426 F.2d 118 (9th Cir. 1970), 22180, United States v. Mead
|Citation:||426 F.2d 118|
|Party Name:||UNITED STATES of America, Appellant, v. Lennard L. MEAD et al., Appellees.|
|Case Date:||March 24, 1970|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
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Leonard Schaitman (argued), Alan S. Rosenthal, Howard J. Kanshner, Attys., Dept. of Justice, Washington, D.C., Larry L. Dier, Asst. U.S. Atty., Wm. Matthew Byrne, Jr., U.S. Atty., Los Angeles, Cal., for appellant.
David Kinley (argued), Wm. L. Callender, Oxnard, Cal., Wm. L. Boyes, Camarillo, Cal., Paul B. Noel, Thousand Oaks, Cal., Carl A. Stutsman, Jr., of Hill, Farrer & Burrill Los Angeles, Cal., for appellees.
Before CHAMBERS and JERTBERG, Circuit Judges, and WEIGEL, [a1] district judge.
CHAMBERS, Circuit Judge.
Lennard Mead and the other appellees are in trouble over a series of government payments for 'farmer's conservation practices.' These payments were pursuant to a Department of Agriculture conservation program developed under the authority of the Soil Conservation and Domestic Allotment Act, 16 U.S.C.§§ 590a-590q. Mead was a farmer-contractor who constructed conservation practices on the farms of his mother (Violet) and the other appellees.
The basic concept of the Agricultural Conservation Program was that the federal government was to assist farmers and ranchers in carrying out approved conservation practices. The Program authorized the government to pay to or for each farmer the lesser of a fixed percentage of the cost price of dirt ditches or dams or a fixed price per unit of work performed (here, price per cubic yard of earth moved). In no event was the payment to exceed a fixed amount for the account of each farmer in a single program year.
The mechanics of the Program allowed government payments to be made directly to the contractor who did the work. Here Mead made out claims for payment with his invoices attached showing 'prices' higher than the cash price to the farmers. Appellees submit and the district court found that in no instance was the claimed cost of a project higher than its actual or fair market value. The payments were all made by the government to Mead but the farmers signed the claims (in one case it was a foreman). In some cases the farmers paid some cash (but not the fixed percentage of the claimed cost of the project which the farmer was to bear). In others they furnished services to Mead or gave him pasture. 1
Now Mead and the farmers are faced with a complaint for statutory double damages and penalties under the False Claims Act, 31 U.S.C. §§ 231-233. Also, the government pleaded payment by mistake as an alternative theory of recovery. The trial court ruled with the defendants and the government appeals. As to false claims, we affirm and as to mistake, we reverse and remand.
Here the defense was largely that the prices shown the government were the 'true value' and thus were not false. A second defense was that the government had not shown intent to defraud the government. The government would have us recede from our statement in United States v. National Wholesalers, 9th Cir., 236 F.2d 944, cert. den., 353 U.S. 930, 77 S.Ct. 719, 1 L.Ed.2d 724. But we adhere to our position that an actual intent to deceive must be proved. We cannot believe that the Congress intended to catch the hapless with the heavy penalties which may be imposed under the False Claims Act. Here is a contractor-farmer (Mead) who appears clumsy rather than venal. And, all the claims in controversy here were handled with the greatest informality. There was some signing in blank and generally the claims were partially prepared by the agents of the Department of Agriculture. It is a far different situation from that in National Wholesalers where it would be difficult to find a more callous presentation of claims. Here, on the evidence on false claims, the trial court could have found in favor of the government, but it did not have to do so. And, it did not.
As to the mistake theory on which we reverse and remand, we would summarize that in all or part of the payments the government was misled as to the correct calculation of its authorized share of the cost.
Having summarized our conclusions, we go into some detail. We do this as to false claims because of the attack on National Wholesalers and we do it as to mistake because we reverse.
I. THE FALSE CLAIMS ACT THEORY
A. WERE THE CLAIMS FALSE?
The government argues that the claims were false because Mead's invoices overstated his actual charges to the applicant farmers and ranchers. Mead's position was that he regarded the terms cost and value as being synonymous and that his statements of the cost of the projects were not in excess of the actual or fair value of the projects. He billed the government for its share in an amount which he regarded as the 'true cost figure' and, in contrast, merely accepted all he could get from the farmers. The evidence showed that in some instances, Mead prepared duplicate invoices. He sent an invoice to the government which stated his estimation of the value of the project. His invoices to the farmers allowed them cash discounts and thus stated amounts which were substantially smaller than their share of the 'actual value' of the project as it was submitted in the...
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