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HORMEL v. UNITED STATES

June 3, 1954

HORMEL et al.
v.
UNITED STATES



The opinion of the court was delivered by: DIMOCK

Plaintiffs sue respectively for $ 428.77 and $ 398, alleged to be due them as balances of the 1948 special dividends on their policies of National Service Life Insurance. The Government contends that nothing is due because the amounts sued for are properly withheld from plaintiffs' dividends since plaintiffs owe the Government the amounts which they now seek to recover. The Government's claim is that plaintiffs owe the amounts in question because the Government has paid those amounts to the New York Life Insurance Company for their account pursuant to the Governmental protection of servicemen's life insurance prescribed by the insurance sections of the Soldiers' and Sailors' Civil Relief Act of 1940 and its amendment in 1942. Oct. 17, 1940, c. 888, §§ 400-414, 54 Stat. 1183, 50 U.S.C.App. old §§ 540-554; Oct. 6, 1942, c. 581, § 13, 56 Stat. 773, 50 U.S.C.App. §§ 540-548.

The Court's Power To Act.

 At the threshold the Government challenges the jurisdiction of the court. Jurisdiction of the action brought by plaintiff Hormel would seem to be clearly granted by 28 U.S.C. section 1346, headed 'United States as defendant', which reads:

 '(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims, of:

 '(2) Any other civil action or claim against the United States, not exceeding $ 10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.'

 We must, however, as to plaintiff Stilson, who is a resident of New Jersey, take into account section 1402(a) which reads:

 '(a) Any civil action against the United States under subsection (a) of section 1346 of this title may be prosecuted only in the judicial district where the plaintiff resides.'

 The action was brought by plaintiff Hormel 'on behalf of himself and all others similarly situated' and Stilson joined as a party plaintiff pursuant to leave of this court granted by Judge Samuel H. Kaufman, 11 F.R.D. 376. As I read Judge Kaufman's opinion he granted the application on two grounds: one, that, in a 'spurious class suit' such as this, venue should not be a barrier to intervention and, the other, that this action was brought pursuant to 38 U.S.C. section 817, *fn1" which made section 445 *fn2" applicable, so that the venue limitation which 28 U.S.C. section 1402(a) put on suits under section 1346(a) did not concern him. The Government points out that, subsequent to Judge Kaufman's decision, section 445 of title 38 U.S.C. was held inapplicable to a suit involving a National Service Life Insurance dividend in Candell v. United States, 10 Cir., 189 F.2d 442. The Court of Appeals there held that the 'benefits' which section 445 referred to did not include the right to participate in dividends. I am persuaded, however, that an action to recover a dividend under a National Service Life Insurance policy, if it cannot be brought under section 445 of title 38, can be brought under section 1346(a) of title 28. Incidentally Judge Kaufman's first ground of decision, that venue is not a barrier to intervention in a spurious class action, would remain intact even if the action were brought under section 1346(a) of title 28 rather than under section 445 of title 38 as he held.

 I am supported in my view that the action may be maintained under section 1346(a) of title 28 by Morton v. United States, D.C.E.D.N.Y., 113 F.Supp. 496, where Judge Byers entertained an action for exactly the same relief as in this one upon the theory that the plaintiff had successfully invoked jurisdiction under that section.

 Defendant says, however, that unless the action is brought under section 445 the position of the Veterans' Administration cannot be reviewed in court. Authority for this is said to be found in section 11a-2 of title 38 U.S.C., Oct. 17, 1940, c. 893, § 1, 54 Stat. 1197, which reads as follows:

 'Notwithstanding any other provisions of law, except as provided in sections 445 and 817 of this title, the decisions of the Administrator of Veterans' Affairs on any question of law or fact concerning a claim for benefits or payments under any Act administered by the Veterans' Administration shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decisions.'

 The Government's point is not well taken. The decisions of the Administrator that are made final and conclusive are decisions 'on any question of law or fact concerning a claim for benefits or payments under any act administered by the Veterans' Administration.' The Government cannot be relying upon the finality of a decision with respect to a claim of an insured for benefits or payments under a policy of National Service Life Insurance because there is no controversy over any such claim. It is conceded that plaintiffs are entitled to the full dividend under such policies. The decision that the Administrator has made and of which they complain is the decision that they owe the Government reimbursement for payments made by the Government under a different Act, the Soldiers' and Sailors' Civil Relief Act. I cannot bring myself to believe that the cited section means that the Administrator of Veterans' Affairs can decide that there is money due from servicemen to the Government under the Soldiers' and Sailors' Civil Relief Act and come into court and obtain a judgment against the servicemen upon the sole allegation that his determination has been made final and conclusive.

 A debt asserted by the Government is not a 'claim for benefits or payments' within the meaning of section 11a-2 of Title 38. This provision has been construed by two courts of appeals as limited to claims by veterans for gratuitous benefit payments, and as inapplicable to rights asserted by the Government. United States v. Gibson, 9 Cir., 207 F.2d 161, 163; Hahn v. Gray, 92 U.S.App.D.C. 188, 203 F.2d 625, 626. But cf. United States v. Gudewicz, D.C.E.D.N.Y., 45 F.Supp. 787. The predecessor provision on the conclusiveness of decisions of the Administrator of Veterans' Affairs, Section 5 of the Economy Act, March 20, 1933, 48 Stat. 9, 38 U.S.C.A. § 705, was similarly interpreted by the Supreme Court as applicable only to gratuities sought by veterans. Lynch v. United States, 292 U.S. 571, 587, 54 S. Ct. 840, 78 L. Ed. 1434. Further, the Government's construction as applied to this case raises the serious question whether the Fifth Amendment would not invalidate a law which would permit the Government to recover a judgment against a citizen without giving him an opportunity to challenge the bare assertion of an administrative officer that money was due and owing. See Hahn v. Gray, 92 U.S.App.D.C. 188, 203 F.2d 625, 626, supra. Where there are two reasonably possible constructions of a federal statute, it is the duty of a federal judge to choose the one which does not raise constitutional doubts. See Dennis v. United States, 341 U.S. 494, 501, 71 S. Ct. 857, 95 L. Ed. 1137. American Communications Ass'n v. Douds, 339 U.S. 382, 407, 70 S. Ct. 674, 94 L. Ed. 925; note, 'Supreme Court Interpretation of Statutes to Avoid Constitutional Decisions', 53 Columbia L.Rev. 633.

 Being thus satisfied of my power to pass on the merits of the controversy, I ...


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