Section 1141(a), Internal Revenue Code, 26 U.S.C.A. § 1141(a), which at the time the United States Electrical Motors v. Jones case, supra, was decided was in part as follows: "The circuit courts of appeals [now the United States Courts of Appeals] and the United States Court of Appeals for the District of Columbia shall have exclusive jurisdiction to review the decisions of the Board [now the Tax Court] * * *." There are exceptions to this paragraph but none of them are pertinent here. Amendments to the section are immaterial here. Ten sections of the Internal Revenue Code are made applicable to a review by the Tax Court but this section is not included. See Note 1.

The District of Columbia court says, in the nature of make-weight argument 153 F.2d at page 137: "It would, we think, require clear language to indicate that Congress intended that any tribunal should have unreviewable authority to determine its own jurisdiction" and adds by way of note: "It is true, as respondents urge, that the provisions of the Internal Revenue Code relating to venue upon appeal * * are in terms unfitted to a renegotiation. But we do not believe that the awkwardness of venue provisions should nullify the substantive right of appeal."² 

With respect to the shortcomings of the venue provisions when attempted to be applied to appeals of renegotiation actions, it rather appeals to us that they show up, not from "awkwardness", but from the fact that the whole provision for appeal from the Tax Court including venue, having been enacted long before renegotiation was thought of, was fashioned solely for appeal of tax cases. We think the lack of appropriate venue provisions in the Act adds weight to the view that the affirmative provision in the renegotiation act prohibiting review applies to all that the Tax Court does in arriving at its judgment rather than just that court's bookkeeping or accountancy. Expressed in another way, the venue provisions were never made to fit a review or appeal as to renegotiation actions because there never was a "substantive right of appeal" conferred upon the Courts of Appeals to "nullify".³ 

Our conclusions are strongly buttressed, we think, by the reasoning in the opinion and conclusions reached by the Supreme Court in Macauley v. Waterman Steamship Corporation, 1946, 327 U.S. 540, at 544, 66 S. Ct. 712, at page 714, 90 L. Ed. 839. The board having jurisdiction to renegotiate under the renegotiation act was about to begin hearings which involved the Waterman Steamship Corporation when that corporation brought suit in the district court for a declaratory judgment alleging that the contracts proposed to be renegotiated were not subject to or covered by the Act, and prayed for an injunction against the board. The district court dismissed the case because the complainant had not exhausted its administrative remedies provided in the Act. The Supreme Court affirmed, holding that the complainant must meet the procedure of the board and must abide by the provision of the Act that the Tax Court "shall have exclusive jurisdiction, by order, to finally determine the amount, if any, of such excessive profits * * *." The court went on to say, "* * * the Act provides that the Tax Court `shall have exclusive jurisdiction, by order, to finally determine the amount, if any, of such excessive profits * * *.' Contrary to respondent's contention that this language limits the Tax Court's jurisdiction so as not to include the power to decide questions of coverage, we think the language shows that the Tax Court has such power. For a decision as to what are and are not negotiable contracts is an essential part in determining the amount of a contractor's excessive profits." The language just quoted unquestionably includes in the Tax Court's determination of the amount of excessive profits the result of considering both law and fact. It leaves little or no room for doubting that the grant to the Tax Court of exclusive jurisdiction to "finally determine that amount, if any," refers to the Tax Court's whole decision as an indivisible judgment or order and not just solely to the accounting involved, and this construction is consistent with the expression immediately following in the opinion, "and such determination shall not be reviewed or redetermined by any court or agency."

The author of the Macauley opinion commented briefly on the legislative history of the act and in pursuing this source of understanding further, all reasonable doubt vanishes.

The report of the committee to the House of Representatives (H.R. 871, 78 Cong., 1st Sess., pp. 76-77) comments upon the de novo power of the Tax Court in redetermination cases and says: "That Court [the Tax Court] will have exclusive jurisdiction, by an order, to make final determination as to whether excessive profits have been received or accrued, or whether a fair price has been determined, and the Tax Court's determination may not be reviewed or redetermined by any other court or agency." [Emphasis ours] In the course of the House Committee consideration of its bill the matter of reviewability of the Tax Court's decisions was discussed with the proposal that the decisions should be reviewable by the Court of Appeals but no amendments accomplishing such end were adopted.⁴  It seems clear that the committee fully understood that no appeal was provided for and that such was the committee's intention. We set out by way of footnote 5 some quotations from two cases decided by the Supreme Court together with our comment which we think are helpful as background of the Act and enlightening as to its importance and the prime necessity for limiting litigation on its subject matter.⁵ 

It is nothing passing strange that appeal is prohibited from the Tax Court's decision. ctually there is more than the ordinary appeal provided. Ordinarily there is no de novo appeal or review from a decision of a board after a hearing because the reviewing tribunal must accept the factual finding if there is substantial evidence to support it. The evidence received by a board need not conform to common law rules and an appellate court cannot reverse as it can in an appeal from a judge's decision if, upon viewing the whole case, it is convinced that a mistake has been made. In place of an ordinary review on the law alone from an administrative board or from a district judge to an appellate court, in renegotiation cases the Congress endowed the Tax Court with the full power to adjudge, de novo, upon evidence taken by it, all of the issues both of law and of fact. And having provided for the board's hearing and for this broad protection against any miscarriage of justice, Congress provided that the litigation should end with it.⁶  That the war exigencies of the situation required speedy final decisions cannot be denied.

Of course, the decision of the Tax Court may be wrong but absolute certainty as to the right or wrong of any decision is not and could not be required of any court. And that there is no constitutional right of appeal is well phrased in Luckenbach Steamship Co. v. United States, 1926, 272 U.S. 533 at 536, 47 S. Ct. 186, at 187, 71 L. Ed. 394: "* * * the well-settled rule applies that an appellate review is not essential to due process of law, but is a matter of grace." (In the interest of brevity we refrain from quoting at length from this case, though it may be read in full with profit.) But with no appeal or review from the trial court the litigant is not prevented from raising his constitutional points for decision in the courts of the land to the final decision of the United States Supreme Court. The Tax Court's decision goes back to the board which is given the power by the Act to bring suit in federal court for enforcement. See 50 U.S.C.A.Appendix, § 1191(c) (2). The contractor respondent may then present his constitutional points and press them for decision to the Supreme Court. Practically this was done in Lichter v. United States, 1948, 334 U.S. 742, 68 S. Ct. 1294, 92 L. Ed. 1694. Therein three cases are grouped for opinion. The complainants in separate matters had declined to ask review by the Tax Court after renegotiation had before the board. The board brought suit in district courts and the defense set up was unconstitutionality of the Act. The Supreme Court affirmed the lower court's holdings that there was no lack of due process and the Act was constitutional on its face. The same principles would have been applied had the suit followed determination by the Tax Court. It may be argued that the right to present constitutional questions in defense to the board's action for enforcement itself extends litigation. To a degree it does but this fact presents no serious situation because litigation on the constitutional question will hardly be pressed after the Lichter decision. Witness the fact that in this very case the constitutional question [constitutionality of the Act on its face] has been withdrawn because of the Litchter decision.

The petitioner, here, (French) claims the Act does not cover the subject matter of the renegotiation had as to his profits. The district courts are open to him to contest this point with the government. See the recent case of United States v. Bonnell, 9 Cir., 180 F.2d 145.

We do not treat the matter of venue at length, but from what we have already said we think it is clear that there is nothing in the law which fixes venue in this court.

We are convinced that no appeal from the Tax Court is provided and that the motion to dismiss must be granted, and it is so ordered.

Motion to dismiss granted.