UNITED STATES EX REL. MARCUS ET AL. v. HESS ET AL.
No. 173
Supreme Court of the United States
January 18, 1943
Argued December 10, 1942.*
317 U.S. 537
At the request of the Court, Solicitor General Fahy filed a brief (on which also were Messrs. Robert L. Stern and Fred E. Strine) on behalf of the United States, as amicus curiae.
MR. JUSTICE BLACK delivered the opinion of the Court.
Respondents, electrical contractors, were employed to work on P. W. A. projects in the Pittsburgh area. Their contracts were made with local governmental units rather than with the United States government, but a substantial portion of their pay came from the United States. Charging the respondents with defrauding the United States through the device of collusive bidding on these projects,1 the petitioner, in the name of the United States and on his own behalf brought this action under § 5438 and §§ 3490-3493 (31 U. S. C. §§ 231-234) of the Revised Statutes.
These sections, now distributed through the statutes, are parts of what was originally the Act of March 2, 1863,
In the instant case, verdict and judgment for $315,000 were rendered against the defendants, of which $203,000 was for double damages and $112,000 was an aggregate of $2,000 sums for 56 violations of § 5438. 41 F. Supp. 197. The Circuit Court of Appeals was of the opinion that the government had been defrauded—a conclusion not challenged here3—but held that the particular fraud was not reached by § 5438. It accordingly reversed. 127 F. 2d 233.
First. The court below, construing § 5438 with “utmost strictness” on the premise that qui tam or informer
We cannot accept either the interpretive approach or the actual decision of the court below. Qui tam suits have been frequently permitted by legislative action,4 and have not been without defense by the courts.5 Moreover, this interpretation of “utmost strictness” narrows
Congress has power to choose this method to protect the government from burdens fraudulently imposed upon it; to nullify the criminal statute because of dislike of the independent informer sections would be to exercise a veto power which is not ours. Sound rules of statutory interpretation exist to discover and not to direct the Congressional will. True, § 5438 is criminal and for that reason in interpreting so much of its language as it shares in common with § 3490 we must give it careful scrutiny lest those be brought within its reach who are not clearly included; but after such scrutiny we must give it the fair meaning of its intendment. Cf. United States v. Raynor, 302 U. S. 540, 552.
We think the conduct of these respondents comes well within the prohibition of the statute, which includes “every person who . . . causes to be presented, for payment . . . any claim upon or against the Government of the United States . . . knowing such claim to be . . . fraudulent.” This can best be seen upon consideration of the exact nature of respondents’ relation to the government. The contracts found to have been induced by the respondents’ frauds were made between them and local municipalities and school districts of Allegheny County, Pennsylvania. A large portion of the money
The government‘s money would never have been placed in the joint fund for payment to respondents had its agents known the bids were collusive. By their conduct, the respondents thus caused the government to pay claims of the local sponsors in order that they might in turn pay respondents under contracts found to have been executed as the result of the fraudulent bidding. This fraud did not spend itself with the execution of the contract. Its taint entered into every swollen estimate which was the basic cause for payment of every dollar paid by the P. W. A. into the joint fund for the benefit of respondents. The initial fraudulent action and every step thereafter taken pressed ever to the ultimate goal—payment
Government money is as truly expended whether by checks drawn directly against the Treasury to the ultimate recipient or by grants in aid to states. While at the time of the passage of the original 1863 Act, federal aid to states consisted primarily of land grants, in subsequent years the state aid program has grown so that in 1941 approximately 10% of all federal money was distributed in this form.6 These funds are as much in need of protection from fraudulent claims as any other federal money,7 and the statute does not make the extent of their safeguard dependent upon the bookkeeping devices used for their distribution. The Senatorial sponsor of this bill broadly asserted that its object was to provide protection against those who would “cheat the United States.”8 The fraud here could not have been any more of an effort to cheat the United States if there had been no state intermediary.
