Koller v. United States

PETITIONER:Koller
RESPONDENT:United States
LOCATION:United States Senate

DOCKET NO.: 362
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 359 US 309 (1959)
ARGUED: Mar 26, 1959 / Mar 30, 1959
DECIDED: Apr 20, 1959

Facts of the case

Question

  • Oral Argument – March 26, 1959
  • Audio Transcription for Oral Argument – March 26, 1959 in Koller v. United States

    Audio Transcription for Oral Argument – March 30, 1959 in Koller v. United States

    Earl Warren:

    Number 362, Raymond Jerean Koller and Martin Silverbrook, Petitioners, versus United States of America.

    Mr. Malis, you had finished your opening argument, you do?

    Robert H. Malis:

    Yes, sir.

    Earl Warren:

    Mr. Kestenbaum, you may proceed.

    Lionel Kestenbaum:

    Mr. Chief Justice, may it please the Court.

    This case involves a fraudulent misuse of veterans priority established under the Surplus Property Act of 1944.

    In this Act, the Congress provided for the disposal of vast quantity of goods which would be left over at the end of the Second World War.

    The statutory objective included fair distribution of goods, avoidance of dislocation of the economy, discouragement of speculation, and encouragement of small business specifically aid to returning veterans was mentioned.

    By 1946 Amendment, veterans were given a priority second only to that of the federal government.

    And in addition to that, the veterans were given the exclusive right to acquire certain specific types and quantities of property which was set aside for them.

    These — a lot of types and quantities and property could be acquired by veterans who desire to acquire them for their own personal use or for the establishment and maintenance of their own small business.

    Now, petitioners, Koller and Silverbrook were veterans who applied for and obtained these priority certificates.

    They — instead of using them for the purposes to which were intended and which were certified in their application, they sold them to a third party.

    Koller executed two fraudulent applications and this — his certificates were used by the third party to purchase two trucks and one car.

    Silverbrook’s certificate was used to purchase six busses and three trucks.

    Both petitioners were indicted to these fraudulent acts.

    They pleaded guilty, and they each paid small fines.

    In the present case as Mr. Malis stated the third day, the Government has to enforce civil remedies provided by this Act, the Surplus Property Act of 1944.

    Section 26 (b) sets forth three alternative measures of recovery and the first one was the one used here, $2000 for each fraudulent act and double damages.

    Summary judgment was granted against Koller for $4000, against Silverbrook for $2000.

    The petitioners’ only defense was that the suit was barred by statute of limitations because it is not been brought within five years of the acts complained of.

    There’s no statute of limitations in the Surplus Property Act itself, the — one rely to parties, one contained in Title 28, Section 2462 imposing a five-year limitation upon suits for a civil fine, penalty or forfeiture.

    The courts below — both courts below relied upon the decision of this Court only three years ago, Rex Trailer Company versus United States and held that the recovery sought by the Government and obtained by the Government was not such as civil fine, penalty or forfeiture.

    Now, the petitioners do not dispute that damage to the Government could be anticipated from violations of this Act.

    There’s none for that matter that damage was actually sustained here.

    And I think the problem can be put in a perspective by examining the elements of damage which the Court set forth in Rex Trailer Company versus United States.

    First, the policy of the Congress concerning disposal of this property were frustrated.

    The fraud diverted the vehicles, these 12 vehicles from veterans or other priority claimants who were entitled to them.

    Second, Mr. Justice Clark in Rex Trailer Company pointed out that there was a pecuniary loss suffered by the United States.

    The sale on these priority certificates was at a much lower price than petitioners or anyone else could have paid — could have paid for these vehicles on the open market.

    Lionel Kestenbaum:

    So, the Government sold these vehicles for a price lower than their market value.

    In addition, since the fraud decreased the number of vehicles available to government agencies, it may very well be — it could be reasonably anticipated that a — federal agencies would have to go out and buy the same vehicles because they have been obtained fraudulently by impeachment.

    Third is the element of the unjust enrichment to the perpetuators of the fraud themselves.

    Mr. — Mr. Justice Clark indicated these elements in the Rex Trailer case but the record there was not adequate to show its existence.

