A-56120, SEPTEMBER 25, 1934, 14 COMP. GEN. 246

A-56120: Sep 25, 1934

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DISPOSITION OF SUCH CLAIMS IS NOT DEPENDENT UPON THE LEGALITY OF THE REGULATIONS OR WHETHER PAYMENT WAS MADE UNDER PROTEST. WERE COPARTNERS IN THE BUSINESS OF BUYING AND SELLING WOOL AT WHEELING. HAVE PRESENTED FOR CONSIDERATION UNDER THE ACT OF APRIL 10. THE CLAIM IS FOR REFUND OF THE AMOUNT OF TWO PAYMENTS MADE BY CLAIMANTS TO THE DEPARTMENT OF AGRICULTURE. PAYMENTS WERE MADE UNDER GOVERNMENT REGULATIONS FOR HANDLING WOOL CLIP OF 1918. WERE MADE UNDER PROTEST AS EVIDENCED BY ENDORSEMENT OF THE CHECKS AS FOLLOWS: PAYMENT IN FULL FOR ALL CLAIMS FOR EXCESS PROFIT UNDER WAR INDUSTRIES BOARD REGULATIONS FOR 1918 PURCHASE FLEECE WOOL WITH THE UNDERSTANDING THAT THERE IS NO LIABILITY FOR INCOME TAX ON THIS AMOUNT AND THAT THE REGULATIONS ARE LEGAL.

A-56120, SEPTEMBER 25, 1934, 14 COMP. GEN. 246

CLAIMS - REFUND OF EXCESS PROFITS ON 1918 WOOL CLIP - ACT OF APRIL 10, 1928 AMOUNTS COLLECTED FROM DEALERS UNDER GOVERNMENT REGULATIONS FOR HANDLING WOOL CLIP OF 1918 AND DISTRIBUTED AMONG THE GROWERS OF SUCH WOOL MAY NOT BE REFUNDED. DISPOSITION OF SUCH CLAIMS IS NOT DEPENDENT UPON THE LEGALITY OF THE REGULATIONS OR WHETHER PAYMENT WAS MADE UNDER PROTEST. SUCH CLAIMS DO NOT CONTAIN SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO JUSTIFY REPORTING THEM TO THE CONGRESS FOR ITS CONSIDERATION UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413.

DECISION BY COMPTROLLER GENERAL MCCARL, SEPTEMBER 25, 1934:

LOUIS AND JULIUS HORKHEIMER WHO, DURING THE YEAR 1918, WERE COPARTNERS IN THE BUSINESS OF BUYING AND SELLING WOOL AT WHEELING, W.VA., HAVE PRESENTED FOR CONSIDERATION UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, A CLAIM FOR $43,971.36, WITH INTEREST. THE CLAIM IS FOR REFUND OF THE AMOUNT OF TWO PAYMENTS MADE BY CLAIMANTS TO THE DEPARTMENT OF AGRICULTURE, ONE FOR $38,432.54 MADE OCTOBER 9, 1920, AND THE OTHER FOR $5,538.82 MADE ON OR ABOUT JULY 19, 1921, REPRESENTING EXCESS GROSS PROFITS ON WOOL FROM THE 1918 CLIP. PAYMENTS WERE MADE UNDER GOVERNMENT REGULATIONS FOR HANDLING WOOL CLIP OF 1918, ESTABLISHED BY WOOL DIVISION, WAR INDUSTRIES BOARD, MAY 21, 1918, AND, CLAIMANTS ALLEGE, WERE MADE UNDER PROTEST AS EVIDENCED BY ENDORSEMENT OF THE CHECKS AS FOLLOWS:

PAYMENT IN FULL FOR ALL CLAIMS FOR EXCESS PROFIT UNDER WAR INDUSTRIES BOARD REGULATIONS FOR 1918 PURCHASE FLEECE WOOL WITH THE UNDERSTANDING THAT THERE IS NO LIABILITY FOR INCOME TAX ON THIS AMOUNT AND THAT THE REGULATIONS ARE LEGAL.

