Petitioners Reply Brief — United States Ex Rel. Marcus v. Hess

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. No. 173°

- ~ SUPREME ‘COURT ‘OF THE UNITED STATES

__ OCTOBER TERM, 1942 -

——— M4

UNITED STATES OF AM ERICA, Ex Rev. MORRIS L.

MARCUS, asp MORRES [2 MARCUS os His Owx

DeEIALE,

Petitiones 7.

WILLIAM F. HESS ET AL. °

“PETITION FOR A OWKIT OF CERTIORARI TO THE UNITED

PTLES CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT ;

REPLY BRIEF FOR PETITIONER.

—

Homer CumMings,

Cusk.es J. Mango, -

5 “i .

Counsel for Petitioners.

7°

-_@.

@ s

INDEX.

(b) Statutory construction .

. (ce) Application of statute... eee wes

(d) The 1-23 estimates of each’ contractor

were fraudulett claims .

and their non-collusion certificates

contained false and fraudulent ‘en-

tries and were made for the purpose

of aiding to obtain the approval and

» payment of the claims of the munici-

palities against the United States _

were fraudulent claims against the

United States within the meaning of

Pe IS ce

Conclusion

Cases: ; Crrations.

—2439

. *

OL LE CE ELLE LOL TE NE DNA TE hi it tie pais ae

| (e) Both the I-23 claims of the contractors

— (f) The requisitions of the municipalities‘

Page

PD Pwwe- n°

Duignan v. U. S., 274 U. 8. 195.:.......... rae oa

Edgington v. United States, 164 U.S. 361... ... i

- Ex parte Shaffenburg, Fed: Cas. No. 12,696, p..

RES 655 ea ea eee sei ew ri

Evans v. United States, 11 F.2d 37............ 12 .

Farmers’, etc. Nat. Bank v. Dearing, 9}. U. S. 29,

FRE sre ig oat tak MAA OE A

First State Sav. Bank v. Dihe, 250 Mich. 525 7

Guaranty Trust Co. v. Henwood, 307 U. S. 247,

{IP na che pk cae beer baues k eiteens 6 nee, 2

Helvering v. Devie, 301 U. 8. 619, eee 2

Helvering v. Mitchell, 303 U.S. 391,401... ... _ 4,13

Hills Sav. Bank v. Cress, 205 Iowa 306 rt 7

Jamestown Iron € Metal Co. v. Knofsky, 291 Pa.

EE Fee EES | PE OEOe Pe ee

' Krauss Bros. Co. v. Melion, 276 U.S. 386. . .

Mandel'v. Cooper Corp., 42 F: Supp. 317... ... 6

Mercur Corp. Ss = 3 2. en a

Miller v. Robertson, 266 U.S. 243, 248.... 4

Olson v. Mellon, 4 F. Supp. 947... .. BME es “ 5

Stewart v. Nahn, 11 Wall. 493,504............. "4

_ Stockwell v. U. S.,13 Wall. 531....-.......... 14

Sunshine Anthracite Coal Co. v. Akins, 310 ,

A he, 2 oS a ee eee 2

United States v. Bowman, 260 U. S. __ See 4

INDEX

coe

United States v. Carolene Products Co.,

iM SS Re

- United States v. Coggin, 43 Fed. 492... 2s

Usited States v. Downey, 257 Fed. 366. ..._.. 12

United States v. Griswold, 24 Fed. 361, 366. he

ite United States v. Hull, 14 Fed. 324. i Lace nee ae.

United States-v. Raynor, 302 U.S. 540, 552. "OR

Texts:

-§ Restatement, Contracts, Sec. 476, com. a.. 6

3 Restatement,-Torts: —

ies)

wie , tm - | :

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 142 |

' + UNITED STATES OF AMERICA, Ex Ret. MORRIS L.

_MARCUS, axv MORRIS L. MARCUS 1x His Own

‘ oo Benacr, ae tee =

| Petitioners,

- v8. 7

WILLIAM F. HESS ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

_ STATES CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.

REPLY BRIEF FOR PETITIONER.

