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denying judicial review of administrative action. The law on this question cannot be stated with much confidence. The Government almost never seeks to move against individual interests while attempting to block judicial review. Occasionally it does so, almost fortuitously, in cases involving relatively minor interests; such is the case with recovery of overpayments of veterans' benefits. In these cases courts do not give much attention to the enormously complex issues of principle involved.80 While this may not be a very serious failure, a greater awareness of the problem, even if it is unlikely to produce definitive answers to the questions involved, supports a reading of section 211(a) which avoids constitutional doubts.

that

Relatively settled, though frequently attacked,1o is the proposition

[t]he United States is not, by the creation of claims. against itself, bound to provide a remedy in the courts. It may withhold all remedy or it may provide an administrative remedy and make it exclusive, however mistaken its exercise."1 The basis of this doctrine is highly theoretical.42 It seems to lie partly in the notion that where Government performs functions, the nature and

39 The §211(a) cases which considered the constitutional issue, see, e.g., United States v. Lawrence, 154 F. Supp. 454 (D. Mont. 1957); United States v. Owens, 147 F. Supp. 309 (E.D. Ark. 1957); Hormel v. United States, 123 F. Supp. 806 (S.D.N.Y. 1954), have tended to treat it in fairly general terms. The most thorough discussion is in Owens, which argues that barring review of government claims would open the door to administrative arbitrariness and discrimination, that allowing the Government to be the judge of its own case would "be repugnant to fundamental notions of fair play," and that the statute should be construed to avoid constitutional "doubts."

40 See, e.g., F. Davis, Veterans' Benefits, Judicial Review, and the Constitutional Problems of "Positive" Government, 39 ÍND. L.J. 183 (1964); cf. Reich, The New Property, 73 YALE L.J. 733 (1964); Van Alstyne, The Demise of the Right-Privilege Distinction in Constitutional Law, 81 HARV. L. REV. 1439 (1968).

41 Dismuke v. United States, 297 U.S. 167, 171-72 (1936).

42 It is frequently pointed out that it does not correspond very closely with real life. During the hearings on the proposed amendment to the no-review provision in 1952, Representative Rogers stated:

I cannot get my thinking to the place where if a man goes into the defense of this country and gets a leg shot off or gets some disease or some injury, that the Government is giving him anything, because he gave up quite a bit. As a matter of fact, the consideration that he is paid from what I think would ripen into a right is more than is present in most contract situations. 1952 Hearings 1986.

In discussing the kindred notion that administrative remedies in the dispensing of benefits presumptively exclude judicial review, Professor Jaffe states:

The notion of "privilege" is in this context a perversion of thought and of language. Pensions and annuities are created under a system of law, usually for service given or other sufficient reason; they are paid out of the tax funds to which all individuals including the claimants have contributed. As Government takes over more and more services and amenities, and to finance them takes a larger and larger part of the citizen's dollar, it is both absurd and dangerous to look upon these services as "privileges." It is precisely in a field such as this, in which vast numbers of the citizenry are deeply affected in their daily life, that the rule of law is most pertinent. Though it may be appropriate in certain situations to exclude judicial review, it is not sound to infer exclusion on the basis that the claim is a "privilege." JAFFE, supra note 37, at 369.

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[Vol.118:288

manner of which are not constitutionally compelled, and especially where such functions consist of giving out what is thought to be in the nature of charity, it may provide for their execution in whatever way it chooses.43 Similarly the recipient of benefits is not thought to have a claim on the attention of the courts which reaches constitutional dimensions. Nothing is being taken from him; he is not being made to do anything. He is simply complaining to the court that the Government will not give him "bounty."

Whatever the merits of this theory, its applicability is open to question in the case of a statute barring judicial review of a Government claim for recovery of overpayments. United States v. Rhode, one of the cases upholding the application of section 211(a) to the recovery of overpayments by the Government, states that "[v]ested rights are not involved in this case. The record deals with overpayment of a veteran's benefit. Such benefits are gratuities."" The suggestion apparently is that the status of the veteran's claim to amounts in his possession corresponding to those already received as benefits is no different than that of his claim to receive benefits in the future: the Veterans' Administration can dispose of either without judicial review. This poses the question whether the government claim is to be seen merely as a kind of accounting adjustment or as a cause of action for the recovery of money. The Government is authorized by statute to recover overpayments by charging them against funds in its possession which it would otherwise pay out; it is therefore not immediately compelled to go to court. It may be argued that since it could proceed without a court, there should be no requirement of judicial review of the merits when, for some reason, it chooses to seek a judgment. But the fact that the Government does proceed by seeking a judgment from a court must itself make a difference. If the notions of due process and of the nature of the judicial function mean anything, they must require a court to examine questions of law, including the question of the substantiality of the evidence underlying the judgment it is being asked to give, where no other court has yet done so.15

45

Furthermore, where the Government does proceed by self-help, as in DiSilvestro, it is not clear that judicial review is not required. Professor Hart puts the question but never really answers it." The

43 Van Alstyne, supra note 40, at 1442 n.11.

44189 F. Supp. 842, 844 (D.S.D. 1960).

45 See Hart, The Power of Congress to Limit the Jurisdiction of Federal Courts: An Exercise in Dialectic, 66 HARV. L. Rev. 1362, 1375-79 (1953); cf. JAFFE, supra note 37, at 384:

We can then conclude that, when a person is the object of an administrative order which will be enforced by a writ levying upon his property or person, he is at some point entitled to a judicial test of legality.

