United States v. Haynes School Dist. No. 8

• Decision Date: 13 December 1951
• Docket Number: Civ. A. No. H-412.
• Citation: 102 F. Supp. 843
• Parties: UNITED STATES v. HAYNES SCHOOL DIST. NO. 8.
• Court: U.S. District Court — Eastern District of Arkansas

102 F. Supp. 843

UNITED STATES v. HAYNES SCHOOL DIST. NO. 8.

Civ. A. No. H-412.

United States District Court E. D. Arkansas, E. D.

December 13, 1951.

COPYRIGHT MATERIAL OMITTED

James T. Gooch, U. S. Atty., Harry E. McDermott, Jr., Asst. U. S. Atty., Little Rock, Ark., for plaintiff.

Hal Mixon, Marianna, Ark., for defendant.

LEMLEY, District Judge.

This cause comes on for hearing upon opposing motions for summary judgment filed by the respective parties, and also upon that portion of the defendant's answer which alleges that the complaint fails to state a claim against the defendant upon which relief can be granted¹, and has been submitted upon the pleadings, affidavits, exhibits, and written briefs. In our opinion the plaintiff's motion for summary judgment should be overruled, and the defendant's plea just referred to should be sustained, subject to leave to the plaintiff to amend its complaint as hereinafter set forth; for the reasons hereinafter stated, we do not deem it necessary to pass upon the defendant's motion for summary judgment.

This is an action brought by the United States against Haynes School District No 8 of Lee County, Arkansas, to recover the sum of $602.71, plus interest and costs, paid to the District by the plaintiff between September 11, 1945 and April 8, 1946 in connection with the so-called "school lunch program", authorized by the Department of Agriculture Appropriations Acts of 1945 and 1946, 58 Stats. 452-453 and 59 Stats. 157, see also 7 U.S.C.A. § 612c and in which the defendant participated during the 1944-45 school year and during the 1945-46 school year from September 11, 1945 through March 30, 1946. Under the terms of this program the federal government reimburses participating school districts for funds expended by them in buying food to be used in serving lunches to school children, the extent of such reimbursement depending upon a formula devised by the Department of Agriculture and set forth in the agreements entered into between the Government and the participating districts.

The original agreement between the parties hereto was dated September 11, 1944 and expired by its own terms on June 30, 1945; on September 11, 1945, it was renewed for the 1945-46 school year and finally expired on June 30, 1946. While no copy of the agreement was attached to the complaint as an exhibit, it was referred to in said pleading, and Article VII thereof, upon which plaintiff relies, was set out in full. Copies of the entire agreement and its renewal have now been filed as exhibits in connection with the motions above referred to.

As stated, the defendant participated in the school lunch program during the 1944-45 school year and during the 1945-46 school year up to and including March 30, 1946; during the latter year seven consecutive monthly claims for reimbursement amounting to $602.71 were submitted by the defendant, and all of them were paid by the plaintiff. This suit has been brought to recover these payments on the ground that the defendant was required to keep and preserve certain records pertaining to the operation of the program, and that when an auditor of the Department of Agriculture undertook to examine its records in November of 1946 and again in the spring of 1947, the defendant was unable to produce such records, and that, therefore, the entire sum of $602.71 was "overclaimed" and "overpaid", and should be refunded to the Government.²

The contract between the parties consisted of ten numbered "Articles", not all of which are important here. The first Article is a declaration of the purpose of the agreement, which is described as the operation of a "Community School Lunch Program", as a part of the nation's wartime food program, "to assist schools and child-care centers in the development and maintenance of an adequate lunch program, which will assist in meeting the nutritional requirements of the Nation's children; to provide for the proper utilization of agricultural commodities purchased through price support programs; to encourage increased consumption of foods in abundance; and to aid American farmers in the long-term development of better domestic markets for agricultural commodities".

