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UNITED STATES v. McNINCH

Supreme Court of the United States

April 1, 1958, Argued ; May 26, 1958, Decided

No. 146

Opinion

 [*595]  [***1003]  [**951]    MR. JUSTICE BLACK delivered the opinion of the Court.

This case was argued with Rainwater v. United States, ante, p. 590, also decided today. It involves three separate actions by the Government to recover damages and  [*596]  forfeitures under the False Claims Act. 1 [****3]  These actions -- which will be referred to, after the principal defendant in each instance, as Cato, Toepleman and McNinch -- were initially brought in different Federal District Courts but on appeal were disposed of by the Court of Appeals in a single opinion. 242 F.2d 359. 2

 In Cato and Toepleman the District Court found the defendants had submitted false claims for crop support loans to the Commodity Credit Corporation, and entered judgment in favor of the Government for the forfeitures provided by the False Claims Act. The Court of Appeals reversed on the ground that a false claim against Commodity was not a claim "against the Government of the United [****4]  States, or any department or officer thereof" within the meaning of that Act. The sole question before us, so far as these two actions are concerned, is whether the Court of Appeals erred in so deciding. For the reasons set forth in Rainwater we hold that it did.

McNinch raises different questions concerning alleged false claims against the Federal Housing Administration. ] By statute the FHA is authorized to insure qualified banks and other private lending institutions against a substantial portion of any losses sustained by them in  [*597]  lending money for the repair or alteration of homes. 3 After a lending institution has been approved by the FHA that agency promises to insure, upon payment of a specified premium, any home improvement loan made by the institution. A borrower desiring to obtain an insured loan applies directly to the private lender, which has final authority to decide whether the loan should be made. If a loan is granted, the lender reports the details to the FHA which automatically insures the loan as soon as the required premium is paid.

 [****5]  The Government's complaint in McNinch charged the defendants with causing a qualified bank to present a number of false applications  [***1004]  for credit insurance to the FHA. 4 The defendants moved to  [**952]  dismiss the complaint, asserting that it failed to state a cause of action. The District Court granted the motion, holding that an application for credit insurance was not a "claim" within the meaning of the False Claims Act. The Court of Appeals affirmed on that same basis as well as on the alternative ground that a false claim against the FHA was not a claim "against the Government of the United States, or any department or officer thereof."

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356 U.S. 595 *; 78 S. Ct. 950 **; 2 L. Ed. 2d 1001 ***; 1958 U.S. LEXIS 1760 ****

UNITED STATES v. McNINCH, DOING BUSINESS AS HOME COMFORT CO., ET AL.

Prior History:  [****1]  CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT.

Disposition:  242 F.2d 359, affirmed in part, reversed in part, and cause remanded.

CORE TERMS

false claim, loans, insure, lending institution, fraudulent, credit insurance

Banking Law, Federal Acts, General Overview, Insurance Law, Claim, Contract & Practice Issues, Premiums, Real Property Law, Mortgages & Other Security Instruments, Mortgage Insurance, Private Mortgage Insurance, Civil Rights Law, Contractual Relations & Housing, Fair Housing Rights, Fair Housing Act, Financing, Federal Programs, Federal Housing Administration, Mortgagee's Interests, Mortgagor's Interests, Secondary Mortgage Market, Federal National Mortgage Association, Governments, Federal Government, Claims By & Against, Labor & Employment Law, Wrongful Termination, Whistleblower Protection Act, Public Contracts Law, Voiding Contracts, Misrepresentation