Earl Warren: Number 46, Rex Trailer Company Incorporated versus United States of America. Mr. Dongus.
Gustave H. Dongus: May it please the Court. This case is here on certiorari to the Court of Appeals for the Seventh Circuit and presents the question whether the prohibition against double jeopardy in the Fifth Amendment bars the Government's recovery from petitioner of the statutory sum of $2000 provided in section 26 (b) (1) of the Surplus Property Act of 1944 pertaining surplus property by a fraud when on the admitted facts the Government had no loss. The statute involved here substance -- in substance provides that every person who shall use or engage in any fraudulent trick, scheme or device for the purpose of securing or obtaining surplus property --
William O. Douglas: (Inaudible)
Gustave H. Dongus: -- 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 cause for them to sue. In addition, the -- I may point out that the statute under subsections 2 and 3 provide two alternative remedies to the Government; namely, that the United States may recover, as liquidated damage, twice the consideration agreed to be paid or as a further alternative, the Government may keep the property or rather recover the property and keep the consideration was --which has been paid. Now, those two alternative remedies are not involved in this case. What is involved is this flat sum of $2000. The facts alleged in the Government's complaint and in the petitioner's answer on which the case was submitted by motions for summary judgment are briefly these. The Government's complaint contained five separate counts. Count one alleged that in June 1947, at Tinker Field in Oklahoma, petitioner did cause a named individual to make a false statement of a material fact in writing to the War Assets Administration for the purpose of obtaining a certain described motor truck. The false statements were statements qualifying the persons -- the person's name in each of the counts as a veteran for priority right to purchase. Counts two through five are identical with count one, as except, as to the name of the person involved and the description of the motor vehicles. Judgment was asked for $2000 on each count or a total of $10,000. Petitioner in its answer pleaded that the Government's action was to recover a statutory penalty and was not for the collection of any obligation or indebtedness owing to the United States or for the recovery of any damage suffered by the United States. And the petitioner had previously been indicted in the District Court -- Federal District Court in Oklahoma in this --in five counts on this very same five transactions. And that he had pleaded nolo contendere in the criminal action. And that the court had imposed a total fine of $25,000 and which fine was paid by the petitioner. The petitioner had then further alleged in his answer that the trucks in question were advertised, offered for sale by the War Assets Administration at a fixed price. And that under the terms of the sale, certain Government agencies, individuals were given the priority right to purchase. That the federal agencies had a higher priority than certified veterans. And that this petitioner had a nonpriority right to purchase, as a dealer in certain types of machinery. The answer further alleged that respondent was not damaged, as the Government was not damaged, did not suffer any loss because of the sale of the trucks and had received the full advertised offering price and if the trucks hadn't been sold to the petitioner or others, it would have been sold at the same price to other priority or nonpriority purchasers. And concluded was the allegation that the complaint seeks to recover a further penalty in addition to the criminal fine previously paid by petitioner, thereby, placing it in double jeopardy, contrary to the Fifth Amendment. The Government's motion for summary judgment on the pleadings was sustained that petitioner was denied. And judgment was entered against petitioner in the sum of $10,000 or $2000 on each of the five counts. That judgment was affirmed by the court below which held that the provision in section 26 (b) (1) for the payment of this $2000 was compensatory and not penal in nature and therefore petitioner's defense of double jeopardy was no bar to this action. Now, the statute itself distinguishes between the sum of $2000 and the double damages which are recoverable. Now as observed by the Sixth Circuit in the United States versus Witherspoon, reported in 211 F.2d which involved a limitation's question, the Court said there that the exaction of the arbitrary sum of $2000 for each offense of obtaining surplus property by fraud without regard to the value of the property is a provision for a penalty and that its purpose is to punish an offense against the public justice. Now, the Government in their brief in this case contends that this $2000, plus double damages, is a reasonable measure of a forseeable damages to the Government. And mentions the fact that surplus property included such items as ships, war plants, port and harbor facilities, strategic materials. But at the other end of the scale, it also included such items as desks, chairs, filing cabinets, typewriters and some items costing as little as 10 cents. But under the Government's contention, it may indict and punish a man criminally for the fraud, no matter how picayunish or small the item may be and then later also collect this $2000 penalty. The Government contends that the decisions of this Court in the United States, or rather, Marcus v.Hess and in 317 United States and in Mitchell versus United States in 303 United States, require they do not compel the holding in this case that the statute is remedial to provide restitution for damage to the Government. And they go on to argue and now I quote from page 11 to 12 of their brief. That once it is decided that this is a remedial action and I quote, “The remedy applies to all cases, under the statute, irrespective of their individual facts or a proof of actual damage." In other words, the facts of the case make no difference. That this amount is recoverable, the remedy inexorably apply in all cases within the sweep of the statute. Now, we submit that neither the Hess case or the Mitchell case are authority for this sweeping doctrine. In the Hess case, if the Court will recall, the action was brought under the False Claims Act which provided that whoever shall commit certain frauds on the Government shall forfeit and pay the sum of $2000. And in addition the Government may recover double damages. The defendants in that case were charged with conspiring by means of certain fraudulent collusive bids on certain Government contracts. The defendants, as the petitioner here, had previously been indicted, and a criminal fine had been imposed. And they pleaded double jeopardy, just as we do or rather the petitioner does here. This Court, in holding that the double jeopardy provision was not applicable, pointed out that the application of the -- the Double Jeopardy Clause to particular cases has not been an easy task for the courts, stating that the subject had been recently thoroughly explored in Helvering v.Mitchell in 303 United States. And that the cases there emphasized the line between several remedial actions brought primarily to protect the Government from financial loss and actions intended to authorize criminal punishment to vindicate public justice. And the court there said, the question for that and decision in that case is whether the statute imposed a criminal sanction in that case, however, as we see it. The Court then said there's enough for present purposes if we conclude that the instant proceedings are remedial and impose a several sanction and went on to say that the key purpose of the statute was to provide for restitution to the Government. In other words, the Government has to have a loss. Now, in this case, the Government has admitted that they had no loss.
