United States v. Baker-Lockwood Mfg. Co., 12673-12675.

• Decision Date: 29 September 1943
• Docket Number: No. 12673-12675.,12673-12675.
• Citation: 138 F.2d 48
• Parties: UNITED STATES v. BAKER-LOCKWOOD MFG. CO., Inc., et al. (three cases).
• Court: U.S. Court of Appeals — Eighth Circuit

138 F.2d 48 (1943)

UNITED STATES v. BAKER-LOCKWOOD MFG. CO., Inc., et al. (three cases).

Nos. 12673-12675.

Circuit Court of Appeals, Eighth Circuit.

September 29, 1943.

Joseph M. Friedman, Chief, War Frauds Civil Unit, Department of Justice, of Washington, D. C. (Francis M. Shea, Asst. Atty. Gen. and Samuel D. Slade, Bonnell Phillips, and Jess G. Shiffmann, U. S. Attys., all of Washington, D. C., on the brief), for appellant.

J. Francis O'Sullivan, of Kansas City, Mo. (Maurice J. O'Sullivan, of Kansas City, Mo., on the brief), for appellee Lou Nathanson.

M. J. Henderson, Jr., Ben W. Swofford, Herbert Jacob, and John B. Pew, all of Kansas City, Mo., for appellees Baker-Lockwood Mfg. Co., Inc., and W. L. Mellor.

Before SANBORN, and RIDDICK, Circuit Judges, and LEMLEY, District Judge.

RIDDICK, Circuit Judge.

On February 12, 1943, the United States grand jury at Kansas City, Missouri, in the Western District of Missouri returned an indictment charging the Baker-Lockwood Manufacturing Company, Inc., and certain individuals with having entered into a conspiracy to defraud the United States in violation of section 37 of the Criminal Code, 18 U.S.C.A. § 88. On Saturday, February 13, 1943, the day following the return of the indictment one Nathanson, a resident of Chicago, filed a civil action against the parties charged in the indictment for the recovery of penalties and double damages provided by section 5438, 18 U.S.C.A. §§ 80, 82-86, and sections 3490-3493, of the Revised Statutes, 31 U.S. C. §§ 231-234, 31 U.S.C.A. §§ 231-234, hereinafter sometimes referred to as the false claims statute. The style of this action in the district court was United States of America at the relation of and to the use of Lou Nathanson, Plaintiff, v. Baker-Lockwood Manufacturing Company, Inc., et al., Defendants. On the following Monday, February 15, 1943, the United States, proceeding under the same statute against the same parties and for the same relief, filed its civil action under the style of United States of America, Plaintiff, v. Baker-Lockwood Manufacturing Company, Inc., et al., Defendants. And on February 17, 1943, one Pink, a resident of Cincinnati, Ohio instituted the identical cause of action in the federal district court at Kansas City under the style of United States of America on relation of Benjamin P. Pink, Plaintiff, v. Baker-Lockwood Manufacturing Company, et al., Defendants.

We are concerned here only with the civil proceedings mentioned above. Section 5438 of the Revised Statutes makes punishable by fine and imprisonment certain efforts to defraud the Government of the United States. By sections 3490 to 3493 of the Revised Statutes, it is provided that one committing any of the acts prohibited by section 5438 shall forfeit and pay to the United States the sum of $2,000, and, in addition, double the amount of the damages sustained by the United States, together with costs of the suit, to be recovered in one civil action. The statute commands the district attorneys of the United States to be diligent in the discovery of false claims against the United States and in the prosecution of civil actions to recover the forfeitures and damages provided by the statute. The Act further provides that such suits may be brought and carried on "by any person, as well for himself as for the United States; the same shall be at the sole cost and charge of such person, and shall be in the name of the United States, but shall not be withdrawn or discontinued without the consent, in writing, of the judge of the court and the district attorney, first filed in the case, setting forth their reasons for such consent"; and that a private person bringing the authorized suit and prosecuting it to final judgment shall be entitled to receive one-half of the amount of the forfeiture and of the damages recovered in the action.

The Baker-Lockwood Manufacturing Company, Inc., filed in each civil action a motion to stay proceedings, alleging that each of the actions involved the same parties plaintiff and defendant, and the same facts and circumstances, and that the defendants could be compelled to respond in only one of them. The United States also in each of the civil actions filed a motion to stay proceedings until the trial of the criminal action, alleging that only one cause of action existed for the recovery of the penalties and damages provided in such cases and that only one of the civil actions could be tried. All of the motions for stays of the civil actions were submitted to the district court at the same time, and argument thereon was participated in by counsel representing all of the parties. It clearly appears from the record that all parties were agreed that the three civil actions involved the identical cause of action against the defendants and that only one of them could be tried; and further that, at the hearing upon the motions, the sole issue as between the parties to the civil actions was which action was entitled to preference over the other in the order of trial, and that this was the issue decided by the court.

At the conclusion of the hearing on the motions, the district court denied the motion of the Government to stay proceedings in the three civil actions until the trial of the criminal action. No reason was given for this decision, but it is inferable from the record that at the time it was rendered the criminal case had been set for trial ahead of the civil actions. Later it developed that the Government was unable to proceed with the trial of the criminal action because of the absence of necessary witnesses, and it became necessary to postpone its trial. In the meantime, however, the district court, having taken the motions for stays in the civil actions under advisement, entered in each action an identical order, by which it stayed the trial of the Government's civil action and of Pink's case until further order of the court. The Nathanson suit was set for trial, and, as matters now stand, it will be tried in advance of the Government's criminal action, and before the Government's civil action. The district court was of the opinion that as between the three civil actions the one first filed in the court was entitled to take precedence over the others. The Government has appealed from the order of the district court overruling its motion to stay proceedings in the civil cases until the trial of the criminal case, and from the orders of the district court staying proceedings in the Government's civil action. The appeals have been heretofore consolidated for hearing in this court.

Nathanson has moved to dismiss the appeal of the United States in the Nathanson suit on several grounds, only three of which require notice. He contends (1) that the United States is not a party to the Nathanson suit, and, for that reason, is not entitled to appear in it or appeal from an order made in it; (2) that the Government has not in fact perfected an appeal from the order staying the Government's civil action entered in the Nathanson suit; and (3) that the order of the court staying the Government's suit is a mere procedural order from which no appeal lies. All of these contentions must be denied. The United States is not only a party on the record in the Nathanson suit, it is a real party in interest, and, as such, we think it has the right to appear and be heard in the protection of its interests. Nor is the question whether the Government has perfected an appeal from the stay order entered in the Nathanson suit of any practical importance in decision here. We think the appeal was properly taken. But, in any event, the Government has appealed from the stay order entered in its civil action,...