Court Opinion

ID: 9446720
Source: CourtListenerOpinion
Date Created: 2023-08-03 22:16:54.463551+00
Date Added: 2024-06-11T17:30:45.354687
License: Public Domain

JOHN R. BROWN, Circuit Judge
(dissenting).
I differ with the Court in only one respect. I would reverse and remand for trial the 29 claims covered by the stipulation. The Court, by its action, orders the entry of summary judgment for the Government.
I.
First, I think that the Trial Court should be free to determine whether the Dealer-Salesmen might not rightfully be permitted to withdraw from this stipulation. Stipulations are to advance the cause of justice, to simplify fact settings, to sharpen questions of law, and permit a decision on them. Where, on the resolution of the law point (such as we have made on the question of the veteran’s intent to occupy the home) adherence to the stipulation would or might produce an injustice or cause an unintended hardship, the Court may relieve counsel of their stipulation. Indeed, we regard the right and power of the Trial Judge to do this as vital and indispensable. Laird v. Air Carrier Engine Service, Inc., 5 Cir., 1959, 263 F.2d 948; and see Brinson v. Tomlinson, 5 Cir., 1959, 264 F.2d 30; Carnegie Steel Co. v. Cam-bria Iron Co., 1902, 185 U.S. 403, 414, 22 S.Ct. 698, 46 L.Ed. 968; Aronstam v. All-Russian Cent. Union of Consumers’ Societies, 2 Cir., 1920, 270 F. 460, 464; Russell-Miller Milling Co. v. Todd, 5 Cir., 1952, 198 F.2d 166, 169.
The stipulation here on the 29 cases served a useful purpose. From the outset the Dealer-Salesmen took the position that even though they knew of the change in the veteran’s intention, the Act, until the 1956 amendments, did not make that significant. To obtain a square ruling on that legal point, they stipulated the ultimate fact that at the time of loan closing the veteran did not intend to occupy the house as his home. But that stipulation was made in a setting in which they took just as persistently the position that no one knew or had good reason to believe that the veteran’s intention at that moment was significant. In other words, the contention was that if this was an incorrect understanding of the law, the error in understanding and application was innocent and in good faith.
The Dealer-Salesmen were good prophets in the Trial Court for the Judge held that they were right both on the construction of the Act and on the good faith. They guessed wrong as to us— completely as to the interpretation of the law, and partially on good faith — since we are all in agreement that this latter could not be disposed of on Dealer’s motion for summary judgment.
But without any of the subsidiary details compressed into the ultimate fact conclusions set forth in the stipulation, this Court proceeds to hold that this amounts to a confession that Dealer made a false claim knowing it to be false, with the purpose falsely to obtain money from the Government.
I cannot believe that, in the posture of this case at the time the parties were anxious for the Trial Court to make a ruling on the construction of the statute, any businessman would have made any such concession, or that his lawyer would have permitted it to be done. At least the litigants and counsel should have the opportunity of having the Trial Court determine whether they are entitled to be relieved from the stipulation when the consequences are now so harsh and assuredly unexpected.
II.
Second, and more important, I do not think that the nature of the intent under the False Claims Act can be elucidated *402and determined apart from the facts which are yet unknown.
The Court ignores the intention of the person making or causing to be made the claim. It regards mistaken as synonymous with false, an erroneous understanding of the law the equivalent of an evil purpose to cheat the Government. It reasons that since the law has always required the veteran’s purpose to occupy the property as his home at both the time of the application and loan closing Dealer made a false claim since it “knew” of this law, but nonetheless persisted in filing a claim for the gratuity which Dealer “knew” was not payable. This rests entirely on knowledge of the law being imputed to the Dealer on the necessary fiction — but still a fiction— that citizens are presumed to know the law.
The question here is whether that fiction can justifiably be transposed onto the False Claims Act to set in train the penalties which here exceed $67,000.
The False Claims Act does not so read. Nor can it safely be read apart from the facts. In other words, its true interpretation and construction on the nature of the intention of the one making the claim should not be determined as an academic matter.
The Act penalizes any person “ * * * who shall make * * * any * * * claim * * * knowing such claim to be false, fictitious, or fraudulent * * note 1, supra. As a minimum the statute requires that the claim be known to be false, known to be fictitious, known to be fraudulent. What is the meaning of the known? Is it enough that the statement made be inaccurate, incorrect, mistaken as a factual proposition? Or is it that the actor understands (a) that the facts are not as he represents them to be, and (b) that to submit the fact will be to obtain money from the Government which he knows is not owed? Is it that the actor must consciously appreciate both the inaccuracy of the factual representation and the non-liability of the Government if the accurate fact were stated ?
Similar questions arise as to the meaning of “false.” Is a claim “false” merely because it is inaccurate or incorrect or mistaken? Must there be some purpose that one make a misrepresentation aware that it is wrong and is being asserted to obtain that which the actor knows is otherwise not payable? Does “false” acquire meaning by immediate association with “fictitious, or fraudulent” ? Does the intent to defraud have to exist with respect to a statement which is “false”? At least one Court indicates that this is so, United States v. National Wholesalers, 9 Cir., 1956, 236 F.2d 944, certiorari denied 353 U.S. 930, 77 S.Ct. 719, 1 L.Ed. 2d 724. Or is the intention to defraud confined to those assertions or representations which are “fictitious” or “fraudulent” as distinguished from “false”?