    Here on the other hand, we have the admitted fact that the petitioners sold their certificates to this third party for a consideration, a consideration which undoubtedly reflected the difference between the market value of these vehicles and the price which the Government was wiling to take from veterans and veterans alone.

    Fourth element, not mentioned by the Court in Rex Trailer but pointed out by the Third Circuit in this case.

    It’s the element of the cause of investigation and litigation which Congress might have had in mind in setting up this measure of recovery in the Act.

    Now, once these items of damage — anticipated damage are set forth then it becomes clear that what we have here in 26 (b) (1) of the Surplus Property Act is a common legislative device.

    To use the language in the Rex Trailer case is the fixing of a lump sum in damages in a situation where the actual damage maybe difficult or impossible to ascertain.

    Now, the Court also said, it is the function of liquidated damages to provide a measure of recovery and just of circumstances.

    The judgment for $2000 for each fraudulent act which was the one upheld in that case was held comparable to recovery under liquidated damage provisions.

    In the same way in Marcus versus Hess of 317 U.S., the almost identical civil remedy of the False Claims Act was involved.

    And the Court held there that the purpose and effect of this kind of recovery was to provide indemnity or restitution to the Government for — for the fraud against it.

    The device of double damages plus specific sum was chosen, the Court said, to assure that the Government would be made completely whole.

    And the choice of such a sum, the discretion in fixing this kind of recovery to assure that the Government would be is whole the choice was up to Congress.

    Could you give an you give an example of what you see would be a civil penalty under the statute?

    Lionel Kestenbaum:

    Yes, Mr. Justice.

    There are many such civil penalties in the U.S. code and there are many — and there are a number of them which are exampled by cases under 2462 itself under the statute of limitations.

    The — some prominent ones, I can give a few as an example.

    If a railroad which violates — which fail to comply with an order of the Interstate Commerce Commission, would have to pay a certain penalty of the violation and certain number of dollars for each day during which this violation continues.

    A farmer who sells a certain amount of his crop above his permissible marketing quota, is subject to a penalty.

    A few others, a ship owner who requires a seaman to work more than eight hours a day, pay a sentence of — is subject for the payment of a certain sum.

    This kind of penalty goes way back.

    One of the earliest ones we have is a participation in a slave trade which could result in a forfeiture of vessel and the payment of certain sum.

    I think the key to all these cases and each one of these situations, there was no transaction of the Government.

    There was no possible foreseeable liability to the Government under any contract towards principles.

    And so what we have in those situations, the Government is seeking to vindicate either a general public policy or the interest of a specific protected class like seaman or another situation, Indians.

    The statutes state that a person who surveyed Indian land illegally is subject to a penalty of $1000 which the Government can collect.

    Now, this line has been indeed drawn under 2462.

    The cases under 2462 recognize that a legislature — the Congress or legislature of the states can establish measures of liquidated damages in a situation where it might be difficult or impossible to prove actual damage.

    Lionel Kestenbaum:

    And in no such recovery whether it’s double damages, treble damages or a fix sum, no such recovery has ever been held to constitute a penalty under this statute of limitations into full with in it.

    The line was set forth by this Court I think quite clearly in Meeker versus Lehigh Valley Railroad, 236 United States, that where the statutory liability fix runs to readdress a private injury that is it runs in favor of the party who was injured or to whom injury was anticipated, then it cannot be a fine, a penalty or forfeiture.

    Hence, it’s not covered by this limitations period.

    I think — I’d like to point out following that — I think the error in the petitioner’s position and the error in the one conflicting decision — that of the Court of Claims is demonstrated by their assumption that double damages is necessarily a penalty.

    Under 2462, this Court has held explicitly that treble damages — that treble damage is recoverable under the antitrust laws that those treble damages are — do not constitute a penalty or a fine.

    And hence, are not covered by these limitations period.

    What they do constitute, they constitute a measure of recovery which a legislature sought to establish.

    Potter Stewart:

    How about the — in addition to double damages under subsection — subparagraph (1) there was the sum of $2000 for each act, without any reference at all (Inaudible) true, isn’t it?

