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Wilson v. United States.

May 18, 1943

WILSON ET AL.
v.
UNITED STATES.



Appeal from the District Court of the United States for the District of New Jersey; John Boyd Avis, Judge.

Author: Biggs

Before BIGGS, MARIS, and GOODRICH, Circuit Judges.

BIGGS, Circuit Judge.

These appeals may be considered in one opinion since they present substantially similar facts and may be disposed of by the application of the same principles of law. The complaints in both cases are founded upon Section 619 of the Tariff Act of 1930, Act of June 17, 1930, c. 497, Title Iv, Section 619, 46 Stat. 758, 19 U.S.C.A. § 1619,*fn1 and the Tucker Act, Section 24(20) of the Judicial Code, 28 U.S.C.A. § 41(20).*fn2

In the complaint at No. 8029 the plaintiffs that on May 21, 1933, they gave original information of a fraud on the customs revenue and a violation of the navigation laws to united States customs agents which resulted in the seizure and forfeiture of a speedboat, the Laura, with a cargo of liquor and in the imposition of fines on its crew. The plaintiffs assert and the United States admits that United States paid the plaintiffs the sum of $2,500 representing 25% of the appraised value of the liquor seized. The plaintiffs further allege that they were informe by the Treasury Department that the fines imposed upon the crew of the Laura " * * * had been subsequently declared to be for the violation of the Customs and Prohibition Laws and * * * as the violation of the Customs Laws had been combined with the Navigation laws or other similar statutes * * * " the fines were not imposed for violation of the customs laws within the purview of Section 619. The plaintiffs allege that for these reasons the Treasury Department denied their claims for 25% of the fines collected. In its answer the United States admits that the Treasury Department refused to pay further compensation to the plaintiffs because "there was no recovery incurred under the customs laws * * * ." The plaintiffs contend that they are entitled also to 25% of the appraised value of the Laura.

In the complaint at No. 8030 the plaintiffs allege that they gave original information to United States customs agents resulting in the seizure and forfeiture of certain liquor for violation of the "Customs and Navigation Laws of the United States" which led to the seizure and forfeiture of liquor appraised at $50,540. They allege that they have received payments totalling $1,822 from the United States as a partial payment of the 25% of the appraised value of the liquor seized. They then allege that the Treasury Department informed them that further compensation was refused them because " * * * the balance of the liquor covered by this seizue had been subsequently forfeited under an Internal Revenue Law and that in view of the decision of the Comptroller General of the United States, holding that proceeds from the forfeitures in cases where allegations of violations of the Navigation or similar statutes are combined with violations of the Customs Laws that they are not recoveries under the Customs Laws within the meaning of Sec. 619 * * * ." The United States asserts in its answer that the Treasury Department denied the plaintiffs' claim for additional compensation because "the recovery from the seizure * * * was not incurred under the customs laws within the meaning of Section 619 * * * ." The plaintiffs claim that $10,000 remains due to them.

Neither complaint alleges that the Secretary of the Treasury made an award or awards in respect to the additional compensation sought by the plaintiffs.

The answers admit that original information was given by the plaintiffs which information resulted in the seizure of the Laura, of the cargoes of liquor and the imposition of the fines collected by the United States. The answers deny liability on the part of the United States to pay compensation to the informers and in separate affirmative defenses the United States moves to strike out the complaints on the ground that they do not state good causes of actions.

The two cases were tried together to the court without juries. Judgments were rendered fro the plaintiffs. The United States has appealed.

The first defense asserted by the United States to both suits is that the Secretary of the Treasury under Section 619 of the Tariff Act of 1930 may in his absolute discretion grant or withhold compensation to informers and since the Secretary has not seen fit to make awards to the plaintiffs, the court below was without jurisdiction to entertain the suits under the Tucker Act. The plaintiffs in effect concede that if they do not have a right to compensation, that is to say if the making of awards by the Secretary of the Treasury and the payment by him of compensation to them rests within the absolute discretion of that executive officer, the court below was without jurisdiction under the Tucker Act to entertain the suits.

