501 F. 2d 811 - Daylo v. Administrator of Veterans' Affairs

The Administrator of Veterans' Affairs appeals denial of his motion,1 under Rule 60(b),2 Federal Rules of Civil Procedure, for relief from a final, unappealed judgment in the nature of mandamus3 ordering him to pay certain death compensation benefits to appellee Daylo, the widow of a serviceman killed in World War II. The Administrator grounds his motion on certain veterans' legislation, Section 8(a) and (b) of the Act of August 12, 1970, 38 U.S.C. 211(a) and 3111 (1970),4 enacted after the final judgment became unappealable. If, as the Administrator contends, these provisions aim to upset judgments, like Mrs. Daylo's, which are final, no longer subject to appeal, and concerned with past legal and factual relationships, the provisions are of doubious constitutionality. Wherever such is fairly possible, we must construe congressional enactments so as to preserve them from constitutional doubt. Reading the language of these enactments against their legislative history, we are not persuaded that Congress intended to disturb judgments like Mrs. Daylo's. Accordingly, denial of the Administrator's motion for relief from the judgment was proper, and it is affirmed.

* From 1945 to 1951 the Veterans' Administration (VA) paid widow's benefits to Mrs. Daylo under 38 U.S.C. 321.5 In 1951, however, the Administration notified her that benefits would cease unless she could prove that she had 'not remarried'-- a statutory condition of eligibility.6 This action conformed to the VA's administrative practice of shifting the burden of proof on the remarriage question to any widow-beneficiary living with another man and holding herself out to the community as his wife.7 Mrs. Daylo sought to prove she had not remarried, but the Administrator found otherwise and terminated her benefits.8

In no other circuit but ours would this controversy have found its way into the courts.9 Since 1940 benefits disputes had been subject to a 'no review' statute which, until its amendment in 1970, provided that decisions of the Administrator

on any question of law or fact concerning a claim for benefits or payments under any law administered by the Veterans' Administration shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decision. 38 U.S.C. 211(a) (1964).10 The view developed in this circuit,11 but in no other,12 that the phrase 'claim for benefits or payments' referred not to all benefits disputes but only to those involving initial benefit claims. It was our lonesome opinion that judicial review remained for disputes involving termination of benefits by the VA.

Needless to say, this position brought us a great deal of business. Many of these cases involved the VA's practice, in administering widows' benefits, of shifting the burden of proof on the remarriage question to the beneficiary.13 We were unable to find statutory authority for the practice. See Sinlao v. United States, 106 U.S.App.D.C. 263, 271 F.2d 846 (1959). In 1962 Congress entered the dialogue by amending 38 U.S.C. 101(3) to provide that a 'widow,' to be eligible for benefits, must not have 'lived with another man and held herself out openly to the public to be the wife of such other man.'14 By establishing a hard and fast rule this amendment went beyond the VA's own practice of merely shifting the burden of proof as to ceremonial remarriage. Recognizing this, Congress expressly gave the 1962 amendment prospective effect only. But the Senate Committee reporting out the amendment stated its understanding that the VA could apply its burdenshifting rule to instances of alleged remarriage occurring prior to 1962.15 This understanding, having no statutory force, was not adopted by the courts in this circuit.16

With this background, we may again pick up the thread of Mrs. Daylo's story. In 1969 she brought a mandamus action in the District Court to compel payment of the death compensation benefits denied her since the early 1950's. On May 7, 1970 the court granted partial summary judgment for Mrs. Daylo 'with respect to benefits payable prior to September 19, 1962'17 (i.e., prior to the amendment, mentioned above, of 38 U.S.C. 101(3)). The post-1962 claims were reserved for later decision, but the District Judge made the partial judgment final and appealable under Rule 54(b).18 The judgment required the Administrator to pay Mrs. Daylo her pre-1962 benefits 'within 120 days.' Deliberately, but for reasons not vouchsafed to us, the Government chose not to appeal Mrs. Daylo's judgment.

