Nassau Smelting Refining Works v. United States/Opinion of the Court

This suit was brought by the United States against the Nassau Smelting & Refining Works in the United States District Court for the Southern District of New York, to recover $15,000, with interest at 6 per cent., for copper bands and pig lead sold and delivered. By its amended answer the defendant did not deny its obligation as claimed, but set up, as counterclaims, balances due from the United States to it of $6,023.81 for one delivery of copper bands, another of $5,836.42, and a third of $2,576.09. The averment in the answer is, as to each of these claims, that the agreement upon which the bands were furnished was not executed in the manner prescribed by law, and so was embraced within the saving provisions of section 1 of the Act approved March 2, 1919, entitled 'An act to provide relief in cases of contracts connected with the prosecution of the war and for other purposes,' and known as the Dent Act (chapter 94, 40 Stat. 1272. [Comp. St. Ann. Supp. 1919, §§ 3115 14/15a to 3115 14/15e]). The defendant's contention was that, as each counterclaim was for less than $10,000, subdivision 20 of section 24 of the Judicial Code of the United States (Comp. St. § 991) gave the District Court jurisdiction to find and award, by way of counterclaims herein, a fair and just compensation to the defendant from the United States. The United States moved for judgment on the pleadings for the full amount claimed in the petition, without deduction of the counterclaims, and this motion was granted; the court holding it had no jurisdiction of suits against the United States under the Dent Act, like those presented as counterclaims herein, either as original actions or set-offs or counterclaims. Judgment was accordingly entered on the complaint for the United States in the sum of $15,286.72. Proceedings in error were prosecuted, and the Circuit Judge, acting as a District Judge, certified, conformably to Judicial Code, § 238 (Comp. St. § 1215), that the jurisdiction of the court was in issue and that the order dismissing the set-offs or counterclaims was based solely upon the ground that the court had no jurisdiction to determine them.

It was suggested at the hearing in this court that, as there was unquestioned jurisdiction of the suit by the United States under the first paragraph of section 24 of the Judicial Code, the case could not be brought directly from the District Court to this court on a certificate under section 238 of the Code as to the jurisdiction of the counterclaim. But we think that unquestioned jurisdiction over the complaint does not prevent a certificate as to jurisdiction of the new suit attempted in the form of a counterclaim. The question is not one as to the introduction of counterclaims as a mere matter of procedure. The objection to a suit against the United States is fundamental, whether it be in the form of an original action, or a set-off, or a counterclaim. Jurisdiction in either case does not exist, unless there is specific congressional authority for it. Nor is there doubt that the question is one which involves the jurisdiction of the District Court as a federal court under the statutes of the United States, for the jurisdiction of the District Court in this regard is wholly dependent on such statutes.

The second question is whether such counterclaims as are averred in the answer are authorized by paragraph 26 of section 24 of the Judicial Code. That paragraph provides that the District Court of the United States shall have jurisdiction, concurrent with the Court of Claims, of all claims not exceeding $10,000 founded upon the Constitution of the United States or any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect to which claims the party would be entitled to redress against the United States, either in a court of law, equity, or admiralty, if the United States were suable. It is argued that these counterclaims are each less than $10,000 in amount, and are founded on a law of Congress and upon a contract, express or implied, with the United States, and do not sound in tort, and therefore are within the power of the District Court to enforce them. The fatal objection to this argument is that these claims are based exclusively on the Dent Act (Act March 2, 1919, c. 94, 40 Stat. 1272, 1273). This act was passed to allow the Secretary of War to adjust and discharge any agreement entered into by any officer or agent acting under his authority or that of the President, during the emergency of the war, and prior to November 12, 1918, with any person, firm or corporation for the production, manufacture, or sale of equipment, materials, or supplies, or services connected with the prosecution of the war, when the agreement had been performed in whole or in part, or expenditures had been made or obligations incurred upon the faith of the same by such person, firm, or corporation prior to November 12th, and such agreement had not been executed in the manner prescribed by law. By section 2 of the act the Court of Claims is given jurisdiction on the petition of the claimant described in section 1 of the act to find and award fair and just compensation in such cases, if the claimant is not willing to accept the compensation offered by the Secretary of War. There is no other provision in the act for judicial action than this. This must be held to be an exclusive jurisdiction conferred upon the Court of Claims. This was the view of this court as shown in United States v. Pfitsch, 256 U.S. 547, 553, 41 S.C.t. 569, 65 L. Ed. 1084. In that case all the statutes which had been passed during the war giving jurisdiction to various courts of the United States for judicial settlement of controversies with the government, were considered and commented on, and among the four instances in which jurisdiction was said to be conferred only on the Court of Claims was the Dent Act. It is true that the question as to the operation of the Dent Act was not involved in the case. But the opinion, in throwing light upon the effect of section 10 of the Lever Act (Act Aug. 10, 1917, c. 53, 40 Stat. 276, 279 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115 1/8ii]), providing for suits in the District Courts in controversies arising thereunder, made a careful comparison of all the acts of the kind and a classification of them. We see no reason to change our opinion as to the construction of the Dent Act in this regard. The defendant below placed itself squarely within the requirements of the Dent Act, and sought adjudication of its claims on the ground that the agreements under which recovery was sought had not been executed in the manner prescribed by law. In this way it put itself outside the field covered by paragraph 20 of section 24 of the Judicial Code, and by its own admission limited itself to the remedy possible under the Dent Act. It is unnecessary for us to consider therefore whether but for the Dent Act it might have brought suit under the general language contained in paragraph 20 of section 24. The effect of the Dent Act was to limit it to the Court of Claims. The District Court, therefore, was right in holding that it had no jurisdiction of the counterclaims and in giving judgment on the pleadings for the government.

Affirmed.