Court Opinion

ID: 9640663
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:11:24.166029+00
Date Added: 2024-06-11T18:10:31.679733
License: Public Domain

WHITAKER, Judge
(dissenting in part and concurring in part).
I cannot agree that Chelsea Factors acquired any rights against the defendant by virtue of Suburban’s assignment to the bank and its letter to the bank instructing it to pay to Chelsea the excess received by it over the amount necessary to discharge Chelsea’s note. As between the bank, Suburban and Chelsea, the bank did become a trustee for Chelsea, but not as to the defendant. This is so, because a copy of Suburban’s letter to the bank was not given the defendant, nor was the defendant otherwise notified of Chelsea’s interest in the assignment. While the amendment to the antiassignment statute permitted an assignment to a financial institution as a trustee for others participating in the financing of a Government contract, still, it provided that notice of the assignment be given the defendant. This necessarily implies, in view of the purpose of the antiassignment statute, that the defendant be put on notice of those having an interest in the funds assigned. Defendant did not want unknown claimants making demands on it. When it paid out money it wanted to be sure it was paying the right party and would not have to pay it again. This was the purpose of the original antiassignment statute, Hobbs v. McLean, 117 U.S. 567, 576, 6 S.Ct. 870, 29 L.Ed. 940; United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171; Pittman v. United States, 116 F.Supp. 576, 127 Ct.Cl. 173, certiorari denied 348 U.S. 815, 75 S.Ct. 23, 99 L.Ed. 642, and it is the purpose-of the requirement of filing a true copy of the assignment.
If a true copy is filed it would show whether the named assignee was acting as agent or trustee for anyone else participating in the financing. If it does not show that the named assignee is an agent or trustee, no one can acquire any rights under it as against the United States other than the person named.
It is true the majority opinion does not rest plaintiff’s right to recover on the assignment to the bank and Suburban’s letter to the bank, but it clearly implies plaintiff might recover on this basis in the absence of the bank’s later reassignment. I disagi’ee as to this, but I do agree that it might recover under the reassignment, except for the fraud which I think it attempted to practice on the defendant.
I agree Suburban’s fraud is not imputable to plaintiff, but I think plaintiff itself attempted to practice a fraud.
When the defendant withheld payment of Suburban’s vouchers A 418 and A 430, Chelsea, having learned that the Suburban contracts were being investigated by defendant, called in Suburban’s officers, and they confessed the shortages.. Chelsea urged them to make up the shortages and they promised to try to do so, but plaintiff does not claim they actually did so. At this point Chelsea’s own gown defiziitely begins to tz-ail in the-mud. It withheld knowledge of this-fraud from the bank, and withheld it also from the defendant, at the same time inquiring of defendant what had become of the money. On May 5, 1952, about six weeks after the last invoice had been submitted, Chelsea wrote the bank, the named assignee, the following-letter :
*695“Re: Assignment of Government ■Contracts No. 23424, & No. 23426
“The above contracts were entered into by Suburban Frosted Foods Inc., 807 Washington Street, N.Y.C., the proceeds of which have been assigned to you, and discounted by you with our firm.
“To date only one invoice has been paid, leaving three invoices out•standing. The payment of these invoices have been overdue for some time now, and inquiries I have made to the disposition of these funds Lave given me no satisfaction.
“Since the government recognizes •only you as the assignee of the above mentioned contracts, I hereby request of you to write the parties involved to determine the cause for delay in payment.
“The invoices involved are as follows:
“Contract No. 23424: Invoice No. A418 Dated March 12, 1952, $6,741.-00; Invoice No. A429 Dated March 26, 1952, $6,069.00.
“Contract No. 23426: Invoice No. A430 Dated March 26, 1952, $7,-864.50; Invoice No. A417 Dated March 12, 1952 was paid on March 26, 1952 in the amount of $15,936.27.
“Copies of the above invoices are in your files for future reference, I would appreciate your acting on this as soon as possible.”
Without saying a word about the shortages, of which they were fully aware when this letter was written, they asked the bank why the invoices had not been paid — “to determine the cause for the delay in payment,” are the exact words of their letter. In this letter they set out the amount of the invoices — not the amount Suburban, or it as assignee, was entitled to claim, but the amount Chelsea knew Suburban had fraudulently claimed. Chelsea wanted the bank to find out why these fraudulent invoices had not been paid.
Had Chelsea been honest and aboveboard and had told the defendant of the shortages, they would have been entitled to collect for the goods actually shipped and accepted by the defendant. But they were not honest and aboveboard. They did not disclose what they knew to be a fact, that the defendant was being overcharged; they withheld this knowledge, and tried to collect the full amount fraudulently claimed, or, at least, to find out why it had not been paid, which I think is tantamount to a request for payment. They did not need to request information as to the cause for the delay in payment; they knew the cause. They were not asking information; they were asking for payment; they were asking for payment for invoices they knew to be fraudulent.
I think this was a deliberate attempt to secure payment of vouchers it knew to be fraudulent.
My reluctance to find anyone guilty of an attempt to practice a fraud is largely overcome in this instance by plaintiff’s apparent knowledge of prior fraudulent conduct on the part of Suburban in its dealings with defendant.
Between September 17, 1951, and December 18, 1951, Suburban and defendant entered into six contracts for frozen foods. All of them called for Grade B or better, except one, which called for Grade A. Chelsea financed these contracts. Chelsea had also financed the purchase by Suburban of various lots of ungraded frozen foods, which were caused to be released from public warehouses by Chelsea at the request of Suburban for the specific purpose of performing the contracts, which called for frozen foods, not ungraded, but of Grade B or better. On these contracts, Suburban deliberately shipped ungraded merchandise in lieu of the graded merchandise specified. Suburban then submitted to Chelsea, to be forwarded to the defendant, a false and fraudulent invoice under each of these contracts, requesting payment for the graded merchandise specified in each contract. Since it had financed Suburban’s contracts with defendant, Chelsea must have known that they called for graded merchandise, and it knew *696that ungraded merchandise was being shipped instead. Chelsea forwarded the invoices with this knowledge, actual or presumptive.
Section 2514 of Title 28 U.S.C. reads:
“§ 2514. Forfeiture of fraudulent claims.
“A claim against the United States shall be forfeited to the United States by any person who corruptly practices or attempts to practice any fraud against the United States in the proof, statement, establishment, or allowance thereof.
“In such cases the Court of Claims shall specifically find such fraud or attempt and render judgment of forfeiture.” [62 Stat. 978.]
In my opinion Chelsea attempted to secure payment of vouchers which they knew to be false and fraudulent, and thereby attempted to practice a fraud against the United States in the “establishment or allowance” of the claim on which it now sues. Under the statute its claim should, therefore, be forfeited to the United States.
For the foregoing reasons I respectfully dissent.