217 U.S. 286 (1910), 10, United States v. Carter

Docket Nº:No. 10, Original
Citation:217 U.S. 286, 30 S.Ct. 515, 54 L.Ed. 769
Party Name:United States v. Carter
Case Date:April 18, 1910
Court:United States Supreme Court

Page 286

217 U.S. 286 (1910)

30 S.Ct. 515, 54 L.Ed. 769

United States



No. 10, Original

United States Supreme Court

April 18, 1910

Nos. 551, 552

Argued January 13, 14, 1910



Where both the courts below have concurred upon material facts, the burden rests on the appellant to satisfy this Court that such conclusions are erroneous.

Where both courts below have found on conceded facts the appellant accountable for illicit gains, the burden rests on him to satisfy the courts that such conclusion is erroneous as matter of law.

A public official may not retain any profit or advantage realized through an interest in conflict with his fidelity as an agent.

Where an officer of the United States secretly receives a part of the profits gained by others in the execution of contracts with the government over which he has control, the United States is entitled to a decree in equity for the amount so received, and this, even if the government cannot prove fraud or abuse of discretion on the part of such officer or that it has suffered actual loss.

In determining whether an officer of the government has been guilty of fraud in connection with contracts under his control, abnormal profits arouse suspicion and demand clear explanation.

The receipt in any manner as a gratuity or otherwise by an officer of the United States of a share of profits on government contracts under his control through a third party is the same, as to his liability to account therefor, as though he received such share direct from the contractor.

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The fact that a close friend of the accused, having intimate relations with him in connection with the matter in suit, and whose testimony would benefit him if statements made by accused in regard to their relations are true, does not voluntarily appear in any of several proceedings, but sees the accused convicted, justifies a presumption that his testimony would not have borne out the defense.

When an officer of the United States has received a share of profits from contracts under his control, the government is not limited, in a suit to recover the same and in which it has impounded securities, to the traced securities; the officer must account for all his gains and, under a prayer for other and general relief, the government is entitled to a judgment for money had and received to its use, and may enforce it against any property of the defendant including property in the hands of third parties with notice of how it was obtained.

The government in a suit to recover illicit gains is justified in agreeing to allow the payment of certain expenses connected with the litigation and to determine title of securities which have been impounded by it with difficulty, and in regard to which there are conflicting claims, in consideration of the surrender of the securities to abide the decision of the court in the case.

Where two courts in succession have concurred in finding that counsel fees are reasonable as allowed, this Court does not feel authorized to disturb the finding.

An agreement on the part of one holding securities in trust to turn over all that have not been disposed of bona fide is not necessarily broken by a failure to turn over some that are held under claim that they were retained for services and disbursements properly earned and incurred, even if the claim cannot be sustained, if it is made in good faith and the question submitted to the court.

Where a stipulation for surrender of securities in suit is made by the government and other parties, even though the government may make what appears to be a bad bargain, the stipulation must be observed if it is actually a contract.

172 F. 1 affirmed.

The facts are stated in the opinion.

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LURTON, J., lead opinion

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

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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 [30 S.Ct. 517] 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 sometime 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 considerable

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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...

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