UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA
October 26, 1955
UNITED STATES of America
The opinion of the court was delivered by: DUSEN
This matter is before the court on defendant's motion to dismiss the action on the ground that suit is barred by the statute of limitations. The Government's complaint, filed on December 29, 1954, seeks a recovery of $ 2,000 from the defendant for alleged violations of the Surplus Property Act of 1944
on December 30, 1946.
The defendant contends that this is an action for the recovery of a penalty and, therefore, subject to a five-year statute of limitations.
The plaintiff argues, on the other hand, that this is merely a civil suit wherein the Government is seeking to recover compensation for the actual damages suffered by it because of the alleged fraud of the defendant, and, therefore, no statute of limitations is applicable.
The Surplus Property Act of 1944 provides, in effect, that for every violation thereof the Government shall be entitled to recover the sum of $ 2,000.
It is significant that this amount is recoverable by the Government without reference to the extent of the damage suffered or, indeed, whether damage was suffered at all. This fact and a reading of the statute clearly indicate that this is an action for a penalty.
In all actions for the recovery of a 'civil fine, penalty, or forfeiture', a five-year statute of limitations applies.
Since the violation enumerated in the Government's complaint occurred on December 30, 1946, it would appear that the statute became a bar on December 29, 1951, and the complaint filed on December 29, 1954, came too late. But the plaintiff argues that if this is an action for a penalty and, thus, subject to the statute of limitations, the Wartime Suspension of Limitations Act applies and, under its terms, the action was not barred until December 31, 1954.
The defendant contends, however, that the Suspension of Limitations Act is directed to criminal actions only and does not apply to civil suits such as this. In view of numerous holdings to the contrary
and the history of the Suspension of Limitations Act,
the defendant's position is rejected.
Also, the defendant, relying on the case of United States v. Klinger, 2 Cir., 1952, 199 F.2d 645, affirmed by an equally divided court, 1953, 345 U.S. 979, 73 S. Ct. 1129, 97 L. Ed. 1393, argues that even if the Suspension of Limitations Act applies, it operates only to suspend the barring of this action until December 31, 1949. In that case, in an opinion by Judge Learned Hand, the Second Circuit construed the word 'running' in the Suspension of Limitations Act
as meaning 'bar' and, therefore, held that the Statute of Limitations ran on December 31, 1949, on all offenses committed within the prescribed period (this date being three years after the termination of hostilities on December 31, 1946). However, in United States v. Grainger, 1953, 346 U.S. 235, at page 246, 73 S. Ct. 1069, at page 1075, 97 L. Ed. 1575, the United States Supreme Court rejected the reasoning of Judge Hand, using this language:
'When the President, December 31, 1946, proclaimed the termination of hostilities of World War II, 3 CFR, 1946 Supp., 77-78, this automatically caused the resumption of the running of statutes of limitations on December 31, 1949. Accordingly, in relation to the instant offenses committed in 1945 and 1946, during the period of suspension, the general three-year limitation prescribed by 18 U.S.C. (Supp. V) 3282, U.S.C.A. 3282, began to run for the first time on January 1, 1950, and expired December 31, 1952.
' United States v. Smith, 342 U.S. 225, 72 S. Ct. 260, 96 L. Ed. 252, held that the offenses to which the Suspension Act applied were only those actually committed before the termination of hostilities December 31, 1946. The length of the period for their prosecution was not there in controversy because the offenses occurred in 1947. That period, however, was mentioned either directly or by implication in the concurring and dissenting opinions published on behalf of a majority of the members of the Court. The following statement was made in the concurring opinion:
"These cases clearly illustrate that the suspension statute was not intended to and should not embrace offenses committed subsequent to December 31, 1946. It applies only to offenses committed between August 25, 1939, and December 31, 1946. For those offenses which occurred between the date of the 1942 Act and the cessation of hostilities, Congress' intention was to give the Department of Justice six years from the latter date to investigate and prosecute. For those offenses which occurred before the date of the 1942 Act, Congress' intention was to give the Department three years after the cessation of hostilities plus whatever portion of the regular three-year limitations' period had not yet run when the 1942 Act was passed.' 342 U.S. at page 231, 72 S. Ct. at page 263.
'This issue was before the Court in No. 527, United States v. Klinger, 2 Cir., 199 F.2d 645, which this day is affirmed by an evenly divided Court, 345 U.S. 979, 73 S. Ct. 1129 (97 L. Ed. 1393). In that case, however, there was presented not only this issue but also an issue as to whether the offense charged was one involving fraud of a pecuniary nature upon the United States.'
For the above reasons, I hold that the statute of limitations on this action did not expire until December 31, 1954, and that the complaint filed on December 29, 1954, was timely.