After the 60-day period for noting appeal had lapsed,19 but still within the '120 days' granted by the District Court to the VA for compliance, Congress passed the Act of August 12, 1970, Pub.L. 91-376, 84 Stat. 787. Armed with this legislation, the Administrator moved under Rule 60(b) for relief from the judgment. Mrs. Daylo resisted the motion, but has not yet invoked court process to force compliance with the judgment. The court agreed to dismiss Mrs. Daylo's pending claims for post-1962 benefits, which decision Mrs. Daylo does not contest, but the court refused to vacate the final judgment involving pre-1962 benefits because it 'was legally entered and no appeal was taken therefrom, and * * * the validity of that judgment is unaffected by the passage of Public Law 91-376.'20

The Administrator contends that Section 8(a) and (b) of the new Act directly conflicts with Mrs. Daylo's judgment in the nature of mandamus.21 Section 8(a) retroactively amended the 'no review' statute, 38 U.S.C. 211(a), to erase the distinction, located by this circuit alone, between initial benefit claims and benefit terminations. The 'no review' provision now reads:

On and after October 17, 1940, except as provided in sections 775, 784, and as to matters arising under chapter 37 of this title, the decisions of the Administrator on any question of law or fact under any law administered by the Veterans' Administration providing benefits for veterans and their dependents or survivors shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decision by an action in the nature of mandamus or otherwise.

Section 8(b) added a new provision, 38 U.S.C. 3111, to ratify the VA's burdenshifting rule with respect to pre-1962 instances of alleged remarriage.

There shall be no payment of dependency and indemnity compensation, death compensation, or death pension which, because of a widow's relationship with another man before enactment of Public Law 87-674, would not have been payable by the Veterans' Administration under the standard for determining remarriage applied by that agency before said enactment.

In the Administrator's view, 38 U.S.C. 211(a) conflicts with Mrs. Daylo's judgment by retroactively withdrawing the jurisdiction of the court which entered the judgment, thus rendering the judgment void. The Administrator finds a second conflict with the judgment by construing 38 U.S.C. 3111 as a legislative command directly contrary to the mandamus incorporated in the judgment. According to the VA, the court's mandate requires exactly that which the statutory provision forbids, i.e., 'payment of * * * death compensation * * * which, because of a widow's relationship with another man before enactment of Public Law 87-674, would not have been payable by the Veterans' Administration under the standard for determining remarriage applied by that agency before said enactment.'

The Administrator's several contentions go an important step further than those considered, and accepted, in de Rodulfa v. United States, 149 U.S.App.D.C. 154, 461 F.2d 1240, cert. denied, 409 U.S. 949, 93 S.Ct. 270, 34 L.Ed.2d 220 (1972). There, judgment had been entered in the District Court against the VA in a benefits dispute, and the VA had appealed only the accompanying award of attorneys' fees, allowing the judgment for the beneficiaries themselves to become final. While the appeal of the fee award was pending here, Congress enacted the amendment to 38 U.S.C. 211(a), and the Administrator urged that the fee award accordingly be vacated on jurisdictional grounds. Recognizing that judgments awaiting decision on appeal are not 'final,' we agreed:

* * * We cannot reconcile the specification in the amended section of a date almost 30 years earlier with any notion that Congress intended these proscriptions to apply only to litigation commenced from the date of amendment forward. We see no purpose to be served by reaching back to the effective date of the older finality statute than to impart to it a meaning Congress felt it should always have had. That objective could be achieved only by intercepting noncontractual claims already in court as well as those that had not arrived, and that is obviously what Congress did. We hold that Section 211(a) in amended form was directed at pending as well as future judicial reviews of the Administrator's determinations on claims for noncontractual benefits.

149 U.S.App.D.C. at 163-164, 461 F.2d at 1249-1250. We took pains to restrict this holding to judgments pending appeal.

We agree that the judgments exclusive of the fee awards-- that is, the portions directing payment of benefits to the widow-claimants-- are beyond the purview of these appeals. Those portions are adjudications by the District Court that became final, because they were not appealed, before the change in Section 211(a) was forthcoming. Nothing we can do on the present appeals can affect them, and nothing we say now is intended to reflect upon them. * * *

149 U.S.App.D.C. at 160, 461 F.2d at 1246. We were also careful to point out the many constitutional 'holdings that a change of law does not retroactively affect a proceeding which has already been terminated by a final judgment prior to the change.' 149 U.S.App.D.C. at 166, 461 F.2d at 1252.

