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Docket Number

No. 14476.

Attorney(S)

Melvin Richter, Atty. Dept. of Justice, Paul A. Sweeney, Atty. Dept. of Justice, Washington, D.C., John D. Hill, U.S. Atty., Birmingham, Ala., Frank M. Johnson, Jr., U.S. Atty., Jasper, Ala., Warren E. Burger, Asst. Atty. Gen., William L. Hogue, Asst. U.S. Atty., Birmingham, Ala., Herman Marcuse, Marvin C. Taylor, Attorneys, Department of Justice, Washington, D.C., of counsel, for appellant. Manuel Levine, Birmingham, Ala., C.B. Snow, George H. Butler, Jackson, Miss., George J. Thornton, Kosciusko, Miss., Junior O'Mara, Jackson, Miss., Butler, Snow O'Mara, Jackson, Miss., of counsel, for appellees.

Judges

Edwin Ruthven Holmes

Acts

Judiciary And Judicial Procedure — Fines, Penalties And Forfeitures — Particular Proceedings — Time For Commencing Proceedings

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Smart Summary

Summary of Opinion: United States v. Weaver et al., No. 14476 (5th Cir. Nov. 18, 1953)

Factual and Procedural Background

The United States brought this civil action seeking recovery of $10,000—$2,000 for each of five separate alleged fraudulent acts—on the theory that defendants obtained surplus United States property by fraud. The district court held that the Government's claim was barred by the five-year statute of limitations, 28 U.S.C. § 2462, and further ruled that the claim was not within the wartime suspension of limitations provided by section 28 of the Surplus Property Act. See district court opinion reported at 107 F. Supp. 963.

For purposes of the appeal, the opinion accepts the following facts as admitted: in September 1946 the War Assets Administration in Atlanta conducted sales of surplus government property (new and used motor vehicles) available exclusively to duly certified World War II veterans who certified the vehicles were for their own personal use or to maintain their established businesses, professions, or agricultural activities. The pleadings admit that the defendants engaged in fraudulent tricks and schemes in connection with these sales, conspired with certain veterans, purchased five "certifications for veterans' preference" from veterans, and by fraudulent use of those certifications obtained five motor vehicles and titles in separate acts from the War Assets Administration.

Legal Issues Presented

Whether the United States' civil claim to recover statutory damages for allegedly fraudulent acquisition of surplus property is barred by the five-year statute of limitations, 28 U.S.C. § 2462.
Whether the claim falls within the wartime suspension of limitations provided by section 28 of the Surplus Property Act of 1944.
Whether the statutory measure of $2,000 per wrongful act is a penal sanction (thus subject to the limitations governing penalties) or a remedial/compensatory measure (not governed by the limitations applicable to penalties).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443	Shows that certain statutory measures of recovery can be remedial and compensatory in nature.	Used to support the conclusion that the statutory measure in the Surplus Property Act may be remedial/compensatory rather than penal, and to contrast compensatory remedies with penal sanctions.
Cotton v. United States, 11 How. 229, 13 L.Ed. 675	Illustrates that the United States is not limited to penal sanctions to protect its property rights.	Cited to support the proposition that the Government may seek non-penal remedies to vindicate property interests.
Commissioners' Court of Nolan County v. Beall, 98 Tex. 104, 81 S.W. 526	Distinguishes between civil sanctions (redressing civil injuries) and penal sanctions (punishing crimes).	Relied on to frame the distinction between remedial and penal remedies when characterizing the nature of the statutory recovery sought by the Government.
United States v. Summerlin, 310 U.S. 414, 60 S.Ct. 1019, 84 L.Ed. 1283	States the general rule that statutes of limitations ordinarily do not run against the United States.	Invoked as part of the court's explanation that § 2462 is an exception to the default rule protecting the United States from limitations defenses, and that absent a federal statute barring the action, the Government's claim should not be time-barred.
Board of Commissioners of Jackson County v. United States, 308 U.S. 343, 60 S.Ct. 285, 84 L.Ed. 313	Affirms the principle that limitations ordinarily do not run against the United States.	Cited alongside Summerlin to support the general doctrine concerning statutes of limitation and the United States.
Guaranty Trust Co. of New York v. United States, 304 U.S. 126, 58 S.Ct. 785, 82 L.Ed. 1224	Also cited for the rule that statutes of limitations ordinarily do not run against the United States.	Used as additional authority for the court's statement of the general rule protecting the Government from limitations defenses absent a contrary statute.
Chattanooga Foundry Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241	Listed among authorities the court referenced in concluding its disposition.	Cited as supporting authority in connection with the court's overall discussion of the sovereign-immunity/limitations principles underlying its decision to reverse.
Brady v. Daly, 175 U.S. 148, 20 S.Ct. 62, 44 L.Ed. 109	Listed among authorities the court referenced in concluding its disposition.	Cited as supporting authority in connection with the court's overall discussion of the sovereign-immunity/limitations principles underlying its decision to reverse.
Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123	Listed among authorities the court referenced in concluding its disposition.	Cited as supporting authority in connection with the court's overall discussion of the sovereign-immunity/limitations principles underlying its decision to reverse.

