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REILLY V. PINKUS, 338 U. S. 269 (1949)

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U.S. Supreme Court

Reilly v. Pinkus, 338 U.S. 269 (1949)

Reilly v. Pinkus

No. 31

Argued October 13, 1949

Decided November 14, 1949

338 U.S. 269

Syllabus

1. In a fraud order proceeding under 39 U.S.C. §§ 259, 732, it was shown that respondent had made expansive claims in advertisements regarding the efficacy and safety of his fat-reducing plan, which consisted of a diet and the taking of small quantities of granulated kelp containing iodine. Testimony of expert witnesses, based upon their general medical knowledge, was slightly conflicting as to the value of iodine for this purpose, but they agreed that the recommended diet might prove harmful to some persons.

Held: the evidence was sufficient to support a finding by the Postmaster General that the efficacy of respondent's reducing plan was misrepresented in his advertising. Pp. 338 U. S. 270-275.

(a) American School of Healing v. McAnnulty, 187 U. S. 94, does not bar a finding of fraud whenever there is the least conflict of opinion as to curative effects of a remedy. Pp. 338 U. S. 273-274.

(b) If made with intent to deceive, misrepresentations such as were made here fall squarely within the type which, in Leach v. Carlile, 258 U. S. 138, were held to justify findings of fraud. Pp. 338 U. S. 274-275.

2. Government witnesses based their expert testimony in part on certain medical books, and respondent was not permitted to cross-examine them about statements contained in other medical books. The presiding officer adopted the prosecutor's view that good faith was not a defense. The Postmaster General found that the efficacy of respondent's reducing plan was misrepresented in his advertising, and issued a fraud order.

Held: the present fraud order should not be enforced; but the proceedings may be reopened to permit additional hearings should the Postmaster General choose to do so. Pp. 338 U. S. 275-277.

(a) It was prejudicial error not to permit respondent to cross-examine the Government's witnesses as to statements contained in other medical books, even though some of them were merely medical dictionaries. P. 338 U. S. 275. chanroblesvirtualawlibrary

Page 338 U. S. 270

(b) This error was not cured by having the factfinder examine the excluded material subsequently. Pp. 338 U. S. 275-276.

(c) In post office fraud cases, proof of fraudulent purpose is essential: it is not sufficient to prove merely that an incorrect statement was made. P. 338 U. S. 276.

(d) One against whom serious charges of fraud are made must be given a reasonable opportunity to cross-examine witnesses on the vital issue of his purpose to deceive. P. 338 U. S. 276.

(e) The strikingly different consequences of cease and desist orders issued by the Federal Trade Commission and fraud orders issued by the Postmaster General emphasize the importance of limiting the latter to instances where actual fraud is clearly proved. P. 338 U. S. 277.

170 F.2d 786, affirmed.

A District Court enjoined enforcement of a fraud order issued by the Postmaster General. 61 F.Supp. 610; 71 F.Supp. 993. The Court of Appeals affirmed. 170 F.2d 786. This Court granted certiorari. 337 U.S. 906. Affirmed, p. 338 U. S. 277.





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