Hugo L. Black: Where -- where is that admitted?
Gustave H. Dongus: It's admitted by the motion for summary judgment You Honor. We, in the record, at page 8, I believe it is. Yes, at page 8 at the top, we recite there in our answer that by reason of the facts above set forth, the plaintiff was not damaged -- was not damaged and did not suffer any loss because of the sale of the trucks. Now, on the motion for summary judgment, those facts are admitted. So, they had no loss. And that the Government had no loss in this case. But they say they're entitled to recover this $2000, although the petitioner's already have been punished for the fraud.
Harold Burton: Will You –
Speaker: (Inaudible)
Gustave H. Dongus: I think it would -- Your Honor would have had to prove some damage, Your Honor.
Speaker: (Inaudible)
Gustave H. Dongus: That's correct.
Harold Burton: (Inaudible)
Gustave H. Dongus: No, Your Honor. That is -- that was held in the Hess case. Now, I wanted to point that out. You see in the Hess case, there -- there was damage. And the -- and the Court sustained the provision for $2000 plus the doubles damages.
Felix Frankfurter: Was the damage proved in the Hess case?
Gustave H. Dongus: Now, on some of the counts, Your Honor. Although the point was not touched on in -- in this Court's opinion. On some of the counts, the Government did not prove an actual amount of damage. And -- and the decision of this Court sustained the holding of the court below that the $2000 is recoverable. But in that case, the damages were -- and provoked from the fact that there are the -- the defendants by their collusive bids had gouged the Government out of some money. In -- in other words, you have a situation there where damages may be hard to prove by the very nature of the collusive bids. And the government didn't admit in that case as they do here that there was no damage. They didn't prove a specific amount of damage.
Felix Frankfurter: You -- you don't challenge the doctrine that were (Inaudible) --
Gustave H. Dongus: That's some --
Felix Frankfurter: -- that if you – if you prove that there was damage and it's difficult of ascertainment what the damages were in dollars in the offense is up to the defendant to cut it down to the -- their side.
Gustave H. Dongus: No, sir.
Felix Frankfurter: You don't -- that is being questioned (Voice Overlap) --
Felix Frankfurter: No, sir. Because that's the Scott versus Marcella --
Felix Frankfurter: Yes.
Gustave H. Dongus: I don't --
Felix Frankfurter: (Inaudible) in this case --
Gustave H. Dongus: I don't dispute that but I -- we do dispute the fact that the Government can't come in and say we can get $2000 although we have not been damaged and we have had no loss. And they have admitted that, in this case.
Felix Frankfurter: You say it has in Marcus against Hess, a -- a collusive bid inferentially implies that if they're having in collusive bid they didn't find there's any difference. We do or plead better than the collusion because the collusion was for the very preference --
Gustave H. Dongus: That's correct.
Felix Frankfurter: -- bidding down the price.
Gustave H. Dongus: That's correct, You Honor.
Felix Frankfurter: Is that your point?
Gustave H. Dongus: That's -- that's my point, Your Honor.
Earl Warren: Could the Government by that admission admit that it suffered no loss or does it merely admit that the -- that insofar as the sale price of the -- of the truck was concerned, it -- it suffered no loss.
Gustave H. Dongus: I --
Earl Warren: Could there not be a difference? Are there not other losses that the -- that the Government could be put to by reason of this transaction and by reason of -- of their necessity for enforcing this law against such actions that the defendant was here guilty of?
Gustave H. Dongus: Well I think that the -- in their -- in the Government's brief, they admitted they had -- that they admit they had no loss. They -- they do -- I'm coming to that. They do try to sustain this on this imposition of this penalty here by certain facts that holds the record outside of the record. Now, I -- I've come to that now as the court below, I might say, in its opinion said, that the -- that the Government was damaged in several respects. Notwithstanding, on the facts on the record, as we see it. The Government said they had no damage. Now, what does that damage --
Earl Warren: Is that the only thing you referred to just that --
Gustave H. Dongus: That --
Earl Warren: -- it's paragraph 10 on top of page 8. That's all you referred to--
Gustave H. Dongus: That's -- that's --
Earl Warren: -- to the admission of the Government.
Gustave H. Dongus: That's right. That is correct, Your Honor. They've admitted that by their motion for summary judging. Now, the – the other damage which they now argue in this -- in their brief in this case neither argued below in which we think its wholly outside the record in this case, consisted of the -- of the following. The -- it is said that the motor vehicles were in short supply in 1946 and 1947. That was half of termination of World War 2. And that this surplus vehicles that the Government wanted to sell these to veterans at -- at less than market prices. Now, there's no proof in this case that these vehicles were -- were sold at anything less than market price. The Government relies on the -- on administrative regulation that surplus property shall be sold at the fair value and that the fair value shall not be less than the price offered to the lowest trade level. Now, I don't know what that means. The price offered to the lowest trade level could well be more and not less than the higher price. And certainly there's -- there is nothing in this record that --
Harold Burton: The --the petitioner's -- the petitioner's conduct in this case would amount to a frustration of the Government's method of disposing of its surplus property, wouldn't it?
