Hass v. United States (93 F.2d 427, 1937)

SANBORN, Circuit Judge.

In the first five counts of an indictment, Albert Hass, W. Pingree Curtis, Frank C. . Parnell, Willard A. Knight, Sam Sparrow, and Clarence R. Parks were charged with having sent five separate notices through the United States mails in furtherance of a scheme to defraud which it is alleged they had devised, section 215, Crim.Code, 18 U.S.C. § 338, 18 U.S.C.A. § 338; and, in a sixth count, they were charged with having conspired to commit the offenses charged in the first five counts, section 37, Crim.Code, 18 U.S.C. § 88, 18 U.S.C.A. § 88. Demurrers to the indictment were overruled. A demand for a bill of particulars was refused. The defendants then entered pleas of not guilty, and (with the exception of Sam Sparrow, who was granted a severance and who had since died) went to trial. At the close of the evidence, they made a motion for a directed verdict, which was denied. The ' jury returned a verdict of guilty as to each of them on all counts, and from the judgments and sentences entered upon this verdict, they have appealed.

The assignments of error challenge: (1) The validity of the indictment; (2) the refusal of the demand for a bill of particulars; (3) the sufficiency of the evidence to establish the offenses charged in the indictment; (4) the admission of certain evidence; (5) certain instructions given by the court in the charge, and the court’s refusal of certain requested instructions.

1. The Indictment.

It is contended that the indictment: (1) Is vague and indefinite; (2) charges a scheme to defraud by certain false pretenses, but with “no conformable negation of the pretenses alleged”; (3) contains no allegations that the false pretenses were made with intent that they should be acted upon to the damage of the persons to whom they were made; (4) contains no allegation that the persons to whom it is alleged the pretenses were made believed them to be true or relied upon them; (5) charges that the scheme to defraud was consummated by the false pretenses, but contains no allegation that the persons to whom they were made parted with anything of value or were damaged in any way.

Section 215 of the Criminal Code, 18 U.S.C. § 338, 18 U.S.C.A. § 338, provides:

“Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, * * * shall, for the purpose of executing such scheme or artifice or attempting so to do, place or cause to be placed, any letter, postal card, package, writing, circular, pamphlet, or advertisement, * * * in any post office * * * to be sent or delivered by the post office establishment of the United States, * * * or shall knowingly cause to be delivered by mail according to the direction thereon, * * * any such letter, postal card, package, writing, circular, pamphlet, or advertisement, shall be fined not more than $1,000, or imprisoned not more than five years, or both.”

The offense defined by this statute consists of two essential elements: (1) The existence of a scheme to defraud; and (2) the placing or causing to be placed in the post office of a letter, postal card, or other mailable matter for the purpose of executing or attempting to execute the scheme. Fournier v. United States, 7 Cir., 58 F.2d 3, 5; Wolpa v. United States, 8 Cir., 86 F.2d 35, 40; United States v. Young, 232 U.S. 155, 34 S.Ct. 303, 58 L.Ed. 548; Robins v. United States, 8 Cir., 262 F. 126.

The purpose of this indictment was to apprise the defendants of the crimes charged against them with such reasonable certainty as to enable them to make their defenses; to prevent their being taken by surprise by the evidence of the government; arid to protect them, after judgment, from another prosecution for the same offenses. Wolpa v. United States, 8 Cir., 86 F.2d 35, 40; Berger v. United States, 295 U.S. 78, 82, 55 S.Ct. 629, 630, 79 L.Ed. 1314; Claiborne v. United States, 8 Cir., 77 F.2d 682, 689; Cowl v. United States, 8 Cir., 35 F.2d 794, 797.

In such an indictment, “while particulars of the scheme are matters of substance and must be described with certainty sufficient to show its existence and character and to fairly acquaint the accused with the particular fraudulent scheme charged against them, the scheme itself need not be pleaded with all the certainty as to time, place and circumstance requisite in charging the gist of the offense, the mailing of the letter or other article in execution or attempted execution of the same.” Gardner v. United States, 8 Cir., 230 F. 575, 578; McClendon v. United States, 8 Cir., 229 F. 523, 525; Cowl v. United States, 8 Cir., 35 F.2d 794, 797, 798; Colburn v. United States, 8 Cir., 223 F. 590, 593; Wolpa v. United States, 8 Cir., 86 F.2d 35, 40.

