Kay v. United States

• Decision Date: 31 January 1938
• Docket Number: No. 61,61
• Parties: KAY v. UNITED STATES
• Court: U.S. Supreme Court

303 U.S. 1

58 S.Ct. 468

82 L.Ed. 607

KAY

v UNITED STATES.

No. 61.

Argued Dec. 10, 13, 1037.

Decided Jan. 31, 1938.

Messrs. Frank R. Serri, of Brooklyn, N.Y., and Wm. S. Culbertson, of Washington, D.C., for petitioner.

Mr. Golden W. Bell, Asst. Sol. Gen., for the United States.

[Argument of Counsel from page 2 intentionally omitted] Mr. Chief Justice HUGHES delivered the opinion of the Court.

Petitioner was convicted of violations of section 8(a)¹ and (e)² of the Home Owners' Loan Act of 1933. Act of June 13, 1933, c. 64, 48 Stat. 128, 134, amended by Act of April 27, 1934, c. 168, § 12, 48 Stat. 643, 647, 12 U.S.C. § 1467(a) and (e), 12 U.S.C.A. § 1467(a, e). The Circuit Court of Appeals sustained the conviction, 89 F.2d 19, and because of the importance of the questions presented certiorari was granted. 301 U.S. 679, 57 S.Ct. 943, 81 L.Ed. 1338.

The conviction was upon eight counts of the indictment, viz., counts 5 and 15 under section 8(a) and counts 8, 12, 14, 20, 24, and 25 under section 8(e). To count 12 petitioner had pleaded guilty, but later was permitted to withdraw that plea, pleaded not guilty, and went to trial. On count 8, imposition of sentence was suspended and petitioner was placed upon probation. On the remaining seven counts, petitioner was sentenced to a year and a day in prison, the sentences to run concurrently.

The Circuit Court of Appeals refused to consider errors arising on the bill of exceptions, as it had not been settled and filed within the time permitted by Rule 9 of the Criminal Appeals Rules, 28 U.S.C.A. following section 723a. The court accordingly limited its consideration to the sufficiency of the indictment, entertaining and deciding the questions of the constitutional validity of the Home Owners' Loan Act and of the provisions of section 8(a) and (e) in particular.

The Government contends that the convictions should be sustained, irrespective of questions of the validity of any part of the statute, upon the ground that, the sentences being concurrent, the judgment should be affirmed if good under any one of the counts. In that view, the Government submits that petitioner consented to the judgment on count 12. The point is that petitioner was permitted to withdraw her plea of guilty to that count, although eleven days had intervened, while Rule 2(4) of the Criminal Appeals Rules, 28 U.S.C.A. following section 723a, requires such a motion to be made within ten days. The Government argues that the provision of the rule is mandatory and hence the judgment, as one upon consent, should be affirmed without consideration of the merits. Petitioner answers that the Government by going to trial is now estopped to raise the question, and, further, that a plea of guilty does not prevent the defendant from challenging the sufficiency of the indictment. 2 Bishop on Criminal Procedure, 2d Ed., § 795. The point does not appear to have been raised either in the District Court or in the Court of Appeals and it is based solely upon the dates of certain entries in the criminal docket without any supporting proof. We are not disposed to deal with a question of that importance presented in this manner.

First.—As to the counts under section 8(a).³—Counts 5 and 15, under that provision, charge that petitioner, being the holder of a second mortgage upon certain premises, in executing the consent to accept bonds of the Home Owners' Loan Corporation in full settlement, and for the purpose of influencing the action of the Corporation, knowingly and falsely stated that her claims were respectively in the sums of $590 and $650, whereas in fact they were respectively only in the sums of $285 and $150.

Petitioner argues that there is no allegation that a loan to the owner was made or approved, or that any payment was made to petitioner; that the second mortgagee's consent is temporary and may be withdrawn; that it is not under oath; and that there is no warranty of the truth of the information given. Petitioner argues, further, that any statement in the consent of a second mortgagee as to the balance due cannot endanger or directly influence any loan made by the Corporation; that the second mortgagee is not an applicant; and that the practice in such cases negatives Reliance on the consent, as the essential factors are the value of the property, as to which the Corporation makes its appraisal, and the earning capacity of the owner. None of these arguments is impressive. It does not lie with one knowingly making false statements with intent to mislead the officials of the Corporation to say that the statements were not influential or the information not important. There can be no question that Congress was entitled to require that the information be given in good faith and not falsely with intent to mislead. Whether or not the Corporation would act favorably on the loan is not a matter which concerns one seeking to deceive by false information. The case is not one of an action for damages but of criminal liability, and actual damage is not an ingredient of the offense.

Petitioner's main argument is that the whole scheme of the statute is invalid; that Congress had no constitutional authority to create the Home Owners' Loan Corporation—to provide for the conduct of a business enterprise of that character. There is no occasion to consider this broad question as petitioner is not entitled to raise it. When one undertakes to cheat the Government or to mislead its offcers, or those acting under its authority, by false statements, he has no standing to assert that the operations of the Government in which the effort to cheat or mislead is made are without constitutional sanction.

We recently dealt with a similar contention that the false claims statute, Criminal Code, § 35, as amended, 18 U.S.C.A. § 80, did not apply to a conspiracy to cheat the United States by false representations in connection with operations under a statute which this Court found to be unconstitutional. We said that such a construction was inadmissible. 'It might as well be said that one could embezzle moneys in the United States Treasury with impunity if it turns out that they were collected in the course of invalid transactions. * * * Congress was entitled to protect the government against those who would swindle it regardless of questions of constitutional authority as to the operations that the government is conducting. Such questions cannot be raised by those who make false claims against the government'. United States v. Kapp, 302 U.S. 214, 58 S.Ct. 182, 184, 82 L.Ed. 205, decided December 6, 1937; Madden v. United States, 1 Cir., 80 F.2d 672. While the instant case is not one of conspiracy to obtain money from the United States, but one of false statements designed to mislead those acting under authority of the Government, the principle involved is the same. Apart from any question of the validity of the other provisions of the Home Owners' Loan Act, Congress was entitled to secure protection against false and misleading representations while the act was being administered, and the separability provision of the act, section 9, 12 U.S.C.A. § 1468, is clearly applicable. Utah Power Co. v. Pfost, 286 U.S. 165, 184, 52 S.Ct. 548, 553, 76 L.Ed. 1038.

There is the further argument that the provision of section 8(a), separately considered, offends the due process clause as being vague and uncertain. We find no merit in that contention. The statute defining the crime is sufficiently explicit.

Second.—As to the counts under section 8(e).⁴—The Government points out that count 14 is based on the statute as it was originally enacted in 1933. That count charges that petitioner on or about April 1, 1934, made a contract with an applicant for a loan for the payment to petitioner of a certain sum for services in connection with the loan, and that the contract was not for 'an ordinary charge or fee authorized and required by the Home Owners' Loan Corporation for services actually rendered for examination and perfection of title, appraisal, and like necessary services.'

Counts 12, 20, 24, and 25, under the statute as amended, charge that petitioner in or about June, July, and September, 1934, made similar contracts for the payment of unauthorized charges.

It appears that the board of directors in January, 1934, specifically provided that 'The ordinary charges author- ized and required' for services should consist of: (1) An appraisal fee as approved by the board; (2) a fee for a character report; (3) necessary recording and similar fees; (4) necessary charges for perfecting title in a sum not exceeding $75 in any case and larger necessary charges if approved by the board; (5) necessary and usual fees for abstracts, examination of title, opinions, certificates of title, or title insurance; (6) charges of attorneys or title companies for escrow services or closing...