Court's Reasoning and Analysis

The court accepted the key facts as admitted by the pleadings: that in September 1946 the War Assets Administration sold surplus motor vehicles to veterans, that the defendants used fraudulent schemes to acquire five veterans' preference certifications and thereby obtained five vehicles and titles. The action is civil in nature and seeks compensatory recovery for injuries to the United States' property rights.

The court analyzed whether the statutory award of $2,000 per wrongful act constituted a penal sanction (and thus implicated the limitations provision in 28 U.S.C. § 2462) or was remedial/compensatory. Relying on precedent indicating that certain statutory measures may be remedial (notably United States ex rel. Marcus v. Hess) and on the Surplus Property Act's purpose to indemnify the United States for injuries to its property rights, the court concluded that the amount fixed by statute was not intrinsically penal but was designed to afford complete indemnity for the injury suffered by the Government for each wrongful act.

The court further observed the general rule that statutes of limitations ordinarily do not run against the United States, citing authorities to that effect (United States v. Summerlin; Board of Commissioners of Jackson County v. United States; Guaranty Trust Co. of New York v. United States). Because § 2462 is an exception to that general rule (applicable to penalties), the court examined whether any federal statute barred this civil action. The court stated that it had been cited to no federal statute that barred the action and that it had found none.

On this basis—characterizing the claim as remedial rather than penal, and finding no federal statute that barred the Government's suit—the court held that the district court's judgment upholding the limitations defense should be reversed and the cause remanded for further proceedings consistent with the opinion.

Holding and Implications

REVERSED AND REMANDED.

Holding: The Court of Appeals reversed the district court's judgment that the United States' claim was time-barred and remanded the case for further proceedings not inconsistent with its opinion.

Implications: The direct effect is that the Government's civil action to recover statutory damages under the Surplus Property Act for the alleged fraudulent acquisition of surplus property may proceed; the appellate court determined the statutory recovery at issue is remedial/compensatory rather than penal and therefore not barred by the penalties statute invoked by the district court. The opinion does not purport to create a new rule of law but applies existing authorities concerning the remedial/penal distinction and the general protection of the United States from statutes of limitation absent an express statute imposing one.

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UNITED STATES v. WEAVER et al.

HOLMES, Circuit Judge.

This is an action by the United States to recover from the defendants the total sum of $10,000, or $2,000 for each of five separate fraudulent acts allegedly committed by the defendants in obtaining surplus property of the United States. In an opinion reported in 107 F. Supp. 963, the district court upheld the contention that the claim of the United States was barred by the five-years statute of limitations. 28 U.S.C. § 2462. The court ruled further that the claim was not within the war-time suspension of limitations provided by section 28 of the Surplus Property Act, 58 Stat. 781.

Now 1948 Revision 19 U.S.C.A. § 3287.

