C. A. Daniel v. United States

234 F.2d 102

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 27, 1956
• Docket: 15758_1
• Status: Published

Opinions

RIVES, Circuit Judge.

This appeal is taken from an aggregate district court award to appellee of $6,-000.00, which sum represents treble the statutory recovery of $2,000.00 for each of three fraudulent acts found to have been committed by appellant for the purpose of obtaining certain surplus property of the United States to which he was not entitled, in violation of the Surplus Property Act of 1944, as amended. The statute upon which appellee’s recovery was based reads as follows:

“(b) Every person who shall use or engage in, or cause to be used or engaged in, or enter into an agreement, combination, or conspiracy to use or engage in or to cause to be used or engaged in, any fraudulent trick, scheme, or device, for the purpose of securing or obtaining, or aiding to secure or obtain, for any person any payment, property, or other benefits from the United States or any Federal agency in connection with the procurement, transfer, or disposition of property under this chapter, * * *

“(1) shall pay to the United States the sum of $2,000 for each such act, and double the amount of any damage which the United States may have sustained by reason thereof, together with the cost of suit * * Title 40 U.S.C.A.,§ 489(b) (1), formerly Title 50 U.S.C.A.Appendix, § 1635(b).

The testimony reveals that, during 1946, appellant and three veterans, George Reese, William Adair and Albert Axe, all worked for the County of Dallas, Texas; that in the Spring of that year each veteran filed an application with the War Assets Administration office at Fort Worth, Texas, wherein each represented that he wished to purchase a Government surplus truck for use in his ■own business, rather than for resale;¹ that, upon the basis of such individual representations by the aforenamed veterans, they were issued veterans’ priority ■certificates enabling them to make priority purchases of such equipment; that veteran Reese used his certificate to purchase a two and one-half ton GMC Cargo Truck for $1,185.00 from the War Assets Administration at a sale held, in March, 1946, at Camp Livingston, Louisiana, to which sale he was accompanied by appellant and for which purpose appellant provided the money at the sale site; that Reese never intended to buy this truck for his own use, as evidenced by the fact that he immediately delivered possession of said vehicle and subsequently transferred title thereto to appellant.

It was further showfi that veteran Adair, by virtue of his having been issued a priority certificate based upon his representation of the need of such vehicle for his own use, became the purchaser of the same type vehicle for the sum of $1,049.00 at a War Assets Administration sale held at Camp Swift, Texas, on May 8, 1946; that on the following day, May 9, 1946, appellant gave Adair a check in this same amount to cover his purchase, whereupon Adair immediately delivered possession of the truck to appellant and subsequently conveyed title to him without ever having used the truck for any purpose of his own, as theretofore represented in his application for a priority certificate to authorize his purchase.

Similarly, the proof reveals that veteran Axe, by virtue of his veterans’ priority certificate issued in reliance upon his aforesaid representation was allowed to purchase the same type vehicle at a sale held at Camp Livingston, Louisiana, on March 28, 1946, for the sum of $1,-139.00; that Axe also never used his truck for his own purposes, but on May 9, 1946 was paid $1,139.00 by appellant therefor and delivered the vehicle to him, subsequently transferring title to him also.

The district court, sitting without a jury, stated its credibility findings and conclusion therefrom in its unreported oral opinion as follows:

“The fact that witnesses testified that the defendant Daniel furnished the money and was working with each of the witnesses, and put up the money to purchase, and in one instance, at least, went with the purchaser when he did purchase, and each of these purchasers were veterans entitled to purchase government property at a lower scale than anyone else could purchase it; under that state of facts I believe that the defendant Daniel knew that these veterans were going to get these certificates and to use them in the purchase of this property. It is almost an insult to one’s ability to connect testimony and to discover where the truth lies to make any other conclusion. He put up the money. He got the things that were purchased. He knew they were veterans. And, as I have already said, in at least one instance went with him down there where the sales were made to the veterans.

******

“I, therefore, conclude, as a matter of law that judgment must go for the plaintiff.”

Appellant’s sole insistence is that the above quoted findings and inferences of the court are clearly erroneous, and palpably insufficient to support its judgment on the basis of the charge actually plead.² He contends, in effect, that since the record is admittedly devoid of any direct testimony showing his complicity in any conspiracy with these veterans to make misrepresentations in their applications for such priority certificates, the court was not authorized to infer his involvement as a matter of law from the case made. As supporting this insistence, appellant relies upon partial deficiencies in the proof resulting from the Government’s failure or inability to show he supplied the money prior to or at the time of purchase for any veteran other than Reese, and upon other testimony tending to negative his participation in any conspiracy with these veterans at the time their applications were made, such as Reese’s assertion that he did not then know appellant, Adair’s testimony that he never told appellant about making any application or receiving his priority certificate, and the further absence of any direct proof as to his knowledge of an application for priority ever having been made by Axe, the veteran who did not testify at the trial.

