United States of America v. Oberlin Carter No 551 Oberlin Carter v. United States of America No 552 Ex parte In the Matter of the United States, Petitioner. No 10, Original. , and 10, Original

Decision Date18 April 1910
Docket Number552,Nos. 551,s. 551
Citation19 Ann. Cas. 594,30 S.Ct. 515,217 U.S. 286,54 L.Ed. 769
PartiesUNITED STATES OF AMERICA, Appt., v. OBERLIN M. CARTER et al. NO 551. OBERLIN M. CARTER et al., Appts., v. UNITED STATES OF AMERICA. NO 552. EX PARTE: IN THE MATTER OF THE UNITED STATES, Petitioner. NO 10, Original. , and 10, Original
CourtU.S. Supreme Court

Messrs. Marion Erwin and Edwin W. Sims for the United States.

[Argument of Counsel from pages 287-293 intentionally omitted] Messrs. Joseph B. Foraker, Horace G. Stone, John B. Daish, and William W. Gurley for Carter et al.

Solicitor General Bowers and Mr. Marion Erwin for petition for writ of prohibition.

Mr. John B. Daish opposed.

[Argument of Counsel from pages 293-297 intentionally omitted] Mr. Justice Lurton delivered the opinion of the court:

This is a bill which seeks to compel the defendant Oberlin M. Carter, late a captain in the Army of the United States, to account for illicit gains, gratuities, and profits received by him through collusion with contractors for river and harbor improvements in the Savannah, Georgia, improvement district, and to follow such illicit profits into securities and other property held for him by other defendants to the suit.

In substance, the bill charges that under an appropriation made by Congress for the improvement of the harbor of Savannah, certain contracts were entered into with John F. Gaynor and Benjamin D. Greene, doing business either in their joint names, or the name of one of them, or as the Atlantic Contracting Company. That these contracts were made in pursuance of plans and specifications prepared and let out under biddings conducted by the defendant Oberlin M. Carter, then an engineer officer assigned as local engineer of the improvements projected in the Savannah district. These contracts were executed, the appropriations disbursed, and the work supervised and accepted by said officer, or, under his advice and recommendations, by the War Department.

It is charged that Carter entered into a corrupt arrangement with the said contractors, by which he undertook to use his power and discretion in the preparation of specifications and contracts, and in advertising and letting the same out in such a way as to enable Gaynor and Greene to become contractors under conditions which would insure them a large profit, and to use his influence, power, and discretion in the supervision and acceptance of the work to their greatest advantage. It is then, in substance, averred that, in consideration of such service to them and the betrayal of his trust, he should share in the profits and receive one third of every distribution made. It is charged in substance that under such agreement or understanding there was paid over to the defendant Carter about $500,000 as his share of the profits, and that the same was converted into real estate, bonds, stocks, and negotiable notes, and that much of these gains were later placed in the custody of certain other defendants named in the bill, two of them being brothers of defendant Carter, to wit, Lorenzo D. Carter and I. Stanton Carter, who are charged as holding same as agents for Oberlin M. Carter. Securities aggregating in value some $400,000, into which the larger part of the share of the defendant Oberlin M. Carter is said to have gone, were attached under this and other bills, ancillary in character, and placed in the hands of a receiver to abide the result of a decree in this case, the same decree to go down in the ancillary suits in other jurisdictions in which any part of the property or securities has been impounded.

There was a decree in favor of the United States in the circuit court, substantially as prayed for. Upon an appeal by the defendants and cross appeal by the United States, to the circuit court of appeals, the decree was affirmed as far as it went, and was enlarged in certain matters upon the appeal of the United States. The original defendants have appealed from this last decree so far as it was favorable to the complainant, and the United States has perfected a cross appeal with reference to certain parts of the decree with which it is discontent. Thus the whole case is here as upon a broad appeal, and the several appeals have been heard upon the entire record, consisting of some thirty printed volumes.

