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A federal judge Monday dismissed a $5 million damage...

LOS ANGELES -- A federal judge Monday dismissed a $5 million damage suit brought by 13 former Iranian hostages against the governments of Iran and the United States stemming from their 444 days of captivity in Tehran.

District Court Judge William Gray, upholding former President Carter's agreement with Iran last January that freed the hostages, granted a motion by the U.S. government to dismiss the case.

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James Davis, the attorney for the hostages, said he would appeal.

'We face this as the first step in our journey,' he said.

The hostages contended the $12.50 per day they received was not sufficient and their action challenged the executive agreement between former President Carter and the Islamic Republic which set them free.

'The agreement was within the executive authority of his (Carter's),' the judge said. 'It may not have been wise, but he wanted to get them (the hostages) home.'

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As reporters gathered outside the courthouse to question Davis and the hostages, a spokesman for a group calling itself the Mass Proletarian War Crimes Tribunal of U.S. Imperalism attempted to read a statement accusing the hostages of 'war crimes.'

A court guard attempted to stop the man and a scuffled started, with both men wrestling on the ground. The fight ended after less than a minute and Davis allowed the spokesman to continue reading what he called what he called a 'subpoena' before the attorney answered more questions from reporters.

The hostages dispersed during the scuffle and managed to avoid the reporters.

The initial part of the plaintiffs' case, argued Monday, was to see if they would be permitted to sue the governments of Iran and the United States for $5 million damages.

Davis said before the hearing consitutional issues were involved in the case, 'McKeel, et al vs. the Islamic Republic of Iran and the United States of America.'

Davis filed the original suit last Feburary on behalf of John D. McKeel Jr., and now represents a dozen other hostages who have since joined the action.

The attorney said he would present the argument 'that an individual has the right to bring action against a sovereign state.'

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The issues were whether the hostages had a case against Iran at the time of their imprisonment, whether the presidential agreement with Iran is valid as to the hostages, and whether there was a taking of valuable property rights.

The U.S. Supreme Court ruled in July, he said, that a settlement in the commercial cases filed after the takeover in Iran was valid, but it did not rule on the hostages.

Most of the 13 hostages were with Davis when he entered the court Monday.

The president doesn't have the power to overrule the Fifth Amendment of the Constitution providing that 'no persons shall be ... deprived of life, liberty or property without due process of law,' Davis said.

The hostages taking part in the action, besides McKeel, were Billy Gallegoos, Charles Wesley Scott, William B. Royer Jr., Donald A. Sharer, Leland Holland, David Roeder, Regis Ragan, Paul Needham, Duane Gillette, Alan B. Golacinski, Malcolm Kalp and Charles Jones Jr.

Scott's wife, Elizabeth, has also joined in the action.

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