Court Opinion

ID: 9452209
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:33:02.462007+00
Date Added: 2024-06-11T17:33:06.822995
License: Public Domain

KILEY, Circuit Judge
(dissenting in part).
The majority opinion leaves untouched the district court’s decision against the Bank on its counterclaim seeking a declaration that the loans were eligible for insurance. I agree with that part of the majority opinion. The basis of the district court’s decision in that part of the case is that the Bank, through Adams, knew when the loans were made of the misstatements in the applications and of the misuse of the loan proceeds. In its opinion the district court expressed the view that loans made in bad faith by the Bank through Adams could not “logically” be eligible for insurance.
I dissent from that part of the majority opinion which reverses the judgment for the United States under the False Claims Act, 31 U.S.C. § 231 (1964).
The district court in an earlier decision denied the Bank’s motion for summary judgment dismissing the government’s suit. United States v. Fox Lake State Bank, 225 F.Supp. 723 (N.D. Ill. 1963). It there held that intent to defraud was not an essential element of the government’s case under the first two clauses of section 231. See 225 F. Supp. at 725. In the decision before us the district court adhered to that holding, which the Bank challenges. The decisions on the question are not uniform.1
In my view it is unnecessary to decide the question because the record supports judgment for the government under either rule.
There is no evidence that the FHA advised the filing of false claims, or that the claims would not be treated as claims for payment, or that the claims were processed merely as requests for rulings ; there is no limitation to that effect in the claims or in letters accompanying the claims and there is evidence of the acceptance by the Bank of the payment by the FHA of the Booth claim, and that what knowledge the FHA had of the misconduct in connection with the loans did not safeguard the government from loss in the Booth claim.
In view of these considerations the district court was not compelled to find that the Bank, out of a reasonable belief that the loans qualified for insurance, filed them in good faith only for the purpose of a ruling, and not for payment.
The purpose of the False Claims Act— to protect the government against possible cheating by claimants who knowingly filed false claims for payment — justifies what might otherwise be a harsh judgment. Moreover, the Bank received $52,-500.00 in settlement of its suit against Adams’ surety on the basis of Adams’ misconduct.

. M.g., compare Fleming v. United States, 336 F.2d 475, 479 (10th Cir. 1964), cert. denied, 380 U.S. 907, 85 S.Ct. 889, 13 L.Ed.2d 795 (1965), and Acme Process Equipment Co. v. United States, 347 F.2d 509, 527 n.26 (Ct.Cl. 1965), with United States v. National Wholesalers, 236 F.2d 944, 950 (9th Cir. 1956), cert. denied, 353 U.S. 930, 77 S. Ct. 719, 1 L.Ed.2d 724 (1957), and United States v. Park Motors, 107 F.Supp. 168, 175 (E.D. Tenn. 1952).