The conclusion that the first clause of § 5438 includes this form of “causing to be presented” a “claim upon or against the government” is strengthened by consideration of the other clauses of the statute. Clause 2 includes those who do the forbidden acts for the purpose of “aiding to obtain” payment of fraudulent claims; Clause 3 covers “any agreement, combination or conspiracy” to defraud the government by “obtaining or aiding to obtain the payment or allowance of any false or fraudulent claim.” These provisions, considered together, indicate a purpose to reach any person who knowingly assisted in causing the government to pay claims which were grounded in fraud,
The situation here is in no sense like that discussed in United States v. Cohn, 270 U. S. 339, 345-347, where the government acted solely as bailee and no person had any claim against it for a payment. The Court in the Cohn case held that there had been no “wrongful obtaining of money . . . of the government‘s,” while there has been such a “wrongful obtaining” here on claims which were presented either directly or indirectly to the government with full knowledge by the claimants of their fraudulent basis.
We conclude that these acts are covered by the statute under consideration.
Second. Previous to the filing of this action these respondents were indicted for defrauding the government and on a plea of nolo contendere were fined $54,000. They and the government, which has filed a brief amicus curiae at our request, assert that the petitioner received his information not by his own investigation, but from the previous indictment; and both argue that §§ 3490-93 should not under such circumstances be construed as permitting suit by the petitioner. The petitioner denies that he relied upon the information contained in the indictment, asserts that he spent money in conducting an investigation of his own, and claims that he presented more evidence than the government had discovered.
Even if, as the government suggests, the petitioner has contributed nothing to the discovery of this crime, he has contributed much to accomplishing one of the purposes for which the Act was passed. The suit results in a net recovery to the government of $150,000, three times as much as the fines imposed in the criminal proceedings; and this recovery was obtained at the risk of a considerable loss to the petitioner since § 3491 explicitly
Neither the language of the statute nor its history lends support to the contention made by respondents and the government. “Suits may be brought and carried on by any person,” says the Act, and there are no words of exception or qualification such as we are asked to find.9 The Senate sponsor of the bill explicitly pointed out that he was not offering a plan aimed solely at rewarding the conspirator who betrays his fellows, but that even a district attorney, who would presumably gain all knowledge of a fraud from his official position, might sue as the informer:
“The bill offers, in short, a reward to the informer who comes into court and betrays his co-conspirator, if he be such; but it is not confined to that class. Even the district attorney, who is required to be vigilant in the prosecution of such cases, may be also the informer, and entitle himself to one half the forfeiture under the qui tam clause, and to one half of the double damages which may be recovered against the persons committing the act.”10
The government presses upon us strong arguments of policy against the statutory plan, but the entire force of these considerations is directed solely at what the government thinks Congress should have done rather than at
Furthermore, one of the chief purposes of the Act, which was itself first passed in war time, was to stimulate action to protect the government against war frauds.12 To that end, prosecuting attorneys were enjoined to be diligent in enforcement of the Act‘s provisions, and large rewards were offered to stimulate actions by private parties should the prosecuting officers be tardy in bringing the suits.
The very fact that Congress passed this statute shows that it concluded that other considerations of policy outweighed those now emphasized by the government; for most of the arguments made here militate against any informer action at all. Had the government filed a suit
Third. As noted above, respondents had previously been indicted and fined for defrauding the government in connection with the same transactions for which they are now being sued. They contend that the present action should be barred because of the “double jeopardy” provision of the Fifth Amendment which provides that no person shall “be subject for the same offense to be twice put in jeopardy of life or limb.” The previous indictment was brought under a general statute dealing with conspiracy to defraud the government,
The application of the double jeopardy clause to particular cases has not been an easy task for the courts. The subject has recently been thoroughly explored in Helvering v. Mitchell, 303 U. S. 391, in which the Court analyzed the cases now pressed upon us and emphasized the line between civil, remedial actions brought primarily to protect the government from financial loss and actions intended to authorize criminal punishment to vindicate
It is enough for present purposes if we conclude that the instant proceedings are remedial and impose a civil sanction. The statutes on which this suit rests make elaborate provision both for a criminal punishment and a civil remedy. Violators of § 5438 may “be imprisoned at hard labor for not less than one nor more than five years, or fined not less than one thousand nor more than five thousand dollars.” We cannot say that the remedy now before us requiring payment of a lump sum and double damages will do more than afford the government complete indemnity for the injuries done it. Helvering v. Mitchell, supra, 401.
