Larson v. Domestic & Foreign Commerce Corporation/Opinion of the Court

This suit was brought in the United States District Court for the District of Columbia by the Domestic & Foreign Commerce Corporation against Robert M. Littlejohn, the then head of the War Assets Administration. The complaint alleged that the Administration had sold certain surplus coal to the plaintiff; that the Administrator refused to deliver the coal but, on the contrary, had entered into a new contract to sell it to others. The prayer was for an injunction prohibiting the Administrator from selling or delivering the coal to any one other than the plaintiff and for a declaration that the sale to the plaintiff was valid and the sale to the second purchaser invalid.

A temporary restraining order was issued ex parte. At the subsequent hearing on the issuance of a preliminary injunction, the defendant moved to dismiss the complaint on the ground, among others, that the court did not have jurisdiction because the suit was one against the United States. The motion was granted. The Court of Appeals reversed, holding that the jurisdictional capacity of the court depended on whether or not title to the coal had passed. Since this was also one of the questions on the merits, it remanded the case for trial. We granted certiorari, 333 U.S. 872, 68 S.Ct. 903, 92 L.Ed. 1149.

The controversy on the merits concerns the interpretation to be given to the contract of sale. The War Assets Administration construed the contract as requiring the plaintiff to deposit funds to pay for the coal in advance and, when an unsatisfactory letter of credit was offered in place of a deposit, it considered that the contract was breached. The respondent, on the other hand, construed the contract as requiring payment only on delivery of the documents covering the coal shipment. In its view, it was not obliged to deposit any funds in advance of shipment and, therefore, had not breached the contract by failing to do so.

A second question, related to but different from the question of breach, was whether legal title to the coal had passed to the responden when the contract was made. If the contract required the deposit of funds then, of course, title could not pass until the contract terms were complied with. If, on the other hand, the contract required payment only on the delivery of documents, a question remained as to whether title nevertheless passed at the time the contract was made.

Since these questions were not decided by the courts below we do not pass on them here. They are important only insofar as they illuminate the basis on which it was claimed that the district court had jurisdiction over the suit. It was not alleged that the contract for the sale of the coal was a contract with the officer personally. The basis of the action, on the contrary, was that a contract had been entered into with the United States. Nor was it claimed that the Administrator had any personal interest in this coal or, indeed, that he himself had taken any wrongful action. The complaint was directed against him because of his official function as chief of the War Assets Administration. It asked for an injunction against him in that capacity, and against 'his agents, assistants, deputies and employees and all persons acting or assuming to act under their direction.' The relief sought was, in short, relief against the Administration for wrongs allegedly committed by subordinate officials in that Administration. The question presented to the courts below was whether such an injunction was barred by the sovereign's immunity from suit.

Before answering that question it is perhaps advisable to state clearly what is and what is not involved. There is not involved any question of the immunization of Government officers against responsibility for their wrongful actions. If those actions are such as to create a personal liability, whether sounding in tort or in contract, the fact that the officer is an instrumentality of the sovereign does not, of course, forbid a court from taking jurisdiction over a suit against him. Sloan Shipyards Corp. v. Emergency Fleet Corp., 1922, 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762. As was said in Brady v. Roosevelt S.S.C.o., 1943, 317 U.S. 575, 580, 63 S.Ct. 425, 428, 87 L.Ed. 471, the principle that an agent is liable for his own torts 'is an ancient one and applies even to certain acts of public officers or public instrumentalities.' But the existence of a right to sue the officer is not the issue in this case. The issue here is whether this particular suit is not also, in effect, a suit against the sovereign. If it is, it must fail, whether or not the officer might otherwise be suable.

If the denomination of the party defendant by the plaintiff were the sole test of whether a suit was against the officer individually or against his principal, the sovereign, our task would be easy. Our decision then would be that the United States is not being sued here because it is not named as a party. This would be simple and would not leave room for controversy. But controversy there has been, in this field above all others, because it has long been established that the crucial question is whether the relief sought in a suit nominally addressed to the officer is relief against the sovereign. In a suit against the officer to recover damages for the agent's personal actions that question is easily answered. The judgment sought will not require action by the sovereign or disturb the sovereign's property. There is, therefore, no jurisdictional difficulty. The question becomes difficul and the area of controversy is entered when the suit is not one for damages but for specific relief: i.e., the recovery of specific property or monies, ejectment from land, or injunction either directing or restraining the defendant officer's actions. In each such case the question is directly posed as to whether, by obtaining relief against the officer, relief will not, in effect, be obtained against the sovereign. For the sovereign can act only through agents and, when the agents' actions are restrained, the sovereign itself may, through him, be restrained. As indicated, this question does not arise because of any distinction between law and equity. It arises whenever suit is brought against an officer of the sovereign in which the relief sought from him is not compensation for an alleged wrong but, rather, the prevention or discontinuance, in rem, of the wrong. In each such case the compulsion, which the court is asked to impose, may be compulsion against the sovereign, although nominally directed against the individual officer. If it is, then the suit is barred, not because it is a suit against an officer of the Government, but because it is, in substance, a suit against the Government over which the court, in the absence of consent, has no jurisdiction.