Gustave H. Dongus: That -- that is true, Your Honor.
Harold Burton: Now, if that's true, may not Congress consider this thing which in the order of evaluating damages might be provided for by statute and is sort of an unliquidated damage?
Gustave H. Dongus: It is true that it's in a form of a -- a -- of a liquidated damage provision. But as we say -- but as we have pointed out in our briefs there they could apply -- the Government could apply this $2000 in any case then, no matter how small the item is, even if it would only cost 10 cents.
Harold Burton: Yes, on Government's belief that the -- this kind of practice frustrates the Government's right to dispose of its surplus property in the manner that Congress has provided. Therefore Congress puts this compensatory damages in the Act as a sort of an unliquidated damage as being a thing hard to prove. It just puts a -- in a -- say given amount.
Gustave H. Dongus: But I think Congress contemplated, if the Court please, in the very -- in the Act itself that there must be -- must be damages. They say two -- they access $2000 in double damages. There -- there must be a damage, it seems to me.
Harold Burton: May the Government not be damaged by this frustration in a sum which is hard to put down in figures actually proves so the Government -- Congress has provide this -- this unliquidated -- but assume --
Felix Frankfurter: Are the criminal features, the penal -- that they tend to the unquestionable (Inaudible) both prison settings and money?
Gustave H. Dongus: No, Your Honor. The -- the penal feature was under 18 United States Code (Voice Overlap)
Felix Frankfurter: Yes, I understand. But what is the expenditure -- the punishment of that -- that penal provision before the appellant, what is it?
Gustave H. Dongus: $10,000 in five years --
Felix Frankfurter: Five (Voice Overlap) --
Gustave H. Dongus: -- that's either five or ten years, I believe, is punishable.
Felix Frankfurter: Why is it -- why is (Inaudible) answer by the facts that the money fines that when Congress provides to fine that's when it takes care of money lawsuits that can't be liquidated in turn.
Gustave H. Dongus: Well, the money fine is to vindicate to public justice as --
Felix Frankfurter: Well, I know but if you -- it's management today and the Government suffers but it can't tell how much it suffers that it fixes (Inaudible)
Gustave H. Dongus: I -- I think that is true, Your Honor. And -- and they've -- to that extent, they've already collected that amount.
Earl Warren: Is that the theory of a fine in a criminal case? I -- I never so understood it. Have you any authority for that?
Gustave H. Dongus: No, sir. We have not submitted any in -- in our brief on that point.
Earl Warren: I did not think that --
Gustave H. Dongus: -- and there's none in the Government --
Earl Warren: -- that the fine -- I did not think that a fine had any relation to the damages that the Government or anybody else might suffer. I thought that was a penal provision just as much as punishment. It was an alternative that -- that the Government imposes for the commission of a crime either imprisonment or a fine or both but without regard to damages.
Gustave H. Dongus: Well, there's an element of damage in it, so, if the Court please, certainly.
Felix Frankfurter: If you can prove damage then we can prove that -- that the whole basis of your argument, as I understand it, is that there are no damages.
Gustave H. Dongus: That's -- there are no -- that is admitted in this case.
Felix Frankfurter: Insofar as there are vague damages, the fine will take care of it.
Gustave H. Dongus: I think it -- it should.
Felix Frankfurter: I don't disagree with your position, you know, but I -- you're free to agree with a lot of argument that's been taken, either.
Gustave H. Dongus: The -- the Government further said, there's an element of damage here, that the procurement of the trucks may have deprived some Government agency from obtaining needed vehicles. But that -- that can't be true here because the Government agencies had a higher priority. And all they needed to do was to exercise that priority to the exclusion of the petitioner. Apparently --
William J. Brennan, Jr.: In U.S. against Mitchell that was suggested that the Government had much expense going to -- for investigation and so forth.
Gustave H. Dongus: Yes, Your Honor. And in that case, the Government had a loss. They had a tax loss. Now, if in the Mitchell case -- if there hadn't been any loss, there was then nothing to base, on which to base the 50% penalty.
William J. Brennan, Jr.: No, but the -- the case -- this reads as though you might come to where it'd say that since the Government has to police all these operations and that whether it's a package of the mails or automobile, it's being sold. It takes a lot of time and a lot of trouble and lot of expense to investigate, police these days. When all they -- that Congress puts this $2000 civil liability or any right liability whether it's civil or not.
Gustave H. Dongus: But it seems to us, Your Honor, that if to -- to investigate a fraud will say that if it -- it resulted in a no loss and then they asked $2000 –-
William J. Brennan, Jr.: -- for your investigation –-
Gustave H. Dongus: for -- for your investigation when you've had no loss it is like pulling yourself up by your own bootstraps.
William J. Brennan, Jr.: But some -- some of your investigations may cost you 10 times the $2000 –-
Gustave H. Dongus: Well, that the --
William J. Brennan, Jr.: Not that it will cost less as the Congress picked on a certain amount.
