Jensen v. United States

• Decision Date: 12 March 1964
• Docket Number: No. 18646.,18646.
• Citation: 326 F.2d 891
• Parties: Edward A. JENSEN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

326 F.2d 891 (1964)

Edward A. JENSEN, Appellant, v. UNITED STATES of America, Appellee.

No. 18646.

United States Court of Appeals Ninth Circuit.

January 22, 1964.

Rehearing Denied March 12, 1964.

Sam Houston Allen, Van Nuys, Cal., Breidenbach & Milhollan, and Francis Breidenbach, Bismarck, N. D., for appellant.

Francis C. Whelan, U. S. Atty., Donald A. Fareed, Asst. U. S. Atty., Chief of Civil Section and James R. Dooley, Asst. U. S. Atty., Los Angeles, Cal., for appellee.

Before CHAMBERS and HAMLEY, Circuit Judges, and JAMESON, District Judge.

JAMESON, District Judge:

The United States of America, appellee here, brought this civil action pursuant to the Act of March 8, 1946, commonly known as the Anti-Kickback Act, 41 U.S. C. § 51,¹ to recover from Edward Jensen, appellant here, and eight other defendants who are not parties to this appeal, fees and commissions illegally paid by the defendants.

Appellant did not file in the district court a statement of the points on which he intended to rely on appeal, as required by Rule 75(d) of the Federal Rules of Civil Procedure; nor did he file a statement of points with the clerk of this court in compliance with Rule 17(6) of the rules of this court. As the record on appeal he designated only the pleadings, findings of fact and conclusions of law, and judgment. Appellee, however, designated as additional items a trial stipulation and all exhibits received on behalf of the plaintiff-appellee.

In his brief appellant specifies as error certain findings of fact and conclusions of law of the district court. Even though we waive compliance with the rules requiring a statement of points,² we are limited, in determining the sufficiency of the evidence to support the district court's findings and conclusions, to those facts which were established, without proof, by the stipulation of the parties.

During the years 1951 and 1952 Pacific Airmotive Corporation was engaged in the business of performing purchase orders and subcontracts for the furnishing of supplies, materials, equipment and services under various prime contracts between the United States and other companies. Pacific Airmotive Corporation, as a first-tier subcontractor, awarded purchase orders and outside production orders to Jensen Manufacturing Company, a second-tier subcontractor, for the furnishing of these supplies, materials, equipment and services. The prime contracts were generally on a costplus, a fixed fee, or other cost reimbursable basis. Jensen Manufacturing Company submitted invoices to Pacific Airmotive Corporation, and this corporation paid the invoices by issuing checks to Jensen Manufacturing Company.

Appellant was the owner and operator of Jensen Manufacturing Company. During 1951 and 1952 he made payment to Airframe Suppliers of Burbank and Airframe Suppliers, Inc. in the total sum of $34,692.44. One-half of this amount was admittedly paid as "an inducement for and in acknowledgment of the orders awarded to Jensen Manufacturing Company" by Pacific Airmotive Corporation. Jensen contends that the other half was paid for services performed by Airframe Suppliers of Burbank and Airframe Suppliers, Inc. It appears, however, that all of the payments were computed by taking a certain percentage of the monetary amount of invoices from Jensen Manufacturing Company to Pacific Airmotive Corporation. The trial court found that the "total sum of $34,692.44 paid by defendant Edward A. Jensen and Jensen Manufacturing Company * * * constituted commissions paid as an inducement for and in acknowledgment of the purchase orders and subcontracts awarded to Jensen Manufacturing Company * * *." (Finding X)

Airframe Suppliers of Burbank was a partnership composed of Millard A. Wachter, Darrold R. Wetmore, Alan F. Broz, and Robert W. Hopkins. It is stipulated that all monies received by the partnership were, after deducting expenses, divided more or less equally among the four. Airframe Suppliers, Inc. was an incorporation of the partnership, and payments to the corporation were divided in the same manner as payments to the partnership.

