United States v. Brown, 7965.

• Decision Date: 04 January 1960
• Docket Number: No. 7965.,7965.
• Citation: 274 F.2d 107
• Parties: UNITED STATES of America, Appellant, v. David J. BROWN and Liston Judge, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

274 F.2d 107 (1960)

UNITED STATES of America, Appellant, v. David J. BROWN and Liston Judge, Appellees.

No. 7965.

United States Court of Appeals Fourth Circuit.

Argued November 12, 1959.

Decided January 4, 1960.

Mark R. Joelson, Atty., Dept. of Justice, Washington, D. C. (George Cochran Doub, Asst. Atty. Gen., Julian T. Gaskill, U. S. Atty., and Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., on brief), for appellant.

No appearance and no brief for appellees.

Before SOPER and HAYNSWORTH, Circuit Judges, and THOMSEN, District Judge.

HAYNSWORTH, Circuit Judge.

In this action for civil penalties under the False Claims Act,¹ the District Court, influenced by the disparity between the amount of the mandatory penalty and the amount of the claims, entered judgment for the defendants upon the ground their claims were not presented directly to Commodity Credit Corporation. Under the scheme by which price supports are extended to tobacco, the farmers' claims of the support price are not filed immediately with Commodity, but that circumstance does not distinguish the case from comparable claims for the support price of other crops which, under prevailing procedures, are filed directly with Commodity.

The defendants, David J. Brown and Liston Judge, are small tobacco farmers in Duplin County, North Carolina.

Brown, for 1956, had a .79 acre tobacco allotment, but he had planted 1.32 acres, an excess of .53 acres. He did not dispose of his excess acreage, and was issued an excess marketing card. Under the Act and the applicable regulations,² Brown was required to market tobacco he harvested only under his excess card, without eligibility for price supports and subject to a penalty of 16¢ per pound.

Brown did market 408 pounds of his tobacco under his excess card for a gross price of $256.80 from which there was deducted a penalty of $65.28.

Liston Judge planted within his allotment and was issued a "within quota" marketing card, showing the general eligibility of the tobacco produced on his farm for price support and for marketing without penalty. Use of that card to market tobacco grown on another farm is prohibited.³

Using Judge's "within quota" card, the defendants on October 3, 1956 offered for sale at Ross Tobacco Warehouse No. 2, in Clinton, North Carolina, five baskets of tobacco which had been grown on Brown's farm and which could lawfully have been marketed only under Brown's excess card. One small basket was sold to a private purchaser for $21.28. The bidding on the remaining four baskets did not reach the support level, and the auctioneer accordingly knocked them down to Flue-Cured Tobacco Cooperative Stabilization Corporation at the support prices, aggregating $302.86.⁴

We made reference to the mechanics by which price supports are extended to tobacco in Commodity Credit Corporation v. Worthington, 4 Cir., 263 F.2d 178. We need only briefly refer to such arrangements here.

It has long been the prevailing practice to market tobacco at auction sales at tobacco warehouses. The tobacco is graded and placed in baskets according to grade. The auctioneer as agent for the farmer⁵ offers each basket successively and knocks it down to the highest bidder.

The Commodity Credit Corporation Charter Act as amended, particularly §§ 5(g) and 4(h),⁶ requires Commodity to utilize existing and customary marketing channels and facilities wherever practicable, and by § 12⁷ it is authorized to utilize the services of cooperatives and producer associations.

Accordingly, Commodity adopted a regulation⁸ that its tobacco price support program would be carried out in the field by producer associations under contracts with Commodity, that Commodity would authorize such associations to make advances to eligible producers directly or through auction warehouses, and that Commodity would make non-recourse loans to the associations in an amount sufficient to cover the associations' advances and its expenses in executing the program.

In conformity with its regulation and its practice in prior years, for the 1956 crop year Commodity had entered into a contract with the Flue-Cured Tobacco Cooperative Stabilization Corporation authorizing and requiring the cooperative to extend advances to eligible producers in an amount equal to support prices whether or not the producers were members or stockholders of the cooperative. Under the contract, the cooperative was thereafter to protect and store the tobacco for Commodity and resell it. If cooperative's marketing operations, produced a profit for the year, one-half of the profit was to have been turned over to Commodity on account of its losses in prior crop years, but the remaining half of the profit was to have been distributed to the participating eligible producers. If, on the other hand, cooperative's marketing operations resulted in a loss for the year, the losses were to have been borne entirely by Commodity.

As contemplated by the contract between Commodity and the cooperative, the cooperative entered into contracts with warehouses under which cooperative obligated itself to make advances at support price levels to producers offering tobacco at that warehouse. In practice, if the highest commercial bid was lower than the support price, the tobacco was knocked down to the cooperative, which, under the contract, was obligated to accept it and to advance the support price.

The contract between Commodity and the cooperative required that the cooperative's contracts with warehouses be approved by Commodity. The contract between the cooperative here and the Ross Warehouse was approved by Commodity.

Commodity had also arranged with Wachovia Bank and Trust Company to act for it as its fiscal agent in the disbursement of its moneys. The procedure, in practice, when tobacco was to be placed in the support program, was that the warehouse paid the producer and sent a settlement memorandum to the cooperative, upon receipt of which the cooperative reimbursed the warehouse and in return received reimbursement from...