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06/23/60 Whittier, Admr. of v. Emmet


June 23, 1960






Before Mr. Justice BURTON, retired,* and WASHINGTON and DANAHER, Circuit Judges.


June 23, 1960. 1960.CDC.116



The Administrator of Veterans' Affairs interpreted Article IV of the 1940 Act, prior to the 1942 Amendments, as establishing by implication a comparable obligation on the part of the insured servicemen to reimburse the Government for its payment of the guaranteed premiums. Under this interpretation, the Administrator collected over $1,640,000 from approximately 8,400 insured servicemen. He did this in large part by offsetting against the debts of the respective servicemen the dividends due them in connection with their National Service Life Insurance policies.3

Although there was some acquiescence in the Administrator's interpretation of the 1940 Act, there also was vigorous opposition to it. This resulted in conflicting judicial decisions4 culminating in 1957 in the Supreme Court's decision, with three Justices dissenting, in United States v. Plesha, 352 U.S. 202. In that case the Supreme Court held that, contrary to the Administrator's interpretation of the 1940 Act, prior to the 1942 Amendments, the insured servicemen were not obligated to reimburse the Government for its payment of premiums on their account.

After the Plesha decision, the next problem was that of returning to the servicemen their funds which had been used erroneously by the Government to reimburse itself for its payment of the guaranteed premiums.

To facilitate such refunding, Congress, in 1958, enacted Public Law 85-586.5 That Act authorized the Administrator of Veterans' Affairs, upon timely application, to refund to the servicemen, without interest, all amounts collected from them by the United States under its erroneous interpretation of the 1940 Act. Public Law 85-586 made available the money to make such refunds and also provided that the right to such refunds was not to be denied by reason of statutory time limitations, judgments theretofore rendered, or "any other technical defense."

In the three cases now before us plaintiffs ask not only for the principal of the sums claimed, but also for interest on delayed dividends due them under their National Service Life Insurance policies. Furthermore, they ask for the allowance attorneys' fees to cover services rendered not only to the named parties to the litigation, but to all persons similarly situated.

In No. 15066, the plaintiff, Emmet, sought a writ of mandamus from the District Court for the District of Columbia ordering the defendant officials to make the payments requested.

In Nos. 15067 and 15068 the plaintiffs, Deering and Mabbutt, brought suit, respectively, in the District Court for the Southern District of New York and the District Court for the Northern District of California for the payment of their claims pursuant to the Tucker Act,6 and the National Service Life Insurance Act.7 Those courts transferred the cases to the District Court for the District of Columbia in reliance upon 28 U.S.C. § 1404(a).8

That court consolidated the cases and granted a preliminary injunction, which is still in effect, forbidding the disbursement of more than 90% of the respective payments authorized by Public Law 85-586. It overruled all objections to its jurisdiction and to the propriety of taking action on the merits of the issues presented. After a plenary hearing it ordered payment by the Government not only of the amounts provided for in Public Law 85-586, but also of interest at 3% per annum on an amount equal to the value of the National Service Life Insurance dividends.9 It also authorized the payment of attorneys' fees of 5% on the aggregate amount of principal and interest to be refunded under Public Law 85-586.

The Government, on appeal, seeks a reversal of the judgment below on the ground that none of these actions should have been heard by the District Court for the District of Columbia. On the merits, the Government contends that neither the allowance for interest nor that for attorneys' fees was justified. For the reasons hereafter stated, we agree with the Government.

In No. 15066, originating in 1955 in the District Court for the District of Columbia, Emmet sought to litigate the question later resolved by the Supreme Court in United States v. Plesha (supra). He asked for a writ of mandamus directed against the Administrator of Veterans' Affairs, the Secretary of the Treasury, the Treasurer of the United States and the Comptroller General. It is elemental, however, that this extraordinary remedy was not available for such purpose, inasmuch as the Tucker Act provided an adequate remedy at law to test the question.10 The pecuniary liability of the United States may be determined only through such procedures as the United States has authorized. Moreover, a writ of mandamus will be issued only to compel the performance of a ministerial duty as distinguished from one calling for exercise of discretion.11 In this case the amounts claimed had not yet been determined at the time the action was filed. While this case was pending, the decision in the Plesha case and the enactment of Public Law 85-586 settled the major legal issues. They did not, however, authorize an allowance for interest and another for attorneys' fees as sought by the plaintiff. The way to reach those issues is not by writ of mandamus. Accordingly, the complaint in the Emmet case must be dismissed on jurisdictional grounds insofar as it applies to mandamus.