CLAIMANTS CONTEND THAT THE INVALIDITY OF THE REGULATIONS HAS BEEN FULLY ESTABLISHED BY THE COURTS AND THAT SUCH PAYMENTS WERE ILLEGAL AND INEQUITABLE AND SHOULD BE REFUNDED TO THEM.

BY ACT APPROVED AUGUST 29, 1916, 39 STAT. 649, 650, CONGRESS ESTABLISHED A COUNCIL OF NATIONAL DEFENSE AND PROVIDED FOR APPOINTMENT BY THE PRESIDENT OF AN ADVISORY COMMISSION. ITS PURPOSE WAS TO EFFECT THE "COORDINATION OF INDUSTRIES AND RESOURCES FOR THE NATIONAL SECURITY AND WELFARE.' ITS DUTIES WERE TO INVESTIGATE, CONSIDER AND DETERMINE THE AMOUNTS, LOCATION, METHOD, AND MEANS OF PRODUCTION AND AVAILABILITY OF MILITARY SUPPLIES AND MAKE RECOMMENDATIONS TO THE PRESIDENT AND HEADS OF EXECUTIVE DEPARTMENTS, AND, AMONG OTHER THINGS,"THE GIVING OF INFORMATION TO PRODUCERS AND MANUFACTURERS AS TO THE CLASS OF SUPPLIES NEEDED BY THE MILITARY AND OTHER SERVICES OF THE GOVERNMENT, THE REQUIREMENTS RELATING THERETO, AND THE CREATION OF RELATIONS WHICH WILL RENDER POSSIBLE IN TIME OF NEED THE IMMEDIATE CONCENTRATION AND UTILIZATION OF THE RESOURCES OF THE NATION.' IT WAS EMPOWERED TO ADOPT RULES AND REGULATIONS FOR ITS WORK AND TO ORGANIZE SUBORDINATE BODIES FOR ITS ASSISTANCE IN SPECIAL INVESTIGATIONS, EITHER BY THE EMPLOYMENT OF EXPERTS OR THE CREATION OF COMMITTEES.

ON APRIL 6, 1917, CONGRESS DECLARED WAR AGAINST GERMANY, AND, FOR THE PURPOSE OF WAGING WHICH, ALL THE RESOURCES OF THE COUNTRY AND THE GOVERNMENT WERE PLEDGED.

BY ACT OF MAY 20, 1918, THE PRESIDENT, AS COMMANDER IN CHIEF OF THE MILITARY AND NAVAL FORCES OF THE NATION, WAS GIVEN BROAD POWERS AND, AMONG OTHERS, SECTIONS 2 AND 5, 40 STAT. 556, 557, PROVIDED:

SEC. 2. THAT IN CARRYING OUT THE PURPOSES OF THIS ACT THE PRESIDENT IS AUTHORIZED TO UTILIZE, COORDINATE, OR CONSOLIDATE ANY EXECUTIVE OR ADMINISTRATIVE COMMISSIONS, BUREAUS, AGENCIES, OFFICES, OR OFFICERS NOW EXISTING BY LAW, TO TRANSFER ANY DUTIES OR POWERS FROM ONE EXISTING DEPARTMENT, COMMISSION, BUREAU, AGENCY, OFFICE, OR OFFICER TO ANOTHER, TO TRANSFER THE PERSONNEL THEREOF OR ANY PART OF IT EITHER BY DETAIL OR ASSIGNMENT, TOGETHER WITH THE WHOLE OR ANY PART OF THE RECORDS AND PUBLIC PROPERTY BELONGING THERETO.

SEC. 5. THAT SHOULD THE PRESIDENT, IN REDISTRIBUTING THE FUNCTIONS AMONG THE EXECUTIVE AGENCIES AS PROVIDED IN THIS ACT, CONCLUDE THAT ANY BUREAU SHOULD BE ABOLISHED AND IT OR THEIR DUTIES AND FUNCTIONS CONFERRED UPON SOME OTHER DEPARTMENT OR BUREAU OR ELIMINATED ENTIRELY, HE SHALL REPORT HIS CONCLUSIONS TO CONGRESS WITH SUCH RECOMMENDATIONS AS HE MAY DEEM PROPER.