The indictment here under consideration charges that prior to December 10, 1931, there were in existence two fraternal benefit societies, the Modern Brotherhood of America (hereinafter called “Modern Brotherhood”) organized under the laws of Iowa, and the Independent Order of Foresters (hereinafter called “Foresters”) organized under the laws of Canada; that each of these societies had a large number of members or benefit certificate holders, and that the assets of each of the societies belonged to its members; that on December 10, 1931, the two societies merged, the Foresters taking over the business, assets, and members of the Modern Brotherhood and assuming its liabilities; that the defendants had devised a “scheme and artifice to defraud” the Foresters “as it should and did exist after the said merger and consolidation and a large number of persons belonging to that class of persons who were members and benefit certificate holders of the said Modern Brotherhood of America who should be and did become, by virtue of said merger and consolidation, members of the said The Independent Order of Foresters as the said The Independent Order of Foresters should and did exist after the said merger and consolidation * * *, and to obtain money and property from the said persons to be defrauded by means of false and fraudulent pretenses and representations, statements and promises hereafter set forth”; that “it was part of said scheme and artifice” that the defendants, some of whom were directors of the Modern Brotherhood, should and they did dominate and control its activities pending the merger and consolidation with the Foresters, and that they should and they did cause the merger, and that they should and they did wrongfully obtain from the persons to be defrauded $300,000 “for the merging and consolidating, and the causing to be merged and consolidated” of the Modern Brotherhood and the Foresters, “without the knowledge or consent of the persons to be defrauded”; that it was further a part of said scheme and artifice that the defendants should and they did convert the $300,000 received from the persons to be defrauded, without the knowledge and consent of such persons; that “it was further a part of said scheme and artifice” that the defendants, while in control of the Modern Brotherhood and while some of them were acting as directors and officers thereof, should and they did, on or about November 7, 1931, at Mason City, Iowa, execute and cause to be executed a written contract to merge the Modern Brotherhood with the Foresters; that “it was .further a part of said scheme and artifice” that the 'defendants should and they did, on or about November 7, 1931, deliver the contract of merger to the commissioner of insurance of the state of Iowa for approval; that “it was further a part of said scheme and artifice” that the defendants should and they did cause to be held in the city of Chicago, 111., on or about December 9, 1931, a convention of duly elected and qualified delegates of the Modern Brotherhood to vote approval of the merger agreement and to authorize the merger; that “it was further a part of said scheme and artifice that the said defendants at the said convention and meeting to be held and held at the time and place aforesaid, should and they did, by means of false and fraudulent pretenses, representations and promises then and there to be made, and made and caused to be made by the said defendants to the said delegates, then and there cause the said delegates to vote in behalf of and for the said Modern Brotherhood of America and its members, their approval of the said contract and agreement to merge and consolidate and vote their approval of and authorization tor the saia merger and consolidation of the said Modern Brotherhood of America with the said The Independent Order of Foresters”; and “that the said false and fraudulent pretenses, representations and promises intended to be made and made and caused to be made by the said defendants, as aforesaid, at the time and place aforesaid, were to the effect that the board of directors of the said Modern Brotherhood of America deemed it to the best interests of the said Modern Brotherhood of America and its members that the said society merge and consolidate its business with the business of the said The Independent Order of Foresters and to the effect that if the said merger and consolidation was voted upon with approval and authorized by the said delegates in behalf of and for the saidc Modern Brotherhood of America and its members, the then officers and directors of the said Modern Brotherhood of America would be employed and engaged by the said The Independent Order of Foresters for a period of four years, but only at an annual salary which was of the same amount that the said directors and officers were then respectively receiving as an annual salary as directors and officers respectively of the said Modern Brotherhood of America; the defendants then and there intending by said pretenses, representations and promises to have the said delegates understand and believe that the only purpose of and reason for the proposing of the said merger and consolidation was to protect and safeguard the interests of the said Modern Brotherhood of America and its members and that none of the then officers and directors of the said Modern Brotherhood of America would receive or obtain any money by reason of said merger and consolidation other than that amount of money to be paid them by the said The Independent Order of Foresters as an annual salary which said amount of money was to be the same amount as the said officers and directors had been receiving as an annual salary respectively as officers and directors of the said Modern Brotherhood of America”; and “that said pretenses, representations and promises, as the defendants and each of them when so making and causing the same to be made to the said delegates and when committing the several offenses in this indictment hereafter charged well knew, were false and fraudulent in that the said merger and consolidation was proposed not for the purpose of protecting and safeguarding the interests of the said Modern Brotherhood of America and its members, but was proposed for the purpose of obtaining by the said defendants from the said persons to be defrauded, the said large amount of money without the knowledge and consent of said persons to be defrauded and were false and fraudulent in that the then officers and directors of the said Modern Brotherhood of America, some of whom are the said defendants, were not, as a result and because of the said merger and consolidation to receive and obtain only that amount of money which was to be paid them as an annual salary by the said The Independent Order of Foresters, but they were to and they did receive and obtain as a result and because of said merger and consolidation, a large amount of money, to-wit: $300,000 other and in addition to the amount of money which was to be paid and was paid them as an annual salary by the said The Independent Order of Foresters”; that- on or about the 25th day of November, 1931, at Mason City, Iowa, the defendants “so having devised said scheme and artifice for obtaining money and property by the means aforesaid from, and to defraud the persons to be defrauded as aforesaid, for the purpose of executing that scheme and artifice and attempting so to do,” placed in the post office of the United States at Mason City, Iowa, five notices each addressed to a different person, calling a special convention of the Supreme Lodge, Modern Brotherhood of America, at the Hotel Del Prado, in Chicago, for December 9, 1931, “for the purpose of considering, acting and voting upon” the proposed plan of merger.