    Lionel Kestenbaum:

    That’s correct.

    Well, the — that Section provide both the double damages and the $2000.

    And the Court stated in Marcus versus Hess which I referred to just a moment ago that it is a — that the device of these two together, double damages and $2000 to recheck was the device chosen by Congress to provide full restitution.

    I think this case is an example of the fact that it’s very difficult to prove double damages.

    The Government did not seek to prove double damages, and the recovery here consist only this fix sum.

    That’s very often the case.

    In Marcus versus Hess which is under the False Claims Act, there was a judgment for both elements together.

    And the Court said, “This is a measure of indemnity, a measure of restitution for the wrong done by the Government.”

    Potter Stewart:

    Mr. Kestenbaum, I don’t want to interfere with the — your own order of your argument but I understood in learning before you conclude a really fine information as to the suspension of the statute of limitations during World War II and as to how that fits into this case at least from your —

    Lionel Kestenbaum:

    Yes, Mr. Justice (Voice Overlap) —

    Potter Stewart:

    — so far as your position goes.

    Lionel Kestenbaum:

    I wish I have a moment.

    The Third Circuit, of course, recognized that the ultimate question in both the cases to which I referred in Rex Trailer and the Marcus versus Hess.

    The ultimate question was different and that it concerned the application of Double Jeopardy Clause.But the rationality of these decisions is what is controlling.

    The rationality of these decisions is dispositive in this case for petitioners conceived that if this recovery can be characterized as liquidated damages.

    If that’s what it is, then it is not covered by this statute of limitation.

    And I may say in passing that the characterization, the definition of this recovery as liquidated damages was the very basis for the decision in those two cases.

    They can hardly be dismissed as dicta.

    In both of those cases, the Court held that since it was liquidated damages.

    Therefore, the recovery would — was a civil recovery.

    And the — that part of the — that element in the case is what controls here.

    Not only is the rationality is positive.

    Lionel Kestenbaum:

    But as the Court below pointed out, Mr. Justice Clark show — said in Rex Trailer that certiorari was granted specifically to resolve a conflict between decisions of the Court of Appeals.

    Felix Frankfurter:

    In your view of the matter, could the defendant (Inaudible) the Government call under the witness and extract evidence from him?

    I’m not saying this intermittently.

    Lionel Kestenbaum:

    In this case, Mr. Justice?

    Felix Frankfurter:

    Yes.

    The nice distinction that had been taken in a civil penalty for which a civil action is brought, the verdict can be directed unlike criminal case, the jury can be told to bring in a verdict for the plaintiff.

    Lionel Kestenbaum:

    Of course the problem is not — is not presented here Mr. Justice.

    Felix Frankfurter:

    I understand that.

    But I — these are nice questions.

    I want to get light on it.

    Lionel Kestenbaum:

    Well, seems there could be a criminal prosecution.

    There is a criminal penalty involved aside from this recovery which is involved here.

    The —

    Felix Frankfurter:

    But you mean the $2000?

    Lionel Kestenbaum:

    No, no.

    There is — the person who perpetuated (Voice Overlap) could be proceeded against for this fraud under criminal provisions of the — of Title 18.

    And for that reason, they would be protected by those —

    Felix Frankfurter:

    I was thinking of (Voice Overlap) against United States and Heffner against United States.There are all sorts of distinction.

    Lionel Kestenbaum:

    Well, Heffner involved a penalty.

    It was a — an amount which a person could be forced to pay for soliciting immigration illegally into the United States.

    It would fit into what I’ve suggested before —

    Felix Frankfurter:

    It’s — but the Court held as you know that a (Inaudible) can be directed in favor of the Government.

    Lionel Kestenbaum:

    That’s correct.

    The Court held in that case that such a penalty was a civil penalty.

    It could be recovered in a civil action.

    Felix Frankfurter:

    Of course I noticed that — I suppose I wonder when that came into the legislative phraseology.

    A civil fine, do you happen to know whether that was after Heffner — you statute.

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    Or a civil fine, penalty or forfeiture.

    Is that a modern trade in penalty legislation?