If, as the Administrator asserts, Sections 211(a) and 3111 aim to upset final judgments no longer subject to appeal, we are confronted with a serious constitutional dilemma. The applicable general rule is of long standing:

* * * It is not within the power of a legislature to take away rights which have been once vested by a judgment. Legislation may act on subsequent proceedings, may abate actions pending, but when those actions have passed into judgment the power of the legislature to disturb the rights created thereby ceases. * * *

McCullough v. Virginia, 172 U.S. 102, 123-124, 19 S.Ct. 134, 142, 43 L.Ed. 382 (1898). A contrary general rule would subject all judicial action to superior legislative review, a regime obviously inconsistent with due process of law and subversive of the constitutional independence of the judicial branch of government. We recognize that there are exceptional circumstances where final judgments may be upset or altered by subsequent legislation, but we have great difficulty fitting Mrs. Daylo's judgment within the established exceptions to the general rule.

In the seminal case, State of Pennsylvania v. Wheeling & Belmont Bridge Co. (Wheeling Bridge Case), 59 U.S. (18 How.) 421, 15 L.Ed. 435 (1855), the Supreme Court held that Congress could retroactively legalize a bridge, built over an interstate waterway, despite a prior judicial decree ordering that the bridge be raised or removed to permit passage of shipping. The decree had been won by a private party alleging that this obstruction of commerce caused him special damage for which there existed no adequate remedy at law. The Court, in vacating the decree, accepted 'as a general proposition, * * * especially as it respects adjudication upon the private rights of parties,' that legislation 'cannot have the effect and operation to annul the judgment of the court already rendered, or the rights determined thereby in favor of the plaintiff.' Id. at 431. But the Court distinguished the case before it 'so far as it respects that portion of the decree directing the abatement of the bridge.' Id. The judgment was vulnerable to retroactive legislation only to the extent that the remedy chosen-- an injunctive decree rather than damages at law-- directly affected public rights.22 Accordingly, the award of costs to the plaintiff which had accompanied the decree was left undisturbed by the Court. Id. at 436. This emphasis upon remedies chosen was reaffirmed in The Clinton Bridge, 77 U.S. (10 Wall.) 454, 19 L.Ed. 969 (1870), which held that an enactment validating the legality of a bridge required dismissal of a pending suit in equity to have the bridge removed but might not similarly require dismissal of a pending suit at law for damages occasioned by the bridge.

In Hodges v. Snyder, 261 U.S. 600, 43 S.Ct. 435, 67 L.Ed. 819 (1923), it was held that legislation could validate consolidation of a school district despite a prior decree enjoining the consolidation:

(A) suit brought for the enforcement of a public right * * * even after it has been established by the judgment of the court, may be annulled by subsequent legislation and should not be thereafter enforced; although, in so far as a private right has been incidentally established by such judgment, as for special damages to the plaintiff or for his costs, it may not be thus taken away.

Id. at 603-604, 43 S.Ct. at 436. In System Federation v. Wright, 364 U.S. 642, 81 S.Ct. 368, 5 L.Ed.2d 349 (1961), the Court held that amendment of the Railway Labor Act required modification of a consent decree, entered under the original Act, which had permanently enjoined a labor union arrangement expressly legalized by the amendment.

There is * * * no dispute but that a sound judicial discretion may call for the modification of the terms of an injunctive decree if the circumstances, whether of law or fact, obtaining at the time of its issuance have changed, or new ones have since arisen. * * *Id. at 647, 81 S.Ct. at 371. See Milk Wagon Drivers Union of Chicago, Local 753 v. Meadowmoor Dairies, Inc., 312 U.S. 287, 298, 61 S.Ct. 552, 85 L.Ed. 836 (1941), and United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932). Finally, in McGrath v. Potash, 91 U.S.App.D.C. 94, 199 F.2d 166 (1952), there was at issue the continuing validity of a final decree requiring that certain private litigants not be deported except by procedures set out in the Administrative Procedure Act. Subsequent to entry of the injunctive decree, Congress had expressly exempted deportation proceedings from that Act. We vacated the decree, 'the statutory basis for the injunction having been removed by Congress.' 91 U.S.App.D.C. at 96, 199 F.2d at 167.

