United States v. Park Motors

• Decision Date: 06 August 1952
• Docket Number: No. 1851.,1851.
• Citation: 107 F. Supp. 168
• Parties: UNITED STATES v. PARK MOTORS, Inc. et al.
• Court: U.S. District Court — Eastern District of Tennessee

107 F. Supp. 168

UNITED STATES v. PARK MOTORS, Inc. et al.

No. 1851.

United States District Court E. D. Tennessee, Northern Division.

July 25, 1952.

Supplemental Opinion August 6, 1952.

Otto Ault, U. S. Dist. Atty., Chattanooga, Tenn., Ferdinand Powell, Jr., Asst. U. S. Dist. Atty., Knoxville, Tenn., for plaintiff.

Anderson & Anderson, Knoxville, Tenn., for defendant.

ROBERT L. TAYLOR, District Judge.

This is an action to recover a civil penalty of $2,000 in each of four counts, together with double damages and costs, for alleged violations of the False Claims Statute, 31 U.S.C.A. § 231, in connection with the sale of four automobiles to as many disabled veterans and claim for reimbursement from the Veterans Administration, as provided by Public Law 663, 79th Congress, approved August 8, 1946, 60 Stat. 910.

There were four transactions, substantially alike, a statement of one being sufficient to fix the approximate time and character of all.

On or about November 5, 1946, one of the veterans applied to the Veterans Administration for, and was granted, a certificate to the effect that he was eligible to purchase an automobile at Government expense, as provided in Public Law 663, wherein the maximum cost is fixed at $1,600. He presented the certificate to the defendants and entered into a purchase-order contract with them for the purchase of an automobile. The price stated in the contract was $1,595.49. Also contained in the contract was a provision that in the event of a change in the retail price of the vehicle before delivery, the purchaser would pay the new price or permit the defendants to cancel the contract. This contract, entered into about November 5, 1946, was submitted to the Veterans Administration and was approved by the Finance Officer on November 13, 1946.

In the meantime, on November 11, 1946, by authority of the Office of Price Administration, the retail price of the ordered automobile was increased in the amount of $105, and the defendants were thereafter notified of the increase. On or before February 6, 1947, defendants informed the purchaser that under the terms of the contract he would have to pay the additional $105 in order to get the automobile. The purchaser agreed to and did pay to defendants the additional $105 and signed a certificate as follows: "I hereby acknowledge receipt of the automobile identified below and certify that the total purchase price, including special attachments and devices listed above required to operate the vehicle safely and any tax which is reflected in the purchase price, does not exceed $1,600.00." Underneath the purchaser's certificate was the certificate of the seller, as follows: "I certify that the above bill is correct and just; that payment therefor has not been received." This was signed: "Park Motors, Inc., by John D. Black, Pres." The bill referred to was in the amount of $1,595.49.

There is a further allegation in the complaint that the transaction involved purchase by the veteran from defendants of certain other items, admitted by defendants to have been a radio and some antifreeze, neither of which was included in either the claim submitted to the Veterans Administration or the contract of purchase of the automobile, but each item was separately contracted for and installed either before or at about the time of delivery of the automobile to the purchaser.

Exclusive of the accessories, the automobile, including the $105, representing the increase in retail price, cost the total of $1,700.49. It is upon this fact of total cost, coupled with the claim for a lesser amount, that the Government bases its case against defendants. The proof shows, however, that before continuing with the transaction after learning of the price increase, defendant Black called the Nashville office of the Veterans Administration and was told over the telephone by some individual in that office that in the judgment of that office he saw no objection to the defendants collecting $105 from the veteran, but that the invoice had to agree with the contract and that the Veterans Administration would not pay over $1,600. No ground exists for a finding that the Government was overcharged, or that the sum of $1,595.49 contained any element of fiction, or that upon being paid the $1,595.49 by the Government the defendants received something which, as a business transaction, they were not entitled to, or that with fraudulent design they undertook to deceive and cheat the Government. On the contrary, the evidence shows that defendants acted in good faith, with honest purpose, and in the belief that they were proceeding with Government approval. In a practical sense, neither the purchaser nor the Government was cheated.