    Lionel Kestenbaum:

    Well, the acts — the statute of limitations was passed in 1839 and at that time, it referred to recovery — as a recovery for any penalty of forfeiture pecuniary or otherwise.

    Felix Frankfurter:

    But this is — I’m getting myself —

    Lionel Kestenbaum:

    I understand.

    Felix Frankfurter:

    — a civil fine.

    Lionel Kestenbaum:

    In this provision, it came in when the —

    Felix Frankfurter:

    You said it was 1839?

    Lionel Kestenbaum:

    The statute of limitations originally comes from 1839.

    I think this language —

    Felix Frankfurter:

    I don’t think it was a civil crime.

    Lionel Kestenbaum:

    I think that came in when it was codified in 1948.

    Felix Frankfurter:

    So, that’s (Voice Overlap)

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    At the recent (Inaudible)

    Lionel Kestenbaum:

    That’s correct.

    Felix Frankfurter:

    But if it wasn’t in the older cases, which you refer to these against United States, penalty against steamship companies for bringing in illicitly aliens —

    Lionel Kestenbaum:

    Well, I think what I meant by answering your question before, Mr. Justice was that Heffner hold that this — this is a civil penalty.

    It can be recovered in a civil proceeding and this would be — the precise kind of penalty that we claim is covered by the statute of limitation.

    Felix Frankfurter:

    I’m suggesting that merely putting the label of a civil penalty that is a penalty which may be pursued as a civil action is not an all embracing comprehensive term because as lead shows although the action is maybe brought similarly and although verdict maybe directed, yet the privilege against self discrimination qualifies the civil act.

    Lionel Kestenbaum:

    Yes, I quite — I quite understand, Mr. Justice.

    And I think — I think —

    Felix Frankfurter:

    (Inaudible)

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    — saying this is a civil penalty and it doesn’t add all legal purpose may answer your question.

    Lionel Kestenbaum:

    I think I’d like to point out in connection with that, that in one sense, the problem presented with respect to such recovery under constitutional provisions is a much more difficult one than the one we have here.

    Under the ones to which you referred, it could be — it could be argued that whatever Congress said is not controlling.

    As Your Honor just stated, the Congress is of course restrained by these constitutional provisions, and you cannot —

    Felix Frankfurter:

    The Congress in the instances we’re talking about.

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    The Congress didn’t say anything.

    This is all court fashion.

    Felix Frankfurter:

    Heffner is court fashioned anything against United States (Inaudible)

    Lionel Kestenbaum:

    I understand, Mr. Justice.

    The point that I was making —

    Felix Frankfurter:

    And the answer was derived from policies behind, respective claims that were asserted.

    Lionel Kestenbaum:

    Yes.

    And the answer was derived I would think also from the problems of interpreting and applying this constitutional provisions.

    In that sense, our case is much easier for awhile Congress cannot alter or cannot transgress this constitutional provisions.

    What we have here is a statute of limitations problem which is wholly within the power of Congress.

    As it sees fit, Congress can either decide to impose a limitation period upon claims accruing to the United States or cannot do so.

    Ordinarily, in civil situations, there is no limitation period against the Government.

    Felix Frankfurter:

    What do you do with Priebe?

    Is that the name of the case I’m thinking of?

    Lionel Kestenbaum:

    Yes, I think there is a name — there is a case by that name, Mr. Justice.

    That case held that a liquidated damage provision set forth in a government contract was a penalty and therefore it could not be enforced.

    But here of course, we have one established by Congress.

    So, there’s no question about its forcibility, the only question is what are the consequences of this kind of measure of damages.

    Felix Frankfurter:

    But before you — before the Court got to that it has to decide whether it’s a compensatory provision or merely an exact (Inaudible).

    Lionel Kestenbaum:

    That’s correct.

    Felix Frankfurter:

    So that the question, in a way, is the same as this, wasn’t it?

    Lionel Kestenbaum:

    That’s correct, except — if Congress — the point I was just making in distinguishing this situation from a constitutional problem is that —

    Felix Frankfurter:

    I’m talking about Priebe —

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    — is it a constitutional question at all.