Without attempting to treat categorically of all points

_ Yaised in the Brief in Opposition—since many are obviously

without merit or are irrelevant—this reply is filed in answer ©

to certain of respondents’ contentions, : |

1. Respondents have shown no authority to- speak for

the Solicitor General.—The suggestion (Br. In Opp. 1-2)

that the Government does not want a certiorari is for

the Goverument.té make. Up to now the Solicitor General

has not found it ‘necessary to rely on others fo present his

' views to this Court. In view of his freedom in that respect

(Rule 7(a)), we know of no reason which should now impel

~ the Court to accept unauthorized representations of others -

on his behalf. os

- 2. The laws of Congress ‘swadctioks establish public

policy.—The contention that qui fam suits are opposed to _

‘public policy or that the views of the Department of Justice

‘or of the courts are properly to control or in any way limit

the plain enactment of the Congress (Br. in-Opp., pp. 2, 6)

of course cannot be entertained here in view of the reiterated

statements by ‘this Court -that the policy or wisdom of

Federal legislation and its, appropriateness as a' remedy |

for the evils which it seeks to eliminate are matters for __

Congress alone to-determine. They are not matters with

which the courts. are concerned. Helvering v. Davis, 3()1 .

U. S. 619, 640; Cincinnali Soap Co.-v. United States, 301 °°

U..S. 308, 324; United States v.-Carolene ‘Products Co.,

304 U. S. 144, 154; Guaranty Trust Co. v. Henwood, 307

U.S. 247, 259; Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381, 394. |

Indeed, R. S; Sec. 5438, ‘red together with t e informer 2 ae

sections, has long been recognized as a ‘‘usefal and neces- .

sary statute’ (Ex parte Shaffenburg, Fed. Cas. No. 12,696

‘at p. 1146). The soundness of the policy of the statute

was recognized in United States v, Griswold, 24 Fed. 361,

366:

The statute is a remedial one. Iti is intended to protect

the tressury againststhe hungry and unscrupulous host

that encompasses it on every side, and should be con- ©

» strued acvordingly. It was passed upon the theory, |

based on experience as old as modern civilization, that

one of the least expensive and most effective means of

preventing frauds on the treasury is to make the per-

petrators of them liable to actions by private persons

acting, if you panes, under the’ strong stimulus : of

/ | a

: :

——«— . " cctnimng tilaceee el . a a Se ee it eS a ee On

- ‘ emcee . -

_personal ill will “or the hope of gain. Prosecutions ————————

~ conducted .by such means compare with the ordinary

inethods as the enterprising privateer does'‘to the-slow-

going public vessel. co

There can be no denial that there presently exist the same -

reasons which were the occasion for the original passage of |

R. S. see. 5438. Reports of Congressional investigating

committees attest the actuality of the evil and public

recognition of the necessity of immediate steps for its sup-

pression. . Clearly, it is not for respondents to argue that

the propriety of enforcement of existing law is, to be

weighed against other alleged counter-balancing considera-

tions, And, as this Court has held; ‘neither is it for the

. courts. Congress has spoken. Short of constitutional .

inhibitions, it is neither for the judiciary nor the executive.

to emasculate this law.either by construction or arbitrary.

refusal to give effect to all its provisions. ;

3. The evidence plainly established a cause of action

under R. S. sec. 5438.—Under Point II in their brief Re-

—spondents advance a number of other contentions equally

fallacious or inapplicable. |

(a) Public policy.-The asserted rule that ‘‘informers

are tiot favored’’ has no application here. In the first

place, no construction of an informer statute is involved.