Mrs. Daylo's judgment, like those upset by legislation in these earlier cases, had a prospective effect in that the Administrator was given '120 days' in which to comply. But this crude resemblance can hardly be considered dispositive. An award of damages at law, which all authorities agree is immune from legislative alteration, is also 'prospective' to the extent that compliance by the judgment debtor may be less than instantaneous. Like an action for damages, a mandamus action sounds in law, not equity, and when the mandate calls merely for payment of a past obligation, it can be distinguished from a conventional money judgment only on the most formal of grounds. No case has yet held that a judgment is vulnerable to legislative annullment merely because the judgment had not yet been complied with when the legislation was enacted. Rather, such vulnerability would seem to depend on the character of the compliance called for. Thus, in Wheeling Bridge Case, supra, The Clinton Bridge, supra, Hodges v. Snyder, supra, and System Federation v. Wright, supra, the judicial decrees at issue called for actions which would have directly affected the rights of many persons not privy to the judgments, i.e., would have trenched upon 'public rights.' In McGrath v. Potash, supra, the decree was addressed only to the parties to the litigation but it did purport to freeze their legal relations for the indefinite future: The immigration authorities were required to use a complex set of procedures in any future attempt to deport the plaintiffs. What appears to unite these cases is that the injunctive decrees at issue were 'legislative' in function, attempting to control the legal status of a variety of future actions which the parties, or others, might or might not wish to take.

The distinction is between restraints that give protection to rights fully accrued upon facts so nearly permanent as to be substantially impervious to change, and those that involve the supervision of changing conduct or conditions and are thus provisional and tentative.

United States v. Swift & Co., supra, 286 U.S. at 114, 52 S.Ct. at 462. The mandamus issued in the present case does not serve 'legislative' functions. No more than would a money judgment does this mandamus speak to the VA's future relations with Mrs. Daylo, or with any other claimant, concerning as yet undecided benefits disputes. Nor is the mandamus directed at Mrs. Daylo's right to future benefits and thus at facts and conditions 'provisional and tentative' in nature. The mandamus was issued entirely on the basis of events long since concluded. Like that of a money judgment, the force of the mandamus is self-terminating upon a single act of compliance; the VA is not bedevilled here by continuing judicial supervision or a 'permanent' decree.

In sum, to hold that Congress could annul Mrs. Daylo's judgment would be to enlarge substantially the exception carved by applicable precedent in the general, constitutional rule that rights vested in final judgments, no longer subject to appeal, are immune from legislative alteration. Thus, were we to accept the VA's construction of 38 U.S.C. 211(a) and 3111, serious doubts would arise as to the constitutionality of those provisions. Where there exist 'serious questions concerning the constitutionality' of legislation, 'it is a cardinal principle' that the courts 'will first ascertain whether a construction of the statute is fairly possible by which the (constitutional) question(s) may be avoided.' Johnson v. Robison, 415 U.S. 361, 367, 94 S.Ct. 1160, 1165, 39 L.Ed.2d 389 (1974), quoting United States v. Thirty-seven Photographs, 402 U.S. 363, 369, 91 S.Ct. 1400, 28 L.Ed.2d 822 (1971). See also Lynch v. Overholser, 369 U.S. 705, 710-711, 82 S.Ct. 1063, 8 L.Ed.2d 211 (1962); International Assn of Machinists v. Street, 367 U.S. 740, 749-750, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961); Flemming v. Nestor, 363 U.S. 603, 617, 80 S.Ct. 1367, 4 L.Ed.2d 1435 (1960). Furthermore, where a statute lies in the shadow of constitutional doubt, its proper construction will usually require an exploration of legislative history.

When one interpretation of a statute would create a substantial doubt as to the statute's constitutional validity, the courts will avoid that interpretation absent a 'clear statement' of a contrary legislative intent.

United States v. Thompson, 147 U.S.App.D.C. 1, 5, 452 F.2d 1333, 1337 (1971), cert. denied, 405 U.S. 998, 92 S.Ct. 1251, 31 L.Ed.2d 467 (1972).