    Lionel Kestenbaum:

    I understand that.

    But in this situation, my point is that if Congress has indicated its intention, its characterization of this kind of recovery as a measure of compensatory recovery, then that simply settled the issues since the matter is one wholly within the power of Congress.

    Felix Frankfurter:

    If it has, so clearly you and I wouldn’t be here on this point.

    Lionel Kestenbaum:

    Well, I may say that every Court other than one Court, the Court of Claims has held that this is clear — this is a clear intention that has been a clear intention of Congress and clearly expressed.

    Felix Frankfurter:

    The fact is that this is merely a question of ascertaining damages and the violation of a contract or ascertaining damages for breach of what we called thought.

    Lionel Kestenbaum:

    That’s correct.

    Felix Frankfurter:

    There is a determination here of fixation — fixing at the outset by Congress so as not to pursue the controversy of litigation except — but there’s an element of smart money, isn’t it?

    Lionel Kestenbaum:

    Yes, I —

    Felix Frankfurter:

    — because you say you can ascertain what the actual damage is, as you do in ordinary contracts on both cases.

    Lionel Kestenbaum:

    That’s correct.

    Felix Frankfurter:

    That’s what the jury gets.

    Lionel Kestenbaum:

    Yes.

    Felix Frankfurter:

    And therefore, when they say, “Well, a statute of limitation is — also have a policy.

    The longer statute relates to a more serious business and shorter statute (Inaudible)

    You want to leave time openings for all the delays and the uncertainties of getting the litigating process —

    Lionel Kestenbaum:

    Or when the Government is — when the Government is involved, Mr. Justice, in ordinary civil recoveries, the Government has no statute of limitation applicable against it.

    Felix Frankfurter:

    The Congress seemed fit to fix one.

    Lionel Kestenbaum:

    Seem fit to fix one in a civil fine, penalty or forfeiture area.

    And what I was stating before was that if the Congress has indicated its intention that this is a compensatory device, then that would settle the issue even though just taking it apart from that congressional intention and we might have a — we might have a problem upon which you might differ.

    Felix Frankfurter:

    That’s your burden to show that this is clearly compensatory and not an additional smarty.

    Lionel Kestenbaum:

    Well, I would — I would put it two ways.

    One, that we believe that Rex Trailer and the — and Marcus versus Hess hold that this is a compensatory device.

    And second, that Congress has clearly indicated this intention — this characterization as its intention.

    And that therefore, that settles the question.

    As far as the intention of Congress is concerned, the Court stated it.

    The Court set it forth in Rex Trailer.

    I will just repeat these elements for a moment here.

    Congress, in the first place, copied Section 26 (b) (1) from the comparable provision of the False Claims Act.

    And this Court, just a year before the Surplus Property Act was passed, this Court had held the same recovery, $2000 for each act and double damages to constitute a compensatory civil remedy.

    As Mr. Justice Clark said in Rex Trailer, obviously, when Congress copied this language, it intended a similar compensatory device in this act.

    Second, Congress specifically designated the two alternative measures of recovery in 26 (b) as liquidated damages.

    The petitioner’s argue that that indicate some sort of distinction between subdivisions (2) and (3) and subdivision — subdivision (1) which are set forth on page 3 of our brief.

    But I think the answer to that in the first place contained in Rex Trailer itself.

    The Court said that each one of these three alternatives can be selected by the Government at its option and each was of the same nature.

    If there has to be an explanation, I think the explanation lies in the chronology to which — which I just referred.

    Since this Court had already held 26 (b) (1) or its equivalent to constitute a measure of liquidated damages, the Congress began with it that it did not have to characterize it.

    This Court has already done so.

    Lionel Kestenbaum:

    And then added on these two alternative methods which the Government — which the United States could allege and each one of those was characterized by the Congress as liquidated damages to assure that it will be treated the same way.

    Turning to the suspension provision to what Mr. Justice Stewart referred a moment ago, I think that no contrary implication of a congressional intent can be drawn from that suspension provision.

    That a suspension applies to a number of statutes under which the government proceeds.