The decision below was-the result of a refusal to give any

effect to the plain provisions of a statute (R. S. sec. 5438)

which makes: no, reference whatsoever to qui tam proceed-

ings. Manifestly,.the séction cannot be arbitrarily con-’

strued to mean one thing: when the United States sues

- Under it and to mean something else when anotiier brings

suit under it in behalf of the United States. :

(b) Statutory construction.—The rule suggested by re- —

' Spondents (Tr. in Opp.; p. 7), that penal statutes are to

pas

ifs

an = ———

~ be: strictly construed, has — been disavowed by ‘this

ean In United States v. nance 260 U. S. 94, it was

held (p. 102): ibs aad 7

‘*Penal provisions like all others aré ie be fairly

construed acterding to the legislative intent as ex-

pressed in the enactment.’’ They are not to be strained _

either way. : ;

More recendly’ ‘it was ; held (Wnited States v. Raynor, 302

U, ‘§. 540, 552):

No rule of eoustrection, however, requires that a

penal statute be strained ' and distorted in order to

-exclude conduct clearly intended to be within its scope

—nor does any rule require that the act. be given the

‘‘narrowest meaning.’’ It is sufficient if the words are /

given their fair meaning in accord with the evident

intent of Congress. — essays .

- This Court recognizes that ‘statutes, such as this, to safe-

guard the fisc and to reimburse the government for the

heavy expense of. investigation plus the loss from the fraud

are clearly remedial in character. Helvering v. Mitchell,

303 'U. S. 391, 401. As: such, of course, they should be

liberally construed to achieve their. purpose. Stewart v.

Kahn. 11 Wall. 493, 504; Farmers’, etc., Nat. Bank vy: Dear-,

ing, 91 U.S. 29, 35; Miller v. Robertson, 266 U. S. 243, 248:

In the instant case, petitioner asks no more thari that. _

the action of .the court below in arbitrarily nullifying the

second and third clauses of the statute be corrected. 7

_-+ contention, successfully made in the court below, that R. 8.

IV.

sec. 5438: applies only where the defendant, either alone

or acting jointly with others, has ‘‘made or. presented’’ a

false claim against the United States ‘‘based upon the |

Government’s own liability to the claimant’’ (Br. in opp.,

pp. 7- sis nsofar j as this broad statement embraces more

ie fee

than the first clause of the-statute, it is obviously captious —

in view of the plain language of -the law. - Edgington v..

United States, 164 U. S. 361, 362-363. -That the defendant

need not be thé person who makes or presents the claim is

apparent from the plain language of the first clause of the .

section: -

Every person who inakes or causes to be made, or

- presents or causes to be presented, for payment or

‘ approval * * -* 7 eae

* any claim “ws ig

and of the second clause:

or who, for the purpose of ‘obtaining or aiding to obtain

the payment or approval of such claim ° *,° (Em-

~ phasis supplied.) ; pee

The exact contention of respondents was early made and -

overruled in United States y. Hull, 14 Fed. 324. The court

there said. (p. 326):

_The -use_of—thistanguage clearly implies that the .

statute is intended to cover a case where an attorney,

_ agent, officer, or other person undertakes to get a

claim which is false and fraudulent allowed in his

own behalf or in behalf. of any other party; otherwise

the language ‘‘aiding to obtain’? would have no mean:

ing whatever. pate cant: ae ae aa

The cases cited -by respondent are manifestly inapposite |

. On this point-and the language quoted from them, read in

context, make it clear that the courts in both the Mercur _

Corp: case (83 F.2d 178) and Olson v. Mellon (4 F- Supp.

947) were dealing with situations in which no ‘“claim”’ had

‘been made by anyone. ayer fare

With the basic premise falls the entire argument (Br.

oe Opp. 7-15) upon which the respondents have principally .

relied—the loophole that they made ‘no claim directly

against the United States, oee Sie in Sa Sa

- While it might well be argued, contrary to respondciis’

contention (Br. in Opp., p. 13), that under principles. of

; axensy one of these inulin had there been no f bie

- and had he been unpaid, might have recovered against: the

‘ f

United States on principles of agency for a disclosed prin-

cipal, it is unnecessary to discuss that question since this

is not a contract action. based upon privity, but is in tort —

for deceit.

(d) “F *he 1-23 estimates of cach contractor were f raudulent

claims.—Under the: heading ‘‘No falsity in any’ claim”

(Br.4n Opp. 15), respondents make their basic argument

that ‘‘there was no falsification or fraud ‘ii anything

which occurred after the contracts: were executed.’’ It.

seems plain that, in reason, a wrongdoer may not thus:

insulate:the demands by which he obtains the fruits, of

- his fraud from the initial misrepresentations by which he

obtained: the contract on which the demands are based.

