United States v. Hougham

• Decision Date: 23 September 1959
• Docket Number: No. 15873.,15873.
• Citation: 270 F.2d 290
• Parties: UNITED STATES of America, Appellant, v. E. B. HOUGHAM, Owen Dailey, William E. Schwartze and Harlan L. McFarland, Appellees. E. B. HOUGHAM, Owen Dailey, William E. Schwartze and Harlan L. McFarland, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

270 F.2d 290 (1959)

UNITED STATES of America, Appellant, v. E. B. HOUGHAM, Owen Dailey, William E. Schwartze and Harlan L. McFarland, Appellees.

E. B. HOUGHAM, Owen Dailey, William E. Schwartze and Harlan L. McFarland, Appellants, v. UNITED STATES of America, Appellee.

No. 15873.

United States Court of Appeals Ninth Circuit.

April 14, 1959.

Rehearing Denied September 23, 1959.

George Cochran Doub, Asst. Atty. Gen., Morton Hollander, Hershel Shanks, Attys., Dept. of Justice, Washington, D. C., Laughlin E. Waters, U. S. Atty., Richard A. Lavine, Asst. U. S. Atty., Los Angeles, Cal., for appellants.

Conron, Heard & James, Calvin H. Conron, Jr., Bakersfield, Cal., for appellee.

Before FEE, BARNES and HAMLIN, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

This action was instituted to recover damages on account of the fraudulent acquisition of surplus property in violation of the provisions of the Surplus Property Act of 1944.¹ It was claimed that defendant E. B. Hougham, individually and under the assumed business name of Baker's Motor Market, had Owen Dailey, William E. Schwartze and Harlan L. McFarland, the other defendants, purchase for him surplus property vehicles from the government. These purchases were charged to have been accomplished by the use of priority certificates of veterans which belonged to the other defendants, respectively. It was claimed that Hougham could not otherwise have obtained title to such vehicles.

The record showed that each of the defendant veterans filed with the War Assets Administration an application for a certificate to enable him to purchase war surplus material on a priority basis. Upon the representations in the applications filed by these veterans, priority certificates were issued to each respectively. In each application presented by a defendant veteran, there was a representation reading as follows:

"I am, or will be, directly or indirectly, the sole proprietor of the enterprise described herein, or, that no person or persons, other than veterans, have or will have any proprietary interest in the enterprise, singly or together, directly or indirectly, in excess of 50 per cent of either the capital invested in the enterprise or of the gross profits or income thereof; * * * that said property is to be used in and as part of the enterprise described herein."

The evidence also proved that Hougham had a large establishment and that defendant veterans were financed by him to purchase the property on the priority certificates; the vehicles were delivered to Hougham, who treated them as his own; the veterans received $10.00 from Hougham.

The cause was tried by the court without a jury. A judgment was entered against Hougham and Dailey for $2,000.00, against Hougham and Schwartze for $2,000.00, and against Hougham and McFarland for $4,000.00. These sums were described as "liquidated damages." The court ruled that the government had presented no proof of actual damage.

A major point raised is whether the action is barred by the Statute of Limitations. The court ruled that no statutory provision was applicable to bar the action.

It was claimed that the bringing of the action was limited by 28 U.S.C.A. § 2462, which reads:

"Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon."

The trial court ruled that the section above quoted did not apply and that, since the Surplus Property Act of 1944 contained no provision for limitation, the action therein authorized could be commenced at any time. It is significant in this connection that the trial court gave judgment for $2,000.00 for each act.

The exact point has been ruled upon by the Court of Appeals for the Third Circuit in the case of United States v. Doman, 255 F.2d 865, 867, where it is said:

"The narrow issue, therefore, is whether Section 26(b) (1) of the Surplus Property Act, which requires a person committing the prohibited act to pay the United States the sum of two thousand dollars for each fraudulent act in addition to double the amount of any damages which the United States may have sustained by reason of Koller\'s and Silberbrook\'s activities provides a civil fine, a penalty, or a forfeiture, or merely compensatory damages."

That court, citing the opinion of Judge Jertberg in the instant case, pointed out that the Supreme Court of the United States, in Rex Trailer Co. v. United States, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 148, had held that the provisions of Section 26(b) (1) are civil and not criminal, although the point of limitation upon an action was not involved, but concluded the later opinion resolved the conflict among the circuits as to the existence of a bar. This Court accepts that solution.²

It may be noted, however, that the acts here for which defendants were held liable were committed sometime between March 16 and September 30, 1946, by the filing of respective priority certificates, while the first complaint was filed December 31, 1954. Even if 28 U.S. C.A. § 2462 were applicable, this complaint was timely.³

Defendants claim that the Statute of Limitations is particularly important because of the filing of an amended complaint on November 2, 1956. The amended complaint did vary from the original in two particulars. First, the charge of fraud in the original complaint was an alleged false...