Felix Frankfurter: You might allocate the salary phase of the highest officials in the Government. They may have spent a lot of time on this case and so you allocate part of the Attorney General's salary as loss to the Government because otherwise, it might have been doing something more profitable on that property. I mean it's --
Gustave H. Dongus: Well that -- that may sustain the -- if the Court please. It may sustain the -- the imposition of the penalty where there is a loss but how can -- when they've investigated, can they come along and say well we haven't had any loss but we want the $2000 anyway.
Felix Frankfurter: The law -- the lawsuit is what you put the Government to expense in finding out whether there was a loss.
Gustave H. Dongus: Well they've – they've admitted here that there wasn't any loss, Your Honor.
Felix Frankfurter: But they took a lot of time and claims and -- and salaries to find that out.
Gustave H. Dongus: Well, the only thing they did in this case was any expense they had was in -- in the criminal prosecution. Now, can -- can they recover that in a civil case, the expense of the criminal -- criminal investigation?
William J. Brennan, Jr.: Now, the Government is supposed to recover -- is supposed to recover anything specifically. They can recover a --
Gustave H. Dongus: Well they --
William J. Brennan, Jr.: -- an amount of money which they say that it shall be paid for damages to them, the liquidated damages in case that there's been a crime.
Felix Frankfurter: You're saying that -- that the liquidated damages that it liquidates something. There's nothing here to liquidate because there's been no damage.
Gustave H. Dongus: Well, that is correct, there. Now, their liquidated damages provisions come -- come in under subsection 2 and 3 where that there are -- this -- they are specifically called liquidated damages. And we submit, if the Court please, that -- that the judgment of the lower court in this cause should be reversed because it is the imposition of a second penalty which contravenes the double jeopardy provision of the Fifth Amendment. Thank you.
Earl Warren: Mr. Richter.
Melvin Richter: May it please the Court. We think that the Marcus and Hess decision of this Court 317 U.S. is -- is possible to this case. In Marcus and Hess, there had been as in this case, there had been prior criminal convictions for fraud. There, as here, the defendants had pleaded nolo contendere and to pay a fine as had been assessed and fines have been paid. Subsequently, in Marcus and Hess, civil proceedings were brought under the False Claims Act. Now, the provision of the False Claims Act, on which these proceedings were brought, provided that in the terms closely similar to the Surplus Property Act that's involved here, that the defendant shall forfeit and pay, and I want to call the Court's attention that mark it, False Claims Acts said forfeit to pay, whereas, as the statute here just said provides pay, shall pay $2000 --
Felix Frankfurter: You're not going trying to draw and make it --
Melvin Richter: No, no.
Felix Frankfurter: -- a benefit for that because the Government can in this case said --
Melvin Richter: The language is --
Felix Frankfurter: -- forfeit is important.
Melvin Richter: That's right. I'm just trying to point out that the language is -- was stronger but as to --
Felix Frankfurter: But it's become important that it can't -- it can't say it strongly.
Melvin Richter: It's just a matter of the fact, is in the situation.
Felix Frankfurter: All right. That's correct.
Melvin Richter: Now, in the Court there, was unanimous in agreeing that the proceeding there was -- did not involve a violation of double jeopardy. Mr. Justice Frankfurter; however, concurred on a separate ground but he agreed with the Court's result. He agreed that there, in that case, there had been no violation of double jeopardy provisions for bringing this subsequent suit for $2000 plus double damages.
Felix Frankfurter: Does the Government accept that mode of arguing?
Melvin Richter: No, sir. We think its our position in this case that whichever view you take, whether you take the -- the view which you espoused, Mr. Justice Frankfurter, or the view that the majority espoused, that this -- and, nevertheless, is not double jeopardy.
Felix Frankfurter: But suppose a (Inaudible) can translate the other view and the Government says that it -- the other view is the one that (Inaudible) that on there is probably it.
Melvin Richter: Well I -- I would --
Felix Frankfurter: I know -- I understand you want to rip the case but I have decided on some rationally, so here, in the grounds.
Melvin Richter: Well, it's our position that if we adopt the view which, view as far as the Marcus and Hess that the -- there's no double jeopardy here. I'd like to just spend a moment on that, if I might, and then pass on to the majority view. The view which Justice -- Mr. Justice Frankfurter in Marcus and Hess was to the effect that, as I understand it, was that Congress can provide a comprehensive scheme of remedies for the punishment of a single offense. And that it's immaterial whether you'd designate them as penal or compensatory. If Congress provides two remedies in the (Inaudible) case and there are other cases which I found which are not -- but cited in our brief which this view was adopted. Then there is no double jeopardy involved if you pursue two of those remedies.
Stanley Reed: Do you think that's the -- but what -- what do you think that happened in this case if this Surplus Property Act had -- had provided not only for this $2000 penalty, whatever you want to call it.
Melvin Richter: Well --
Stanley Reed: -- and also ten years imprisonment, having been persecuted and $25,000 could even because of this comprehensive statutory remedy, the prosecuted --
Melvin Richter: Well I -- I
Stanley Reed: -- for imprisonment for 10 years.