    And even if it does cover also civil statute of limitations as well as criminal statutes, even if it does cover civil statute, even if it does hold civil statute of limitation, there is nothing to intimate — there’s nothing in its passage to intimate that Congress thought there was a civil statute which applied to the recovery in the Surplus Property Act.

    The Third Circuit not only relied upon the rationale of this Court’s decision in Marcus versus Hess and in Rex Trailer but it pointed out as I was stating a moment ago that certiorari had been granted in Rex Trailer to resolve a conflict between the Courts of Appeals.

    And that’s conflict, the conflict referred to was the conflict on this precise issue, the statute of limitation issue.

    The Third Circuit said that it believe that the Court in deciding Rex Trailer must have resolve the very conflict to which it had referred in its opinion.

    And we submit that the Third Circuit was justified in reaching that conclusion.

    And the same conclusion had, as I indicated, been reached by every other court that has been faced with this problem other then the Court of Claims.

    As I already have indicted this conclusion below is demonstrated to be correct by the uniform interpretation of the statute of limitation itself.

    Petitioners have cited various cases using the words penalty.

    But not only do they ignore the holdings of this Court in Rex Trailer and in the Marcus versus Hess but they also ignore this uniform interpretation of the statute of limitation itself.

    This Act has been on the book since 1839 and — and as I’ve stated, it has never been applied to a measure of recovery fixed by a legislature as a mode of liquidated damages to which an injured party can rely upon.

    (Inaudible)

    Lionel Kestenbaum:

    We contend, Justice first that it is not — cannot be called civil penalty that this Court had already held that it is not a civil penalty.

    (Inaudible)

    Lionel Kestenbaum:

    We would contend, Mr. Justice that even if it might be going on a civil penalty for other purposes and as far the statute of limitation is concerned, the Congress has sufficiently indicated that it is not covered by the statute, that it is comparable to a civil compensatory action for damages.

    And for that reason, this congressional intent is conclusive on this issue.

    This issue being one which I have indicated is wholly within the power of Congress.

    (Inaudible)

    Lionel Kestenbaum:

    I think I’ve tried to answer very briefly, Mr. Justice just a moment ago.

    Potter Stewart:

    I didn’t hear that.

    Lionel Kestenbaum:

    Yes.

    The — I stated that a suspension does not indicate a contrary congressional intent since it applies to a number of statutes which cover frauds against the United States.

    Potter Stewart:

    What was — what statute of limitation was suspended and when and for how long?

    Lionel Kestenbaum:

    Well, the statute — as the suspension statute indicates, it’s set forth in page 27 of our brief.

    It applies to all offenses.

    Any existing statute of limitations applicable to any offense involving fraud against the United States, there are a number of such criminal penalties set forth in the United States code and each one of those would be told until three years after the termination of hostilities.

    Potter Stewart:

    And this — this would have applied to the — to the criminal offense under which these people were cross — were convicted.

    Lionel Kestenbaum:

    That’s correct.

    Potter Stewart:

    And that’s — any applicable statute of limitations applicable to that offense was extended or (Voice Overlap) —

    Lionel Kestenbaum:

    That’s correct, yes.

    Now, there are some disputes as to whether it applies to civil statute.

    Our brief indicated that it did not or there are some lower court — District Court holdings that this also told civil statues of limitation.

    I may say that the False Claims Act, the one involved in Marcus versus Hess had a civil statute of limitation.

    So, even if the Congress was intending by this suspension to affect civil statute of limitations, there is another one which it might have wanted to affect.

    There’s certainly no intimation that Congress thought there was a civil statute of limitations applicable to this statue, the Surplus Property Act of 1944.

    There is none in this civil — in the Surplus Property Act and the False Claims Act had to contain a specific statute of limitations in order to have one applicable to it.

    Does that answer your question Mr. Justice?

    Potter Stewart:

    I’m not sure that it does.

    I — would it be your position that the specific statute of limitations in the False Claims Act was told by this legislation or not?

    Lionel Kestenbaum:

    The Government has taken that position in a number of District Court cases and has — those District Courts have so held.