Deering and Mabbutt sought relief comparable to that sought in the Emmet case but by a different procedure. They filed their complaints in the District Courts of their respective districts of residence. Each alleged that jurisdiction existed in those courts both under the Tucker Act and the National Service Life Insurance Act. On motions of plaintiffs those courts transferred both cases to the District Court for the District of Columbia under authority of 28 U.S.C. § 1404(a). The Government here contends that the complaints should have been dismissed or the cases re-transferred to permissible districts.

Section 1404(a) limits transfers of such cases to those districts where the action might have been brought in the first instance.12 Such limitation excludes venue in this district under the Tucker Act, because by § 1402(a) venue under the Tucker Act is limited to the courts of the districts of the plaintiffs' residence or to the Court of Claims.

But plaintiffs also contend that venue lies in the District Court for the District of Columbia under the National Service Life Insurance Act of 1940.13 Under the jurisdictional provision of that Act, actions involving disagreements as to claims under National Service Life Insurance contracts may be brought either in the district of the plaintiff's residence or in the District Court for the District of Columbia.

That provision, however, does not apply to the instant cases because the complaints here seek to recover the collections erroneously made by the Government in reliance upon the Soldiers' and Sailors' Civil Relief Act of 1940, not the National Service Life Insurance Act. The cases before us do not involve any disagreement about dividends under the Insurance Act. The Government admits the plaintiffs' right to those dividends. It disbursed them from the Insurance Fund and credited plaintiffs' accounts by offsetting the erroneous claims of the Government under the Soldiers' and Sailors' Civil Relief Act.

Even if these differences be treated as disagreements as to dividends, it still would be necessary to show here that this disagreement was one for an "insurance benefit" within the meaning of 38 U.S.C. § 784(h).14 Candell v. United States, 189 F.2d 442 (C.A. 10th Cir. 1951), indicates that disputes over dividends do not so qualify. As was pointed out in Candell, insurance dividends are realized as a result of low mortality experience and economies in the operation of the insurance company. They are unrelated to the obligation to pay the particular policyholder for a loss insured against and are not the same sort of payment as an insurance benefit.

Furthermore, the "disagreement" which is a prerequisite to a suit under the Insurance Act must include the filing of a claim or protest and a denial. That is absent here. United States v. Christensen, 207 F.2d 757 (C.A. 10th Cir. 1953).

After the court below had declined to dismiss these cases or to transfer them to other District Courts, it considered them on their merits and granted substantially the relief requested. On these appeals, the parties have argued the merits. Although we have concluded that the lower courts were in error in deciding that venue in Deering and Mabbutt lies in the District of Columbia, this does not preclude us from disposing of these cases on the merits. Section 1406(b) of the Judicial Code provides that deficiencies in venue shall not impair a District Court's jurisdiction if objection to the deficiency is not timely and sufficient.15 Venue is primarily designed to protect defendants from inconvenient forums and courts from inconvenient lawsuits. Once the case has been heard fully and fairly on the merits, the reasons for reversing the judgment on grounds of improper venue are substantially diminished in the absence of prejudice to a party who has preserved his standing to complain by timely objection.16 This factor distinguishes the cases before us from those where the decision of the District Court on the venue question was brought before the Court of Appeals by petition for mandamus or interlocutory appeal before a hearing on the merits.17

We proceed to a disposition of the instant cases on their merits because the erroneous determination of the venue questions below does not constitute reversible error as to any of the parties. These cases were transferred to this district on motions of the plaintiffs and their view of the venue questions prevailed below. Having invoked the transfer provisions of § 1404(a) themselves, and having failed to take a cross-appeal from the judgment below in their favor on the merits, they have waived their right to complain of the improper venue. Peoria & P.U.R. Co. v. United States, 263 U.S. 528 (1924).