It is, of course, well accepted that for one act a person may be liable both to pay damages and to suffer a criminal penalty. Long ago, this Court said, “A man may be compelled to make reparations in damages to the injured party, and be liable also to punishment for a breach of the public peace, in consequence of the same act; and may be said, in common parlance to be twice punished for the same offense.” Moore v. Illinois, 14 How. 13, 19, 20. Congress has “power to give an action for damages to an individual who suffers by breach of the law.” Chattanooga Foundry v. Atlanta, 203 U. S. 390, 396, 397. And it has this same
This remedy does not lose the quality of a civil action because more than the precise amount of so-called actual damage is recovered. As to the double damage provision, it cannot be said that there is any recovery in excess of actual loss for the government, since in the nature of the qui tam action the government‘s half of the double damages is the amount of actual damages proved. But in any case, Congress might have provided here as it did in the anti-trust laws for recovery of “threefold damages . . . sustained and the cost of suit, including a reasonable attorney‘s fee.”
It is argued that the $2,000 “forfeit and pay” provision is “criminal” rather than “civil,” even if the double damage feature is not. The words “forfeit and pay” relate alike to the $2,000 sum and the double damages. The use of the word “forfeit” in conjunction with the word “pay” does not force the conclusion that the provision is criminal. No one doubts that Congress could have accomplished the same result by authorizing “double” or “quadruple” or “punitive” damages or a lump sum payment for attorney‘s fees, or by definition of the elements of “actual damages.” Special consequence cannot be drawn from the use of the word “forfeit.” While this might under other circumstances be an appropriate word to suggest a fine upon the failure to pay which an individual might be imprisoned, no such punishment is provided here upon default in payment. The words “forfeit and pay” are wholly consistent with a civil action for damages. Atchison, T. & S. F. Ry. Co. v. Nichols, 264 U. S. 348, 350-352; cf. Hepner v. United States, 213 U. S. 103, 104-111.
It is true that “Punishment, in a certain and very limited sense, may be the result of the statute before us so far as the wrong-doer is concerned,” but this is not enough to label it as a criminal statute. Brady v. Daly, 175 U. S. 148, 157. We think the chief purpose of the statutes here was to provide for restitution to the government of money taken from it by fraud, and that the device of double damages plus a specific sum was chosen to make
Fourth. Section 3490 requires that the $2,000 forfeit be paid for doing “any” of the acts prohibited by § 5438. Before the District Court, petitioner contended that this sum should be exacted for every form submitted by respondents in the course of their enterprise, while respondents argued that there should be merely one $2,000 sum collected for all the acts done. The District Court concluded that the lump sum in damages should be assessed for each separate P. W. A. project. Petitioner does not object to this decision and we conclude that under the circumstances of this case each project can properly be counted separately. The incidence of the fraud on each additional project is as clearly individualized as is the theft of mail from separate bags in a post office, Ebeling v. Morgan, 237 U. S. 625; and see Blockburger v. United States, 284 U. S. 299. Cf. Gavieres v. United States, 220 U. S. 338, 342. Under respondents’ view the lump sum to be paid would be about $30.00 a project; and we cannot suppose that Congress meant thus to reduce the damages recoverable for respondents’ fraud and thereby allow them to spread the burden progressively thinner over projects each of which individually increased their profit.
We have examined the other contentions of the respondents and approve of the disposition of them by the courts
Reversed.
MR. JUSTICE MURPHY took no part in the consideration or disposition of this case.
MR. JUSTICE FRANKFURTER, concurring:
I agree with the decision of the Court. But it seems to me that the plea of double jeopardy should be rejected on a ground other than that taken by the Court. In all other respects I join in its opinion.
This is a qui tam action under R. S. § 3490 to recover a “forfeiture” and “double the amount of damages which the United States may have sustained” by reason of the same acts of fraud for which the respondents were previously indicted under § 37 of the Criminal Code,
Punitive ends may be pursued in civil proceedings, and, conversely, the criminal process is frequently employed to attain remedial rather than punitive ends. It is for this reason that scienter has not been deemed to be a requirement in some criminal prosecutions. “Many instances of this are to be found in regulatory measures in the exercise of what is called the police power where the emphasis of the statute is evidently upon achievement of some social betterment rather than the punishment of the crimes . . .” United States v. Balint, 258 U. S. 250, 252.
