United States v. Kissel

• Decision Date: 26 October 1909
• Citation: 173 F. 823
• Parties: UNITED STATES v. KISSEL et al.
• Court: U.S. District Court — Southern District of New York

173 F. 823

UNITED STATES v. KISSEL et al.

United States Circuit Court, S.D. New York.

October 26, 1909

Henry A. Wise, U.S. Atty. (Charles F. Brown, John W. H. Crim, and James R. Knapp, of counsel), for the United States.

William D. Guthrie and William Church Osborn, for defendant Kissel.

George Whitefield Betts, Jr., and Francis H. Kinnicutt, for defendant Harned.

HOLT District Judge.

These are demurrers filed by the government to pleas in bar interposed by the defendants Kissel and Harned to the indictment. The indictment charges the defendants with a conspiracy in restraint of interstate commerce, in violation of Act July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901, p. 3200), commonly called the 'Sherman Act.' The defendants are the American Sugar Refining Company and its directors, and certain other persons. The indictment alleges, in substance, that the defendants conspired to prevent the Pennsylvania Sugar Refining Company from doing business. It is alleged that this result was accomplished that the defendant Kissel, acting secretly as agent of the American Sugar Refining Company, made a contract to loan to Adolph Segal $1,250,000, upon a note of Segal secured by certain collateral, among which collateral were 26,000 shares, being a majority, of the stock of the Pennsylvania Sugar Refining Company; that, having thus obtained such majority of the stock, a new board of directors, in the interest of the American Sugar Refining Company, was elected that said board immediately voted to close the refinery of the Pennsylvania Sugar Refining Company; and that it has since done no business. The defendants Kissel and Harned have pleaded, in bar of the prosecution, the statute of limitations; and the defendant Kissel has also pleaded in bar that, having produced on the trial of a civil action certain documents tending to prove certain facts necessary to be proved in this case, he is entitled to immunity from prosecution under this indictment.

Admittedly the general three-year statute of limitations for crimes not capital contained in section 1044 of the United States Revised Statutes (U.S. Comp. St. 1901, p. 725), applies in this case. It is also conceded that the execution of the contract between Kissel and Segal, by which the loan was made and the control of a majority of the stock of the Pennsylvania Company obtained, the consent of the Champion Construction Company to the pledge of the stock, the power of attorney by that company to Kissel, the election of the new directors, the meeting of the new board, at which the vote was passed that the Pennsylvania Sugar Refining Company should thereafter refrain from carrying on business until the further order of said board, the advance of $1,250,000 by the American Sugar Refining Company to Kissel, and the loan of that amount by Kissel to Segal, were all done and the entire transaction closed in all respects on or before January 4, 1903. Therefore the offense alleged in this indictment was complete, and this indictment might have been brought, on January 5, 1904. The indictment was not filed until July 1, 1909, more than five years after the time when the alleged conspiracy was entered into and its object entirely accomplished. Obviously, therefore, the statute of limitations is a bar to this prosecution, unless the crime charged in the indictment is a continuing offense, or acts have occurred which have renewed the offense and started again the running of the statute.

A conspiracy, in its legal sense, is a misdemeanor at common law. It has been defined as an agreement by two or more persons to do an illegal act, or to do a legal act by illegal methods. Such a conspiracy, if entered into, could be criminally punished at common law, whether any act in furtherance of it was done or not. Section 5440 of the United States Revised Statutes (U.S. Comp. St. 1901, p. 3676) provides that if two or more persons conspire either to commit any offense against the United States, or to defraud the United States, and one or more of such parties do any act to effect the object of the conspiracy, all the parties to such conspiracy shall be liable to criminal punishment. Under this statute, a mere conspiracy is not an offense; but, in addition to the conspiracy, one or more of the parties to it must do some act to effect its object before a criminal prosecution can be maintained. The first section of the Sherman act provides that:

'Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor.'

The second section of the act provides that:

'Every person who shall monopolize or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states or with foreign nations, shall be deemed guilty of a misdemeanor.'

This indictment is necessarily brought under these provisions of the Sherman act. No indictment can be brought in the United States courts for the offense of conspiracy at common law, because it has not been made an offense by any United States statute. Nor could this indictment have been brought under section 5440 of the United States Revised Statutes, because there is no law of the United States making a conspiracy in restraint of trade or to monopolize trade an offense against the United States except the Sherman act, and there cannot be a conspiracy to engage in a conspiracy. Under the Sherman act no overt act is necessary to the commission of the offense. That provides that every person who engages in a conspiracy in restraint of trade or commerce, or to monopolize trade, is guilty of the offense. The question in this case, therefore, is when the statute of limitations begins to run in an indictment for conspiracy under the Sherman act.

The law of conspiracy has been the subject of a great deal of over-refined discussion, and the authorities upon the subject are quite conflicting. Some hold a conspiracy to be an offense complete when entered into, and upon which the statute of limitations immediately begins to run. Others hold it to be a continuing offense, from which it is argued that the statute of limitations never begins to run against a conspiracy until it is abandoned and whatever result has been accomplished by it annulled. The government's counsel, upon the argument, claimed that the defendants, having once entered upon the conspiracy and closed the refinery of the Pennsylvania Company, continued to be engaged in the conspiracy every day so long as the refinery was closed. It would follow, from this position, that the only way in which the defendants could start the statute of limitations running would be to rescind the vote to close the refinery, have the directors friendly to the American Sugar Company resign, and deliver back to the original holders the stock taken as collateral. No authorities have been cited sustaining such a position. Most of the cases cited have arisen in prosecutions based upon section 5440, under which the indictment must not only charge the conspiracy, but one or more overt acts.

Some authorities hold that the statute of limitations begins to run in such prosecutions as soon as one overt act has been committed, and that, if more acts in furtherance of the conspiracy are performed, that does not stop the running of the statute. United States v. Owen (D.C.) 32 F. 534; United States v. McCord (D.C.) 72 F. 159; Ex parte Black (D.C.) 147 F. 832; United States v. Biggs (D.C.) 157 F. 264. Other cases hold, in substance, that each additional overt act starts the statute running anew. United States v. Bradford (C.C.) 148 F. 413; Ware v. United States, 154 F. 577, 84 C.C.A. 503, 12 L.R.A. (N.S.) 1053: United States...