Melvin Richter: Well, if it defines criminal statute as I understand generally, provide for imprisonment or fine or both. And you could, can -- and file, imprison the man and fine him under the criminal statute and still not have double jeopardy if the statute provides for it. Now the -- the statute in this case --
Felix Frankfurter: As well the question is whether you must dispose of it all in one -- in one --
Melvin Richter: -- proceeding --
Felix Frankfurter: -- in the case of proceeding or you may break it up into two.
Melvin Richter: -- into two.
Stanley Reed: What I'm getting is that your -- your argument would --
Melvin Richter: Well I'm just -- and on --
Stanley Reed: If you're here to sustain the proper -- subsequent prosecution after a fine --
Melvin Richter: That's right.
Stanley Reed: -- for the penal provision.
Melvin Richter: But -- well, I -- that the point is this. All I -- I would like to make my position clear. All I'm trying to say at this point is that whichever view you take -- whichever view that was announced in Marcus and Hess, whether you take the majority's view or you take Mr. Justice --
Felix Frankfurter: Well --
Melvin Richter: -- Frankfurter's view. Whichever view, there isn't double jeopardy in this case. Now I – I would intend to go in the moment. I just was -- wanted to spend a few minutes on the --
Stanley Reed: Well, I'm trying to point out I think your -- your comprehensive schedule of defenses may get you into some difficulty.
Melvin Richter: Well I -- it may very well be. In this case though, as applied in this case, I think that there would -- that there's no -- no problems have been attached here because in this case and I -- your -- the -- the statute here as in the Helvering -- as in False Claims Act, provided that the civil remedies provided, and that's referring back to Section 26 (b) (1) which is involved here, shall be in addition to all other criminal penalties. And that I still remember, is provided by law. And then the Senate Report, well, which is on -- cited on page 25 of our brief, the Senate Report says that these remedies are exclusive of any other similar remedies which United States may have in the said provisions of the criminal code as related to fraud or to -- in conspiracy and referring to Section 18 U.S.C. Section 80 which was that the --
Stanley Reed: Was --was this passed shortly after --
Melvin Richter: Marcus and Hess?
Stanley Reed: Marcus and Hess?
Melvin Richter: Oh, yes. Oh, I -- I'm -- I'm just ,as I say, trying to put a few minutes to Justice Frankfurter's view and then I might --
Felix Frankfurter: Don't take your time on this, but I just want to know whether a fellow who had great difficulty such as I do on the -- both with the Mitchell mode of argument – or he Hess mode of argument whether if you can -- reconcile themselves to those modes of argument, namely, by sticking labels on and call them civil, you take care of everything whether if hasn't got any or has difficulty with that -- great difficulty myself --
Melvin Richter: Well I -- I --
Felix Frankfurter: -- whether -- whether the Government -- what the Government's attitude do. So, I've come up with what I'd have to say to him.
Melvin Richter: Well -- well I -- I appreciate the -- the problems that you have with Marcus and Hess and Helvering in this, for that reason, that I wanted to point out really the -- at the outset of my argument. That even on the approach you took in Helvering and Mitchell -- I mean in Marcus and Hess. There's no double jeopardy involved here.
Felix Frankfurter: Because this case tests that. This case tests that.
Melvin Richter: Well --
Felix Frankfurter: If you have -- because both in Mitchell and in Hess there were arguments that the Government was out of pocket. And if the Government is out of the pocket, then it can fix them, can liquidate what is out of the pocket without any nice calculation. But here, it is conceded, you (Inaudible)
Melvin Richter: No, I expect to.
Felix Frankfurter: Well, that takes the ground from under. But if you -- if -- if it'd be a starting point that, in the fact, that the Government was not out of pocket. Then all they talk about compensatory that goes out of the window, as far as I'm concerned, though. But you can't --
Melvin Richter: Well --
Felix Frankfurter: -- convince it for something that you haven' t thought.
Melvin Richter: Well, there's -- there's no doubt in this case that there's no damage that we can reduce to any physical amount, to a monetary amount. And on the other hand it's our claim that --
Felix Frankfurter: Because that's what damages mean, monetary. If you're going to give $2000, well, you have to have some dollars.