The protection against twice being punished for the same offense should hardly be made to depend upon the necessarily speculative judgment of a court whether a “forfeiture” and “double the amount of damages which the United States may have sustained” constitutes an extra penalty, or merely an indemnity for loss suffered. If that is the issue on which the protection against double jeopardy turns, those who invoke the Constitution, as do the respondents here, ought to be allowed to prove that, as a matter of fact, the forfeiture and the double damages are punitive because they exceed any amount that could reasonably be regarded as the equivalent of compensation for the Government‘s loss. That in civil actions punitive damages are, as a matter of due process, sometimes allowed, see Shevlin-Carpenter Co. v. Minnesota, 218 U. S. 57, 69-70, or that there may be distinct penal and remedial provisions for the same wrong, see O‘Sullivan v. Felix, 233
In my view the proper approach to the problem of double jeopardy in a situation like this, where Congress has imposed two sanctions for misconduct, however one may label them, and has provided for their enforcement in two separate proceedings, is that which was taken by Judge (later Mr. Justice) Blatchford in In re Leszynsky, 16 Blatchf. 9. The short of it is that where two such proceedings merely carry out the remedies which Congress has prescribed in advance for a wrong, they do not twice put a man in jeopardy for the same offense. Congress thereby merely allows the comprehensive penalties which it has imposed to be enforced in separate suits instead of in a single proceeding. By doing this Congress does not impose more than a single punishment. And the double jeopardy clause does not prevent Congress from prescribing such a procedure for the vindication of punitive remedies.
This view commends itself to reason. It is confirmed by history. For legislation of this character, providing two sanctions for the same misconduct, enforceable in separate proceedings, one a conventional criminal prosecution, and the other a forfeiture proceeding or a civil action as upon a debt, was quite common when the Fifth Amendment was framed by Congress. See, e. g., the ma-
If it be suggested that a succession of separate trials for the enforcement of a great number of criminal sanctions, even though set forth in advance in a single statute, might be a form of cruelty or oppression, the answer is that the Constitution itself has guarded against such an attempt “to wear the accused out by a multitude of cases with accumulated trials,” see Palko v. Connecticut, 302 U. S. 319, 328, by prohibiting “cruel and unusual punishments.” Amendment VIII. But short of that which would offend the Eighth Amendment, statutes prescribing cumulative remedies have been commonplaces in the history of federal legislation. The Sherman Law, for example, allows four means of redressing a single offense—criminal prosecution, injunction, seizure of goods, and treble damages. If a qui tam action like the one now before us were to be provided by Congress as a further deterrent against violation of the Sherman Law, it would certainly be commonly regarded as an additional punishment. But the double jeopardy clause would nevertheless not come into play.
It is for these reasons that I think the plea of double jeopardy in this case cannot be sustained.
MR. JUSTICE JACKSON, dissenting:
I am constrained to dissent from the second division of the opinion and from the conclusion it supports.
I cannot deny that on a literal reading the statute says what the Court‘s opinion renders it to say. That being
But that we have in these matters considerable, although ill-defined, freedom is certain. I could not better state my attitude toward the present statute as applied to this case than in the language of the present Chief Justice in United States v. Katz, 271 U. S. 354, 357:
“All laws are to be given a sensible construction; and a literal application of a statute, which would lead to absurd consequences, should be avoided whenever a reasonable application can be given to it, consistent with the legislative purpose.”
Nor was he announcing unorthodox or unconventional doctrine. In American Tobacco Co. v. Werckmeister, 207 U. S. 284, 293, Mr. Justice Day said:
“But in construing a statute we are not always confined to a literal reading, and may consider its object and purpose, the things with which it is dealing, and the condition of affairs which led to its enactment so as to effectuate rather than destroy the spirit and force of the law which the legislature intended to enact.