ON JULY 28, 1917, THE COUNCIL OF NATIONAL DEFENSE, WITH THE APPROVAL OF THE PRESIDENT, HAD ORGANIZED THE WAR INDUSTRIES BOARD TO FURNISH NEEDED ASSISTANCE TO THE DEPARTMENTS ENGAGED IN MAKING WAR PURCHASES. THERE WAS CREATED WITHIN THE WAR INDUSTRIES BOARD AN AGENCY DESIGNATED AS THE WOOL DIVISION. ON MAY 21, 1918, THE WOOL DIVISION ISSUED REGULATIONS FOR HANDLING THE WOOL CLIP OF 1918.

PURSUANT TO THE REORGANIZATION ACT OF MAY 20, 1918, SUPRA, THE PRESIDENT, BY EXECUTIVE ORDER, ON MAY 28, 1918, ESTABLISHED THE WAR INDUSTRIES BOARD AS A SEPARATE ADMINISTRATIVE AGENCY TO ACT FOR HIM, UNDER HIS DIRECTION, AND INSTRUCTED AND DIRECTED IT TO ASSIST THE SEVERAL SUPPLY DEPARTMENTS AND ANTICIPATE THE PROSPECTIVE NEEDS OF THE GOVERNMENT AND AVAILABLE SUPPLIES THEREFOR AS FAR IN ADVANCE AS POSSIBLE IN ORDER THAT BUSINESS MEN MIGHT BE AFFORDED OPPORTUNITY FOR PLANNING TO MEET SUCH NEEDS.

BY SECTION 120 OF THE ACT OF JUNE 3, 1916, 39 STAT. 166, 213, ALL PRODUCERS WERE REQUIRED TO GIVE PREFERENCE TO ORDERS PLACED BY THE PRESIDENT. EARLY IN 1918 IT WAS ANTICIPATED THAT IN ORDER TO FURNISH CLOTHING AND BLANKETS FOR THE ARMY AND NAVY THE DEMAND FOR WOOL WOULD EXCEED THE SUPPLY. UNDER VARIOUS ACTS OF CONGRESS THE PRESIDENT, AS COMMANDER IN CHIEF OF THE ARMY AND NAVY, HAD THE CONSTITUTIONAL POWER TO COMMANDEER THE ENTIRE WOOL CROP OF THE COUNTRY. SUCH POWER COULD SCARCELY BE QUESTIONED. SEE MITCHELL V. HARMONY, 13 HOWARD 115, 133; UNITED STATES V. RUSSELL, 13 WALLACE 623; AND ROXFORD KNITTING MILLS V. MOORE AND TIERNEY, 265 FED. 177. THE GOVERNMENT, OF COURSE, WAS BOUND TO MAKE JUST COMPENSATION FOR ALL PRIVATE PROPERTY SO TAKEN. TO HAVE COMMANDEERED THE WOOL FROM EACH INDIVIDUAL GROWER WOULD HAVE BEEN A COLOSSAL UNDERTAKING AND WAS OBJECTIONABLE FOR MANY REASONS.

FOR THE PURPOSE OF DETERMINING A WORKING AGREEMENT, CONFERENCES WERE HELD BETWEEN THE WOOL GROWERS AND DEALERS AND THE WOOL DIVISION OF THE WAR INDUSTRIES BOARD. PRICES TO BE PAID FOR THE DIFFERENT GRADES OF SCOURED WOOL WERE DETERMINED AND THE AGENCIES AND METHODS FOR HANDLING WERE TENTATIVELY AGREED UPON. OF COURSE, GROWERS AND DEALERS WERE REPRESENTED BY SPOKESMEN WHO HAD NO AUTHORITY TO BIND THEM.

