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Erie Basin Metal Products Inc. v. Campbell

February 17, 1958


Author: Major

Before DUFFY, Chief Judge, and MAJOR and FINNEGAN, Circuit Judges.

MAJOR, Circuit Judge.

We have before us a petition praying that a writ of mandamus or prohibition issue to the Honorable William J. Campbell, a Judge of the United States District Court for the Northern District of Illinois, Eastern Division, directing that an order be entered removing Cause No. 54-C-1920 from the list of cases awaiting trial and deferring trial until the Tax Court of the United States and the United States Court of Claims have each finally disposed of cases involving the same or similar subject matter.

The United States instituted two actions against petitioner, Erie Basin Metal Products, Inc., a corporation (hereafter "Erie"), pursuant to the Renegotiation Act of 1943 as amended, Title 50 U.S.C.A.Appendix, ยง 1191 (hereafter the "Act"), to recover excessive profits, within the meaning of that Act, determined by the War Contracts Price Adjustment Board to have been received or accrued by Erie under its contracts subject to renegotiation, for its fiscal years 1943 and 1944. The action to recover excessive profits for 1943 has on appeal by Erie twice been decided by this Court in its favor. United States v. Erie Basin Metal Products, Inc., 7 Cir., 231 F.2d 294; United States v. Erie Basin Metal Products, Inc., 7 Cir., 244 F.2d 809.

The action out of which the instant controversy arises was to recover excessive profits for the year 1944. Section 1191(c)(2) provides:

"Actions on behalf of the United States may be brought in the appropriate courts of the United States to recover from the contractor any amount of such excessive profits actually paid to him and not withheld or eliminated by some other method under this subsection."

Section 1191(e)(1) provides:

"Upon such filing [of a petition for redetermination with the Tax Court] such court shall have exclusive jurisdiction, by order, to finally determine the amount, if any, of such excessive profits received or accrued by the contractor or subcontractor, and such determination shall not be reviewed or determined by any court or agency. * * * The filing of a petition under this subsection shall not operate to stay the execution of the order of the Board under subsection (c)(2)."

The amount of excess profits due from a war contractor is determined in a unilateral proceeding by the Board and the defenses available to a defendant in an action by the government to recover such profits is narrowly limited. United States v. Edward Valves, Inc., 7 Cir., 207 F.2d 329.

Erie within the time prescribed by statute filed with the Tax Court of the United States a petition for redetermination of the amount of its excess profits, if any, which action is now pending. Obviously, this proceeding encompasses all disputes between the government and Erie relative to excess profits, including those sought to be recovered in the pending action. Erie also filed in the United States Court of Claims a suit against the government in which it sought recovery of what is characterized as termination claims. We need not detail the proceedings which have taken place in that Court but, as we understand, the issues as finally made include that of Erie's liability asserted as a basis for recovery in the pending action. This proceeding in the Court of Claims is likewise pending.

Erie, so it is alleged, has been inactive since shortly after the end of World War II, and its only substantial assets consist of money due from the United States on war contract termination claims and settlements of approximately more than one million dollars. Erie points out that it cannot in the pending action obtain a hearing and decision on the merits of the claim sought to be maintained against it by the government. This results from the limitations inherent in the statute on the right of a war contractor to defend on the merits. On the other hand, it is contended with plausibility that the Tex Court has jurisdiction and is charged with the responsibility of deciding on the merits all issues between the parties, including the unilateral determination of defendant's liability for which recovery is sought in the action now pending in the District Court. Moreover, a decision of the Tax Court will be final and binding on all parties. There is some dispute, which we need not resolve, relative to the issues in the case before the Court of Claims but it appears that the validity of the unilateral determination upon which the suit now pending is predicated is also in issue before that Court.

On April 26, 1957, Erie filed a sworn motion before Judge Campbell requesting that the cause now pending be removed from the trial call and that a trial and decision be deferred until final disposition of the renegotiation case pending in the Tax Court and the termination claims case pending in the Court of Claims. A brief was filed in support of this motion and oral argument was heard by respondent. Respondent by order denied the motion and directed that the case proceed to trial. It is of this order that petitioner complains, with a prayer that this Court issue its directions to respondent to defer trial of the action as requested until the cases before the Tax Court and the Court of Claims have been decided.

Erie contends that by reason of the Court's limited jurisdiction it will be deprived of its constitutional and statutory rights unless trial is deferred until after final disposition of the cases now pending in the Tax Court and the Court of Claims. This contention is based upon the following allegations of the petition:

"If the United States obtains a substantial judgment, as sought by it in said cause No. 54 C 1920, and attempts to collect said judgment, which is the sole purpose and object of the action, it will bring about a public sale, in the form of an execution sale, of petitioner's interest in the termination claims against the United States, since these claims constitute the only substantial assets of petitioner available to satisfy such judgment. Very little would be offered for such claims which are so strongly opposed, with the result that petitioner will be stripped of ownership of said claims without any benefit except a small amount of credit against the judgment procured by the ...

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