As for the Government, if it prevails on the merits, the erroneous determination of the venue amounts to harmless error. It would not make any significant difference from the Government's point of view whether the cases were tried in New York and California, or in the District of Columbia. In fact, the Government has had the advantage of having to try only one proceeding and take appeals in one circuit rather than to have had three trials and take appeals in three circuits. In this situation there is no basis for concluding that prejudice to the Government resulted from trial in an improper district. It would be an obviously questionable result if we should find for the Government on the merits, and yet order it to relitigate the cases in other forums merely because improper venue had been imposed upon it over its timely objections.

On the merits, the court below ordered the defendants to pay plaintiffs, intervenors, and each veteran similarly situated, the amount the Administrator of Veterans' Affairs had wrongfully applied to the reimbursement of the United States for premiums advanced by it on the serviceman's commercial life insurance under the Civil Relief Act of 1940. The court below also ordered the payment of interest at 3% per anum on the amount so to be paid. An obvious reason for denying this allowance of interest is that Congress has made no provision for its payment. It is elemental that pre-judgment interest cannot be assessed against the Government in the absence of a specific provision authorizing such assessment.18 Furthermore, since all but the few named parties to these actions will receive payment of their claims solely under Public Law 85-586, rather than under the judgments rendered in these cases, the terms of such payments are to be determined by such statute. It expressly states that the payments authorized are "without interest."

There is no authority in the National Service Life Insurance Act for the allowance of interest claimed by the named plaintiffs in these actions. In fact, the Supreme Court has held that no interest was allowable under the World War I Insurance Act, which is substantially identical to the National Service Life Insurance Act, even in the extreme case of a wrongfully withheld death benefit.19

The court below also ordered the allowance of attorneys' fees of 5% of the aggregate principal and interest which the court ordered paid under Public Law 85-586. These fees were to be applied first to reimbursement for legal expenses in certain named cases and the balance was to be divided among counsel named in the order. This allowance was not dependent upon statutory authority but rested upon the equity powers of a court to allow attorneys' fees in exceptional cases and for dominating reasons of justice. Sprague v. Ticonic Bank, 307 U.S. 161 (1939). The nature and extent of the legal services performed control the allowance rather than any formal relationship between client and attorney. The decision in the Plesha case authoritatively established the rights of the claimants and in that sense was a necessary pre-condition to the payment of any refunds to the veteran claimants. This decision, however, was merely an application of law which was available to other litigants under the doctrine of stare decisis. One who is influential in litigation leading to the announcement of a rule of law does not thereby gain a right to compensation from all those who later benefit from the application of the rule. Nor did the Plesha decision create such a distinct fund for the benefit of the class of claimants either by way of stare decisis or otherwise. It merely decided the claims of a few veterans out of about 8,400 who had claims involving a common question of law. Many of those claims would have been defeated by technical defenses, statutes of limitation, voluntary payments of res judicata, except for the waiver of such defenses by Congress as set forth in Public Law 85-586. In that Act, Congress made available the Civil Relief Fund and other funds for reimbursement of the veterans entitled to it.

From the small number of claimants who have joined these actions during the four years since the litigation was commenced, it is probable that few will join before judgment. Of the nine present intervenors, only two were not parties to one of the class suits or to Plesha. Few more, if any, are likely to join now in view of Public Law 85-586.The saving of so few, out of about 8,400 claimants, from the operation of the statute of limitations is not an adequate reason for imposing attorneys' fees upon all 8,400 litigants.

Appellees' ultimate position is that they are entitled to attorneys' fees because Congress was moved by this litigation to pass an Act assisting these claimants. The class Congress favored is broader than that covered by the Plesha decision. The assertion of a non-contractual claim for compensation for services rendered in sponsoring favorable legislation does not deserve prolonged discussion.

The judgments of the District Court are reversed and the cases are remanded to it with directions that the complaint in No. 15066 be dismissed and that the complaints in Nos. 15067 and 15068 be dismissed unless the appellees move for a transfer to courts having jurisdiction over the actions for further proceedings not inconsistent with this opinion.

Reversed and remanded.


* Sitting by designation pursuant to 28 U.S.C. § 294(a).

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