United States v. Rippetoe

• Decision Date: 30 December 1949
• Docket Number: No. 5974.,5974.
• Parties: UNITED STATES et al. v. RIPPETOE et al.
• Court: U.S. Court of Appeals — Fourth Circuit

178 F.2d 735 (1949)

UNITED STATES et al. v. RIPPETOE et al.

No. 5974.

United States Court of Appeals Fourth Circuit.

Argued November 14, 1949.

Decided December 30, 1949.

Harold R. Love, Pro Se (Burdette W. Bergman and J. Baumhofer, Minneapolis, Minn., on brief), for appellants.

Samuel Want, Darlington, S. C., J. Spencer Bell, Charlotte, N. C., and A. L. Hardee, Florence, S. C. (Willcox, Hardee, Houck & Palmer, Florence, S. C., on brief), for appellees.

Before PARKER, Chief Judge and SOPER and DOBIE, Circuit Judges.

PARKER, Chief Judge.

This is an appeal from a summary judgment for defendant in an informer's suit instituted under 31 U.S.C.A. §§ 231 and 232 to recover on account of alleged fraud in the presentation of a claim against the United States. Plaintiff alleged, not only that the claim was false, but also that there was corruption on the part of government officials in dealing with it. The learned District Judge thought that, because plaintiff did not negative knowledge of the fraud on the part of government officials, but on the contrary charged their knowledge of and complicity in the fraud, the court was without jurisdiction to entertain the suit under subsection C of 31 U.S.C.A. § 232, which provides:

"* * * (C) The court shall have no jurisdiction to proceed with any such suit brought under clause (B) * * * whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought * * *."

In this holding we think there was error. In the first place, we do not think it incumbent upon plaintiff to negative knowledge on the part of government officials of the evidence upon which his action is based. The provision of the statute is that when "it is made to appear" that the suit is based upon evidence or information in possession of the United States, etc., the court shall be without jurisdiction to proceed with it. This clearly means, not that plaintiff must in his pleadings or otherwise negative knowledge on the part of government agents, but that the court shall lose jurisdiction whenever that fact is established in the case.

In the second place, we do not think that knowledge on the part of a government official who is implicated in the fraud precludes suit by the informer. The whole history of the provision shows that its purpose was, not to bar bona fide suits by informers merely because corrupt officials of the government might have participated in the fraud or refused to prosecute it, but to prevent the bringing of parasitical actions by those who sought to profit from governmental investigations or prosecutions by using the evidence which these had developed, as occurred in United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443, the decision in which led directly to the legislation of which the provision here is a part. In a letter to the Speaker of the House, advocating the repeal of the original informer statute following that decision, Hon. Francis Biddle, who was then Attorney General, pointed out the need for remedial legislation in the following language:¹

"Recent experience shows that plaintiffs in informers' suits not only fail to furnish to the United States the information which is the basis of their actions, but on the contrary, at times base the litigation on information which has been secured by the Government in the regular course of law enforcement. Such plaintiffs at times not only use information contained in indictments returned against the defendant, but also seek to use Government files to prove their cases. Consequently, informers' suits have become mere parasitical actions, occasionally brought only after law enforcement officers have investigated and prosecuted persons guilty of a violation of law solely because of the hope of a large reward."

A bill was introduced into Congress following the receipt of this letter providing for the repeal of the informer statute. It passed the House but was amended in the Senate, the report of the Senate Committee stating:² "The committee have amended the bill to protect and compensate genuine informers who comply with the provisions respecting notice to the Attorney General * * *." It was with this in view that the act which finally became law as an amendment of the informer statute was worked out when the House bill as amended by the Senate was referred to a conference committee.

It is a well settled principle of law that knowledge of an agent who is engaged in an attempt to defraud his principal will not be imputed to the principal. American Surety Co. v. Pauly, 170 U.S. 133, 18 S.Ct. 552, 42 L.Ed. 977; 2 Am.Jur. 298-299; A. L. I. Restatement of Agency sec. 282(1). Some of the worst frauds upon the government have been those in which officials have participated; and it is hardly reasonable to suppose that Congress intended to forbid suits by informers based on such frauds, merely because of the knowledge of a false agent who participated in the fraud and whose interest would be to conceal it. There is reason in saying that an informer may not sue on a claim of which those who may be expected to protect the interests of the government have knowledge; and this is clearly what the act means. This reasoning does not apply, however, where the knowledge is in possession of one who has participated in a fraud on the government and is interested in concealing it. To so hold would in large measure emasculate the statute and deprive the public of its benefit in cases where it is most needed. It is clear that the amendment enacted into law the views expressed by Mr. Justice Jackson in...