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Keywords

contractdefendantliabilitystatutetrialpiracy
contractdefendantstatutetrialcommon lawpiracy

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Falter v. U.S., 23 F.2d 420

Facts

In 1919, Falter was the head of the Textile Branch of the Surplus Property Division of the War Department, while Canter and Weiss were employees of Gottesman, who had contracts for surplus textiles. The defendants conspired to misrepresent the status of these contracts, claiming they were unfilled to obtain goods at original contract prices, despite knowing the claims were false. They formed a company, Universal Sales Company, to facilitate this fraud, leading to significant financial gain at the expense of the United States.

The facts, as they jury might have found them from the evidence, were that Falter had been for some time before the month of November, 1919, the head of the Textile Branch, in charge of the sale of surplus war materials falling under that class, and was well acquainted with its work, its records, and its practices.

Issue

The main legal issue was whether the defendants' actions constituted fraud under the statute, particularly in light of the judge's instructions to the jury regarding the nature of the fraud.

The question going to the heart of the case is whether a fraud was proved within the statute, especially in the light of what the judge said to the jury.

Rule

The court applied the principle that a conspiracy to defraud the United States is a crime, regardless of whether the United States had a legal obligation to fulfill the contracts in question.

While there are no crimes against the United States, except by statute, any fraud upon the United States is of a public character, and would at common law have itself been a crime, and quite independently of that a conspiracy to defraud the United States would also have been criminal.

Analysis

The court found that the defendants' misrepresentations to Cole, who was unfamiliar with the branch's practices, constituted deceit. Falter's assurances led Cole to accept orders at prices lower than market value, which was a clear violation of the law. The court emphasized that the defendants could not escape liability by claiming that the United States was not legally bound to fulfill the contracts.

To say that the defendants are to be excused because of the success of their contrivances would be to sanction the very consummation of their crime.

Conclusion

The court affirmed the convictions, concluding that there was sufficient evidence to support the jury's finding of fraud. The defendants' actions were deemed criminal under the applicable statutes.

The defendant's guilt was amply proved, the lengthy trial was fairly conducted, and there is no reason why the judgment should not stand.

Who won?

The United States prevailed in the case, as the court upheld the convictions based on the evidence of conspiracy and fraud presented at trial.

The United States had not, we shall assume, bound itself by legal obligation to fill any of the contracts made by its officers in the Surplus Property Division of the War Department.

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