The first five counts of the indictment, which charge the substantive offenses, are identical except that a different party is named in each count as the addressee of the notice alleged to have been mailed.

The conspiracy count of the indictment is in conventional form, and charges the defendants with having conspired to devise the scheme described in the first five counts and to execute it through the use of the mails.

Giving to the language of the indictment a sensible construction, we think that it charges a single scheme to defraud by means of the false and fraudulent pretenses specified in the indictment, a scheme whereby, by making such false representations, the defendants, all of whom with the exception of Parks were officers and directors of the Modern Brotherhood, should and did cause the Supreme Council of that society to approve and authorize the merger, and thus should and did enable the defendants to obtain wrongfully from the Foresters $300,000 for effectuating the merger.

This scheme is, in our opinion, sufficiently described in the indictment to apprise the defendants as to its nature and as to the representations which it is claimed were to be made and were made by them in executing it. The indictment, after stating what the representations were to be, and what they were, alleges that they were false and that the defendants knew them to be false, and then alleges why they were false. This was a sufficient negation of the truth of the representati®ns. United States v. New South Farm & Home Company, 241 U.S. 64, 68-71, 36 S.Ct. 505, 60 L.Ed. 890.

But the defendants contend that th'ere is no charge that they intended to induce the persons to whom the representations were made to act thereon, and that it is not alleged that they intended that the representations should be believed or relied upon. Having charged a scheme to defraud a group of persons by means of representations which were false and known to be false and which were made for the purpose of inducing and did actually induce the approval and consummation of a merger whereby the defendants wrongfully procured $300,000 from the persons to be defrauded, it was not necessary that the indictment should go further and allege that the defendants, at the time they made the representations, intended that the false representations should be believed and relied upon and should produce the result which they were obviously intended to produce. The intent of the defendants in these respects is a necessary inference from the facts stated in the indictment. Kriebel v. United States, 7 Cir., 8 F.2d 692, 695, 696; Ewing v. United States, 9 Cir., 136 F. 53, 57.

The contention that because the indictment charges the consummation of the scheme to defraud, it must, also show that the persons to whom the representations were made parted with something of value to them, is without merit. The crime denounced by the statute is the mailing of the notices in executing or attempting to execute the scheme. If the scheme was devised prior to the time the notices were mailed and jf the notices were mailed in execution of it, the crime was then complete whether those to be defrauded were actually defrauded or not. Furthermore, it is charged in the indictment that the defendants did wrongfully obtain $300,000 from the Foresters after that society had absorbed the members of the Modern Brotherhood.

From what has been said, it is apparent that the indictment was not duplicitous, as the defendants claim. It charges but the one scheme and artifice to defraud and to obtain money by false and fraudulent pretenses.

In Livezey v. United States, 5 Cir., 279 F. 496, at page 498, certiorari denied 260 U.S. 721, 43 S.Ct. 12, 67 L.Ed. 481, the-court considered a similar contention, and disposed of it in the following language:

“It is contended that the indictment is bad for duplicity, because it charges a scheme to defraud and also to obtain money by false and fraudulent representations. We do not think the objection is tenable. 'It is not pointed out in argument that there is a difference between a scheme to defraud and one to obtain money by false and fraudulent representations, and we are unable to perceive any. The indictment sufficiently charges both a scheme to defraud and the use of the mails. Ruthven v. United States, 222 F. 70, 137 C.C.A. 364; Bartell v. United States, 227 U.S. 427, 33 S.Ct. 383, 57 L.Ed. 583; United States v. Young, 232 U.S. 155, 34 S.Ct. 303, 58 L.Ed. 548; Preeman v. United States, 244 F. 1, 156 C.C.A. 429.”