We consider first 38 U.S.C. 211(a), the amended 'no review' statute. The Administrator locates an intent to annul final judgments in the fact that Congress made the amendment retroactive to October 17, 1940, the date of enactment of the first 'no review' statute. This is not an untenable argument, but it overlooks another possible explanation for the retroactivity language. Congress might well have thought that, absent such language, the amendment would be judicially construed to apply only prospectively, with no effect on pending suits and judgments not yet final at the time of enactment. The Supreme Court has long held that 'retroactivity, even where permissible, is not favored, except upon the clearest mandate.' Claridge Apartments Co. v. Comm'r of Internal Revenue, 323 U.S. 141, 164, 65 S.Ct. 172, 185, 89 L.Ed. 139 (1944). For this reason, our conclusion in de Rodulfa v. United States, supra, that 38 U.S.C. 211(a) applies to pending as well as new cases relied very heavily on the retroactivity language in the provision, 149 U.S.App.D.C. at 161, 163-164, 461 F.2d at 1247, 1249-1250. It might be objected that Congress would not have stretched retroactivity back 30 years if the only purpose were to intercept pending cases and nonfinal judgments. But this argument overlooks the fact that many of the suits pending in the courts when the provision was debated dealt with benefits owing for years 'as early as the 1940's.'23

Indeed, we think the 30-year reach of the retroactivity language militates rather strongly against the view that the language aimed to nullify final judgments no longer subject to appeal. It would be an extraordinary gesture for Congress to obliterate judgments rendered over a 30-year period and thereby empower the VA to sue for return of all moneys paid out on those old judgments. At oral argument the VA informed us that it has decided not to bring suit against judgments already paid, presumably because such a course would be an affront to both common sense and fair play. But the VA's formal interpretation of 38 U.S.C. 211(a) imputes to Congress an intent to authorize just such a course. Nowhere in the legislative history of the provision can we find any reference to such an intent; certainly there is no 'clear statement' of it.

The retroactive amendment of 38 U.S.C. 211(a) had its origin in a proposal, supported by the VA, to redefine the term 'claim' in all of Title 38 of the Code;24 the redefinition was to make clear that the term covered benefit terminations as well as initial benefits claims. The VA urged that the redefinition be made retroactive to October 17, 1970:

* * * From an examination of the legislative history of Public Law 866, 76th Congress (which enacted the first 'no review' statute on October 17, 1940), it seems quite clear that the Congress intended the exemption from judicial review therein enacted to be all-inclusive and did not contemplate the construction adopted in the Wellman, Thompson, and Tracy decisions (of the D.C. Circuir). Since the pending bill would, if enacted, remove all doubt as to the intended scope of the existing finality provisions, the Veterans' Administration strongly endorses the bill's enactment.

While we cannot furnish any precise estimate of the savings to be effected through the enactment of H.R. 17564, a study by the Veterans' Administration of the first 32 judgments adverse to the Administrator, has shown that accrued and estimated future payments in those cases alone will total in excess of.$1.4 million. As heretofore noted, nearly all of these judgments involved application of the presumption of * * * remarriage rule.25

We think there is a clear distinction between an intent to 'remove all doubt as to the intended scope of the existing finality provisions' and an intent to upset final, unappealable judgments entered-- perhaps years earlier-- under those provisions. The quoted statement does of course mention '32 judgments adverse to the Administrator,' but there is no clear statement that these would be overturned by the proposed amendment or, indeed, that these judgments were, at the time, final and no longer subject to appeal. Elsewhere in its statement, the VA focused on cases then moving through the courts (i.e., pending cases) and on the possibility of 'millions' of new cases in the future.26

The House Committee decided to amend 38 U.S.C. 211(a) directly, and retroactively, rather than to redefine 'claim' retroactively for all of Title 38.27 In defending its proposed amendment, the Committee retraced the story of this circuit's aberrant reading of the former 38 U.S.C. 211(a) and expressed alarm that 'suits in constantly increasing numbers have been filed in the U.S. District Court for the District of Columbia by plaintiffs seeking a resumption of terminated benefits.'28 These general comments give no indication that the proposed amendment was to upset final judgments no longer subject to appeal. On this issue the Committee's specific remarks directed at the proposed amendment are at best ambiguous:

