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UNITED STATES v. TEMPLE

December 18, 1956

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PAUL L. TEMPLE, SULLIVAN BOX FACTORY, A COPARTNERSHIP, AND REPUBLIC BOX COMPANY, A COPARTNERSHIP, DEFENDANTS.



The opinion of the court was delivered by: Sullivan, District Judge.

This action is one by the Government to recover damages for several transactions in which it claims it has been defrauded by defendant Paul Temple. On the basis of its complaint and one other document which will be discussed later, the Government has moved for a summary judgment in its favor.

    "Any person * * * who shall make * * * any claim
  upon or against the Government of the United States *
  * * knowing such claim to be false, fictitious, or
  fraudulent * * * 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 * * * and such forfeiture and damages shall
  be sued for in the same suit."

The cause of action there given is limited by Title 31 U.S.C.A. § 235, which provides that "Every such suit shall be commenced within six years from the commission of the act, and not afterward".

That limitation would, in view of the times involved, bar the present action so far as Counts I and II are concerned, unless the time for filing was extended by the Wartime Suspension of Limitations Act, Title 18 U.S.C. § 3287:

    "When the United States is at war the running of
  any statute of limitations applicable to any offense
  (1) involving fraud or attempted fraud against the
  United States or any agency thereof in any manner * *
  * shall be suspended until three years after the
  termination of hostilities as proclaimed by the
  President * * *"

The question therefore is whether Section 231 designated an "offense involving fraud or attempted fraud against the United States". The Supreme Court held in United States v. Grainger, 1953, 346 U.S. 235, 73 S.Ct. 1069, 97 L.Ed. 1575, that a violation of the companion criminal section of the False Claims Act, Title 18 U.S.C. § 287, was such an "offense" and that the Wartime Suspension of Limitations Act accordingly tolled the normal three-year Statute of Limitations. Whether this decision requires a similar conclusion in the present instance depends upon a comparison of the sections involved. Using exactly the same language, both are concerned with any person who "makes any claim against the United States, knowing such claim to be false"; the sole distinction is in the remedy provided.

That a civil and compensatory remedy is made available to the Government in addition to a criminal sanction does not in any way change the character of the act performed, or make it any less an "offense against the United States". United States v. Strange Bros. Hide Co., D.C.N.D.Iowa 1954, 123 F. Supp. 177. Nor is this conclusion a mere matter of semantics revolving around the word "offense". The False Claims Act was concerned with fraud of a pecuniary nature, committed against the government, Marzani v. United States, 1948, 83 U.S.App.D.C. 78, 168 F.2d 133, affirmed without opinion 335 U.S. 895, 69 S.Ct. 299, 93 L.Ed. 431 and 336 U.S. 922, 69 S.Ct. 653, 93 L.Ed. 1084; United States v. Cochran, 5 Cir., 1956, 235 F.2d 131 and United States v. Lurie, 7 Cir., 1955, 222 F.2d 11, 15. The Wartime Suspension of Limitations Act was concerned in turn with the ease with which fraud could be concealed, and sought to grant the government in time of war a correspondingly longer time to discover it. Bridges v. United States, 1953, 346 U.S. 209, 73 S.Ct. 1055, 97 L.Ed. 1557. Surely Congress may be assumed to have been as anxious, or even more anxious, to preserve to the government its civil remedy as its criminal retribution.

Since Sec. 231 provides a remedy for an offense against the United States involving fraud, the time for its enforcement was tolled by the Wartime Suspension of Limitations Act, and this action was timely filed as to Counts I and II.

Count III alleges the presentation to the Government of a fraudulent claim and seeks recovery under Title 41 U.S.C.A. § 119, which allows recovery by the United States for presenting to the government a false document for the purpose of obtaining money. This section is subject to no specific statutory limitation, and a recent Supreme Court decision, Rex Trailer Co. v. United States, 1956, 350 U.S. 148, 76 S.Ct. 219, indicates that Title 28 U.S.C. § 2462 limiting the time for recovery of "penalties" would not apply, cf. United States v. Weaver, 5 Cir., 1953, 207 F.2d 796; United States v. Witherspoon, 6 Cir., 1954, 211 F.2d 858; and Erie Basin Metal Products, Inc., v. United States, Ct.Cl., 145 F. Supp. 922. Counts IV and V (described below) are common law counts as to which there is no statute of limitations against the government. The defense of the statute of limitations as to these Counts must accordingly also be overruled.

The second affirmative defense is that the plaintiff's claim has been previously adjudicated and is barred by a judgment recovered by the Reconstruction Finance Corporation against Paul Temple on August 5, 1949 in the United States District Court for the Southern District of Illinois, Southern Division. The Government's somewhat unusual response to this pleading was to rely on the same judgment as entitling it to a summary judgment here, and it attaches to its motion a certified copy of the prior complaint and judgment.

That suit was brought against Paul Temple and Gordon Knoblich, doing business as the Sullivan Box Factory, a partnership, and Sullivan Industries, Inc., a corporation. The complaint alleges that Temple and Knoblich, doing business as the Sullivan Box Factory, executed and delivered to the Smaller War Plants Corporation (predecessor to the R.F.C.) three notes dated April 28, 1945, October 26, 1945, and March 22, 1946, which are in part unpaid, and asks judgment on the notes. A default judgment was entered for $38,430.65.

In the present complaint, the first two Counts allege that in 1945 and 1946 the Smaller War Plants Corporation made loans of $26,000 and $75,000 (in round figures) to the Sullivan Box Factory, a partnership in which Temple was a partner, which loans were made on the basis of false representations; double damages are asked under the False Claims Act. Count III under Title 41 U.S.C.A. ยง 119 alleges that a false claim was presented by Temple, or the Republic Box Co. of which he was a partner, to the War Department, and paid by it. Count IV re-alleges the ...


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