40

Suppose Congress authorizes a program of direct action by Government officials against private persons or private property. Suppose, further, that it not only dispenses with iudicial enforcement but either limits the jurisdiction

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interest of the injured individual is the same, regardless of whether the Government sucs him or withholds other funds and compels him to sue it. But where the individual is suing the Government, he must overcome the obstacle presented by the doctrine of sovereign immunity."7 The usual form of such litigation is a suit for National Service Life Insurance dividends, which is specifically authorized by statute.18 Section 211(a) may be read as an exception to such authorization. Since the suit is clearly a suit for money against the United States, it falls in the area where the much criticized doctrine of sovereign immunity is still thought to have the most vitality. But to deny judicial review would be to rely on the power of Congress to regulate the jurisdiction of the federal courts, and on the doctrine of sovereign immunity, to reach a result which courts should properly take pains to avoid: it would establish the constitutional power of the Government, at least in some circumstances, to deprive an individual of vested rights without judicial process. The technique of statutory construction is readily available to avoid such a holding, and it should be used.50

49

CONCLUSION

The proper construction of section 211(a) is one which permits judicial review of government claims of prior erroneous payment. This raises the question whether a judicial decision favorable to the veteran should also bind the Veterans' Administration concerning prospective payments to the veteran. If DiSilvestro had established that the record did not contain substantial evidence that the relevant records were not

of the federal courts to inquire into what the officials do or denies it altogether.

Hart, supra note 45, at 1387.

Professor Hart goes on to suggest that the answer is that the court should examine the Government's action on the merits, and if it is invalid to declare the jurisdictional limitation invalid and proceed under its general grant of jurisdiction. Id. But this argument does not face the problems raised by the situation in which the individual's complaint is one that will only be satisfied by the payment of money by the Government, and in which the doctrine of sovereign immunity may therefore be applicable. 47 See generally JAFFE, supra note 37, at 197-231; Carrow, Sovereign Immunity in Administrative Law-a New Diagnosis, 9 J. PUB. L. 1 (1960).

48 38 U.S.C. § 784 (1964).

49 E.g., Dugan v. Rank, 372 U.S. 609 (1963). But see Carrow, supra note 47, at 13-17.

50 Cf. Lynch v. United States, 292 U.S. 571 (1934). The beneficiaries of government insurance policies sued for amounts due thereunder. The Economy Act of 1933 had repealed all acts pertaining to the insurance policies involved. The question was whether the beneficiaries had thus been deprived of property without due process of law, although reference was also made to the fifth amendment prohibition on taking property without just compensation. The Court held that the policies were contracts creating vested rights. It distinguished between the rights and the remedy. While the Government could withdraw its consent to be sued without (in a constitutional sense) impairing the rights involved, the Court held that Congress intended to abrogate the right rather than to withdraw the remedy, and it therefore held for the beneficiaries. The curious reasoning is a good example of the reluctance of courts to ascribe to Congress an intent to use the doctrine of sovereign immunity to make ineffective what would otherwise be constitutional rights. Hart supra note 45. at 1371.

INDIANA LAW JOURNAL

Volume 39

WINTER 1964

No. 2

VETERANS' BENEFITS, JUDICIAL REVIEW, AND THE CONSTITUTIONAL PROBLEMS OF "POSITIVE" GOVERNMENT FREDERICK DAVIST

If a chartered commercial bank refused to honor a depositor's check because of an illegality in some collateral transaction, or because of the low state of the depositor's morals, legal redress for the victim would be swift and sure. Similarly, a resolution by corporate directors limiting dividend distributions to shareholders who are willing to execute loyalty affidavits might not be expected to survive a representative suit brought by those aggrieved. Yet, at least in the theoretical sense, a veteran can currently be denied benefits solely on grounds almost as irrelevant and arbitrary as those hypothesized above.

This anomalous gap in the celebrated "American system of justice" has received scant attention from either courts or commentators, although it cries for reform. Moreover, even a casual review of the judicial and legislative attitude towards benefits claimants suggests that such attitudes are shaped more by moralistic reservations concerning the desirability of such programs in the first place than they are by allegiance to the concept of "equal justice under law."

The absence of a substantial body of law dealing with benefits claims in American administrative law is contrary to the experience of such con

† Professor of Law, Emory University.