Melvin Richter: Well, that's the very function of providing a minimum payment which I would -- I would get to in a -- by my past from your approach I -- which I think would show there's no double jeopardy in this case, to the approach which the Court, the majority, took in Marcus and Hess. Now, in Marcus and -- the majority's approach there was to determine whether or not the -- the $2000 for the sum was double damage provision of the False Claims Act was compensatory of penal. The Court, relying and while referring to its early case in Helvering versus Mitchell said that the question was one of the statutory construction. And then, at one -- proceeded to point out that the Government can sue and as a private inquirer has rights similar to a private person in enforcing its contracts that it has two capacities in the sense, one quite sovereign in which it brings suits to -- suits to take care of the public justice, to protect the public justice, and secondly has a capacity as --as a private person on which it has rights to sue for breach of contract, should cover, et cetera. And in the -- the Court held that in the latter capacity without -- that the Court would -- that the United States was proceeding in the latter capacity as of -- as of a quite politic in Marcus and Hess and as such was entitled to recover for fraud in which it was perpetuated upon it. And as a result, the Court went on to hold at -- on page 18 of our brief that -- that we think that the chief purpose of a statute here which is the False Claims Act, where they had a similar provision such as we have here, was to provide for restitution to the Government of money taking prominent by fraud, and that the device of double damages plus a specific sum was chosen to make sure that the Government would be made completely whole. The inherent difficulty of choosing a proper specific sum recognizing that it's difficult to fix the sum of -- of -- by -- and approve a sum by damages, would be -- which would give full restitution was a problem for Congress. And so the Court affirmed as compensatory and therefore, not involving violating the double jeopardy provision. The $2000 plus double damage provision of the False Claims Act. Now, we think that provision is fully applicable. I mean that holding is very applicable here. In the first place, the two statutes that we have are -- have this very same purpose. The Surplus Property Act was designed in this provision 26 (b) (1) and the following b (2) and b (3), are all designed to protect the Government against the perpetration or enable the Government to recover for fraud perpetuated by -- on it and we got the Surplus Property Program. The False Claims Act involved in Marcus and Hess was designed to prevent -- permit the Government to recover for frauds perpetuated on it in connection with False Claims generally. So, the purpose of the two statutes was generally the same. Now, the language of the two statutes were generally the same, too. The only material and difference between the -- the two provisions that involved in Marcus and Hess and that involved here, is that the False Claims Act provides for certain pay in this statute it -- it provides to pay it. And as I say -- really hasn't -- that the language in Marcus and Hess, if anything, was just stronger rather than the -- the language here. And thirdly I'd like to point out that Marcus and Hess was decided on -- in January of 1943 which is about 15 months prior to the enactment of the Surplus Property Act here. So, we think it's drawing from that. It's -- it's the fair assumption that the Congress had in mind this Court's interpretation of the language in this False Claims Act in enacting the comparable language of the Surplus Property Act. Now, in addition, the Court in Marcus and Hess and in Helvering and Mitchell pointed out that it's really a question of statutory construction. So, it's appropriate in these circumstances to look at the legislative intent. Now, when doing that, first you look to the face of the Surplus Property Act. You'll notice that Section 26 (d) which is on page 3 of our brief refers to civil remedies. Referring back to Section 26 (b) quite characterizes that civil remedy. The civil remedies provided in this section shall be in addition to all other civil remedies and penalties provided by law. Secondly, its -- I'd like to point out that Section b (1) which is the provision that's involved here, appears in the same section with b (2) and b (3). And as my Brother says that both b (2) and b (3) deal with liquidated damages, expressly provide that to compensate the Government shall recover liquidated damages. So that we think it's unlikely that Congress would include in a single provision of b (1), b (2), and b (3), when 2 are compensatory and 3 is intended to be penal.
Speaker: If you accept this argument, does that mean that it'd pull through, the damages unnecessary (Inaudible)
Melvin Richter: I think -- I think that's -- I -- I think that's right. And I think that our position as a proof of damage is unnecessary. I would like to point out, however, and I will get to that, I just wanted, if I may just go through this. I do want to point out that we don't concede that there was no damage here. That it's true the suit that we brought here was just for the $2000. But that is because -- although there was damage that the Government was -- did suffer damages. But there were damages that were the type which just can't be reduced to a -- a monetary amount. And it's the very function of a liquidated damage provision of contracts are this minimum damage provisions of $2000 here on minimum damages in your copyright statute or -- or did say a double damages in your -- in your Fair Labor Standards Act with -- with the element of additional to double damage in the Fair Labor Standards Act. All of which recognized that there are situations where a defendant by his actions come first commits a legal wrong against the plaintiff and which, however, it's impossible to -- the damages can't be reduced to a financial amount. You take a copyright case -- a -- which is just one example. A -- someone infringes on a copyright, has a copyright for dramatic production say, like in (Inaudible) that you have set out in our brief. The plaintiff -- the defendant infringes by -- by lifting from someone else's play it seemed and -- use, incorporates in the play which he produced. It's pretty clear that the -- that the owner of the -- of the copyright, the plaintiff has been injured as result to that. Yet, how to reduce that to money amount? It seems it's almost impossible. So, as a net result, the copyright statute has a schedule of statutory damage of so much -- so much for this type of infringement, so much for this type of thing, with a -- with a minimum, I think, in the sum of $50 to $250. And that's -- that's common. I mean that's -- that's -- you go to -- go to the Woolworth case which was before this Court in 344 U.S. where the -- there was an infringement under -- of the statute. Woolworth had -- had the statute, a -- a piece of the statute which they were selling. That in that case, Woolworth proved that they had -- their profit I -- I recollect was about $900 of -- then they were the defendant. The plaintiff couldn't prove any actual loss from his infringement.Yet the Court affirmed the $5000 award under the statute. Now, we think that we were damaged here in a number of ways. I'd like to point out before I do -- do go into that --
Speaker: But on this motion for summary judgment, don't you have to stand on the proposition that damages their own?