-In the first place, in Mandel v. Cooper Corp,, 42 F. Supp.

317, cited by respondent, it is specifically noted that the

instant cake is distinguishable on its facts. The court in

that case was at some pains to point out that (p. 318) “a

clearly appears from the- affidavits of the defendants that

the defendants made no express representations that the —

prior. bids were not the result of any agreement aniong

bidders.’’

In the case at bar such representations were plainly :

made. The distinction is all important. It is plain that —

fraud and misrepresentation may induce not merely the

fdrmation of a contract but also some performance under

t. 2 Restatement, Contracts, sec. 476, com. a.” Here, even

Fs if it be assumed that the contract itself was a. genuine *

contract fixing the amounts which could subsequently be

claimed by reapondents on their periodic. estimates, it is

nevertheless clear’ that—because the. original contract had

been obtained - ‘by. fraud involving an: affirmative repre-

sentation—the periodic claims based on such contract were |

; 2 ‘

Poe Lite ; > &

‘also fraudulent claims within the meaning of the statute.

\v nited States v. Coggin, 3 Fed. 492, 495. Certainly this

is true. where, as here, the fraud in inducing the contract .

was accompanied by affirmative statements and at the time

each periodic claim for payment was made the contractor

_ remained silent knowing that the municipality and the

approving Government officer were relying i in part on that

original affirmative representation of non-collusion. | Each,

denland of the contractor in his Form I-23 estimate, par-

ticularly in the silence of the. contractor, amounted to a

continuing representation accompanying each claim of the

Form I-23 monthly periodical estimates (See Petition, pp.

- 89). Hills Sav. Bank v. Cress, 205 Iowa 306; First State’.

Sav. Bank vy .Dake, 250 Mich: 525; Brown v. Lobdell F. &

~ €o., 51 TH. App. 574. It follows that each claim, itself in-_

volving this continuing fraudulent representation, was

‘fraudulent in character within. the ee of clause ‘1 of

R. S. sec. 5438. * | :

‘The a rale is set forth in 3 Restatement, Torts,

~ One who ial with another in a business trans-

action or induces another to deal with a third person

knowing that the other is relyitig upon the maker’s

misrepresentation previously made to induce the other

to act in another and earlier transaction is subject ‘to

the same liability as though the maker had repeated

the. representation for the purpose of influencing the

- - reeipient’s conduct i in the later transaction. | ate

(é) Both the 1-23 claims of the contractors and their -

nos-collusion certificates contained false and fraudulent .

entries and were made for the purpose of diding to obtain

the approval and payment of the claims of the municipali- -

tres against the United States. —The respondents would

here limit. petitioners to the single question of whether

a case was proved under the fitst clause of R. 8. sec. 5438 |

(Br. in Opp. pp. 17-18).

But petitioner in his complaint relied on all of the first

three clauses of. the statute, alle ing conspiracy under the

‘third clause and use of false “fraudulent certificates

under the second clause (R. 14) and those issues were sub-

mitted to the jury (R. 133-134, 137-138). The respondents,

in overturning the judgment of the district court, obtained

the ruling of the circuit court of appeals that:

The statutory language here important EO re-

covery only where the defendants presented a “claim

upon or against the government of the United States

or any department or officer thereof’’.

; Daiwa v: United States, 274 U. S. 195, 20, cited by re-

spondent, merely held: Ses

_ It is. only in exceptional cases coming here from the

_ federal courts that questions not pressed or passed

upon below. ‘are reviewed.

na Sunce the record biwe shows: that the circuit court of. ap-

peals in reversing the trial court’s judgment necessarily

_ aid specifically held that the language of the second and

third clauses was to be disregarded, it clearly passed upon

_ the question. of the effect of the second and ‘third clauses

of the statute as a matter of law.' Therefore, the error

of that court on that question, properly specified as error

(Pet. 11- 12), i is clearly here for review.

