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818T CONGRESS) HOUSE OF REPRESENTATIVES 1st Session

SOUTHERN FIREPROOFING CO.

JULY 7, 1949.-Committed to the Committee of the Whole House and ordered

to be printed

Mr. KEATING, from the Committee on the Judiciary, submitted the

following

REPORT

(To accompany H. R. 627)

The Committee on the Judiciary, to whom was referred the bill (H. R. 627) for the relief of Southern Fireproofing Co., having considered the same, report favorably thereon with amendments and recommend that the bill do pass.

The amendments are as follows: Page 1, line 5, strike out "$32,935.52" and insert in lieu thereof '$27,019.39".

At the end of the bill add: : Provided, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000.

The purpose of the proposed legislation is to pay the sum of $27,019.39 to Jacob Lichter and Jennie L. Lichter, partners doing bussiness as Southern Fireproofing Co., of Cincinnati, Ohio, in full settlement of all claims against the United States under certain negotiation agreements between them and the Secretary of War (now the Secretary of the Army).

STATEMENT OF FACTS On October 20, 1944, the Under Secretary of War issued a unilateral order determining that Jacob Lichter and Jennie L. Lichter, partners doing business as Southern Fireproofing Co., Cincinnati, Ohio, with respect to certain subcontracts of the firm, had realized excessive profits of $70,000 during the calendar year 1942, less a tax credit of

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at Government expense, the undersigned, Lacey C. Zapf, respectfully petitions the reimbursement of travel and other allowable expenses incurred by him in returning his dependent daughter to Washington, D. C., for permanent residence.

Attached is an itemized statement of transportation and other expenses incident to the travel of Mrs. Betty Zapf Prudden from Sydney, Australia, to her home in Washington, D. C.

LACEY C. ZAPF,

Foreign Service Officer, Class II. Subscribed and sworn to this 8th day of January 1942 before me, a notary public in and for the District of Columbia. (SEAL)

M. LENORE FLINT, Notary Public, My commission expires February 1, 1944.

.

STATEMENT OF TRANSPORTATION AND OTHER EXPENSES INCIDENT TO THE TRAVEL

OF MRS. BETTY ZAPF PRUDDEN FROM SYDNEY, AUSTRALIA, TO WASHINGTON,

D. C., UNITED STATES OF AMERICA
February 2, 1940: Sydney, Australia, Oceanic Steamship Co., S. S.

Monterey, 1 first-class minimum fare of £103 15s. Od., less 15 percent
diplomatic concession £88 3s. 9d. (£88 3s. 9d. converted at $3.28,

the on-demand buying rate Sydney on New York on Feb. 2, 1940) --- $289. 24 Transfer of heavy baggage from residence to boat, 12 shillings (at rate indicated above)-

1. 96 Taxi from residence to boat 5 shillings (converted at rate indicated above).

82 Sailed at 11 a. m., from Sydney, Australia, on S. S. Monterey, rent of 1 steamer rug on voyage.

1. 50 February 19, 1940:

Arrived Wilmington, Calif., 9 a. m., transfer of baggage, boat to train...

6. 00 Taxi, boat to train..

4. 50 Rail transportation, Los Angeles to Washington, D. C.

85. 89 Pullman, Los Angeles to Washington, D. C., depart Los Angeles via Southern Pacific, 8:15 p. m.--

21. 55 Feb. 22, 1940: Arrive Chicago 8:30 a. m., transfer of baggage.-

3. 00 Depart Chicago, via Pennsylvania R. R., 3:20 p. m. Feb. 23, 1940:

Arrive Washington, D. C., 9:40 a. m., transfer baggage, train to residence

3. 00 Taxi, station to residence...

1. 60 Per diem:

Feb. 2, 1940, from Sydney at 11 a. m., to arrival in Wilmington,

Calif., at 9 a. m., Feb. 19, 1940-On board ship, 18 days, at $2.50. 45. 00 Feb. 19, 1940, from Wilmington, Calif., at 9 a. m., to arrival in

Washington, D. C., at 9:40 a. m., Feb. 23, 1940, 442 days, at $5.- 22. 50

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SOUTHERN FIREPROOFING CO.