For the purposes of this appeal, the following facts must be admitted: In September, 1946, the War Assets Administration, an agency of the United States in Atlanta, Georgia, pursuant to the Surplus Property Act of 1944, as amended, conducted sales of certain surplus property of the government, consisting of new and used motor vehicles, which were available for purchase exclusively by duly certified veterans of World War II who certified that the vehicles sought to be purchased were for their own personal use or for the maintenance of their established businesses, professions, or agricultural activities. It must further be admitted, under the present state of the pleadings, that the defendants used or engaged in fraudulent tricks and schemes, in connection with said sales, and conspired among themselves and with certain of said veterans to acquire said property at said sales; that pursuant to the aforesaid conspiracy, the defendants purchased from said veterans five "certifications for veterans' preference," above referred to, which had been issued to said veterans by said Administration; and that, by fraudulent use thereof, the defendants obtained five motor vehicles and titles of ownership to the same, in separate and several acts, from said War Assets Administration.

This is not a criminal prosecution; it is not a civil action for a penalty; it is a civil action to recover an award of damages of a compensatory nature, payable to the United States for injuries to its property rights. In view of the difficulty of computing exactly the damages suffered by the government, it was within the province of Congress to choose a measure of damages, including a specific sum, that would give full restitution to the United States. The statutory language of Section 26(b)(1) of the Surplus Property Act of 1944, 50 U.S.C.Appendix, § 1635(b), and in particular the selection of measures of damages held by the Supreme Court, United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443, to be of a remedial and compensatory nature only shortly before the enactment of the Surplus Property Act, indicate that it was not the legislative intention to impose penal sanctions. The United States is not limited to penal sanctions in order to protect its property rights. Cotton v. United States, 11 How. 229, 232, 13 L.Ed. 675.

Now 40 U.S.C.A. § 489.

Every law must have its sanction, that is, its means of enforcement, or it will be nothing more than a precept or working rule. Without such sanction it can hardly be called a law. Sanctions are of two kinds: those that redress civil injuries and those that punish crimes. The first are called civil sanctions, the second, penal sanctions. Commissioners' Court of Nolan County v. Beall, 98 Tex. 104, 81 S.W. 526, 528. We agree with the court below that the complaint herein, seeking to impose a civil sanction, stamps this action as remedial, not criminal, in nature, 107 F. Supp. 963, 966; but we reach a different conclusion from that reached by it with reference to the arbitrary sum of $2000 being intrinsically a provision for penalty and within the statute that limits the time for commencing actions for the enforcement of penalties. 28 U.S.C. § 2462. We cannot say that the amount fixed by statute will do more than afford the government complete indemnity for the injury done it by each of said acts of the defendants.

The intent and purpose of the Surplus Property Act of 1944, 58 Stat. 756, were to facilitate and regulate the orderly disposal of surplus property of the United States, including the giving of an opportunity to returning veterans to establish themselves in business, agriculture, or professional life. 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. Section 26(b) (1) seeks to indemnify the United States for such injuries. It provides for payment to the United States of an amount not so disproportionate to the actual injury that it cannot be deemed wholly compensatory. Cf. United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443.

The general rule is that statutes of limitations ordinarily do not run against the United States. United States v. Summerlin, 310 U.S. 414, 60 S.Ct. 1019, 84 L.Ed. 1283; Board of Commissioners of Jackson County v. United States, 308 U.S. 343, 351, 60 S.Ct. 285, 84 L.Ed. 313; Guaranty Trust Co. of New York v. United States, 304 U.S. 126, 132, 58 S.Ct. 785, 82 L.Ed. 1224. Thus said section 2462 constitutes an exception to this general rule and is in derogation of an inherent attribute of sovereign immunity. It follows that, since we have been cited to no federal statute that bars this action, and have found none, the judgment appealed from should be reversed and the cause remanded for further proceedings not inconsistent with this opinion. It is so ordered. United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443; Chattanooga Foundry Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241; Brady v. Daly, 175 U.S. 148, 20 S.Ct. 62, 44 L.Ed. 109; Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123.

Reversed.

UNITED STATES v. WEAVER