The relief sought in this case was not the payment of damages by the individual defendant. To the contrary, it was asked that the court order the War Assets Administrator, his agents, assistants, deputies and employees and all persons acting under their direction, not to sell the coal involved and not to deliver it to anyone other than the respondent. The district court held that this was relief against the sovereign and therefore dismissed the suit. We agree.

There may be, of course, suits for specific relief against officers of the sovereign which are not suits against the sovereign. If the officer purports to act as an individual and not as an official, a suit directed against that action is not a suit against the sovereign. If the War Assets Administrator had completed a sale of his personal home, he presumably could be enjoined from later conveying it to a third person On a similar theory, where the officer's powers are limited by statute, his actions beyond those limitations are considered individual and not sovereign actions. The officer is not doing the business which the sovereign has empowered him to do or he is doing it in a way which the sovereign has forbidden. His actions are ultra vires his authority and therefore may be made the object of specific relief. It is important to note that in such cases the relief can be granted, without impleading the sovereign, only because of the officer's lack of delegated power. A claim of error in the exercise of that power is therefore not sufficient. And, since the jurisdiction of the court to hear the case may depend, as we have recently recognized, upon the decision which it ultimately reaches on the merits, it is necessary that the plaintiff set out in his complaint the statutory limitation on which he relies.

A second type of case is that in which the statute or order conferring power upon the officer to take action in the sovereign's name is claimed to be unconstitutional. Actions for habeas corpus against a warden and injunctions against the threatened enforcement of unconstitutional statutes are familiar examples of this type. Here, too, the conduct against which specific relief is sought is beyond the officer's powers and is, therefore, not the conduct of the sovereign. The only difference is that in this case the power has been conferred in form but the grant is lacking in substance because of its constitutional invalidity.

These two types have frequently been recognized by this Court as the only ones in which a restraint may be obtained against the conduct of Government officials. The rule was stated by Mr. Justice Hughes in Philadelphia Co. v. Stimson, 1912, 223 U.S. 605, 620, 32 S.Ct. 340, 344, 56 L.Ed. 570, where he said: ' * *  * in case of an injury threatened by his illegal action, the officer cannot claim immunity from injunction process. The principle has frequently been applied with respect to state officers seeking to enforce unconstitutional enactments. (Citing cases.) And it is equally applicable to a Federal officer acting in excess of his authority or under an authority not validly conferred.'

It is not contended by the respondent that the present case falls within either of these categories. There was no claim made that the Administrator and his agents, etc., were acting unconstitutionally or pursuant to an unconstitutional grant of power. Nor was there any allegation of a limitation on the Administrator's delegated power to refuse shipment in cases in which he believed the United States was not obliged to deliver. There was, it is true, an allegation that the Administrator was acting 'illegally,' and that the refusal to deliver was 'unauthorized.' But these allegations were not based and did not purport to be based upon any lack of delegated power. Nor could they be, since the Administrator was empowered by the sovereign to administer a general sales program encompassing the negotiation of contracts, the shipment of goods and the receipt of payment. A normal concomitant of such powers, as a matter of general agency law, is the power to refuse delivery when, in the agent's view, delivery is not called for under a contract and the power to sell goods which the agent believes are still his principal's to sell.

The respondent's contention, which the Court of Appeals sustained, was that there exists a third category of cases in which the action of a Government official may be restrained or directed. If, says the respondent, an officer of the Government wrongly takes or holds specific property to which the plaintiff has title then his taking or holding is a tort, and 'illegal' as a matter of general law, whether or not it be within his delegated powers. He may therefore be sued individually to prevent the 'illegal' taking or to recover the property 'illegally' held.