JULY 7, 1949.-Committed to the Committee of the Whole House and ordered

to be printed

Mr. Keating, from the Committee on the Judiciary, submitted the

following

REPORT

[To accompany H. R. 627)

The Committee on the Judiciary, to whom was referred the bill (H. R. 627) for the relief of Southern Fireproofing Co., having considered the same, report favorably thereon with amendments and recommend that the bill do pass.

The amendments are as follows:

Page 1, line 5, strike out “$32,935.52” and insert in lieu thereof $'$27,019.39".

At the end of the bill add: : Provided, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000.

The purpose of the proposed legislation is to pay the sum of $27,019.39 to Jacob Lichter and Jennie L. Lichter, partners doing bussiness as Southern Fireproofing Co., of Cincinnati, Ohio, in full settlement of all claims against the United States under certain negotiation agreements between them and the Secretary of War (now the Secretary of the Army).

STATEMENT OF FACTS

On October 20, 1944, the Under Secretary of War issued a unilateral order determining that Jacob Lichter and Jennie L. Lichter, partners doing business as Southern Fireproofing Co., Cincinnati, Ohio, with respect to certain subcontracts of the firm, had realized excessive profits of $70,000 during the calendar year 1942, less a tax credit of $42,980.61, or the sum of $27,019.39. Payment was not made in accordance with the order.

On May 9, 1945, suit was filed by the Government in the United States District Court for the Southern District of Ohio, naming these partners as defendants, to collect the amount said to be under the foregoing unilateral order. On June 26, 1945, an answer was filed by the partners which stated that no excessive profits were realized on said subcontracts, and also that the said subcontracts were exempt from renegotiation by virtue of the terms of the Renegotiation Act itself.

The case came' on for hearing soon thereafter upon motions for summary judgment and for judgment on the pleadings filed by the Government. No evidence was presented at the trial. The court held that the subcontracts involved, and out of which the sums said to be due the Government arose, were awarded to the partners as a result of competitive bidding under a prime contract with a department of the Government for the construction of buildings and facilities; that the contracts were exempt from renegotiation by the terms of the Renegotiation Act itself (sec. 403 (i) 1 and 701 (d)); but that nevertheless the court had no power to give any relief because the Tax Court had exclusive jurisdiction to make all such determinations; and that, accordingly, it would hear no evidence on the issues raised in the answer of the partners.

The defendants, that is Jacob Lichter and Jennie L. Lichter, as such partners. then appealed to the United States circuit court of appeals, and maintained, among other things, (1) that under the original renegotiation legislation (Revenue Act of 1942 which contained the original Renegotiation Act) the validity of any defense to an order of an administrative official relating to renegotiation could be decided and determined in the several disrict courts of the United States; that the Revenue Act of 1943 (act of February 24, 1944) first inserted the Tax Court provision, and did not abrogate the preexisting remedy in the district court as to 1942 business; and that accordingly the district court had jurisdiction to hear the entire matter; (2) that, for the reason that the district court had found that the subcontracts involved were awarded as a result of competitive bidding under a prime contract with a department of the Government for the construction of buildings and facilities, the contracts were exempt under the Revenue Act of 1943.

On February 12, 1947, the matter was argued and submitted to the United States Circuit Court of Appeals for the Sixth Circuit. On March 10, 1947. the court affirmed the judgment of the district court.

On May 27, 1947, defendants, that is Jacob Lichter and Jennie L. Lichter, as such partners, filed a petition for writ of certiorari to the United States Supreme Court. On June 16, 1947, the writ of certiorari was granted. The matter came on for argument in the Supreme Court of the United tates in November of 1947, and was decided on June 14, 1948.

The Supreme Court affirmed the lower courts, holding (1) that the Tax Court had exclusive jurisdiction, or, in other words, that no matter what might be the defense to the unilateral order, defendants had no right to be heard thereon in the district court; (2) that even if the subcontracts involved were exempt by reason of the fact that they were awarded as a result of competitive bidding under a prime

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