United States v. Onan

• Decision Date: 11 July 1951
• Docket Number: 14291.,No. 14234,14234
• Citation: 190 F.2d 1
• Parties: UNITED STATES et al. v. ONAN et al. (two cases).
• Court: U.S. Court of Appeals — Eighth Circuit

190 F.2d 1 (1951)

UNITED STATES et al. v. ONAN et al. (two cases).

Nos. 14234, 14291.

United States Court of Appeals Eighth Circuit.

June 20, 1951.

Rehearing Denied July 11, 1951.

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H. R. Love and H. M. Roberts present on behalf of appellants.

Benedict Deinard, Minneapolis, Minn. (R. H. Fryberger, Minneapolis, Minn. was with him on the brief), for appellees.

Before GARDNER, Chief Judge, and THOMAS and JOHNSEN, Circuit Judges.

GARDNER, Chief Judge.

These were actions brought in the name of the United States of America by appellants H. M. Roberts and H. R. Love as informers against David W. Onan and various other companies and individuals to recover for alleged fraud in connection with termination claims against the United States. There was originally but one action and the complaints in the two actions differ in no material matter. The complaints were not printed by appellants but the complaint in the first suit filed is reproduced in a supplemental record by appellees. The complaint is very elaborate and alleges among other things: "That the defendants, have by their acts and by said false, fictitious and fraudulent statements, representations and claims, caused the United States, and an agency thereof, to sustain damages, in the amount of $1,256,536.00, by the doing and committing of the acts and the concealment of material facts set forth herein." It demands judgment for a total of $2,525,072.00, together with costs, expenses and attorneys' fees "to be taxed and added, in accord with the provisions of Section 232, Title 31 of the United States Code Annotated; and for an award out of the judgment, or proceeds of any settlement effected of this suit, to the persons bringing the same, in the name of the United States, and carrying the same on to conclusions, judgment, settlement and termination according to the laws made and provided * * *."

The actions have not reached final judgment but the appeals are from two orders which will hereafter be more fully described.

The actions are based on Section 231, Title 31, United States Code Annotated, which fixes liability for making false claims against the government. Appellants are laymen but in bringing and prosecuting these suits have acted as attorneys for the United States in whose name the suits were brought. They were not named as parties plaintiff although they are named as appellants.

On April 13, 1950, appellants filed a complaint in the Fourth Division of the District Court. On June 12, 1950, within the sixty days allowed by statute, the United States filed its appearance and specifically reserved all of its rights to carry on the litigation. On September 6, 1950, appellants filed an affidavit of prejudice against Judge Nordbye, alleging that in the absence of the appellants he had conferred with counsel for certain appellees concerning interrogatories previously filed by appellants. Thereafter, on September 13th and 19th, 1950, appellants had garnishee summons served on five large banks in Minneapolis, thereby impounding large sums of money belonging to appellees, and on September 19th caused summons and complaint to be served on certain appellees. The garnishee summons was not issued by the clerk of the trial court but the appellants signed the name of the United States thereto as plaintiff, under the practice in Minnesota. On application of the appellees the court issued two orders to show cause why the service of summons in garnishment should not be quashed and the appellants adjudged in contempt of court. On September 28, 1950, after holding that the affidavit of prejudice filed by appellants was insufficient and untimely, the court after hearing entered an order quashing both the garnishee summons and the service of summons on appellees, directing that action be carried on solely by the United States until such time as it should evidence its intention not to proceed, and enjoining appellants from further intermeddling in the case during the time reserved to the United States to proceed with its prosecution.