    But I was — my position is that whether or not this applies to a civil statute of limitation, it certainly doesn’t indicate any congressional intent that there was a civil statute here for the False Claims Act itself had to contain its own civil statute.

    The False Claims Act does not rely upon any civil statutes applicable to fines, penalties or forfeitures which is the one which we have here.

    Potter Stewart:

    But was that act to False Claims Act under which Marcus against Hess was decided.

    Lionel Kestenbaum:

    That’s correct.

    So, I’ve got stated the Surplus Property Act involves not an attempt by the Government.

    It has indicated general public policy or the interest of a protected class, it involves a situation in which damage to the Government could have been anticipated.

    Just as Congress can fix a measure of recovery such as double or treble damages involving private plaintiffs so it can fix the same kind of measure when the Government itself was the one which was injured.

    And as this Court has held and as Congress intended, the civil remedies in this act constitute a measure of liquidated damages to the party injured here in the United States.

    And for that reason, the statute of limitation for penalties and forfeitures is not — not applicable.

    Robert H. Malis:

    Mr. Chief Justice.

    Earl Warren:

    Mr. Malis.

    Robert H. Malis:

    May I, Mr. Justice Stewart, perhaps more actively answer your question, 56 Stat. 747 is the citation of the original suspension section enacted in 1942.

    In 58 Stat.649, this was enacted July 1st, 1944.

    Certain important language was changed.

    The earlier statute clearly was a criminal suspension act.

    It applied to offenses indictable under the law.

    It’s so stated when two years later in July 1st, 1944, the Contract Settlement Act in the law, the language offenses indictable was deleted and the statute was expanded to include acts, transactions and so on and applied to specifically the Contracts Settlement Act.

    In 1954, in October, three months later, and in the same volume of the statute at large, 58 Stat. 765, the Surplus Property Act contained an amendment to this suspension of limitation section.

    Robert H. Malis:

    That is Section 28 of the Surplus Property Act and I submit to this Court that —

    Potter Stewart:

    And that — that Act, the Surplus Property Act which is the one here involved —

    Robert H. Malis:

    Yes.

    Potter Stewart:

    — was originally enacted 1944, is that right?

    Robert H. Malis:

    Yes, sir.

    It was.

    And at that time —

    Potter Stewart:

    And part of that Act was an amendment to the suspension of the — of the statute of limitations?

    Robert H. Malis:

    As it had been amended, only three months before —

    Potter Stewart:

    It had been amended earlier 1944.

    Robert H. Malis:

    Yes, sir.

    That is exactly correct.

    And we submitted on our earlier portion of the argument that Section 28 is that suspension section relating to acts, transactions, and offenses.

    Not only offenses now indictable and that it follows by two sections, the subject 26 (b) (1) here on the consideration.

    We submit that the Congress definitely must have intended or assume that the provisions of the Surplus Property Act ant the Contract Settlement Act in each of which statutes, they took the trouble to enact suspension sections were bound by or governed by limitations.

    Otherwise, the presence of those suspension sections in that very act containing no criminal aspects of its own would be a rather unusual method of draftsmanship.

    Now, the Government assumes in their argument that we agree that these damages exist.We definitely do not agree on any such thing.

    There is nothing in this record at all which relates to damages to a program or damages in any other sort other than the offenses complained of were committed.

    As a matter of fact, the super priority which is referred to by the Government was not enacted until two of the three acts complained about had already taken place.

    The super priority section as it’s been referred to was enacted on May 3rd, 1946.

    And it gave the secretary the right to delegate or to separate certain of the surplus vehicles for the benefit of veterans if he so chose.

    However, the two acts, the first two acts have already occurred then.

    There is no evidence whatever that any such delegation ever took place during the offenses complained off in this case, none whatever.

    We feel that there should be and there is a differentiation between a penalty as the language uses it and the purpose for which that is applied.

    As Mr. Justice Frankfurter pointed out, the question of penalty may be applied in an international law sense where one state enforced the law of the state of another.

    It may be applied as to double jeopardy as it was in Rex Trailer and Marcus.

    It may very well be applied to determine whether a defendant be required to testify.

    Now, none of those issues have been before the Supreme Court of the United States as applied to the statute of limitations.