Article III of the Agreement provides that the Government will reimburse the school district, in accordance with a specified formula and subject to certain limitations not here pertinent, "for the purchase cost of food used in accordance with this agreement in the preparation of meals served to children attending or visiting the (participating school.)"

Article IV obligated the district to purchase food for the program at prices no higher than those generally prevailing in the area, and, as far as possible, to buy locally produced food; this Article also obligated the District to buy in as large quantities as were feasible foods which the War Food Administration should from time to time announce as being in abundance, to encourage, as far as possible, the maximum consumption of such foods by the children, and to accept such foods as might be donated to it by the Administration if such foods could be utilized, and if transportation and handling made such acceptance possible. The District was further required to maintain adequate facilities for storing, preparing, and serving food bought under the Agreement or donated by the Administration, and to maintain "proper sanitation and health standards in conformance with all applicable laws and regulations".

By Article VI the District was required to offer meals to all children attending school, and was required to serve meals without cost to children who were unable to pay for them. This Article further provided that: "No distinction or segregation of any sort shall be permitted between paying and non-paying children;" and, that: "All funds accruing from the operation of the program shall be used only in the maintenance of the program in reducing the price of meals to paying children, or in improving the quality of the meals."

The most important Article in the Agreement, as far as this case is concerned, is Article VII, which deals with "Claims, Reports, and Records". This Article provided that the District should "submit to the Administration monthly, as its claim for reimbursement and report of operations a certified statement on Form FDA-536." It was further provided that the District should maintain or cause to be maintained "full and complete records of all operations under this agreement, which records shall include the following: (a) the number of meals, by type, served each day; (b) the number of meals, by type, served free each day; (c) income accruing as a result of payments made by children and all other income, in money or in kind, accruing as a result of the operation of the program; (d) itemized receipts for all food purchased for the program; (e) all program expenditures for items other than food; and (f) receipt of commodities from the Administration." It was further provided that: "The (school district) shall make available to the Administration for examination, at any reasonable time and place, all records pertaining to the operation of the program."

Article X provided for termination by either party at will upon the giving of ten days' notice to the other, and further provided that the Administration "may cancel this agreement immediately upon receipt of evidence that the terms and the conditions of this agreement are not fully complied with by the sponsoring agency."

The first of the claims here involved was dated October 1, 1945, and the last was dated March 30, 1946; each claim was supported by a certificate reading as follows: "I (we) certify that the above information is true and correct; that the operation of the program was in accordance with the agreement; that the claim is just and correct, and that payment therefor has not been received; that the receipts and other records required by the agreement are on file to substantiate this claim; and that the amount claimed does not exceed the purchase cost of agricultural commodities used during the month." Each of these claims set forth the cash income and expenditures of the program during the month, a list of purchases of "designated abundant foods", the number and type of meals served, the number of meals served free, and the amount of the claim. Each was paid by the Government upon vouchers submitted by the War Food Administration.

When the defendant was unable to produce records for inspection by the auditor, the latter interviewed Miss Willie Cox, a teacher at the school, who advised him that the records pertaining to the program had been lost or destroyed, but that lunches had been served to the students during the period in question. The auditor made a report of his investigation and concluded the same with the following statement: "Because of the failure on the part of the sponsor (the District) to maintain records as required by Section VII of the agreement, the entire amount claimed and paid, $602.71, for the period is considered to have been overpaid." The same view was taken by the Comptroller General. On July 3, 1947, a letter of demand was written to the defendant, and the demand not being complied with, this suit was filed in February of the current year.

The Government's complaint, after setting out the pertinent statutes, alleges the making of the original agreement in 1944 and the extension thereof, and quotes Article VII of the agreement, which has been heretofore analyzed; the complaint further alleges the submission and the payment of the several claims, and then concludes with the following operative allegation: "The debtor failed to produce records to substantiate its claims for funds expended. Accordingly, the entire amount claimed by the debtor and paid by the Government, $602.71, has been overclaimed and overpaid, and the said sum * * * is therefore properly for refund by the debtor to the United States."

In its answer ...