United States v. Feinberg

Citation140 F.2d 592
Decision Date31 January 1944
Docket NumberNo. 214.,214.
PartiesUNITED STATES v. FEINBERG et al.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Emanuel G. Kleid, of New York City, for appellants.

Robert S. Rubin, of Philadelphia, Pa., for appellee.

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

L. HAND, Circuit Judge.

This appeal is from a conviction for conspiracy to use the mails to defraud, and for the substantive offense of using them in a scheme to defraud. The appellants argue that the evidence was not sufficient to support a verdict in a criminal prosecution; but they chiefly rely upon supposed errors occurring during the course of the trial. First, they complain of the opening and closing addresses of the prosecutor; second, they say that the admission of evidence linking the appellant, Feinberg, with a notorious criminal, John Torrio, was extremely prejudicial; and third, they object to the admission of the books of the companies concerned, on the ground that no proper foundation had been laid for them. These are the only objections serious enough to deserve discussion. The facts in general were as follows. The appellant, Feinberg, was the president and the controlling influence in a company engaged in the distribution of liquors in New York City, Prendegast-Davies, Ltd. (which, we shall speak of as P-D). Godfrey, the other appellant, was manager of the Kinsey Distilling Company, of which one, Clarke, was president. (Clarke was also indicted and convicted, but has not appealed). C. H. Graves & Sons Co. was engaged in rectifying, bottling and distributing liquors; all its shares were held by C. H. Graves & Sons Distillers, Inc., of whose shares Feinberg and his wife held eighty-one per cent. (We shall speak collectively of these two companies as Graves.) The interest of Godfrey and Clarke in Graves was that it was a large "outlet" for the Kinsey Company's liquor. The American Beverage Corporation (which we shall speak of as A. B. C.) was a corporation, many of whose shares were held by the public; but its control — 72,000 shares — was in the hands of one, McCullough; it manufactured carbonated waters and sold liquor. In December, 1938, Godfrey and Clarke got an option upon McCullough's shares, but later failed to secure the purchase price — $250,000 — and in January, 1939, through them and Feinberg, P-D took over the option and bought the shares with its own money. The prosecution's case rested upon the charge that they later fraudulently misappropriated from A. B. C. the price of the shares, and, after they got control of the company, used it in their own interest. In order to secure the purchase money, Feinberg persuaded certain creditors of P-D not to press their claims against it; and after in this way building up its bank deposits, he was able to withdraw $250,000 with which to pay McCullough. Armed with the shares so acquired, he elected himself, Godfrey, Clarke and others directors of A. B. C., who then voted that that company buy all the assets of P-D — except the A. B. C. shares themselves — and more than 81,000 shares of Graves, in consideration of the promise of A. B. C. to pay all the debts of P-D, amounting to about $900,000. A. B. C. in accordance with this bargain did pay all the debts of P-D, so that the final outcome was that P-D had control of A. B. C. and was free of indebtedness, and that A. B. C. had purchased all the former assets of P-D and 81,000 shares of Graves for $900,000. Whether this was a fraud depended on the value of the property received by A. B. C., which was hotly disputed upon the trial. The accused conceded that as mere matter of book value the tangible property did not equal the indebtedness, but they argued that that value was the least part of the inducement to A. B. C. P-D and Graves, they said, had an exceedingly valuable good will as an "outlet"; and this, coupled with the very substantial tangible assets, much more than equalled the purchase price. The prosecution challenged any such value in the good will; it said that P-D had been losing money in the past, and that Graves was so far in extremis that Clarke and Godfrey, to whose Kinsey Company it was a necessary "outlet", had been looking about to salvage it at all costs. The prosecution further alleged and introduced evidence which, if the jury chose to accept it, proved, that in a number of details the assets of P-D and Graves were not honestly set down in the books. It is not necessary to set out the details of the conflicting evidence; it made issues which a jury might have decided either way.

