The opinion of the court was delivered by: KITCHEN
The United States brings this civil action pursuant to the provisions of the False Claims Act (Act), 31 U.S.C.A. § 231 et seq., to recover forfeitures and double damages provided for in section 231. Jurisdiction is founded in 31 U.S.C.A. § 232. The matter is before this Court on a stipulation of facts, trial memoranda of law, and oral argument of counsel. Findings of the Court are based on that stipulation.
Defendant United National Labs (United), a corporation of the State of New Jersey, was engaged in the business of purchase and sale of electron tubes. Defendant Bornstein was part owner and general manager of United; defendant Page was part owner, vice-president, and manager of sales of that corporation. At all times relevant to this proceeding United was operated and managed by Bornstein and Page.
In August 1962 the United States Signal Supply Agency entered into Supply Contract No. DA-36-039-AMC-01080(E) with Model Engineering and Manufacturing Corp., Inc. (Model), a corporation of the State of Indiana. Model was engaged in manufacturing and building electronic radio equipment and radio sets, and under the contract was to supply radio kit sets
to the Department of the Army. The component parts list of this contract specified that Sub-item #1-5-33, to be included in the radio accessory kits, called for:
2 ea. Tube, Electron JAN type 4X150G Per Specifications, MIL. E-1 and TSS MIL. E-1, 302E dated 4/17/57
Due to the requirements of the equipment specifications and "JAN" tests the use of a non-"JAN" branded commercial tube or a surplus or obsolete "JAN" branded tube required prior written approval from the Government contracting officer who administered the contract. Model had not obtained such approval and, in fact, certified that the material offered was new, recently manufactured, had never been used, and was not former surplus of any type.
In May, 1963 defendant Page wrote Model advising that United was able to supply JAN 4X150G electron tubes at a price of $32.00 per tube.
In that same correspondence Page assured Model that United would test the tubes according to the applicable military specifications and would certify the tubes by Government inspection. Defendants knew that the tubes were for use in the Government contract, even though they had never seen a copy of that agreement.
Pursuant to the above arrangement in July 1963 defendants shipped ten 4X150G tubes to Model for sampling. Following a preliminary inspection of the sample tubes, Model sent a form to United advising of the following facts concerning the tubes:
In December 1963 Model issued to United a purchase order for 1008 JAN 4X150G electron tubes at a total cost of $32,256.00 and a unit price of $32.00 per tube. Shortly thereafter United shipped 120 of the subject tubes to Model. In early January 1964, however, Model returned the tubes as unacceptable because they had not been JAN branded or Government source inspected.
Model then became concerned that United might not be able to furnish tubes that met Government specifications and requested United confirm that the correct tubes could be furnished. By letter of January 24, 1964, signed by defendant Bornstein, Model was advised as follows:
This letter is to stand as affirmation by us that we are fully equipped and capable to delivery (sic) any and all electron tubes and semi-conductors on which we accept purchase orders from you to the applicable military specifications and government source inspection supplied as required.
The defendants then affixed or caused to be affixed to the tubes in their possession in January 1964
the following markings:
(2) The manufacturer's qualification code ...