The obvious answer to this evidentiary argument, as we understand it, is that the trial court was not bound to accept this testimony, nor to attach credence to Adair’s apparent attempt to exonerate appellant,³ but was justified in its ultimate conclusion of liability in view of the contrary proof as to appellant's employment relationship and association with the veterans at the time of their applications and the priority purchases, his fairly inferable knowledge of their eligibility as veterans for such priority vehicle purchases at prices substantially less than those for such trucks as may otherwise have then been available ;⁴ his almost immediate acquisition of title thereto before each vehicle had ever been used by the veteran for any purpose of his own; his act in either furnishing the money for the purchase, as in the Reese transaction, or reimbursing the veteran in the exact amount of his purchase immediately upon delivery of the vehicle shortly thereafter, as in the Adair purchase; and finally, the inference that appellant either furnished the money for the Axe purchase,⁵ or that at least it was never actually contemplated that Axe would make the personal use of it represented in his prior application, as evidenced by his immediate delivery of possession and subsequent transfer of title to the truck to appellant before he could use it for any purpose of his own. In view of all this testimony and inferences reasonably flowing therefrom, certainly we may not set aside the district court’s findings as “clearly erroneous.” Rule 52(a), Fed.Rules Civ.Proc., 28 U.S.C.A. Furthermore, from our careful review of the entire record testimony, we can conscientiously claim no “definite and firm conviction that a mistake has been committed” which would justify reversal. See United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746.

This is not a criminal proceeding, but a statutory, civil action for liquidated damages, and the Government was not required to prove any conspiracy between appellant and the veterans to file any false applications for the priority certificates beyond a reasonable doubt, but was only required to adduce either substantial evidence of his involvement in such a conspiracy, or his inducement of the misrepresentation as a “fraudulent trick, scheme or device” to enable him to procure surplus vehicles on a priority basis to which he was not then entitled under the Act. Acknowledging our duty under the rule to view the testimony and inferences therefrom in the light most favorable to the prevailing party below, we think the proof is adequate to support the award under either theory. See United States v. Rex Trailer Co., 7 Cir., 218 F.2d 880, affirmed 350 U.S. 148, 76 S.Ct. 219; cf. Russell v. United States, 5 Cir., 222 F.2d 197. Certainly, the proof was sufficient to make out a prima facie case of appellant’s involvement in each of the transactions and liability to respond civilly in liquidated damages under the statute; and this not being a criminal case, his failure either to take the stand, or show that he was unable to testify, or even to offer any- excuse whatever for his failure to testify in explanation of suspicious facts and circumstances peculiarly within his knowledge, fairly warrants the inference that his testimony, if produced, would have been adverse.⁶ As appropriately stated by this Court in Anderson v. United States, 185 F.2d 343, 346, a civil condemnation proceeding in which the claimant of an automobile forfeited for having been used in violation of the internal revenue laws also failed to take the stand:

“The pertinent and controlling evidence was within his knowledge and it was within his power to explain the circumstances connected with the transaction, yet he declined to testify. ‘His silence may well count against him, as against any other civil litigant.’ Kent v. United States, [5 Cir., 157 F.2d 1, 2].”⁷

Again, the testimony of the two investigators, Girlinghouse and Thomason, to the extent that it was not objected to as hearsay, constituted evidence in the cause. As said by the Supreme Court in Diaz v. United States, 223 U.S. 442, 450, 32 S.Ct. 250, 252, 56 L.Ed. 500: “So, of the fact that it was hearsay, it suffices to observe that when evidence of that character is admitted without objection, it is to be considered and given its natural probative effect as if it were in law admissible.” ⁸

That the Government had a legitimate, proprietary interest in insuring the disposal of its surplus vehicles only to veterans on a priority basis, in accord with the announced policy and objectives of the Surplus Property Act;⁹ that appellant was chargeable with knowledge of that declared policy and the prohibition against sale or transfer of a veteran’s rights to non-veterans under guise of a fraudulent scheme or agency;¹⁰ and that the Government has suffered compensable damage under the statute for appellant’s having obtained such vehicles in manifest perversion of that declared policy, are all propositions which, we think, have been settled beyond our duty of further review. As the Supreme Court has most recently held in its construction of this same statute in the Rex Trailer Co. case, supra:

“It is obvious that injury to the Government resulted from the Rex Trailer Company’s fraudulent purchase of trucks. It precluded bona fide sales to veterans, decreased the number of motor vehicles available to Government agencies, and tended to promote undesirable speculation.” 350 U.S. 148, 76 S.Ct. 219, 222.¹¹ The judgment is

Affirmed.