A careful examination of all cases under the False Claims Act fails to indicate any satisfactory answers to these serious questions. This Court then is making them wholly as an academic matter on the basis of a stipulation made in con-clusionary terms.
A consideration of the False Claims Act and the analogous problem of intent in criminal cases demonstrates, I think, that we have jumped the gun on this serious question. That the False Claims Act is remedial and civil in nature, and hence not penal for purposes of double jeopardya does not minimize its being “drastically penal” in fact. United States ex rel. Brensilber v. Bausch & Lomb Optical Company, 2 Cir., 1942, 131 F.2d 545, affirmed 320 U.S. 711, 64 S.Ct. 187, 88 L.Ed. 417. Indeed, here we are dealing with $67,000 as the penalty (including double the gratuity) in the 29 cases with the prospect of another $48,-000 as to the remaining 21. To impose such terrific consequences upon a citizen *403because he deliberately set out on a course to obtain money from the Government which he knew was not rightfully due would be one thing. Congress might well have intended that result. To impose such consequences merely because the citizen (and some fine lawyers advising him) guessed wrong on the law — or guessed wrong on what Court would someday hold he had guessed wrong on the law — is quite another thing. It would be surprising that Congress expected to hold the citizen to such prescience when the sovereign’s own judges are known not only to make similar miscalculations, but the judiciary, with its hierarchy of successive appellate courts, is established as a recognition of the fact that judges will make mistakes on the law.
Much of the quibblingb about the remedial or civil or penal nature of the False Claims Act is put to rest by the latest characterizations of this Act by the Supreme Court.c
As we are construing the provisions of a criminal statute * * *,” United States v. McNinch, 356 U.S. 595, at page 598, 78 S.Ct. 950, at page 952, 2 L.Ed.2d 1001, note c, supra, principles relating to criminal law are of immediate relevance. “Knowing” the claim to be false then is equivalent, or at least akin, to wilfully submitting a false claim. “The two words ‘knowingly’ and ‘wilfully’ are often used as equivalents. Certainly, the mere omission of the word ‘wilfully’ is not to be construed as eliminating the element of criminal intent from the crime.” Zebouni v. United States, 5 Cir., 1955, 226 F.2d 826, 828. In the context of this very Act relating to veterans’ housing, we have defined wilful to mean “conscious that what he was doing was unlawful.” Corcoran v. United States, 5 Cir., 1956, 229 F.2d 295, 299.
The process in reaching the result in this case apparently is that (a) since the implied d representation that the veteran would occupy the house as his home was *404incorrect, i.e., wrong, mistaken, that makes it false because (b) the various papers were deliberately delivered and the other actions were intentionally taken at the time of the loan closing and (c) the Dealer is charged with unlawful purpose since the law considers that a person intends the natural consequences of his acts.
But this is to do what we condemned in Hargrove v. United States, 5 Cir., 1933, 67 F.2d 820, 823, 90 A.L.R. 1276, 1280. “The court here fell into the error of not distinguishing between the elements of an offense, where the statute simply denounces the doing of an act as criminal, and where it denounces as criminal only its willful doing. In the first class of cases, especially in those offenses mala prohibita, the law imputes the intent. * * * In the second class of cases, a specific wrongful intent, that is, actual knowledge of the existence of obligation and a wrongful intent to evade it, is of the essence.” McBride v. United States, 5 Cir., 1955, 225 F.2d 249, 253-254. See also Babb v. United States, 5 Cir., 1958, 252 F.2d 702, 707-708.
In assaying the legal consequences of action, there is a vast difference between intending to do the act which a statute might denounce and, on the other hand, purposely doing such act but with the added ingredient of a consciousness that it was illegal, i.e., in violation of known law. St. Johnsbury Trucking Company v. United States, 1 Cir., 1955, 220 F.2d 393; 22 C.J.S. Criminal Law § 29 (1940); 14 Am.Jur., Criminal Law § 23 (1938). A conviction for a false FHA loan application under 18 U.S.C.A. § 1010 penalizing the making of “any statement, knowing the same to be false” was reversed, Smith v. United States, 6 Cir., 1956, 230 F.2d 935, 939, for failure of the trial court to submit defendant’s theory that what he had done in the loan transaction was done under the good faith belief that the action was permissible and that the lending bank official had so advised him.
The efforts e of this and other Courts in wrestling with the complex problem of the kind of intent required under any penalty statute should serve as a warning that we ought not to undertake the formidable task as academicians. We ought to judge the law on the facts, and the law against the facts.
In this case the precise problem is whether Congress intended that the heavy sanctions of the False Claims Act flow from the purposeful submission of facts which happen to be incorrect, or whether the actor must have been conscious that the asserted fact was wrong and nevertheless submitted it deliberately knowing it to be incorrect and conscious that to do the latter was to claim a payment which the Government did not owe were the true facts known.
This should be answered in the light of facts, not an ultimate conclusion.
I, therefore, respectfully dissent to this extent.
Rehearing denied; BROWN, Circuit Judge, dissenting.

