The opinion of the court was delivered by: LEVET
Plaintiff has moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A.
This action is brought pursuant to Title 28 U.S.C.A. § 1345 and Section 403(c) of the Renegotiation Act, as amended (50 U.S.C.A.Appendix, § 1191).
The complaint alleges that after notice to the defendant, proceedings were had and conducted by the representative of the Navy Price Adjustment Board (Services and Sales Renegotiation Section) pursuant to the Renegotiation Act, as amended, to determine the amount of the excessive profits realized by the defendant during the fiscal year ended May 31, 1943, in the performance of contracts and subcontracts subject to renegotiation.
The complaint further states that on or about August 1, 1946, the said Navy Price Adjustment Board determined and ordered that of the profits realized by the defendant during the said fiscal year the sum of $ 170,000 represented excessive profits which should be eliminated and recovered; that on August 1, 1946, the said Board duly notified defendant of the determination and order and demanded payment in the sum of $ 170,000; that by reason thereof there is now due and owing to the plaintiff the sum of $ 170,000 with interest at the rate of 6% from and after September 14, 1946.
The amended answer concedes that informal proceedings were had and conducted by representatives of the Services and Sales Renegotiation Section to determine the amount of excess profits realized by the defendant; denies that the determination and order set forth in paragraph 4 of the complaint, determining the excess profits to be $ 170,000, was made by the Navy Price Adjustment Board, and denies that the profits referred to therein were realized in the performance of contracts as distinguished from subcontracts subject to renegotiation. The amended answer further denies that the said sum of $ 170,000 is due and admits non-payment thereof.
For an affirmative defense, the defendant in this amended answer in substance alleges as follows:
(1) That subsequent to the entry of the United States in the World War in December 1941, the defendant undertook to procure and did procure for Buckeye Traction Ditcher Company (hereinafter referred to as 'Buckeye') contracts with the United States in connection with Army and Navy requirements; that the defendant was to receive a commission of 1% on all shipments made by Buckeye to the United States Armed Forces on contracts procured for Buckeye by the defendant;
(2) That in December 1943 a representative of the Services and Sales Renegotiation Section, acting on behalf of the Secretary of the Navy, commenced renegotiation proceedings against the defendant for its fiscal years ending December 31, 1942 and 1943;
(3) That on August 1, 1946, a representative of said Section, acting on behalf of the Secretary of the Navy, notified the defendant that of the sums received by the defendant in the fiscal year ending May 31, 1943, the sum of $ 170,000 represented express profits which should be repaid to the United States;
(4) That the said determination was based entirely upon commissions received by the defendant from Buckeye and upon a settlement sum paid by Buckeye to the defendant, and that this Settlement sum was in effect based 'almost entirely' on commissions due on British and Canadian contracts, but that Buckeye incorrectly represented to said Section that a very large part of the settlement sum should be allocated to American contracts; that the defendant endeavored to procure from said Section a record of the renegotiation proceedings against Buckeye but that all such requests of defendant for such information were denied;
(5) That defendant was a subcontractor on contracts as defined in Section 403(a)(5)(B)(ii) of the Renegotiation Act of 1943 and that the renegotiation proceedings, which are the subject matter of the within complaint, involve only commissions received by the defendant as such subcontractor;
(6) That the defendant has been aggrieved by the determination of the Secretary of the Navy within the purview of Section 403(e)(2) of the Renegotiation Act of 1943;
(7) That under such Section 403(e)(2) the defendant as a subcontractor described in Section 403(a)(5)(B)(ii) of the Renegotiation Act of 1943 has no right to file a petition with the Tax Court of the United States for redetermination thereof;
(8) That the Renegotiation Act, insofar as it is purported to subject the defendant to renegotiation and required the defendant to pay any alleged excessive profits to plaintiff, was unconstitutional, void and without lawful effect and that the said Act as amended as applied to the defendant violated the provisions of Amendment 5 of the Constitution of the United States in that it deprived the defendant of its property without due process of law, etc.
Section 403(e)(2) of the Act, 58 Stat. 87, 50 U.S.C.A. Appendix, § 1191(e)(2), which provides for appeals to the Tax Court, reads in part:
'(2) Any contractor or subcontractor (excluding a subcontractor described in subsection (a)(5)(B) (of this section) aggrieved by a determination of the Secretary made prior to the date of the enactment of the Revenue Act of 1943, with respect to a fiscal year ending before July 1, 1943 as to the existence of excessive profits, which is not embodied in an agreement with the contractor or subcontractor, may, within ninety days (not counting Sunday or a legal holiday in the District of Columbia as the last day) after the date of the enactment of the Revenue Act of 1943 (Feb. 25, 1944), file a petition with The Tax Court of the United States for a redetermination thereof, and any such contractor or subcontractor aggrieved by a determination of the Secretary made on or after the date of the enactment of the Revenue Act of 1943 (Feb. 25, 1944), with respect to any such fiscal year, as to the existence of excessive profits, which is not embodied in an agreement with the contractor or subcontractor, may, within ninety days (not counting Sunday or a legal holiday in the District of Columbia as the last day) after the date of such determination, file a petition with The Tax Court of the United States for a redetermination thereof. * * *'
Section 403(a)(5)(B) of the Act, 58 Stat. 80, 50 U.S.C.A. Appendix, § 1191(a)(5) (B), which in effect describes these '(a)(5)(B) subcontractors,' reads in part:
'(5) The term 'subcontract' means -- * * *
'(B) Any contract or arrangement other than a contract or arrangement between two contracting parties, one of which parties is found by the Board to be a bona fide executive officer, partner, or full-time employee of the other contracting party, (i) any amount payable under which is contingent upon the procurement of a contract or contracts with a Department or of a subcontract or subcontracts, or determined with reference to the amount of such a contract or subcontract or such contracts or subcontracts, or (ii) under which any part of the services performed or to be performed consists of the soliciting, attempting to procure, or procuring a contract or contracts with a Department or a subcontract or subcontracts * * *.'
It appears from an affidavit of Melvin Pine, who is a director in dissolution of Whitehouse & Pine Inc., defendant, and who was executive vice president and secretary of the said corporation, that:
(1) During the corporate existence of the defendant, the business conducted was primarily that of acting as a commission broker and manufacturer's representative for the sale and distribution of products and machinery manufactured by its principals; that this work included solicitations and procurement of contracts for which the defendant received commissions, computed on the basis of the amount of the contracts procured for the principals. ...