Recognizing that the: judgment of the district court may

be sustained under.the second clause of the Statute. = inet

a eee

‘It may be noted that the court clearly dig not pass ¢ on the question of

the sufficiency of the evidence to sustain the verdiet under the second and

third clauses. of the statute. It was. without power to do so, for no such

point was stated in ‘the “Points to Be. Raised on Appeal” (R. 399) and

. much of tue evidence was omitted in the Designation of Record on Appeal

(R. 392-395). ae ae Co. v. Mellon, 276 U. 8, 386, 390.

(1) the Form J-23 monthly estimates or claims of the,

contractors were false er fraudulent or (2) if the certificates

of non-collusion were for fhe purpose of aiding to obtain |

_. the.payment of claim against the United States, the re- -

‘Spondents attack both grounds (Brief in ‘Opp. pp. 18-22) .

as follows: Tem a iad

(1) It is contended that the periodic estimates contained

no “fraudulent or fictitious entry’’. . Respondents : point

' to Ex. 245, R. 202-207, as showing no such entries. Exan-

ination of that exhibit ‘shows that it states as ‘‘true and .

correct statement of the contract account’? certain amounts

* gleged to have been ‘‘earned’’. And it contains the fur-

ther statement that (R. 205): © -

All work has been perforri. and materials supplied

in full accordance ‘wjth the terms and conditions of

the’ corresponding & construction contract ‘documents.

But made| part of each: such contract was the invitation

_ for bids atid the bid proposal including certificate of non-

collusion (R. 217, 225-296). The certificate of non-cotlusion

was thus obviously part of the contract documents.

It seems plain that, where. the contract documents in-

cluded the certificate of non-collusion and whére as a direct

result of breach of the certificate of non-co]lusion the rates

at which work was ‘charged were higher than they would

otherwise haVé-been, the statement in each I-23 estimate

_ that work had been performed ‘‘in full accord with the

terms arid conditions of the contract documents’’ could not

be other than false and fraudulent and was necessarily a

Part of the continuing fraud. | .

(2) Respondents assert (Br. in Opp. 19-20) that there

is absolutely no evidence. that the certificates of non-col-

> lusion were included in the Government audit or that they

Were relied upon by the administrative officers of the Govy-

* “40

-ernment in acting upon the municipalities ’ requisitions of

. federalfunds. The Regulations of the Federal Emergency

- Administrator. of Public Works provided that the reyui-

sitions of the municipalities (that is,- thee ‘claims which

| respondents purposed to aid in obtaining), should -be for.

‘warded to: the Executive Officer at Washington, where they

“ will -be subjected to a final review and to a’check against

all of the. pertinent project records”? {44 C, F. R. 230.24,

- see Pet. App’x. pp..30-31). “As pointed out in the Petition’

{p. 21, mote) respondents: are charged with knowledge of

‘this regulation. ‘The form of finance agreement used in

all-cases specifically prov ided that five copies of all exe-

ented contract doeuments be furnished to the PWA before ‘

any work was done thereunder 4{R. 165). -It could not be _

seriously thought: or contended that these . construction

' contracts, qoost of which embodied the “certificate of non-

collusion of ‘the contractor, would be other than highly

pertinent in determini g the propriety of payments to

the municipalities on their intermediate and final’ requi-.

‘sitions. to cover the’ cost of construction.

~ Clearly beside the point +8 respondents’ further argu-

" ment (Br. in Opp., p. 21) that the’ suspension of payme:t

instanced by petitioner (Pet., p. 10) would have been made

in any event. It is obvious that, regardles of the ultimate

effeet in a particular case, these false ce ificates must be

-tegarded as manifesting a purpose on the part of respond- |

-’. ents that they should-have their obvious consequence, '. ¢.,

‘aiding to obtain the payment or. ‘approval of the claim of

* the municipality against the United States.

We ’ The requisitions of the mesiicipelities were » fraudu-

lent claims against the United States within the meaning of

the statute. —Respondents make'the further argument that -.

thé claims or requisitions filed by the municipalities with

the United States were‘not ‘fraudulent claims’’ within the

ten \ .

nO ‘ ny er Ok EO en TOR OO eho Sa ty sas ia idailintiiintinsitinatintiaen cee mat PARROTS IL, BAPE a.