IT WAS AGREED THAT GROWERS COULD CONSIGN THEIR WOOL TO DEALERS WHO WOULD REMIT TO THEM EXACTLY WHAT THE GOVERNMENT ALLOWED AND PAID FOR SUCH WOOL, LESS FREIGHT AND INTEREST ON ADVANCES, OR THEY COULD SELL THEIR WOOL TO APPROVED DEALERS. AS AN INDUCEMENT TO GROWERS TO ACCEPT THE PLAN, IT WAS AGREED THAT PROFITS OF DEALERS WOULD BE LIMITED.

THE REGULATIONS OF MAY 21, 1918, ISSUED SUBSEQUENT TO SUCH CONFERENCES, AMONG OTHER THINGS, PROVIDED:

PROFITEERING PROHIBITED.

AS A GUARD AGAINST PROFITEERING, THE BOOKS OF ALL APPROVED DEALERS IN DISTRIBUTING CENTERS SHALL BE AT ALL TIMES OPEN TO GOVERNMENT INSPECTION, AND IF IT BE FOUND THAT THEIR GROSS PROFITS, INCLUDING THE AFORESAID COMMISSION OF 4 PERCENT, ARE IN EXCESS OF 5 PERCENT ON THE SEASON'S BUSINESS, THEN SUCH GROSS PROFITS SHALL BE DISPOSED OF AS THE GOVERNMENT DECIDES.

THE BOOKS OF THE COUNTRY DEALERS SHALL LIKEWISE BE OPEN TO GOVERNMENT INSPECTION. IF IT BE FOUND THAT THEIR GROSS PROFIT FOR THE SEASON'S BUSINESS IS IN EXCESS OF 1 1/2 CENTS PER POUND, THEN SUCH EXCESS PROFITS SHALL BE DISPOSED OF AS THE GOVERNMENT MAY DECIDE.

UNDER THESE REGULATIONS CLAIMANTS APPLIED FOR AND RECEIVED A PERMIT TO OPERATE AS A CENTRAL DEALER AT THE DISTRIBUTING CENTER FOR FLEECE WOOLS, WHEELING, W.VA. UPON RECEIPT OF PERMIT, CLAIMANTS SIGNED AND RETURNED AN AGREEMENT TO OPERATE AS CENTRAL DEALERS UNDER SUCH REGULATIONS AND APPARENTLY DID SO OPERATE DURING THE YEAR 1918.

ON DECEMBER 31, 1918, THE PRESIDENT, BY EXECUTIVE ORDER, DISSOLVED THE WAR INDUSTRIES BOARD AND TRANSFERRED ITS FUNCTIONS RESPECTING THE DOMESTIC WOOL CLIP OF 1918 TO THE BUREAU OF MARKETS, DEPARTMENT OF AGRICULTURE. THEREAFTER THE BUREAU OF MARKETS MADE AN AUDIT OF THE BOOKS OF CLAIMANT AND DETERMINED THAT IT HAD MADE A PROFIT IN EXCESS OF 5 PERCENT ON THE SEASON'S BUSINESS. CLAIMANT PAID THE GOVERNMENT THE AMOUNT OF PROFITS IN EXCESS OF THAT ALLOWED BY THE REGULATIONS. IT KNEW THAT THE LEGALITY OF THE REGULATIONS HAD BEEN QUESTIONED BY OTHER DEALERS AT THAT TIME BUT PAID THE AMOUNT UPON DEMAND.

IN THE ACT OF JULY 24, 1919, 41 STAT. 267, AN APPROPRIATION WAS MADE AS FOLLOWS:

TO ENABLE THE BUREAU OF MARKETS TO COMPLETE THE WORK OF THE DOMESTIC WOOL SECTION OF THE WAR INDUSTRIES BOARD AND TO ENFORCE THE GOVERNMENT REGULATIONS FOR HANDLING THE WOOL CLIP OF 1918 AS ESTABLISHED BY THE WOOL DIVISION OF SAID BOARD, PURSUANT TO THE EXECUTIVE ORDER DATED DECEMBER 31, 1918, TRANSFERRING SUCH WORK TO THE SAID BUREAU, $35,000.