In the meantime, and on September 7, 1950, without notice to the United States or appellees, appellants commenced an action in the third division of the trial court by filing a complaint which is a duplicate of that previously filed in the fourth division, except for immaterial deviations in the names of certain of the defendants, and on October 20, 1950, appellants again caused garnishee summons to be served on various banks, impounding deposits of appellees amounting to hundreds of thousands of dollars. Appellees first learned of the pendency of the second suit when they secured copy of the garnishee summons on October 20, 1950. The commencement of the second action was concealed from the trial court at the hearing of September 28th. On October 30, 1950, on motion of appellees, the court entered an order to show cause returnable November 3, 1950, calling on appellants to show cause why the actions should not be consolidated, the garnishee summons issued in the second action quashed, and the appellants adjudged in contempt of court on the ground that the commencement of the second suit and the issuance of garnishee summons therein were colorable evasions of the prior orders of the court. Appellants were personally served with this order to show cause.

At the hearing of November 3, 1950, appellants personally appeared. On November 8, 1950, the court entered its order consolidating the two cases, quashing the garnishee summons dated October 30, 1950, enjoining appellants from taking any further steps in connection with the litigation until the United States evidenced its intention not to proceed with the prosecution thereof (permitting, however, appellants to present motions for leave to carry on the litigation), adjudging appellants in contempt of court, and ordering them to pay a fine of $2500.00 to the clerk of the court, to be paid over to the moving defendants in reimbursement of the damages suffered by them, or in default of payment to be committed to jail until the fine be paid. On November 6, 1950, appellants filed demand for jury trial of the contempt of court orders to show cause. In this demand it was alleged that appellant Roberts had not been served with any of the show cause orders.

On November 16, 1950, the United States filed a statement withdrawing its prior appearance. Appellants, having failed to pay the fine imposed, were committed to jail where they were confined for a period from December 4 to December 22, 1950, when the commitment order was suspended. The appeal challenges the validity of the order of September 28, 1950, and likewise challenges the validity of the order of November 8, 1950.

Appellees interposed the threshold contention that neither the order of September 28, 1950, nor that of November 8, 1950, is appealable. Certain features of the orders would not, if embodied in a separate order, be reviewable on appeal from the order but the orders contain injunctional features which we think make them appealable. United States v. Baker-Lockwood Mfg. Co., 8 Cir., 138 F.2d 48.

An affidavit of prejudice having been filed against Judge Nordbye, it is contended that he automatically became disqualified and was without authority to enter the orders appealed from. As this question goes to the validity of both of the orders, we shall first consider it. As has been noted, the affidavit of prejudice was filed September 6, 1950, but was apparently not called to Judge Nordbye's attention until the time set for hearing of the order to show cause which resulted in the order dated September 28th. A better understanding of the situation may be gathered by referring to certain proceedings which had been taken prior to the filing of this affidavit of alleged bias and prejudice.

The United States filed notice of appearance June 12, 1950. Thereafter, on July 29, 1950, and again on August 7, 1950, appellants applied to the court for an order authorizing them to carry on the action on the ground that the United States had failed to prosecute with due diligence. On August 9, 1950, Judge Nordbye overruled the motion and in doing so "ordered: that all further proceedings in this cause be stayed until the further order of the court." At the time of entering this order appellants were present, and the court in an oral opinion indicated that the government would require some time after its appearance to proceed in the prosecution of the lawsuit. In the course of this opinion the court, among other things, said: "My understanding of the statute is that, if it appears that, taking into consideration these matters, the Government would have to give attention to, that within the six month period it did not make a sufficient showing of diligence in the prosecution of this suit, then the Court might find that there was a lack of due diligence, and then the Court could say, `Well, in the interest of the public, the United States has fallen down on the job and the Court is going to turn this lawsuit over to the informer for prosecution.'"

The court further said in that oral opinion: "Furthermore, it seems to me that until we determine who is going to handle this lawsuit, whether you as the informers or the United States, that the service of the process and any steps taken in the furtherance of this lawsuit should be left to the United States until the Court has determined that it is no longer a proper party to proceed with the lawsuit."

It was following the entry of the order of August 9th that the affidavit of prejudice was filed, which the court held insufficient and untimely.

Section 144, Title 28, United States Code, while providing for the filing of a timely and sufficient affidavit that the judge has "a personal bias or prejudice either against him or in favor of any adverse party," also provides that such affidavit shall be filed not less than ten days before the beginning of...