    It is true, and I am somewhat interested as to why, in Mr. Justice Clark’s opinion.

    He says, we took certiorari — we granted certiorari because of asserted conflict and it wasn’t until — as read in the Government’s brief that they — they had joined in that request rather than opposing it as here.

    (Inaudible)

    Robert H. Malis:

    I beg your pardon, sir.

    Hugo L. Black:

    The conflict involves limitations.

    Robert H. Malis:

    The conflict involves limitation.

    The issue involves double jeopardy and as we respectfully stated, I hope in our brief — after merely — a footnote reference to it — the Court exclusively devoted itself to double jeopardy.

    That’s why we say, sir that we are here for the first time on the question of limitations.

    And we — we do very hardly recommend the Priebe case as Mr. Justice Frankfurter was questioning the Government.

    (Inaudible)

    Robert H. Malis:

    The previous cases is one which sets forth quite clearly that in the absence of any measure of damage or any proof of damage whatsoever, an interorum provision to be applied upon the occurrence of an event regardless of whether any actual damages sustained or not is a penalty.

    And the language in that case has been followed and it’s the foundation for the law as we understand liquidated damages.

    The final point that I think we should make regardless of all the cases cited by the Government, there is not one which contains a provision for $2000 or its ilk and a multiple or a fraction of provable damage in every case, Helvering and Mithcell, Huntington and Attrill all those cited in our briefs and in the Government’s brief.

    Nowhere is there a situation which says take $2000 and double or a half of the provable damage.

    That $2000 was decided in Marcus and Hess to be collectible regardless of any proof of actual damage whatsoever.

    And with the —

    (Inaudible)

    Robert H. Malis:

    It would, sir.

    And as I pointed out in my brief, if there were seven defendants who conspired together, but committed not one over a day, however, these seven defendants would each be liable for the $2000.

    How do you distinguish this statute from the treble damage point?

    Robert H. Malis:

    Well, the Congress has clearly indicated the — that 26 (b) (2) and (3) are liquidated damages.

    They’ve so stated.

    In our brief, we say that that determination is not before us.

    When they add $2000 to a multiple, and the multiple — you’ll see, Your Honor pleases, the multiple stands for its foundation upon proof of actual damage.

    And the jury returns the verdict the Government has been damaged for $1000.

    Then we doubled it.

    This is in a sense, compensatory.

    It is smart money that Congress has said, “It is given to the person injured.”

    Here, however, the basic distinction and the damages lies in the accessibility of that $2000 forfeiture or stipend as the courts have referred with, irrespective of one nickel worth of damage or any proof of any damage.

    Plus, when added to it, double the amount.

    You see, this is really intended to enforce the policy to prevent to punish.

    And it is this sort of thing that the Congress in enacting 2462 and referring back to Your Honor’s opinions in Marcus and Hess said, “We may recover such a thing in a civil suit.”

    Robert H. Malis:

    If this is the philosophy of the Court and the language which the Court uses to define this $2000 26 (b) (1) and then for hundred years, the Congress has failed to repeal the existing statute of limitations in the False Claims Act further indicating its satisfaction with it and the fact further that Congress in 1948 reenacted this 100-year-old statute of limitations.

    These things are all in my mind, indicative of an intention and an understanding that 2462 regardless of what we call 26 (b) (1), whether we call it penalty or forfeiture or civil crime or compensatory, for the limited purpose of limitations as oppose to double jeopardy or international law.

    But for the limited purpose of limitations, we urge that the Congress understood 2462 to full and rely upon and to govern such a suit.

    All the Government had to do here, they had nine years legally.

    All they had to do here was to institute suit before the suspension section applies.

    I — I commend to Your Honors the case of McKenna versus Armour which was affirmed in 254 F.2d 90 and certiorari denied in this Court in 358 U.S. 834 this year — 1958 in which that point of the suspension section applying to civil actions was decided.

    And so, we urge this Court to reverse the judgment of the Court of Appeals solely on the ground that the Government started 10 years after they should have.

    Five years after the men were indicted and that they are bound by the statute of limitation.