United States v. McNinch/Concurrence Douglas

Mr. Justice DOUGLAS, concurring in part and dissenting in part.

I agree with the Court as respects the false claims made against the Commodity Credit Corporation. I disagree as to the claims against the Federal Housing Administration. The allegations are that McNinch and others, having contracted to make alterations and improvements in various homes, presented to a South Carolina bank several fraudulent loan applications. The applications were accompanied by fictitious credit reports and misrepresented the financial eligibility of the homeowners. These loan applications were made with the intent that they be accepted by the Federal Housing Administration for insurance.

These are the allegations, which for present purposes we must assume are correct.

The South Carolina bank had been approved by FHA as a lending institution. The bank approved the requested loans and applied to FHA for insurance. FHA insured the loans. Thereupon the proceeds of the loans were deposited to the accounts of these respondents in the South Carolina bank.

The statute, R.S. §§ 3490, 5438, 31 U.S.C. § 231, 31 U.S.C.A. § 231, covers anyone who fraudulently 'makes or causes to be made, or presents or causes to be presented, for payment or approval * *  * any claim' against the United States. No claim has been tendered against the United States for 'payment.' But a claim has been presented for 'approval' in the meaning of the Act. For the United States has been induced by fraudulent representations to insure these loans. One who has the endorsement of the United States on his paper has acquired property of substantial value. It is a property right of value because it represents a claim against the United States. It is of course contingent until a default occurs. But when fraudulent, it represents an effort to 'cheat the United States' (United States ex rel. Marcus v. Hess, 317 U.S. 537, 544, 63 S.Ct. 379, 384, 87 L.Ed. 443) to the extent that the United States underwrites the losses on the loans. The fact that precise damages are not shown is not fatal, as Rex Trailer Co. v. United States, 350 U.S. 148, 153, 76 S.Ct. 219, 222, 100 L.Ed. 149, holds.

This cheating of the United States is as real, as substantial, and as damaging as those specific abuses against which the managers of this legislation railed when it was before the Congress. We do not have to stretch the law to include this type of 'claim,' as this form of insurance is a well-recognized property interest. See Fidelity & Deposit Co. of Maryland v. Arenz, 290 U.S. 66, 54 S.Ct. 16, 78 L.Ed. 176. The obtaining of credit risk insurance from the Government by fraudulent means is a form of plundering as flagrant as the presentation for 'payment or approval' of any other type of claim against the Treasury. As Judge Rives said in his dissent in United States v. Cochran, 5 Cir., 235 F.2d 131, 135, 'Inducing the Government to pledge its credit by a false and fraudulent claim' is as much within the Act as 'inducing it to part with its money or property.'