“It is true, and the plaintiff in error cites authorities to the proposition, that where the words of an act are clear and unambiguous they will control. But while seeking to gain the legislative intent primarily from the language used we must remember the objects and purposes sought to be attained.”1
If ever we are justified in reading a statute, not narrowly as through a keyhole, but in the broad light of the evils it aimed at and the good it hoped for, it is here. The
In this case the Government investigated respondents and on November 3, 1939, indicted them for conspiracy to defraud. On January 5 and February 6, 1940, the de- [post, p. 562] the Government indicted and pleas of nolo contendere, and fines were imposed. While the criminal case was still pending, and on January 25, 1940, petitioner commenced his informer proceeding, the averments in his complaint being substantially a copy of the indictment. It is not shown that he had any original information, that he had added anything by investigations of his own, or that his recovery is based on any fact not disclosed by the Government itself. In the companion case [post, p. 562] the Government indicted and pleas of nolo contendere were entered on January 15, 1940, and two weeks thereafter Ostrager filed his complaint alleging facts substantially identical with those in the indictment, some of the paragraphs being almost verbatim copies. We are informed that these cases have already stimulated a number of other private individuals to intervene with similar action after Government criminal proceedings had disclosed frauds.
Since 1863 this law has been upon the statute books. Never until now has the bar dreamed that it permitted such use. When once it was attempted to commence an informer action under a similar statute after the Government had brought a civil action, this Court promptly limited the statute to preclude that sort of abuse. Francis v. United States, 5 Wall. 338. There was no specific language in the statute to support that court-made limitation, and although I find no specific language in this statute to support another, I should now say that the same limitation exists where the Government has already possessed itself of the facts and disclosed them in criminal proceedings. This is what I think the profession has generally assumed this statute to mean. If the statute has all these eighty years authorized this sort of proceeding, the legal profession of the United States has been strangely unresponsive to a Congressional proffer of windfall income.
We are justified in determining whether we will accept a new interpretation not before sustained in the history of this statute by reference to the condition of our own times rather than to those of former ones. Nothing better illustrates the difference between the conditions of 1863 and the present than the statement quoted by the Court, made by the Senate sponsor of the Informer Act, “Even
But even as to non-officials, to permit the informer to recover when he has not actually informed seems to me an evil result unintended by the Act. The Court‘s interpretation means that the Government cannot institute a criminal action that is not subject to seizure of some interloper who thereby wrests control of its course from the Government itself. As lawyers not without experience in the practicalities of law-enforcement, we know that the trial of a criminal case can be wrecked by pre-trial of the issues on the civil side of the court, particularly if the civil trial is conducted by those not interested in the criminal
Moreover, we know that the assets of men engaged in criminal activities are rarely equal to the discharge of their obligations and in that event by sharing the available assets with an informer, the Government‘s financial recovery is diminished.
Also it has been found necessary to vest in someone the power to compromise claims of the Government, either where they are of doubtful collectibility or where the claim itself is of questionable validity. What becomes of the Attorney General‘s control over litigation in this respect if an informer may be admitted to share in the control of the case and may act in collusion with the guilty party? May he no longer make a compromise of a case that will withstand subsequent attack by an informer?
It must be borne in mind that this is not a case where we are adhering to a construction of a statute which has been continuously applied over its long life. In such event I should not unlikely join with my colleagues. This, however, is the case of a new construction upon an eighty-year-old statute, one so farfetched that no member of the bar has ever before ventured to offer it in any reported case.2
UNITED STATES EX REL. OSTRAGER ET AL. v. NEW ORLEANS CHAPTER, ASSOCIATED GENERAL CONTRACTORS, INC. ET AL.
No. 236
Argued December 10, 11, 1942.—Decided January 18, 1943.
Mr. William Katz, with whom Mr. Burnett Wolfson was on the brief, for petitioners.
Mr. R. Emmett Kerrigan, with whom Mr. Eberhard P. Deutsch was on the brief, for respondents.
At the request of the Court, Solicitor General Fahy filed a brief (on which also were Messrs. Robert L. Stern and Fred E. Strine) on behalf of the United States, as amicus curiae.
MR. JUSTICE BLACK delivered the opinion of the Court.
This action is substantially similar to that in United States ex rel. Marcus v. Hess, ante, p. 537. Relying on §§ 5438 and 3490-93, Revised Statutes, the petitioner charges that the respondents caused the government