. See United States ex rel. Marcus v. Hess, 1943, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443; Rex Trailer Company, Inc. v. United States, 1956, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149.

. The dissent in United States v. Tieger, 3 Cir., 3950, 234 F.2d 589, 592, 595, certiorari denied 352 U.S. 941, 77 S.Ct. 262, 1 L.Ed.2d 237, is typical. In McNinch, 356 U.S. 595, 600, 78 S.Ct. 950, 2 L.Ed.2d 1001, note 10, the majority holding, not the dissent, was approved.

. “But it must be kept in mind, as we explained in Rainwater, that in determining the meaning of the words ‘claim against the Government’ we are actually construing the provisions of a criminal statute. Such provisions must be carefully restricted, not only to their literal terms but to the evident purpose of Congress in using those terms, particularly where they are broad and susceptible to numerous definitions. * * * ” United States v. McNinch, 1958, 356 U.S. 595, 598, 78 S.Ct. 950, 952, 2 L.Ed.2d 1001, 1004. This referred specifically to note 8 and the related text in Rainwater which stated: “In reaching our conclusion, we are aware that the civil portion of the Act incorporates, as a test of liability, the provisions of the criminal section as they were set out in § 5438 of the Revised Statutes of 1878, and that according to familiar principles the scope of these provisions should be confined to their literal terms. Yet even penal provisions must be ‘given their fair meaning in accord with the evident intent of Congress.’ United States v. Raynor, 302 U.S. 540, 552, 58 S.Ct. 353, 359, 82 L.Ed. 413.” Rainwater v. United States, 1958, 356 U.S. 590, at page 592-593, 78 S.Ct. 946, at page 948, 2 L.Ed.2d 996, 999.

. The representation was implied only. Even on the Government’s theory the Dealer, up to the time of the loan closing, has done no wrong. The Dealer does, of course, know of the original Application for TTome Loan Guaranty or Insurance handled as set forth in Step Two, note 5, supra. But at that time, under the stipulation, all was in order. The wrong arises when, in Step Four, note 5, supra, the Dealer “causes” the Lender to loan the money and issue the Certification of Loan Disbursement. The closest it gets to representation of the Veteran’s intent is the certificate that “(5) The loan conforms otherwise with the applicable provisions of the Act and the regulations.”
This is also emphasized by the stipulation itself, note 9, supra. It does not state that Dealer knew of the veteran’s change of intention and then concealed it from the Lender, or that Dealer knew that the loan could be guaranteed only if the veteran’s intent remained the same. Nor does it state that Dealer knew that under the catch-all certification of item (5) quoted above this comprehended the veteran’s then existing intentions.

. One soon gets back to the opinion in Morissette v. United States, 1952, 342 U.S. 246, 250-252, 72 S.Ot. 240, 96 L.Ed. 288. See also 22 C.J.S. Criminal Law §§ 29, 30; 14 Am.Jur., Criminal Law §§ 23, 24; Reyes v. United States, 9 Cir., 1958, 258 F.2d 774, 782-83; Annotation Wil-fullness or intent as an element of offenses denounced by Federal Income Tax Law, 90 A.L.R. 1280 (1934). We have dealt with it many times. At the head of the list should be the thorough opinion written by Judge JONES in McBride v. United States, 5 Cir., 1955, 225 F.2d 249, 253 — 255. See also Bernstein v. United States, 5 Cir., 1956, 234 F.2d 475, 485; Fallen v. United States, 5 Cir., 1955, 220 F.2d 946, 948; Baker v. United States, 5 Cir., 1955, 227 F.2d 376, 378; Berkovitz v. United States, 5 Cir., 1954, 213 F.2d 468, 472-475; Russell v. United States, 5 Cir., 1955, 222 F.2d 197; Rent v. United States, 5 Cir., 1954, 209 F.2d 893, 899-900.