Two of the partners in Airframe Suppliers, Wachter and Wetmore, were employed full time by Pacific Airmotive Corporation and were, respectively, the second and third ranking executive officials in charge of its manufacturing division. The other two partners, Broz and Hopkins, were not shown to have any relationship to Pacific Airmotive. Wachter and Wetmore were joined as defendants in this action, although they are not parties to this appeal. Broz and Hopkins were not made parties to the action.

Jensen knew that Wachter and Wetmore were employees of Pacific Airmotive, as well as members of the Airframe Suppliers firms, and he knew that monies paid to Airframe Suppliers of Burbank and Airframe Suppliers, Inc. would be received by Wachter and Wetmore. Apparently there was no showing that Jensen knew how much money Wachter and Wetmore received, or how the money he paid to Airframe Suppliers would be divided among Wachter, Wetmore, Broz, and Hopkins.

The case was tried before the court, without a jury, and judgment was entered against Jensen and Airframe Suppliers, Inc., jointly and severally, for the full amount of $34,692.44, plus interest and costs.

Appellant first contends that the court erred in finding that the entire sum was paid as an inducement for and in acknowledgment of purchase orders and contracts from Pacific Airmotive. It is well settled that the district court's findings of fact cannot be set aside on appeal unless "clearly erroneous". Rule 52(a) Federal Rules of Civil Procedure; United States v. Grissler, 9 Cir.1962, 303 F.2d 175, 176. The transcript of the testimony, including appellant's own testimony, is not before us, and the record on appeal does not include all of the evidence on which the district court might have based its findings. "In such a situation, this Court may not consider appellant's contention." Watson v. Button, 9 Cir. 1956, 235 F.2d 235, 237.

Appellant next contends that the court erred in finding as a fact that all sums paid by appellant to Airframe Suppliers were paid to employees of Pacific Airmotive Corporation. (Finding XVI) The absence of a transcript of the evidence is not fatal to a consideration of this specification of error. It is stipulated that all monies received by both Airframe Suppliers of Burbank, the partnership, and Airframe Suppliers, Inc., the corporation, were, after deducting expenses, divided "more or less equally between Wachter, Wetmore, Broz, and Hopkins".³ It is agreed that only two of the four, Wachter and Wetmore, had any connection with the first-tier subcontractor, Pacific Airmotive.⁴

The Anti-Kickback statute, 41 U.S.C. § 51, (note 1 supra) prohibits "the payment of any fee, commission, or compensation of any kind * * * by * * * a subcontractor * * * to any officer, partner, employee, or agent of a higher tier subcontractor * * *." Appellant accordingly contends that only half of the sums which he paid, i. e., the amounts received by Wachter and Wetmore, constituted payment to persons proscribed by the Act, and that recovery must be limited to the amounts they received.

Appellee argues that appellant by his own wrong made it possible for all of the monies to be distributed to proscribed employees, and the fact that only one-half actually went to them should not relieve appellant for liability for the entire sum; that "when the money left appellant's hand it was all tainted with an illegal purpose" and the later division of the money "did not operate to remove this taint."

Counsel have cited no case, nor has our research disclosed any, which has considered this question.⁵ We conclude that the wording of the Act supports appellant's position. Airframe Suppliers itself, whether as a partnership or corporation, "is not an officer, partner, employee, or agent of a higher tier subcontractor" to which payment of a fee or commission is prohibited. It was the payment to and receipt of monies by Wachter and Wetmore, the proscribed employees of Pacific Airmotive, which constituted the prohibited act. This was not accomplished until distribution of the payments among the partners or shareholders. Broz and Hopkins were not proscribed employees. The Government did not seek recovery from them of any of the money paid by appellant.⁶ We conclude that appellant may not be held for the monies received by Broz and Hopkins.

Since the district court concluded that the entire sum of $34,692.44 was paid to proscribed employees, no findings were made as to the amounts which were actually paid to Wachter and Wetmore. The case must be remanded for additional findings on this point.

Appellant's third contention is that the court erred in concluding as a matter of law that payments made by appellant were in violation of the Anti-Kickback Act because there was no...