IN THE ACT OF MAY 31, 1920, 41 STAT. 725, AN APPROPRIATION WAS MADE FOR THE SAME PURPOSE IN THE SAME LANGUAGE. IN THE ACT OF MARCH 3, 1921, 41 STAT. 1343, ANOTHER APPROPRIATION WAS MADE IN THE SAME TERMS WITH AN ADDED PROVISION AS FOLLOWS:

* * * AND TO CONTINUE, AS FAR AS PRACTICABLE, THE DISTRIBUTION AMONG THE GROWERS OF THE WOOL CLIP OF 1918 OF ALL SUMS HERETOFORE OR HEREAFTER COLLECTED OR RECOVERED WITH OR WITHOUT SUIT BY THE GOVERNMENT FROM ALL PERSONS, FIRMS, OR CORPORATIONS WHICH HANDLED ANY PART OF THE WOOL CLIP OF 1918;

ANNUAL APPROPRIATIONS IN THE EXACT OR SIMILAR LANGUAGE OF THE 1921 ACT HAVE BEEN MADE BY CONGRESS FOR EACH SUCCEEDING YEAR TO AND INCLUDING THE FISCAL YEAR ENDING JUNE 30, 1934, IN PROGRESSIVELY DECREASED AMOUNTS. THE CONGRESSIONAL RECORD AND COMMITTEE REPORTS DISCLOSE THAT THE MATTER WAS CAREFULLY CONSIDERED AT THE TIME SUCH APPROPRIATIONS WERE MADE ON MORE OCCASIONS THAN ONE. THE HOUSE AND SENATE AT TIMES DISAGREED AS TO THE LANGUAGE TO BE USED IN THE APPROPRIATION ACT AND THE QUESTION WAS SETTLED BY CONFEREES OF BOTH HOUSES.

WITH THE AID OF THE APPROPRIATIONS AFORESAID, THE BUREAU OF MARKETS OF THE DEPARTMENT OF AGRICULTURE HAS COLLECTED FROM WOOL DEALERS THROUGHOUT THE UNITED STATES APPROXIMATELY $750,000 WHICH, AS NEARLY AS POSSIBLE, HAS BEEN DISTRIBUTED AMONG THE WOOL GROWERS IN ACCORDANCE WITH THE WISHES OF THE CONGRESS AS EXPRESSED IN SUCH ACTS. SEE IN THIS CONNECTION DECISION OF THIS OFFICE OF JUNE 8, 1934, A-55903. A PORTION OF THE COLLECTIONS WAS MADE PURSUANT TO JUDGMENTS OF UNITED STATES DISTRICT COURTS. IN ALL SUCH CASES HEARD AND TRIED PRIOR TO THE YEAR 1925, THE RIGHT OF THE GOVERNMENT TO RECOVER WAS SUSTAINED DURING WHICH TIME EIGHT FEDERAL DISTRICT COURTS RENDERED DECISIONS FAVORABLE TO THE GOVERNMENT. THE PRINCIPAL PART OF THE MONEY COLLECTED WAS PAID VOLUNTARILY. THE DEALERS HAD OPERATED UNDER A PERMIT ISSUED BY THE GOVERNMENT. THEY HAD AGREED TO OPERATE UPON THE BASIS OF A COMMISSION TO BE PAID BY THE GOVERNMENT IN HANDLING ALL CONSIGNED WOOL AND TO HAVE THEIR PROFITS LIMITED AS TO WOOL PURCHASED OUTRIGHT. IN ORDER TO PROTECT THEMSELVES THEY HAD PURCHASED THE WOOL AT SLIGHTLY LESS THAN THE VALUE FINALLY DETERMINED UPON GOVERNMENT INSPECTION AND GRADING. WHEN AN AUDIT OF THEIR BOOKS DISCLOSED THIS, THERE WAS NOTHING UNCONSCIONABLE OR INEQUITABLE IN REQUIRING THE PAYMENT OF SUCH DIFFERENCE TO THE GOVERNMENT TO BE DISPOSED OF UNDER DIRECTION OF THE CONGRESS.