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meaning of the statute because each was in strict\accord. |

. :with the pre-existing Finance Agreement of each niunici- —

~ pality with the United States (Br. in Opp., p. 22). Ines-

"sence, this merely amounts to saying that the municipality

‘was innocent of any fraudulent intent. . ;

But it is established that a defendant who makes a fraudu- »

lent representation to another intending or expecting that

it will be exhibited or repeated to a third party for the pur-

pose of deceiving him is liable in tort to the person so de-

"ceived. David v. Louisville Trust Co., 181 Fed. 10, 14-15:

_., Jamestown Iron & Metal Co: v. Knofsky, 291 Pa. 60. In

_ the Restatement, Torts, Voi. 3, Sec. 533, the rule is stated :

a“

_ Thé maker of a fraudulent misrepresentation in a

business transaction is subject to Hability to another

who acts in justifiable reliance upon it if the misrep-

‘ resentation, although not made directly to the other, is:

made to a third person for the purpose of having him

' Tepeat its terms or communicate its substance to the

other in order to influence his conduct in a particular

transaction or type of transaction. (ta

Comment a. Inducing action between third ‘persons.

The rule stated in this Section is applicable not only

_ where.the maker’s purpose is to influence by its repe--

tition the conduct of another-in a transaction with the

Maker but also where his purpose is to influence the

' other’s conduct in a transaction with a third person.

Respondents, in effect, contend that the fraudulent repre-

.Sentations made by them in their Form 1-23 claims and in

their certificates of: non-collnsion, forming part of the

' ‘Supporting fact basis upon-which the demands of the munic-

_ Ipalities were paid by the United States, were nevertheless

‘$0 far insulated by the interposition of the municipality

as to prevent the claim of the municipality from, being

@ fraudulent claim against the United States within ‘the ee

~ Meaning of the second clause of R. S., Sec. 5438, Drky ‘

a i ae

ghee

‘

ee Oy

“ee

lent statement’’ (Br. in Opp., p. 22).

Tlris contention ignores the realities of the situation and

the plain intent of the law. As here, claims against the

Government invariably and necessarily consist of state-

ments of fact in connection with demands for payment;

and it would be a perversion of language to say that the

fraudulent 1-23 estimates which support the alemands of

the municipalities and the fraudulent non-collusion certifi-

cates which with them formed part of the basis upon which

_ those demands were paid by the United States do not con-

_ stitute the demands of the municipalities agfalse claim

_11-F.. (2d) 37, 39. The character of the claims of, the 2

° municipalities—that is to say, whether true, genuine, and !

honest, or false, fictitious and fraudulent—must be deter-

mined in view of all of the facts and circumstances: attend-

ing them. Dimmick v. United States, 116 Fed. 825, 828; ef.

Unite! States v. Downey, 257 Fed. 366, 368. The fraudulent ,

‘representations of the respondents, as they come to the

Tnited States in support of and to some degree.as part of

the mynicipalities’ demands, are still actively fraudulent. |

Moreover, to construe the second clause of the statute as

covering these facts is merely to read it as adopting the

_ principles recognized at common law.?

It is, therefore, submitted ‘that, within, the fair teed

the United States were fraudulent claims so far as these de-

fendants are concerned. ‘ae

2In 3 Restatement, Torts, a 533, com. d, with respect to representa-

tions to rating — it is pointed out: -

- The dente ape ses ting company does not communicate the figures

of the misrepresentations is immaterial. It *

parang ‘eae substance is summarized with reasonable accuracy

or, that the. rating given expresses the effect of the misstatements —_

. found this contention- on, the assertion that the claims of .

‘the municipalities ‘‘éentained no false; fictitious or fraudu-

. .

eel e tar innocence tee, Senshi nite mnt en

‘ -

; 13

£ (g) The United Statés has a statutory cause of action.—

It is also contended (Br. in Opp., p. 23) that the right of ac-

‘ tign here is confined to the local municipalities, because a .—

donor has no cause of action against a third party who de- -

frauds a donee. The simple answer is that, even if the

contractual relationship could be regarded as creating

merely a donor-donee relationship, which we deny, this was

not a comipleted gift and it is well-established that even

under common law principles the action of deceit for fraud

is not based on contractual relation and privity of the

\\ parties is not essential. Furthermore, since the cause of

_ action here is purely statutory, the sole question is whether |

the facts bring the case within its operation.

