United States v. Company, NEIFERT-WHITE

Decision Date05 March 1968
Docket NumberNEIFERT-WHITE,No. 267,267
Citation19 L.Ed.2d 1061,390 U.S. 228,88 S.Ct. 959
PartiesUNITED STATES, Petitioner, v. COMPANY
CourtU.S. Supreme Court

John S. Martin, Jr., Washington, D.C., for petitioner.

Patrick F. Hooks, Townsend, Mont., for respondent.

Mr. Justice FORTAS delivered the opinion of the Court.

This is an action by the United States to recover statutory forfeitures under the False Claims Act.1 The question is whether the Act applies to the supplying of false information in support of an application to a federal agency, the Commodity Credit Corporation (CCC), for a loan. The District Court dismissed the action on the ground that an application for a CCC loan, as distinguished from a claim for payment of an obligation owed by the Government, is not a 'claim' within the meaning of the Act. The Court of Appeals for the Ninth Circuit affirmed. We granted certiorari. 389 U.S. 814, 88 S.Ct. 69, 19 L.Ed.2d 65 (1967).

The CCC is authorized to make loans to grain growers to finance the construction or purchase of storage facilities. § 4(h) of the Commodity Credit Corporation Charter Act, as amended, 62 Stat. 1071, 15 U.S.C. § 714b(h). Pursuant to its authority under statute, 15 U.S.C. § 714b(d), the CCC has adopted regulations providing for the granting of loans in amounts not to exceed 80% of the actual purchase price of storage bins. A grain grower who desires to apply for a loan is required to support his application by an invoice showing the pur- chase price and the amount of the down payment made by him. 23 Fed.Reg. 9687.

Since the Government's complaint was dismissed for failure to state a cause of action, the allegations of the complaint must be taken as true for present purposes. According to the complaint, respondent is a dealer in grain storage bins. In 1959, in selling bins to 12 grain farmers, one of respondent's officers prepared invoices in which the purchase price was deliberately overstated. The purpose was fraudulently to induce the CCC to extend loans to respondent's customers in amounts exceeding 80% of the actual purchase price. The invoices were submitted to the CCC along with the loan applications, and the agency relied on the overstated purchase price in determining the amount of loans that were subsequently made. The United States claims the statutory forfeiture of $2,000 for each of the 12 alleged violations of the Act.

The issue in this case is narrow and precise: Does the False Claims Act reach 'claims' for favorable action by the Government upon applications for loans or is it confined to 'claims' for payments due and owing from the Government? 2 It is respondent's position that the term 'claims' in the Act must be read in its narrow sense to include only a demand based upon the Government's liability to the claimant. Respondent relies upon United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616 (1926), and United States v. McNinch, 356 U.S. 595, 78 S.Ct. 950, 2 L.Ed.2d 1001 (1958), to support this narrow reading.

Cohn involved a criminal proceeding under an earlier version of the present False Claims Act.3 It concerned a fraudulent application to obtain the release of merchandise which did not belong to the United States and which was being held by the customs authorities as bailee only. The case did not involve an attempt, by fraud, to cause the Government to part with its money or property, either in discharge of an obligation or in response to an application for discretionary action. The language in the Court's opinion upon which respondent relies cannot be taken as a decision upon a point which the facts of the case did not present.4

In McNinch, the Government brought suit for damages and forfeitures under the False Claims Act, in its present form, against persons who had filed fraudulent applications for home-modernization loans with a private bank which was regularly insured by the Federal Housing Administration against losses on such loans. The bank granted the loans sought by defendants, which were 'routinely' insured by the FHA. 356 U.S. at 597, n. 4, 78 S.Ct., at 951. This Court held that since FHA 'disburses no funds nor does it otherwise suffer immediate financial detriment,' id., at 599, 78 S.Ct., at 952, the transaction was not within the ambit of the False Claims Act. The Court emphasized the distinction between contracts of insurance against loss such as those involved in McNinch, and transactions in which the United States pays or lends money. For purposes of the present case, we need not reconsider the validity of this distinction. It is sufficient to note that the instant case involves a false statement made with the purpose and effect of inducing the Government immediately to part with money.

The precise question presented by this case has never been considered by the Court. However, both the history and the language of the False Claims Act, as well as the thrust of our prior decisions, indicate the answer to our present inquiry. The original False Claims Act was passed in 1863 as a result of investigations of the fraudulent use of government funds during the Civil War. Debates at the time suggest that the Act was intended to reach all types of fraud, without qualification, that might result in financial loss to the Government.5 In its present form the Act is broadly phrased to reach any person who makes or causes to be made 'any claim upon or against' the United States, or who makes a false 'bill, receipt, * * * claim, * * * affidavit or deposition' for the purpose of 'obtaining or aiding to obtain the payment or approval of' such a false claim. In the various contexts in which questions of the proper construction of the Act have been presented, the Court has consistently refused to accept a rigid, restrictive reading, even at the time when the statute imposed criminal sanctions as well as civil.6 See, e.g., United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943).

On the very day that this Court decided McNinch, it also decided three cases holding that a fraudulent application for a loan submitted to the CCC was a claim against the Government of the United States, within the meaning of the False Claims Act.7 The question debated in those cases was not the meaning of the word 'claim,' but whether the CCC, a wholly owned government corporation, was 'the Government of the United States, or any department or officer thereof' within the meaning of the statute. In the course of its opinion on this matter, the Court noted that the objective of Congress in enacting the False Claims Act 'was broadly to protect the funds and property of the Government from fraudulent claims, regardless of the particular form, or function, of the government instrumentality upon which such claims were made' and that '(b)y any ordinary standard the language of the Act is certainly comprehensive enough to achieve this purpose.' Rainwater v. United States...

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