Melvin Richter: Well, I -- no. I don't think so. If you -- if the Court will look at page 7 and page 8 of the record, you'll notice that paragraphs 6, 7, 8, and 9 are all more -- are all introductory to paragraph 10. At least, what -- let me rephrase it. That the paragraph 10, is really a summary of what the Court -- what the defendant is alleging in the prior paragraph. And it says that by reason of the facts above set forth. Now, the only facts that they set forth are that this -- that this -- the product -- the -- the vehicles were sold -- were -- were being sold at the sale at Tinker Field. That the -- there was first to go to priority holders and then they go to nonpriority holders. That if the priority holders exhausted -- then exhausted, that will go to nonpriority holders at the same price. And all they're really saying by -- by reason of the facts above set forth, is that the Government suffered no monetary damages on the -- of that sale at -- at -- by virtue of the fact that it had the property not all going to the veterans if they would have been in the position to get it at the same price. So that -- that there are other elements of damages which we point out on our brief. Now, one of the damages, that we wanted to go to the priority holders. We didn't want to go to other people. And there was no -- there's nothing in here to say that any nonpriority holders got -- received any vehicles. As a matter of fact, I -- I'm sorry I just thought to go outside of the record that I want. The fact is that, as far as this complaint is because this answer is concerned, all of the vehicles went to priority holders and those who were masquerading such as the plaintiff, the defendant here as priority holders. So that we were damaged in the -- to the extent that we're going to people whom -- to whom we didn't want to sell the property to. And they were -- they were getting it by this masquerade of this. Secondly, as Mr. Justice Reed pointed out in Helvering and Mitchell, the Government was -- the Court held that the 50% addendum there was -- was compensatory because the Government is entitled to recover for the cause of investigating and ferreting of the fraud. We were -- we encountered the same problems here of how much money was expended on ferreting out this fraud. You can't find out that the Government's, it's just one of this things. It happens, the fraud is ferreted out, but you don't allocate money to it. And it's all -- all this is -- are elements of damages which we suffered here. I'd like to point out, if the Court please, that in Marcus and Hess -- in Marcus and Hess there were 56 contracts to which the -- the penalty of, if you want to call it penalty, of $2000 was -- was allowed. Of that 56 contracts, eight of them there was no damage at all. The fraud had been caught at the outset. There were fraudulent bids submitted but the -- before any money was paid out on it, before anything was done, the fraud was detected. So that note that the Government then suffered no damage in -- in that case. And -- and that goes -- eight contracts in Marcus and Hess. Now furthermore, --
Speaker: This -- this case comes to us, and perhaps in some technical fashion on the motion for summary judgment.
Melvin Richter: That's true.
Speaker: -- and here's an allegation that says both. That there was no monetary loss suffered and no, in effect, no other legal damage suffered in an argument --
Melvin Richter: Well it --
Speaker: -- that could stand on that.
Melvin Richter: If -- if you read paragraph 10, it says that by reason of the facts above set forth, the plaintiff was not damaged which is -- this is by reason -- that this is -- that there are conclusions from this paragraph --
Speaker: That damage ended (Voice Overlap)
Melvin Richter: -- did not suffer any loss if you go on now, because of the sale of said trucks and received the full advertised offering price for the same and had said trucks had not been sold to persons who purchased them. They would have been sold at the same price to other priority and nonpriority purchasers. Now, their allegation of no damage is -- is a limited one. It does or doesn't do anything to negate the fact that the Government was -- has incurred damages as far as investigating the fraud was concerned. It doesn't do anything about negating the damage that the Government suffered by virtue of selling it to people to whom it had no intention to selling the property to. The -- the Government was willing to sell the property to nonpriority holders, after all the priority holders were satisfied and not before. The fact is in this case they -- the defendant masqueraded themselves as the priority holders by misuse of veteran certificates and managed to obtain these vehicles. Now, the fact if you -- this -- it gives me a post and I don't know if it does you, but it gives me a post if there was no advantage, if there was no advantage that they were going to gain by engaging this -- this fraud. Why did they do it? The fact is, I think, that everybody knows that in 1947, at this time, there was a shortage of all sorts of motor vehicle. The fact is, I know personally, I had to wait about 15 months before I can get a -- could get a – obtain a passenger car. And these people who are in the business of selling motor, automobile equipment and they, the price of which they could get is resell of these -- of these vehicles once they got them was substantially higher or -- or presumptively. They wouldn't have done it unless they could have made a profit on it. So, if the Government was undertaking to sell these -- these automotive equipment to certain people at a price, usually a log of the -- of the advertisements forbid, said that it will be sold to nonpriority holders after all the priority holders had been satisfied. It -- it was -- it was just so much window -- not window. Their -- this was just highly unrealistic. The fact of the matter is that most of these instances, the priorities holders themselves didn't get all the vehicles they want.
Earl Warren: But one of the main purposes of this Act was to rehabilitate veterans, was it not Mr. Richter? And -- and if the Act was frustrated by -- by fraud of this character, the Government would be obliged to rehabilitate those veterans in another way.
Melvin Richter: Do away. That's right.
Earl Warren: And that will cost money.
Melvin Richter: Well we would --
Earl Warren: What happens?
Melvin Richter: -- we -- that's right sir. We -- we wanted to make sure that these -- these vehicles went to certain priority holders. Veterans was one of the priority holders. Government agencies were others. Certain other RFC, small loan, there are other various people, but we wanted to make sure that these vehicles went first to the priority holders. And then if there were any leftover, in the rare instance where if any were leftover, then they could go to nonpriority holders. The fact is that by masquerading --
Earl Warren: Yes.
Melvin Richter: -- as priority holders, as veterans, the -- the defendants in this case prevented the Government from achieving its purpose. And to that extent, how the Government as a private person, was damaged although, in a way which you can't reduce to monetary amount, and that's why you have this $2000.
Felix Frankfurter: Imagine, let me shift. So, I could make my mind shift. Suddenly there comes a point when the Government becomes a private person. How -- how does help the argument?
