273 F.2d 153 (4th Cir. 1959), 7967, United States v. Cato Bros., Inc.

Docket Nº:7967.
Citation:273 F.2d 153
Party Name:UNITED STATES of America, Appellant, v. CATO BROTHERS, INC., Wilfred R. Cato, William R. Cato, and Magie L. Dunn (nee Magie L. Stone), Appellees.
Case Date:December 14, 1959
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 153

273 F.2d 153 (4th Cir. 1959)

UNITED STATES of America, Appellant,

v.

CATO BROTHERS, INC., Wilfred R. Cato, William R. Cato, and Magie L. Dunn (nee Magie L. Stone), Appellees.

No. 7967.

United States Court of Appeals, Fourth Circuit.

December 14, 1959

Argued Nov. 12, 1959.

Page 154

John G. Laughlin, Atty., Dept. of Justice, Washington, D.C. (George Cochran Doub, Asst. Atty. Gen., John M. Hollis, U.S. Atty., Norfolk, Va., and Samuel D. Slade, Atty., Dept. of Justice, Washington, D.C., on the brief), for appellant.

Charles W. Laughlin and A. C. Epps, Richmond, Va. (Christian, Barton, Parker & Boyd, Richmond, Va., on the brief), for appellees.

Before SOBELOFF, Chief Judge, SOPER, Circuit Judge, and THOMSEN, District Judge.

SOPER, Circuit Judge.

This appeal is taken from an order of the District Judge whereby the defendants were released from the obligation of a judgment to pay to the United States the sum of $60, 000 on condition that they pay to the United States the sum of $20, 000. The judgment for $60, 000 had previously been affirmed by this court and the United States appeals on the ground that the District judge had no power to amend the judgment in this way.

On July 31, 1956, the District Court awarded the United States $2, 000 upon each of thirty false claims submitted by the defendants to the Commodity Credit Corporation whereby they obtained loans on cotton in thirty separate transactions and gave notes which contained the false representation that the notes were made by the producers of the cotton. The suit was based on the civil False Claims Act, 31 U.S.C.A. § 231, which provides in effect that any person not in the military or naval service who makes any claim for payment upon or against the Government of the United States or any department or officer thereof, knowing the claim to be false, fictitious or fraudulent, shall forfeit and pay to the United States the sum of $2, 000 and, in addition, double the amount of damages which the United States may have sustained by reason of the doing of such act. The judgment of the District Court for $2, 000 on each of the thirty false claims was reversed by this court on appeal (United States v. McNinch, 4 Cir., 1957, 242 F.2d 359) on the ground that a claim against the

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Commodity Credit Corporation is not a claim against the United States since a government corporation is not a department of the government. In reaching this conclusion, we were influenced by the legislative history which showed that the criminal False Claims Act, 18 U.S.C. § 287, which was originally directed against false claims against or upon the Government of the United States or any department or officer thereof, had been specifically amended to add to this list 'any corporation in which the United States of America is a stockholder', whereas the civil False Claims Act had not been so amended. The Supreme Court, however, reversed this holding, sub nom ine United States v. McNinch, 356 U.S. 595, 78 S.Ct. 950, 2 L.Ed.2d 1001, a companion case considered by us together with the case at bar. The Supreme Court held that a claim against the Commodity Credit Corporation is a claim against the Government of the United States or any department or officer thereof within the meaning of the provisions of the civil False Claims Act.

On remand, the case was reargued in this court, Toepleman v. United States (Cato Bros., Inc. v. United States), 4 Cir., 263 F.2d 697, and additional contentions on behalf of the defendants were considered. These contentions were based on the ground that the United States had not sustained any calculable damages by reason of the actions of the defendants and therefor the imposition of such a plurality of penalties, that is, thirty in the pending case and eighty-two in the companion Toepleman case, was unconstitutional. We rejected the contention on the ground that damages are always suffered by the United States when a false claim is presented and that the Government may protect itself against this eventuality even though the damages are not nicely ascertainable, so that even when the penalty is multiplied by a plurality of impositions, the total amount of the forfeiture cannot be justly regarded as a taking without just cause or due process. Accordingly the judgment of the District Court in favor of the United States was affirmed in Cato Bros., Inc. v. United States, 4 Cir., 263 F.2d 697, and subsequently a petition for writ of certiorari was denied by the Supreme Court, 359 U.S. 989, 79 S.Ct. 1119, 3 L.Ed.2d 978.

Ordinarily this would have been an end of the litigation, but when the case was returned to the District Court the defendants reopened the controversy by moving to vacate the judgment which had just been affirmed. The motion was based on Rule 60 of the Federal Rules of Civil Procedure, 28 U.S.C.A., which empowers the District Court (a) to correct clerical mistakes in judgments and (b) to relieve...

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