Prior to the increase in the retail price, the Government had approved the contract figure of $1,595.49. Increase by the manufacturer of the retail price to the extent of $105 added nothing to and took nothing away from the automobile. There is no affirmative showing that the increase of the price conferred any benefit upon the defendants. In ordinary reason, if the defendants were entitled to receive $1,595.49 from the Government before the increase, they were still entitled to receive that sum. Nevertheless, for the reason that $1,595.49 was not the entire cost of the automobile, it is insisted by the Government that defendants knowingly and wilfully presented a false claim which the Government paid, but which the Government would not have paid had it known all of the pertinent facts.

Defendants take the position that regulations purporting to exclude separate contracts for accessories lacked statutory and constitutional support, that performance of the sale contract and submission of the claim had Government approval, and that the claim submitted was not false and contained no fraudulent representation. On behalf of defendants it is also urged, and in the Court's opinion proved, that defendants had no specific intent to defraud or deceive the Government, but acted throughout openly and with honest intent.

As against the stated defenses, it is the Government's insistence that the claim was false because it did not state the true cost of the automobile, that defendants knew of its falsity in that respect, that in that knowledge they wilfully presented the claim for payment and in due course received payment thereon, and that in that situation the law implied fraudulent intent, if such intent is material.

Sec. 231 of Title 31 U.S.C.A., provides as follows:

"Any person * * * who shall make or cause to be made, or present or cause to be presented, for payment or approval, * * * any claim * * * knowing such claim to be false, fictitious, or fraudulent, or who, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, makes, uses, or causes to be made or used, any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry * * * shall forfeit and pay to the United States the sum of $2,000, and, in addition, double the amount of damages which the United States may have sustained by reason of the doing or committing such act, together with the costs of suit * * *."

As evidence of his receipt of the automobile, the purchaser signed a statement in the following words:

"I hereby acknowledge receipt of the automobile identified below and certify that the total purchase price, including special attachments and devices listed above required to operate the vehicle safely and any tax which is reflected in the purchase price, does not exceed $1,600.00.

"Section V — Receipt for Automobile.

"Make, Olds; Model, 66; Year, 1947; Motor No. 6-90898-H; Purchase price, $1,595.49; Date of sale, 11-15-46.

"Special attachments required to operate the vehicle: Hydra-Matic Drive.

"Name and Address of Seller: Park Motors, Inc., 900 S. Gay St., Knoxville, Tenn.

"Date of Delivery, Feb. 6, 1947.

"Signature of Veteran: Victor H. Huckeby."

Below the signature of the veteran appears the following:

"I certify that the above bill is correct and just; that payment therefor has not been received."

This is signed: "Park Motors, Inc., By John D. Black, Pres."

As the date of delivery of the automobile was February 6, 1947, the date of the receipt acknowledging delivery presumably would be the same or a subsequent date. At the top of the statement and appearing as the first item below the letter heading is the following: "Knoxville, Tenn., February 6, 1947." This date should, and does, fix the date of both certificates as February 6, 1947. On that or a prior date the purchaser paid the additional $105 heretofore mentioned as the retail price increase. The purchaser's statement that the total purchase price did not exceed $1,600 was, therefore, not true as of that date. Although the statement fixes the date of sale as November 15, 1946, and as of that date there had been no payment of the $105, this does not change the fact that at the date of the certificate the purchaser had paid, or contracted to pay, a total of $1,700.49. By certifying below the signature of the purchaser that the "above bill is correct," the seller adopted the purchaser's statement by reference, thus making the incorrect statement of the purchaser that of the seller also. Inasmuch as the seller, that is the defendants, knew all of the facts, there is no escaping the conclusion that the seller knew of the incorrectness of the statement and presented it to the Government, knowing that it did not reflect the "total purchase price."

From this finding that defendants knew the statement did not reflect the total purchase price, does it follow that defendants presented a claim upon the Government, knowing such claim to be false, fictitious or fraudulent? That defendant Black was told by some person in the Nashville office of the Veterans Administration that it would be proper for him to...