The situation disclosed, taken as a whole, permitted the conclusion that the sale had been made to obtain control of the business of A. B. C., by means of false statements and in disregard of the interests of the minority shareholders. As we understand it, the accused do not argue that the evidence would not have supported a verdict in a civil case, but they do say that it was not cogent enough to exclude all reasonable doubt of their guilt. Evidence upon an issue which merely preponderates is indeed different from evidence which excludes all doubt; and the same tenderness which imperatively requires the customary admonition to a jury, might also have resulted in a straiter scrutiny of the evidence in a prosecution than in a civil suit, before the issues should be presented to a jury. United States v. Renda, 2 Cir., 56 F.2d 601. Courts have sometimes expressed themselves as though there were a difference. Fraina v. United States, 2 Cir., 255 F. 28, 35; Chicco v. United States, 4 Cir., 284 F. 434; Lempie v. United States, 9 Cir., 39 F.2d 19. It is probable, whatever they say, that in their actual judgments the added gravity of the consequences often makes them more exacting. But courts — at least federal courts — have generally declared that the standard of evidence necessary to send a case to the jury is the same in both civil and criminal cases; and that, given evidence from which a reasonable person might conclude that the charge in an indictment was proved, the court will look no further, the jury must decide, and the accused must be content with the instruction that before finding him guilty they must exclude all reasonable doubt. Pierce v. United States, 252 U.S. 239, 251, 252, 40 S.Ct. 205, 64 L.Ed. 542; Matthews v. United States, 8 Cir., 192 F. 490, 494, 495; Stout v. United States, 8 Cir., 227 F. 799, 801; Hays v. United States, 8 Cir., 231 F. 106, 108, affirmed sub. nom. Caminetti v. United States, 242 U.S. 470, 37 S.Ct. 192, 61 L.Ed. 442, L.R.A.1917F, 502, Ann.Cas. 1917B, 1168; Looker v. United States, 2 Cir., 240 F. 932; Felder v. United States, 2 Cir., 9 F.2d 872, 875; United States v. Rowe, 2 Cir., 56 F.2d 747, 750, 751; Crono v. United States, 9 Cir., 59 F.2d 339. We agree with Judge Amidon in Hays v. United States, supra, 231 F. 106, who refused to distinguish between the evidence which should satisfy reasonable men, and the evidence which should satisfy reasonable men beyond a reasonable doubt. While at times it may be practicable to deal with these as separate without unreal refinements, in the long run the line between them is too thin for day to day use.

We come therefore to the errors in the conduct of the trial. The first, as we have said, is in the conduct of the prosecutor. In his opening to the jury he said that Feinberg had been convicted of violating the Prohibition Law, 27 U.S.C.A. § 1 et seq., while it was in force. That was an allegation in the indictment, which the judge later refused to let him prove, although he did allow in evidence an order which refused to extend the license of A. B. C. The theory of the prosecutor was that since a permit was necessary to the business it had been a fraud to suppress the fact of Feinberg's conviction when he was to be in charge of the business. We do not see why the evidence should have been excluded, but, that aside, it was certainly reasonable for the prosecutor not to apprehend that it would be; nor did the accused suffer, if his allusion left any trace in the jury's minds, because, as we have just said, the fact of his conviction was admissible anyway.

The next complaint is that in his closing address the prosecutor commented upon the fact that none of the accused took the stand. At first blush this appears as a grave error, but on closer examination it turns out to have been quite justified. The record does not contain the closing address of the accused's counsel and we have it only from the version given by the judge, which was that counsel had said that the jury had heard all the testimony "and the defendants, if they took the stand, could not add anything to that"; and that "they had been interrogated thoroughly." "I know all the testimony. There would not be anything that they could add to what had been testified to." In so assuring the jury, the counsel invited their consideration of what the accused would have said on the stand, and surely he surrendered any privilege they had not to testify. He could not in justice ask that the prosecutor must...

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