4. Imposition of a civil penalty after conviction does not

constitute double jeopardy.—The contention that respond-

- ents are being punished twice is without merit. In Hel- |

tering v. Mitchell, 303 U. S. 391, this Court overruled a

_ Similar contention based on a prior acquittal of a criminal

charge of wilful attempt to evade. or def at the inconie .

tax. Upholding a civil action, under section 293(b) of

the 1928 Revenue Act, to recover a 50 pen cent penalty

because of a deficiency due to fraud with in +to-evade

the tax, the Court said: |

That acquittal on a criminal charge is not a bar to:

a civil action by the Goverament, remedial in its nature,

arising out of the same facts on which the criminal

proceeding was based has long been settled. - (P. 397.)

Congress may impose both a criminal and a civil

‘Sanction in respect to the same act or omission: for

. the. double jeopardy clause prohibits merely punish-

hig twice, or attempting a second time to punish crimi- |

‘ mally, for the same offense. (P. 399.)

Remedial: sanctions may be of varying types * * °*

Forfeiture of goods or their value and the payment

of fixed or. variable sums of money are other sanctions

Which have been recognized as enforceable by civil

uy.

_aennuanen Yn

‘ .

ate cena annmeas gama:

proceedings. * * * In spite of ‘their comparative

‘severity, such sanctions have been upheld against —

the contention that they are essentially criminal and

subject to the procedural rules governing criminal

_ prosecutions., (Pp. 399-400.)

The remedial character of sanctions imposing addi-

tions to a tax has been made clear by this Court in‘

passing upon similar legislation. They are. provided

primarily as.a safeguard for the protection of the

revenue and to reimburse the Government for the

heavy ‘expense of investigation and the loss resulting

from the taxpayer’s fraud. In Stockwell vy. United

States, 13° Wall. 531, 547, 551, the Court said of a —

provision which added double the value of the goods:

~—"4«]t must therefore be-considered as remedial, as pro-

viding indemnity for loss. And it is not the less so

because the liability of the wrongdoer is measure: by

double the value of the goods received, concealed or

. purchased, instead, of their single value.’’ (P. 401.)

That Congress provided a distinctly civil proce-

dure for the collection of the additional 50 per centum

indicates clearly that it intended a civil, not a criminal

sanction. (P. 402.)

”

That ix tho situation in the instant proceeding. | (on-

gress provided for two separate proceedings for the of-

fenses alleged in the complaint. The one was. purely a

criminal sanction providing: fine _and imprisonment, and

the othér was a civil sanction providing for the recovery

of damages, and forfeiture.

5. Consent of Cétiimissioner ‘or Ahinieg’ General ts un-

necessary.—The final point made by respondents, that this.

suit requited the consent or authorization of.the Commii-

sioner of Internal Revenue.and the Attorney General is

clearly without merit as is amply shown in the epinion of

_ the circuit court of appeals, and it. is unnecessary to add

to the’ complete answer there made (R. 479-483).

—— a a i i

* °

a CONCLUSION.

This cause involves the naked legal question of the

liability of parties to the United States for ‘fraudulent acts

in connection with public contracts. Few subjects of the |

law are presently more “portant, and this: subject is.

destined to become of eve greater importance in the future.

Not only is the subject «! importance as a matter of law;

but it is one of importa: ze in connection with publie policy.

generally and as an incident to national. defense. In these

'. construction—such as that indulged ‘by the court below—

. which emasculates a statute under circumstances and at a

time when that very statute is intended to be applicable

to the full. It is therefore respectfully submitted that the

writ of certiorari should issue as prayed in the petition.

' Homer Cumminas,

Caries J, Maratorrs,

SS Spo ‘Counsel for Petitioner.

Sepfember 1942.

(2489)

Fr ey ern rae 1 ng ho 8 es

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