The facts essential to be stated, as sifted out of this great record of pleadings and evidence, are these: From some time in 1889 until July 20, 1897, Oberlin M. Carter, then a brilliant and rising officer of engineers in the Army of the United States, was assigned to duty and placed in charge of certain improvements, for which an appropriation had been made, in the harbor of Savannah. It is enough to say, without going into particulars, that this duty involved large powers and con- siderable discretion in the matter of plans, preparation of contracts, advertising for and acceptance of bids, superintendence and acceptance of the work as it progressed, and some latitude in the construction and modification of contracts. It is undoubtedly true that the plans, the form of contracts, the character and time of advertising, and acceptance of bids, as well as most matters involving the exercise of judgment and discretion during the execution of contracts, were reported to the War Department for its approval or rejection. Nevertheless it is most thoroughly made out that the action and recommendation of a local engineer officer in charge of such work practically determined the situation so long as he had the confidence of his superiors and kept within the general limits of the appropriation by Congress for the work in hand. Passing by a number of comparatively small contracts made prior to 1892, as well as a very large one made in 1896, but not completed when Captain Carter was succeeded in July, 1897, the bill charges:

'That commencing with the contract No. 4820 of September 16, 1892, let in the name of Edward H. Gaynor, contractor, that after the payment of the cost of the work, and after the payment to the other persons, parties to the said fraudulent scheme aforesaid, the profits, amounting to over $2,000,000, of all the aforesaid contracts so fraudulently let, as aforesaid, were divided from time to time between Oberlin M. Carter, Benjamin D. Greene, and John F. Gaynor, in three equal shares, one of which shares was apportioned to the said Oberlin M. Carter as his share of the profits arising from the consummation of said scheme to defraud the United States.'

Aside from certain contracts prior to September, 1892, and subsequent to May, 1896, the circuit court found, and the circuit court of appeals confirmed the finding, that between September 16, 1892, and May 12, 1896, the United States, through the defendant Oberlin M. Carter, as its disbursing officer, paid to Gaynor and Greene, or the Atlantic Contracting Company, a corporation of which they owned all of the shares except a few assigned to certain kinsmen for organization purposes, on account of what we shall hereafter describe as Gaynor and Greene contracts, the sum of $2,567,493.48. They also found that of this sum $1,815,941.62 was distributed as net profits between John F. Gaynor, Benjamin D. Greene, and some third person not publicly known to be interested. The remainder, $751,551.86, was the sum disbursed by Greene and Gaynor for labor, supplies, and salaries, being the actual cost of the work for which the government had in some way been induced to pay, under contracts drawn and supervised by Captain Carter, the sum of $2,567,493.48. These figures are not derived from any set of books kept by either the contractors or by Carter. Though the execution of these contracts extended over a period of four years and involved the receipt and expenditure of millions, yet the contractors say they kept no books other than one which related to supplies bought and ordinary labor or salary accounts, and that that book could not be produced. The plan under which Greene and Gaynor carried on these great affairs, as shown by the evidence, was to apply monthly payments received from Carter, as the government's disbursing officer, to the payment of the monthly expenses and advances which might have been made by one or the other of the contractors, and then divide the balance into three parts, one part being at once handed over to Greene, another to Gaynor, and the third to some third person, who both courts found upon the evidence to have been one Robert F. Westcott, the father-in-law of the defendant Oberlin M. Carter, or to accounts kept in his name, and that this third was ultimately turned over to Carter himself.

Without any distinct finding as to the method by which the government had been defrauded, or as to the extent of actual loss sustained, both courts concurred in the conclusion that the government had been defrauded, and had suffered great loss. Without any distinct finding as to whether one third of the profits realized had been paid over to Robert F. Westcott, as a secret partner with Greene and Gaynor, or to him as the representative of Captain Carter, yet both courts concurred in holding that, if Westcott was interested as a partner in the contracts, Carter, under all of the facts, was chargeable with knowledge of such partnership relation, and that if, with such knowledge, he accepted from Westcott the share of profit so received, he was accountable to the government for all such illicit gratuities or gains. In view of this concurrence of opinion upon these material facts the burden rests heavily upon the appellant Oberlin M. Carter to satisfy this court that their conclusions are plainly erroneous, or that, conceding the facts to be as found, the decree holding him accountable is erroneous as matter of law. The Carib Prince (Wuppermann v. The Carib Prince) 170 U. S. 655, 658, 42 L. ed. 1181, 1185, 18 Sup. Ct. Rep. 753; Brainare v. Buck, 184 U. S. 99, 46 L. ed. 449, 22 Sup. Ct. Rep. 458.

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