Melvin Richter: All I was -- the Government, of course, is the Government at all times. There's no question about that. I didn't intend to say the Government was a private person. What I was trying to --
Tom C. Clark: (Inaudible)
Melvin Richter: I'm sorry sir.
Tom C. Clark: What happened to the trucks?
Melvin Richter: I don't know what happened to the trucks, I just gathered they were resold and at a profit. I don't know.
Tom C. Clark: That's the end of wanting the -- when the Congress wanted to be just and probably unjust eventually, the illegal purchase part of the act in the --
Melvin Richter: Well, with the -- with the amount of profit that they -- profit they made assuming they made a profit is unknown. It's not in the record. I just want -- I just to answer Justice Frankfurter. All we were saying, all I intend to say, was that the Government has the same right to maintain a suit for damages, the way a private person does. And that the Government in that sense has thea dual capacity. That one, they can bring a suit of private -- a suit for private damages -- a damage for breach of contract. I think there's cases like that practically everyday up here, suits for breach of contract by or against the Government. And that is or as any other type of damage that the Government has encountered as a -- as a private -- as a -- like any private individual. I'm not referring to the Tort Claim Acts at this point.
Felix Frankfurter: [Laughs]
Melvin Richter: I -- all I'm trying to do is --
Felix Frankfurter: All I'm trying to -- and wonder, what kind of intellectual company you get on to the fact of saying the Government has the same right that a private person has.
Melvin Richter: Well -- (Voice Overlap) to recover damages.
Felix Frankfurter: We're dealing here with an exertion of governmental authority which is, it is exerted in a certain way twice, the Constitution forbids. So, how do I get any clarification by saying some of the (Inaudible) and gives me a new set of theatrical equipment and it deals with a private scenario.
Melvin Richter: Justice Frankfurter, I -- let me explain. If -- if there, suppose there -- (Voice Overlap)
Felix Frankfurter: I think I know what you are talking about, but I don't know why you talk that way.
Melvin Richter: Well, I'm just following the teachings of the cases of this decision of this Court. And Marcus and Hess I think --
Felix Frankfurter: If you follow everything that's been said in this Court on this subject, then I can assure you, you'll gain great confusion which is the motto of the party.
Melvin Richter: Oh, I've tried that and I'm still in the forest --
Felix Frankfurter: All right.
Melvin Richter: But the point is, that I'm trying to -- we've -- I've got -- what you have here is the most recent expression of this Court in Marcus and Hess. You have a statute which is closely similar to that in Marcus and Hess.
Hugo L. Black: Did we go -- did we go to that distinction?
Melvin Richter: I'm sorry sir.
Hugo L. Black: I've read the opinion again. I had forgotten a lot of what I said in it. But did we go to that distinction about the right of the private person and the right of the Government?
Melvin Richter: Well, I have the opinion here --
Hugo L. Black: Well --
Melvin Richter: No.
Hugo L. Black: But I've -- we may have. I --
Melvin Richter: No.
Hugo L. Black: I did --
Melvin Richter: It says here it would present the strange anomaly indeed, (Inaudible) page 550 of 317 U.S. It would present a strange anomaly indeed if having the power to make contracts and hold property as other persons, natural or artificial. They are -- were not entitled to same remedies for their protection. In other words, the Government has -- has a body quality can -- has the right to sue for compensation.
Hugo L. Black: That's a governmental power just like any other. Isn't that --
Melvin Richter: Oh. Sure. But it -- it's comparable in the sense that they operate -- oh, I'm -- I'm not -- I don't think we're at odds.
Hugo L. Black: No, I don't think so. I don't know. I don't --
Melvin Richter: No. I -- I don't -- I don't -- what I'm trying to say is that we have the same rights to sue for compensation for affecting us, as a private person, within the confines of Marcus and Hess, I am not trying to go beyond that. I'd like to point out before I sit down --
Speaker: Just accept it.
Melvin Richter: -- that in Marcus and Hess, there were, as I said 56 contracts. On eight of them, no damages were proved. And on the remaining 46 -- 48, I'm sorry, the damages which were proved by the United States ranged from all, about $50. And an individual contract for which we receives the $2000 statutory amount up to $40,000 with the bulk of them being, well below -- well a substantial number of them are -- are below $1000. We think that on the authority of Marcus and Hess, this Court should affirm the judgment below.
Earl Warren: Mr. Dongus, do you --
Gustave H. Dongus: May it please the Court. Again, I'm taking up with the Hess case again which Mr. Richter had mentioned. Now, in that case as to those contracts, eight contracts, where the Government didn't prove any loss, the Government didn't admit in that case that they had no loss. The difficulty there was they couldn't approve an actual amount of loss.But -- but here, they've had admitted there is no -- no loss or damage. The point was made of the fact, well, there was a shortage in motor vehicles in 1947. Well, that doesn't make any difference. Suppose these trucks were sold today, where a veteran should -- could buy the vehicles anywhere. Does that mean to say that -- does it mean to say, well, then you can collect the $2000 in -- in 1947 and not collect it in 1955? I don't think anything turns on the shortage of -- of the motor vehicles. And the -- the Government has further contended that emphasize the fact that, well, this is a civil remedy or if it isn't the fact that it's a civil remedy, what is it? What do we have here? And as we said there's nothing but punitive -- that's punishment. And the petitioner has already paid a fine and he's been punished once. And the Double Jeopardy Clause prevents him from being punished twice, thank you.