See, also, United States v. Stever, 222 U.S. 167, 173, 32 S.Ct. 51, 53, 56 L.Ed. 145, in which the Supreme Court said:

“Whether the facts averred in this count constitute a scheme to obtain goods or money by a common-law false pretense may admit of grave doubt. But whether that be so or not, it would require very subtle distinction to conceive of a use of the mail to promote a scheme to obtain property or money by means of false pretenses which would not also be a ‘scheme or artifice to defraud’ within the plain meaning of § 5480” [the predecessor of present section 215, Crim.Code, 18 U.S.C.A. § 338].

While we do not regard the indictment as a model of criminal pleading, we think it is sufficient as to all counts.

2. The Demand for Bill of Particulars.

A demand for a bill of particulars in a criminal case invokes the exercise of a sound judicial discretion on the part of the trial court. Myers v. United States, 8 Cir., 15 F.2d 977, 985; Goldstein v. United States, 8 Cir., 63 F.2d 609, 612. The defendants concede this, but contend that in this case the court, in denying their demand for a bill of particulars, abused its discretion. They asked the court to compel the government to give them the following information: (1) The name or description of the person or persons who' made the false pretenses; (2) how, that is in what manner, by oral, printed, or written statement or statements, the alleged false and fraudulent pretenses, representations, and promises, were made or caused to be made by the defendants; (3) what false and fraudulent pretenses, representations, and promises were made or caused to be made by the defendants, in lieu of the conclusion that said alleged false and fraudulent pretenses, representations, and promises were “to the effect” of certain matters and things as alleged in the indictment.

The particulars demanded by the defendants were different from those demanded in Billingsley v. United States, 8 Cir., 16 F.2d 754, which is relied upon by the defendants as supporting their contention that the refusal of their demand constituted an abuse of discretion. In that case the second count of an indictment charged that the defendants, on the 8th day of July, 1925, had in their possession one pint of whisky in the county of Nowata, state of Oklahoma, and that the place where such liquor was possessed was within the limits of the Indian country where the introduction of intoxicating liquor was prohibited by federal statutes. The defendants sought to • have the government advise them the specific date and place when and where it charged "them with having had unlawful possession of whisky. This court held that the allegation's of the indictment were not sufficiently certain to apprise the defendants fully of what they would be called upon to meet at the trial and to enable them to prepare their defense; and that therefore the denial of their demand for a bill of particulars constituted an abuse of discretion. It is, of course, plain that this court was of the opinion that the defendants were entitled to know at what specific place in the county of Nowata they were . charged with having had possession of the whisky in violation of federal statutes relating to the Indian country. 25 U.S.C.A. § 244.

In the case at bar the trial court was hot compelled to require the government to furnish the information demanded by the defendants unless it was “necessary for the protection of the rights of the accused.” Bartell v. United States, 227 U.S. 427, 433, 33 S.Ct. 383, 384, 57 L.Ed. 583. Whether it was necessary for the protection of their rights was at least a debatable question, and the record discloses no surprise and no prejudice resulting from the denial of this information, and hence no abuse of discretion requiring a reversal. Peck v. United States, 7 Cir., 65 F.2d 59, 61; Somberg v. United States, 7 Cir., 71 F.2d 637, 639; Bedell v. United States, 8 Cir., 78 F.2d 358, 362.

3. Sufficiency of the Evidence.

We next turn to the evidence to ascertain whether it establishes the offenses charged in the indictment.

It tended to prove the following facts:

Defendant Hass was president and defendants Knight, Parnell, and Curtis were directors of the Modern Brotherhood. Defendant Parks was manager of the C. R. Parks Service Company, an insurance brokerage concern. Whether this company was a corporation or was merely a trade-name used by the defendant Parks is not disclosed. Apparently Parks and the Parks rService Company were one and the same legal entity.

For some time prior to December 31, 1930, the Modern Brotherhood of America had been actuarially insolvent due to the fact that the premium rates charged its members for their insurance were inadequate. It had not, however, failed to meet its obligations as they matured. In the fall of 1930, the Commissioner of Insurance of Iowa, Mr. Ray Yenter, notified the society that some action should be taken to better its financial condition. Defendant Hass was later notified by Mr. E. W. Clark, Mr. Yenter’s successor as commissioner of insurance, that something must be done by the society to improve its condition, and that the thing to do was to effect a merger with some other similar society which was actuarially solvent. In 1930 the defendant Parks entered into an oral agreement with the Foresters whereby he or his company was to receive $750,000 for effecting a merger of the Modern Brotherhood with the Foresters. Of this sum, $300,000 was to be paid upon completion of the merger, and the balance was to be paid in monthly installments. The terms of the merger agreement between the Modern Brotherhood and the Foresters were finally settled and reduced to writing on or about November 7, 1931. By the agreement, the Foresters were to take over all of the assets of the Modern Brotherhood at 100 cents on the dollar (which was more than they were worth) and to assume all of its obligations.