1. The characterization of a tradition which refuses to approve of administrative illegality, however manifested, as the "American system of justice" is eloquently set forth in an old California decision: "[U]nder the American system of justice it is the policy of our law that a person should not even be deprived of a permit . . . without a fair and impartial hearing. ." Irvine v. State Bd. of Equalization, 40 Cal. App.

2d 280, 104 P.2d 847, 850 (1940).

2. The following cases hold that even if the action of the Veterans' Administration (hereinafter referred to as V.A.) is arbitrary and capricious, no relief is available under the "no-review" clause. 38 U.S.C. § 211(a) (1958). Sinlao v. United States, 271 F.2d 846 (D.C. Cir. 1959); Hahn v. Gray, 203 F.2d 625 (D.C. Cir. 1953): Van Horne v. Hines, 122 F.2d (D.C. Cir. 1941). See also Letter From Mr. G. H. Hyde, Chief, Benefits and Facilities Section of the V.A. Regional Center at St. Paul, Minn., to Martin Weeks, of Vermillion, S. D., April 6, 1961, in connection with the claim of Mr. Kenneth Steinmasel (see discussion in notes 63-79 infra and accompanying text): "I regret that Congress in writing the law provided no escape for this office from the decision made here."

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tinental European countries as France." In fact, it may be suggested that in France, and on the Continent generally, administrative law tends to reflect a genuine concern for justice in the administration of social benefit and welfare programs. In the United States, on the other hand, the primary concern has been with the regulation of business excesses, while preserving a maximum entrepreneural freedom, and the establishment of limitations on the discretion exercised in the allocation of resources. One result is that in the United States few attorneys and even fewer law students have ever been confronted with the unique legal problms presented by benefits claimants. Similarly, despite the widely heralded advent of the welfare state in Britain, administrative law problems in that country. have centered mainly upon property control and occupational licensing, and, as might be expected, British courts have approached the "benefits" or "status" problems with comparable artlessness."

The differing weights given these benefits interests under the various systems of administrative law account in large measure for the difficulties which beset the comparative scholar and may help to explain Dicey's naïve remark that the common-law system has no "droit administrative." They also reflect the pervasiveness of the "Protestant ethic,"

3. In France, the administrative tribunals and the Council of State, as the appellate body, have jurisdiction to remedy every official abuse of discretion, and are therefore more concerned with such individual rights as pension payments and job security. See Deak & Rheinstein, The Machinery of Law Administration in France and Germany, 84 U. PA. L. REV. 846, 858-61 (1936); Letourneur & Hamson, Executive Powers in France, 11 CAMB. L.J. 258 (1952).

4. E.g., Ribeyrolles, Conseil d'Etat, Jan. 17, 1930, [1930] Section du contenticux R. 76 (revocation of educational benefits reversed); Goujon, Conscil d'Etat, May 5, 1928, R. 576 (failure to extend required increase in pension payments). Both cases have been translated and reproduced in VON MEHREN, THE CIVIL LAW SYSTEM 283, 291 (1957). See also PEKELIS, LAW AND SOCIAL ACTION 83-87 (1950); Gormley, The Significant Role of French Administrative Jurisprudence, 8 S.D.L. REV. 32 (1963). 5. Three of the most widely celebrated British administrative law cases concern housing and real property. Franklin v. Minister of Town & Country Planning, [1948] A.C. 87; Rex v. Minister of Health (Ex parte Yaffe), [1931] A.C. 494; Local Gov't Bd. v. Arlidge [1915] A.C. 120.

6. E.g., Regina v. Metropolitan Police Comm'r (Ex parte Parker), [1953] 2 All E. R. 717 (Q.B.); Nakkuda Ali v. Jayaratne, [1951] A.C. 66; General Medical Council v. Spackman, [1943] A.C. 627. See also Frederick Davis, Must a Licensing Authority Act Judicially?, 32 N.Z.L.J. 360 (1956), 18 N.Z.J. PUB. An. 45 (1956).

7. E.g., Ex parte Fry, [1954] 1 Weekly L. R. 730 (no judicial review of "disciplinary" action); Healy v. Minister of Health, [1955] 1 Q.B. 221 (C.A. 1954) (no review of pension status); Rex v. Northumberland Compensation Appeal Tribunal (Ex parte Shaw), [1952] 1 K.B. 338 (C.A. 1951) (review by certiorari to correct error of law not on the record approved, but court's reasons for departing from traditional views are tortured and unconvincing); Rex v. Inspector of Leman St. Police Station (Ex parte Venicoff), [1920] 3 K.B. (deportation order unreviewable).

8. "In England, and in . . . the United States . . . the system of administrative law and the very principles on which it rests are in truth unknown." DICEY, LAW OF THE CONSTITUTION 330 (9th ed. 1939).

9. In the context used here, the "Protestant ethic" identifies that ascetic char