1 . Like the Trial Court, we attach little significance to the proven fact that the originals of these veterans’ applications for priority certificates had been destroyed prior to the trial and pursuant to an Act of Congress authorizing destruction of such Government records, especially in view of testimony by Government agent, Girlinghouse, that the veteran’s representation that his proposed purchase of surplus property for JUs own use “normally is in the application”. The veteran, Reese, in fact admitted in his testimony that he represented in his application his intention to use the surplus truck in his own business, and the inclusion of such representation by all three veterans in their applications for the priority certificates is not seriously disputed here. Viewed most favorably to appellant, this is merely a deficiency affecting the cogency of the Government’s proof, and one which obviously could not be seriously urged in bar of this action. Further, even in a criminal case, as this Court recently said in Watson v. United States, 224 F.2d 910, 912,

“The use of secondary evidence will * * * be Justified * * * if it be shown by competent evidence that the Government or its agents had destroyed the original and primary evidence in its possession without any fraudulent purpose or any intent to create an excuse for its nonproduction. Riggs v. Tayloe, 9 Wheat. 483, 487, 6 L.Ed. 140; 20 Am. Jur., Evidence, Sec. 438 ; 4 Wigmore on Evidence, 3rd ed., Sec. 1198.”

2 . The complaint alleged that appellant “used, or engaged in, or caused to be used, or engaged in, or entered into an agreement, combination, or conspiracy to use or engage in a fraudulent trick, scheme or device for the purpose of securing or obtaining surplus property consisting of three GMG 1942 model trucks from the United States.”

3 . Adair testified that ho bought the truck with Ms own money in appellant’s absence; that because the truck broke down with him on the way home, he felt he had been “gypped”, and sold it to appellant just to get rid of it. As heretofore noted, however, appellant reimbursed Adair the very next day after Ms purchase for the exact cost of the truck, and before Adair had ever used the truck for any business purpose of his own.

4 . This Court judicially knows that a shortage of trucks for civilian use existed in 1946 shortly after the end of World War II.

5 . There was no positive showing that appellant furnished the money for the Axe truck purchase, but it was shown that Axe purchased $4,000.00 worth of cashier’s cheeks from a bank just before his purchase, at a time when his bank balance was not nearly so large, and appellant’s balance in that same bank was well in excess of that amount. The Government insists that Axe used three of these cashier’s checks, each in the amount of $500.00, to pay for his truck.

6 . See Local 167, etc., v. United States, 291 U.S. 293, 298, 54 S.Ct. 396, 78 L.Ed. 804; 31 C.J.S., Evidence, § 156 d, p. 860; 20 Am.Jur., Evidence, § 190, p. 193; Vol. II Wigmore on Evidence (3rd ed.), § 289, p. 171; see also, Meier v. Commissioner, 8 Cir., 199 F.2d 392, 396, and authorities there cited.

7 . “Constitutional protections against the drawing of adverse presumptions from failure to testify [apply] only to criminal cases. * * * It is utterly irrelevant to a civil proceeding such as the present one.” Attorney General v. Pel-letier, 240 Mass. 264, 134 N.E. 407, 423.

8 . See also, Spiller v. Atchison, T. & S. F. Ry. Co., 253 U.S. 117, 130, 40 S.Ct. 466, 64 L.Ed. 810; Rowland v. (Boyle) St. Louis & S. F. R. R. Co., 244 U.S. 106, 108, 37 S.Ct. 577, 61 L.Ed. 1022; Schlemmer v. Buffalo, Rochester and Pittsburgh Ry. Co., 205 U.S. 1, 9, 27 S.Ct. 407, 51 L.Ed. 681; and the authorities collected in footnote 14 of the opinion of Judge Learned Hand in United States v. Costello, 2 Cir., 221 F.2d 668, 678, affirmed 350 U.S. 359, 76 S.Ct. 406.

9 . For a clear declaration of the Congressional policy and purpose in enactment of the Surplus Property Act of 1944, see Title 50 U.S.C.A.Appendix, § 1611(f), (h), and (q); and Id., § 1625.

10 . See, e. g., United States v. Comstock Extension Mining Co., 9 Cir., 214 F.2d 400, 402.

11 . This Circuit had previously so construed the statute in United States v. Weaver, 207 F.2d 796, 798, wherein it held “There can be no doubt that the property rights of the United States were injured as a result of the acts alleged in the complaint [charging similar violations].”