CLAIMANTS RELY UPON THE CASES OF UNITED STATES V. SMITH (32 FED./2D) 901); UNITED STATES V. BROWN (39 FED./2D) 851); UNITED STATES V. MCAFARLAND (15 FED./2D) 823 (CERTIORARI REVOKED, 275 U.S. 485) ); UNITED STATES V. AVERY (30 FED./2D) 728), AS CONCLUSIVELY DETERMINING THE INVALIDITY OF THE REGULATIONS OF 1918. THE CASES HAVE BEEN CAREFULLY EXAMINED.

IN THE MCFARLAND CASE THE DEFENDANTS HAD NOT SIGNED THE AGREEMENT. THE COURT REPEATEDLY EMPHASIZED THIS AND REALLY DECIDED THE CASE ON THAT POINT AND THEN STATED THAT THE REGULATIONS PROVIDED FOR A PENALTY AND WOULD HAVE BEEN UNENFORCEABLE IF THE DEFENDANTS HAD SIGNED THEM. SINCE THE DEFENDANTS HAD NOT SIGNED THE AGREEMENT TO OPERATE UNDER THE REGULATIONS, IT IS NOT UNDERSTOOD HOW THE VALIDITY OF THE REGULATIONS WAS IN ISSUE. CERTIORARI WAS REVOKED WHEN ATTORNEYS FOR THE UNITED STATES AGREED THAT THE REGULATIONS WERE INVALID.

IN THE AVERY CASE, DECIDED IN THE DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK, THE COURT HELD THAT THE DEFENDANTS HAD NOT SIGNED THE AGREEMENT AND FOLLOWED THE RULE OF THE MCFARLAND CASE, AND THEN ADDED THAT THE REGULATIONS PROVIDED A PENALTY AND WERE INVALID.

IN THE SMITH CASE, DECIDED IN THE DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, THE DEFENDANTS HAD SIGNED AN AGREEMENT TO OPERATE SUBJECT TO THE REGULATIONS THERETOFORE OR THEREAFTER TO BE ADOPTED BY THE BOARD FOR HANDLING OF THE 1918 DOMESTIC CLIP. THE COURT HELD THAT DEFENDANTS WERE NOT BOUND BY THE AGREEMENT AND CRITICIZED THE PROPOSED DISTRIBUTION. THE DECISION WAS BASED UPON THE MCFARLAND CASE AS ABOVE.

IN THE CASE OF UNITED STATES V. BROWN, IN THE CIRCUIT COURT OF APPEALS FOR THE FIRST CIRCUIT, APRIL 11, 1930, THE COURT AGREED WITH THE CONCLUSIONS EXPRESSED IN THE MCFARLAND CASE AND HELD THAT THE REGULATIONS WERE INVALID AND THAT DEFENDANTS WHO HAD SIGNED AN AGREEMENT TO OPERATE THEREUNDER WERE NOT BOUND. THE COURT CRITICIZED THE PROPOSED DISTRIBUTION SO MANY YEARS AFTER THE TRANSACTION AS IMPRACTICABLE AND INEQUITABLE. HOWEVER, IN THE CASE OF UNITED STATES V. KRAUS, ET AL., 33 FED./2D) 406, CIRCUIT COURT OF APPEALS, SEVENTH CIRCUIT, JUNE 20, 1929, IT WAS HELD THAT THE DEFENDANTS BY THEIR ACCEPTANCE OF A PERMIT AND AGREEING TO OPERATE ACCORDING TO REGULATIONS FIXING COMMISSIONS AND LIMITING PROFITS BECAME GOVERNMENT AGENTS FOR THAT YEAR AND WERE BOUND BY THE AGREEMENT. THE OPINION CITES AND APPROVES A NUMBER OF CASES IN WHICH THE RIGHT OF THE GOVERNMENT TO RECOVER HAD BEEN UPHELD. THE MCFARLAND CASE IS REFERRED TO AND DIFFERENTIATED FROM THE OTHER CASES.

