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November 19, 1943


The opinion of the court was delivered by: BARD

This matter arises on defendant Anaconda's motions to quash the return of service of the summons on it and to dismiss the complaint or to stay further proceedings in the action.

The action was instituted under the Revised Statutes of the United States, Sections 3490 and 3493, 31 U.S.C.A. §§ 231 to 234, by Helen M. Reichmann, in the name of the United States and in her own name as informer, to recover damages and penalties imposed by these sections for defrauding the United States.

 Section 3490, 31 U.S.C.A. § 231, provides that any person not in the armed forces of the United States who knowingly presents a fraudulent claim against the United States shall forfeit and pay to the United States the sum of $2,000 and, in addition, double the damages sustained by the United States by reason thereof.

 Section 3493, 31 U.S.C.A. § 234, provides that the person who brings and prosecutes to final judgment an action for the recovery of such damages and forfeiture shall be entitled to one-half of the recovery.

 Service on the corporate defendant was made on one Thomas V. Gargan, who was designated by the defendant as "District Manager" of the sales territory comprising the eastern half of Pennsylvania, lower New Jersey and part of Delaware. The individual defendants named in the action were not served. Defendant Anaconda's motion to quash the service of the summons on it challenges the sufficiency of this service to bring it within the jurisdiction of this court.

 Section 3491 of the Revised Statutes, 31 U.S.C.A. § 232, grants jurisdiction to the district courts of the United States within whose jurisdictional limits the person committing the fraud "shall be found" to hear and determine any actions under the statute. Whether a corporation may be "found", within the meaning of this section, in a jurisdiction where it does no business, might be arguable. It is conceded by the defendant, however, that if it is doing business in this district, it may be "found" here, its contention being that under the authorities it is not "doing business" in this district.

 The facts bearing on this question, as shown by the depositions filed of record, are that the defendant maintains, and has maintained for a number of years, a sizeable office in a Philadelphia office building, with its name on the door and listing in the telephone books. It employs five employees in this office, including Gargan, who was in charge thereof. It pays all the expenses of maintaining the office and the salaries of these employees, payments being made from the defendant's New York office. Sales are solicited by the Philadelphia office from customers in the territory referred to above and from two independent sales agents for the defendant in that territory. Most sales are effected by the Philadelphia office subject to "approved credit".Upon such approval by the New York office, the merchandise ordered is shipped from factories outside of Pennsylvania directly to the customers. Although there are no figures in evidence as to the volume of the business thus effected, it is clear that it is considerable in amount and has continued for a number of years.

 In my opinion, these facts are sufficient to establish that the defendant is doing business in this district sufficiently to be subject to the process of this court. The tendency of the courts in recent years has been to regard activities by agents of a corporation which result in a regular flow of goods into a state sufficient to render the corporation subject to service of process within that state, especially where a local office is maintained therein for the purpose of soliciting sales, and the question of where the purchase is legally consummated is considered of slight significance, 18 Fletcher, Cyclopedia Corporations (Perm.Ed.) § 8718. See also Real Silk Hosiery Mills, Inc., v. Philadelphia Knitting Mills Co., 3 Cir., 46 F.2d 25; Fort Wayne Corrugated Paper Co. v. Anchor Hocking Glass Corp., D.C., 31 F.Supp. 403.

 This leaves for consideration defendant's motion to dismiss the complaint or to stay further proceedings in the action. In support of this motion, defendant has filed an affidavit that prior to the institution of the present suit a civil complaint was filed by the United States of America against the corporate defendant and two of the individual defendants named in the present action, in the United States District Court for the District of Rhode Island, seeking recovery, under the same statute, for the same alleged fraudulent claims, and that this prior action is still pending. Defendant contends that since these actions are qui tam actions, the pendency of the prior suit precludes the prosecution of the present suit for the same relief, and requires the dismissal, or at least a stay, of this action.

 This contention has merit. Particularly since the recent decision of the Supreme Court in the case of United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S. Ct. 379, 87 L. Ed. , construing the successful prosecution of an informer's action, rather than the discovery of the fraudulent conduct, as the test of his right to recover a fee as an informer under this statute, would there be grave danger in permitting "informers" to maintain such actions despite the pendency of a prior action under the statute for the same relief. Immediately upon the filing of the first such action, similar actions could be instituted by "informers" in every district in which the defendant could be "found", and the first one able to force his action to a successful conclusion would thus obtain the informer's fee, possibly very considerable in amount, to the exclusion of the others.

 The problem of the effect of the pendency of a prior action under this statute has been passed upon by the courts in United States v. B.F. Goodrich Co., D.C., 41 F.Supp. 574. The defendants in an action under this "Informers Act" moved for a stay of proceedings because of a pending action by another on the same cause, and the plaintiff moved to consolidate the two actions. In disposing of those motions, Judge Bright said at page 575 of 41 F.Supp.:

 "Obviously, under the general rule well known and so long adhered to, one plaintiff should not be permitted to bring and maintain at the same time more than one action for the same relief. The only plaintiff in an action such as this must be the United States, no matter who brings it on its behalf. Before the commencement of this action, suit had already been commenced by the United States in the Mandel case, for the very same relief sought by Scott here. There can be no division of the moneys collected because, among other reasons, the statute expressly provides that such a suit shall be at the sole cost and charge of the person bringing it; and the proceeds are to be divided one-half to him and the other half to the United States. Others are excluded. Even the sovereign has no right to interfere. The first plaintiff has sole control of the action, except that he cannot dismiss it without consent of the judge and the District Attorney. Under the circumstances, this action must be stayed. United States v. Griswold, 26 Fed.Cas. page 42, No. 15,266; Bush v. United States, C.C., 13 F. 625; United States v. Dwight Manufacturing Co., D.C., 213 F. 522; Beadleston v. Sprague, 6 Johns., N.Y., 101; Ferrett v. Atwill, 8 Fed.Cas. page 1161, No. 4,747.

 "For the same reasons, plaintiff's motion to consolidate, which is opposed by these defendants and by Mandel, should be denied. This is not a derivative action in the same sense as one brought by a stockholder for the benefit of a corporation. There recovery is solely for the benefit of the corporation. Here the recovery is solely for the benefit of the United States and the informer. If there can be but one action and one ...

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