It seems to this committee that it is quite clear that the Congress, in enacting the exemption from judicial review in Public Law 866, 76th Congress, intended that exemption to be all inclusive and did not intend the fairly tortured construction adopted by the court of appeals in the Wellman, Thompson, and Tracy holdings. * * *

In view of the foregoing, this committee has included in H.R. 17958, a new subsection 8(a) which restates the provisions of subsection 211(a) of title 38, United States Code, to eliminate the word 'claim' from that subsection. * * * The provision is specifically made effective October 17, 1940, the date of enactment of Public Law 866, 76th Congress. The committee believes that this approach to solving the problem is preferable to that employed in H.R. 17564, i.e., adding a definition of the word 'claim' to title 38, United States Code. The restated section 211(a) will make it perfectly clear that the Congress intends to exclude from judicial review all determinations with respect to noncontractual benefits provided for veterans and their dependents and survivors.

As noted above, a large percentage of the suits filed to date have involved the presumption of remarriage rule. A study of the first 32 judgments adverse to the Administrator of Veterans' Affairs has shown that accrued and estimated future payments in those cases alone will total in excess of.$1.4 million. It is therefore appearent that the enactment of these provisions will result in substantial savings to the Government.29

It is arguable that the final paragraph implies an intent to upset the 'first 32 judgments,' but the ambiguities remain: Conceivably the Committee cited those judgments simply as a portent of future losses should the amendment not be enacted; and even if those judgments were a target of the amendment, it is not clear that the Committee thought them final and unappealable. The simple fact is that the Committee did not focus its attention on whether final judgments, no longer subject to appeal, should be upset. Rather, the Committee's conscious and stated objective was merely to 'make it perfectly clear that the Congress intends to exclude from judicial review all determinations with respect to noncontractual benefits.'30 This objective can of course be met without providing renewed judicial review to reopen judgments already final.

Congress adopted the Committee's proposed amendment of Section 211(a) with a minimum of floor debate. The scattered remarks directed at the amendment were entirely general in character and indicated no awareness or intent that the amendment would come into conflict with final judgments no longer subject to appeal.31

We turn next to the new section, 38 U.S.C. 3111, which provides that 'there shall be no payment of * * * death compensation' when such 'would not have been payable' under the VA's pre-1962 'standard for determining remarriage.' The House Committee's explanation of this provision is very brief.

The committee has also added subsection 8(b) to H.R. 17958. This language, which stems from H.R. 7624, 91st Congress, will expressly ratify the application of the Veterans' Administration administrative presumption of remarriage rule with respect to all pre-1962 cases. This action is deemed necessary because the judiciary has ignored the Congressional endorsement, in 1962, of that administrative practice.32

The question is whether the provision's no-payment command to the VA was meant by Congress to apply even where the payment is mandated by a final judgment no longer subject to appeal. The language of the provision does not say so; nor does the legislative history so indicate, the floor debates adding nothing to the House Committee's explanation of the provision's purpose.33 Certainly we cannot hold that 38 U.S.C. 3111 applies to final judgments merely because no express exemption for such judgments is carved into the provision. Such an exemption is rarely if ever contained in new legislation. The exemption is to be assumed unless the legislature speaks clearly to the contrary. Congress has not done so in this case.

We conclude that 38 U.S.C. 211(a) and 3111 do not conflict with the validity and force of final judgments, like Mrs. Daylo's, which were no longer subject to appeal on the effective date of those statutory provisions, which adjudicated only past events, and which required merely a payment of benefits past due at the time of judgment.34 It is conceivable that Congress intended such judgments to fall. But, if so, the intent was nowhere clearly expressed. In view of the serious constitutional problems which such an intent would raise, we are unwilling to impute it to Congress on the basis of ambiguous and fragmentary evidence. As passage of the two statutory provisions had no effect on the validity and force of Mrs. Daylo's judgment, the Administrator's motion under Rule 60(b) was properly denied.

Affirmed.