The first question which we must determine therefore is whether Section 619 vests in the Secretary of the Treasury an absolute discretion to award or deny compensation to informers. If Section 619 is to be so construed the suits must be dismissed.

Provisions somewhat like those of Section 619 are to be found in Section 4 of the Act of June 22, 1874, 18 Stat. 186. This is the earliest appearance of an informers statute of this character in the federal acts. Section 4 provided in part: "That whenever any officer of the customs or other person shall detect and seize goods, wares, or merchandise, in the act of being smuggled, or which have been smuggled, he shall be entitled to such compensation therefor as the Secretary of the Treasury shall award * * * ." That portion of Section 4 that dealt with awards to informers was couched in permissive language substantially similar to that employed in Section 619; viz., "And whenever any person not an officer of the United States shall furnish to a district attorney * * * information * * * which shall lead to the recovery of any duties withheld, * * * such compensation may * * * be paid [under the direction of the Secretary of the Treasury] to such persons * * * as shall be just and reasonable * * * ". The contrast between the mandatory and permissive words of the statute, the mandatory words being applicable to awards to be made by the Secretary of the Treasury to officers of the United States, and the permissive words being applicable to compensation to be paid to informers, might have afforded help in construing Section 619 were it not for the provisions of Section 6 of the Act of June 22, 1874. Section 6 provided that in any case where judicial proceedings have been instituted, the informer should establish his claim to compensation to the satisfaction of the court dor judge having cognizance of such proceeding. It goes on to provide that when any fine or penalty or forfeiture is collected without judicial proceedings, " * * * the Secretary of the Treasury shall, before directing payment to any person claiming such compensation, require satisfactory proof that such person is justly entitled thereto." The language of Section 6 indicated that the Secretary of the Treasury was to perform at least a semijudicial function since he was to require satisfactory proof of the claimant's compliance with the statute. Compare, however, the decision of the Circuit Court of Appeals for the Second Circuit in Re Ghazal, 174 F. 809, construing the 1874 Act which held that that statute made the Secretary of the Treasury the "* * * sole judge as to whether there is an informer who is entitled to a share under * * * (Section 4). Until he acts the informer has merely an expectation of reward." Supra, at page 811 of 174 F. The Circuit Court of Appeals for the Second Circuit also cited the decision of the Court of Claims in Ramsey v. United States, 14 Ct.Cl. 367, which takes the same point of view. See Id., page 373 of 14 Ct.Cl.

The legislative history of Section 619 affords no help in interpreting this aspect of it; nor does the legislative history of its predecessor acts or of the Tariff Act Amendments of 1935, Act of August 5, 1935, c. 438, Title III, Section 305, 49 Stat. 527, 19 U.S.C.A. § 1619, throw light upon the subject. We must therefore find the legislative intent from an examination of Section 619 itself.

Section 619 provides for a qui tam action for the benefit of an informer. the policy of Congress in passing it and its predecessor acts was to protect the custom revenues of the United States. A substantial portion, 25 percent, of the moneys received by the United States by reason of original information given by the informer, "may" be awarded and paid to the informer. An informer would have little incentive to give original information upon occasions at considerable personal risk to officers of the United States if his compensation rested in the absolute discretion, almost, one might say, in the whim, of an executive officer. Indeed the strongest point which the Government can assert in this phase of its argument is the fact that the statute uses the word "may" instead of the word "shall". The duty in the case at bar is one imposed upon a public officer. As a matter of law the word "may", ordinarily permissive in quality, may be given a mandatory meaning. This was well put by the Court in Banc of Delaware in DuPont v. Mills, 9 W.W.Harr. 42, 51, 196 A. 168, 173, 119 A.L.R. 174, wherein it was stated, "But, the word 'may', ordinarily permissive in quality, is frequently given a mandatory meaning * * * where a public body or officer is clothed by statute with power to do an act which concerns the public interest, or the rights of third persons. In such cases, what they are empowered to do for the sake of justice, or the public welfare, the law requires shall be done. The language, although permissive in form, is, in fact peremptory." ...


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