If this is an adequate theory on which to rest the conclusion that the relief asked is not relief against the sovereign, then the respondent's complaint made out a sufficient basis for jurisdiction. The complaint alleged that the respondent's contract with the United States was an immediate contract of sale under which title to the coal had passed. The coal was thus alleged to be the respondent's coal, not the United States' coal. Retention of it by the Administrator after demand was claimed to be a conversion; sale to a third party would aggravate the conversion. Since these actions were tortious they were 'illegal' in the respondent's sense and hence were contended to be individual actions, not properly taken on behalf of the United States, which could be enjoined without making the United States a party.

We believe the theory to be erroneous. It confuses the doctrine of sovereign immunity with the requirement that a plaintiff state a cause of action. It is a prerequisite to the maintenance of any action for specific relief that the plaintiff claim an invasion of his legal rights, either past or threatened. He must, therefore, allege conduct which is 'illegal' in the sense that the respondent suggests. If he does not, he has not stated a cause of ction. This is true whether the conduct complained of is sovereign or individual. In a suit against an agency of the sovereign, as in any other suit, it is therefore necessary that the plaintiff claim an invasion of his recognized legal rights. If he does not do so, the suit must fail even if he alleges that the agent acted beyond statutory authority or unconstitutionally. But, in a suit against an agency of the sovereign, it is not sufficient that he make such a claim. Since the sovereign may not be sued, it must also appear that the action to be restrained or directed is not action of the sovereign. The mere allegation that the officer, acting officially, wrongfully holds property to which the plaintiff has title does not meet that requirement. True, it establishes a wrong to the plaintiff. But it does not establish that the officer, in committing that wrong, is not exercising the powers delegated to him by the sovereign. If he is exercising such powers the action is the sovereign's and a suit to enjoin it may not be brought unless the sovereign has consented.

It is argued, however, that the commission of a tort cannot be authorized by the sovereign. Therefore, the argument goes, the allegation that a Government officer has acted or is threatening to act tortiously toward the plaintiff is sufficient to support the claim that he has acted beyond his delegated powers. It is on this contention that the respondent's position fundamentally rests, since it is admitted that, if the action to be prevented or compelled is authorized by the sovereign, the demand for it must fail as a demand against the sovereign. It has been said, in a very special sense, that, as a matter of agency law, a principal may never lawfully authorize the commission of a tort by his agent. But that statement, in its usual context, is only a way of saying that an agent's liability for torts committed by him cannot be avoided by pleading the direction or authorization of his principal. The agent is himself liable whether or not he has been authorized or even directed to commit the tort. This, of course, does not mean that the principal is not liable nor that the tortious action may not be regarded as the action of the principal. It does not mean, therefore, that the agent's action, because tortious, is, for that reason alone, ultra vires his authority. An argument to that effect was at one time advanced in connection with corporate agents, in an effort to avoid corporate liability for torts, but was decisively rejected.

There is, therefore, nothing in the law of agency which lends support to the contention that an officer's tortious action is ipso facto beyond his delegated powers. Nor, do we think, is there anything in the doctrine of sovereign immunity which requires us to adopt such a view as regards Government agencies. If, of course, it is assumed that the basis of the doctrine of sovereign immunity is the thesis that the king can do no wrong then it may be also assumed that if the king's agent does wrong that action cannot be the action of the king. It is on some such argument that the position of the respondent rests. It is argued that an officer given the power to make decisions is only given the power to make correct decisions. If his decisions are not correct, then his action based on those decisions is beyond his authority and not the action of the sovereign. There is no warrant for such a contention in cases in which the decision made by the officer does not relate to the terms of his statutory authority. Certainly the jurisdiction of a court to decide a case does not disappear if its decision on the merits is wrong. And we have heretofore rejected the argument that official action is invalid if based on an incorrect decision as to law or fact, if the officer making the decision was empowered to do so. Adams v. Nagle, 1938, 303 U.S. 532, 542, 58 S.Ct. 687, 692, 82 L.Ed. 999. We therefore reject the contention here. We hold that if the actions of an officer do not conflict with the terms of his valid statutory authority, then they are the actions of the sovereign, whether or not they are tortious under general law, if they would be regarded as the actions of a private principal under the normal rules of agency. A Government officer is not thereby necessarily immunized from liability, if his action is such that a liability would be imposed by the general law of torts. But the action itself cannot be enjoined or directed, since it is also the action of the sovereign.