HOWEVER, DETERMINATION OF THE VALIDITY OR INVALIDITY OF THE REGULATIONS OF MAY 21, 1918, COVERING HANDLING OF THE WOOL CLIP FOR 1918 IS UNNECESSARY IN THE DISPOSITION OF THE INSTANT CLAIM. WHETHER THE PAYMENTS WERE MADE VOLUNTARILY OR UNDER PROTEST IS NOT MATERIAL. FAVORABLE RECOMMENDATION OF THE CLAIM IS SOUGHT UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, WHICH PROVIDES:

THAT WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON.

IN DECISION OF THIS OFFICE, A-55903, JUNE 8, 1934, IT WAS STATED:

* * * IN THE CONFERENCES BETWEEN THE WOOL GROWERS AND THE WOOL DIVISION OF THE WAR INDUSTRIES BOARD, PRIOR TO HANDLING OF THE 1918 CLIP, IT WAS AGREED THAT THE PROFITS OF APPROVED WOOL DEALERS WOULD BE LIMITED; THE WOOL GROWERS WERE ADVISED THAT THEIR INTERESTS WOULD BE CAREFULLY GUARDED; THAT THEY COULD CONFIDENTLY AND SAFELY CONSIGN THEIR WOOL TO APPROVED DEALERS, AND WOULD RECEIVE EXACTLY WHAT THE GOVERNMENT PAID FOR THE WOOL LESS FIXED COMMISSIONS; AND IF THEY SOLD THEIR WOOL OUTRIGHT THE BOOKS OF ALL APPROVED DEALERS WOULD BE EXAMINED BY GOVERNMENT INSPECTORS AND THEIR GROSS PROFITS LIMITED TO 5 PERCENT ON THE SEASON'S BUSINESS. THE GROSS PROFITS OF COUNTRY DEALERS WOULD BE LIMITED TO 1 1/2 CENTS PER POUND. THE REGULATIONS FOR HANDLING THE WOOL CLIP OF 1918 CONTAINED A PROVISION TO THAT EFFECT. AT THAT TIME THE UNITED STATES WAS ENGAGED IN WAR; THE RIGHT OF THE GOVERNMENT TO COMMANDEER THE WOOL IT NEEDED IS ADMITTED, BEING, OF COURSE, BOUND TO MAKE JUST COMPENSATION THEREFOR; THE WOOL GROWERS SOLD THEIR WOOL UPON THE REPRESENTATION OF THE GOVERNMENT AND WITH THE UNDERSTANDING THAT THEY WERE BEING PAID PRICES FIXED BY THE GOVERNMENT AND THAT THE DEALERS WOULD BE PROHIBITED FROM PROFITEERING AT THEIR EXPENSE.

FOLLOWING THE CLOSE OF THE WAR A PLAN FOR COLLECTION AND DISTRIBUTION OF EXCESS GROSS PROFITS FROM THE 1918 WOOL CLIP WAS ADOPTED. IN ANNUAL ACTS MAKING APPROPRIATIONS FOR CARRYING OUT THE PLAN THE CONGRESS APPROVED IT.

UNDER SUCH CIRCUMSTANCES I DO NOT FIND THAT THE CLAIM OR DEMAND CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO JUSTIFY MY REPORTING IT TO THE CONGRESS FOR ITS CONSIDERATION.

THIS ACTION IS NOT TO BE CONSIDERED AS A CRITICISM OF CLAIMANTS OR OTHER DEALERS WHO HANDLED WOOL OF THE 1918 CLIP. ON THE WHOLE, IT IS GENERALLY UNDERSTOOD THAT THEY ACCOMPLISHED THEIR UNDERTAKING IN A PATRIOTIC MANNER AND WITH A SMALL MARGIN OF EXCESS GROSS PROFITS AND ARE TO BE COMMENDED, BUT THERE IS NOTHING INEQUITABLE IN THEIR PAYING THE UNITED STATES SUCH EXCESS TO BE DISPOSED OF BY THE GOVERNMENT.

ACCORDINGLY, THE REQUEST OF CLAIMANTS THAT THEIR CLAIM BE REPORTED TO THE CONGRESS UNDER THE PROVISIONS OF THE ACT OF APRIL 10, 1928, SUPRA, MUST BE, AND IS, DENIED.