United States v. Lee, 1882, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171, is said to have established the rule for which the respondent contends. It did not. It represents, rather, a specific application of the constitutional exception to the doctrine of sovereign immunity. The suit there was against federal officers to recover land held by them, within the scope of their authority, as a United States military station and cemetery. The question at issue was the validity of a tax sale under which the United States, at least in the view of the officers, had obtained title to the property. The plaintiff alleged that the sale was invalid and that title to the land was in him. The Court held that if he was right the defendants' possession of the land was illegal and a suit against them was not a suit against the sovereign. Prima facie, this holding woud appear to support the contention of the plaintiff. Examination of the Lee case, however, indicates that the basis of the decision was the assumed lack of the defendants' constitutional authority to hold the land against the plaintiff. The Court said (106 U.S. at page 219, 1 S.Ct. at page 260):

'It is not pretended, as the case now stands, that the president had any lawful authority to (take the land), or that the legislative body could give him any such authority except upon payment of just compensation. The defense stands here solely upon the absolute immunity from judicial inquiry of every one who asserts authority from the executive branch of the government, however clear it may be made that the executive possessed no such power. Not only that no such power is given, but that it is absolutely prohibited, both to the executive and the legislative, to deprive any one of life, liberty, or property without due process of law, or to take private property without just compensation.

'Shall it be said * *  * that the courts cannot give a remedy when the citizen has been deprived of his property by force, his estate seized and converted to the use of the government without any lawful authority, without any process of law, and without any compensation, because the president has ordered it and his officers are in possession?'

The Court thus assumed that if title had been in the plaintiff the taking of the property by the defendants would be a taking without just compensation and, therefore, an unconstitutional action. On that assumption, and only on that assumption, the defendants' possession of the property was an unconstitutional use of their power and was, therefore, not validly authorized by the sovereign. For that reason, a suit for specific relief, to obtain the property, was not a suit against the sovereign and could be maintained against the defendants as individuals.

The Lee case, therefore, offers no support to the contention that a claim of title to property held by an officer of the sovereign is, of itself, sufficient to demonstrate that the officer holding the property is not validly empowered by the sovereign to do so. Only where there is a claim that the holding constitutes an unconstitutional taking of property without just compensation does the Lee case require that conclusion. The cases which followed Lee's do not require a different result. There are a great number of such cases and, as this Court has itself remarked, it is not 'an easy matter to reconcile all the decisions of the Court in this class of cases.' With only one possible exception, however, specific relief in connection with property held or injured by officers of the sovereign acting in the name of the sovereign has been granted only where there was a claim that the taking of the property or the injury to it was not the action of the sovereign because unconstitutional or beyond the officer's statutory powers. Certainly, the Court has repeatedly stated these to be the cases in which such relief could be granted. A contrary doctrine was stated in Goltra v. Weeks, 1926, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074. In that case the United States had leased barges to the plaintiff under a contract which gave it a right to repossess under certain conditions. Believing that those conditions existed, officers of the Government attempted to repossess the barges. The Court held that a suit to enjoin them from doing so was not a suit against the United States. The Court said that the taking of the barges was alleged to be a trespass and hence 'illegal.' Therefore, the actions of the officers were personal actions, not the actions of the United States and injunction against them would not be injunction against the United States. 271 U.S. at page 544, 46 S.Ct. at page 616, 70 L.Ed. 1074. For this conclusion the Court relied entirely upon the opinion of Mr. Justice Hughes in Philadelphia Co. v. Stimson, 1912, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570. The reliance was misplaced since the opinion in that case clearly and specifically rested on the claim that there was a lack of statutory power to act, not simply on a claim of tortious injury to the plaintiff.

Opposed to the rationale of the Goltra opinion is the decision, by Mr. Justice Holmes, in Goldberg v. Daniels, 1913, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191. There, as here, the question concerned the effect of a claimed sale of Government surplus property. The plaintiff submitted a sealed bid for a surplus war vessel, accompanied in that case by a certified heck as payment in advance. When the bids were opened his was the highest. The Secretary of the Navy, however, determined not to accept the bid and refused to deliver the vessel. The plaintiff brought mandamus. He alleged that the sale was complete when the bids were opened and that the ownership of the vessel was therefore in him, and he asked that the Secretary be compelled to deliver it. The lower courts examined the details of the transaction and concluded that the sale was not complete until the Secretary announced his acceptance of the bid. On appeal here, it was expressly held that it was not necessary to decide whether the lower courts were correct. The suit must fail as one against the United States, the Court said, whether or not the sale was complete. In so holding the Court said, in effect, that the question of title was immaterial to the court's jurisdiction. Wrongful the Secretary's conduct might be, but a suit to relieve the wrong by obtaining the vessel would interfere with thesovereign behind its back and hence must fail.

Both cases are pressed upon us. The petitioner argues, and correctly, that the result in the Goldberg case calls for a similar result in this case-a dismissal of the suit for want of jurisdiction. The respondent argues, with equal correctness, that the theory of the Goltra opinion-that an allegation that the actions of Government officers are wrongful under general law is sufficient to show that they are 'unauthorized'-calls for an affirmance of the decision below. Since we must therefore resolve the conflict in doctrine we adhere to the rule applied in the Goldberg case and to the principle which has been frequently repeated by this Court, both before and after the Goltra case: the action of an officer of the sovereign (be it holding, taking or otherwise legally affecting the plaintiff's property) can be regarded as so 'illegal' as to permit a suit for a specific relief against the officer as an individual only if it is not within the officer's statutory powers or, if within those powers, only if the powers, or their exercise in the particular case, are constitutionally void.

The application of this principle to the present case is clear. The very basis of the respondent's action is that the Administrator was an officer of the Government, validly appointed to administer its sales program and therefore authorized to enter, through his subordinates, into a binding contract concerning the sale of the Government's coal. There is no allegation of any statutory limitation on his powers as a sales agent. In the absence of such a limitation he, like any other sales agent, had the power and the duty to construe such contracts and to refuse delivery in cases in which he believed that the contract terms had not been complied with. His action in so doing in this case was, therefore, within his authority even if, for purposes of decision here, we assume that his construction was wrong and that title to the coal had, in fact, passed to the respondent under the contract. There is no claim that his constituted an unconstitutional taking. It was, therefore, inescapably the action of the United States and the effort to enjoin it must fail as an effort to enjoin the United States.

It is argued that the principle of sovereign immunity is an archaic hangover not consonan with modern morality and that it should therefore be limited wherever possible. There may be substance in such a viewpoint as applied to suits for damages. The Congress has increasingly permitted such suits to be maintained against the sovereign and we should give hospitable scope to that trend. But the reasoning is not applicable to suits for specific relief. For, it is one thing to provide a method by which a citizen may be compensated for a wrong done to him by the Government. It is a far different matter to permit a court to exercise its compulsive powers to restrain the Government from acting, or to compel it to act. There are the strongest reasons of public policy for the rule that such relief cannot be had against the sovereign. The Government as representative of the community as a whole, cannot be stopped in its tracks by any plaintiff who presents a disputed question of property or contract right. As was early recognized, 'the interference of the Courts with the performance of the ordinary duties of the executive departments of the government, would be productive of nothing but mischief. * *  * '

There are limits, of course. Under our constitutional system, certain rights are protected against governmental action and, if such rights are infringed by the actions of officers of the Government, it is proper that the courts have the power to grant relief against those actions. But in the absence of a claim of constitutional limitation, the necessity of permitting the Government to carry out its functions unhampered by direct judicial intervention outweights the possible disadvantage to the citizen in being relegated to the recovery of money damages after the event.

It is argued that a sales agency such as the War Assets Administration, is not the type of agency which requires the protection from direct judicial interference which the doctrine of sovereign immunity confers. We do not doubt that there may be some activities of the Government which do not require such protection. There are others in which the necessity of immunity is apparent. But it is not for this Court to examine the necessity in each case. That is a function of the Congress. The Congress has, in many cases, entrusted the business of the Government to agencies which may contract in their own names and which are subject to suit in their own names. In other cases it has permitted suits for damages, but, significantly, not for specific relief, in the Court of Claims. The differentiations as to remedy which the Congress has erected would be rendered nugatory if the basis on which they rest-the assumed immunity of the sovereign from suit in the absence of consent-were undermined by an unwarranted extension of the Lee doctrine.

The cause is reversed with directions that the complaint be dismissed.

It is so ordered.

Reversed with directions.

Mr. Justice DOUGLAS.

I think that the principles announced by the Court are the ones which should govern the selling of government property. Less strict applications of those principles would cause intolerable interference with public administration. To make the right to sue the officer turn on whether by the law of sales title had passed to the buyer would clog this governmental function with intolerable burdens. So I have joined the Court's opinion.