People v. Crossman

• Decision Date: 06 October 1925
• Citation: 149 N.E. 330,241 N.Y. 138
• Parties: PEOPLE v. CROSSMAN.
• Court: New York Court of Appeals Court of Appeals

241 N.Y. 138

149 N.E. 330

PEOPLE

v.CROSSMAN.

Court of Appeals of New York.

Oct. 6, 1925.

Alexander R. Crossman was convicted of violating Penal Law, § 390. From a judgment of the Appellate Division (211 App. Div. 673, 208 N. Y. S. 85), unanimously affirming a judgment of the Court of General Sessions, entered on a verdict of conviction, defendant appeals.

Reversed, and new trial ordered.

Appeal from Supreme Court, Appellate Division, First department.

George Z. Medalie, of New York City, for appellant.

Joab H. Banton, Dist. Atty., of New York City (Robert C. Taylor, of New York City, of counsel), for the People.

HISCOCK, C. J.

The appellant has been convicted of the crime of violating section 390 of the Penal Law (Consol. Laws, c. 40). This section relates to and prohibits the maintenance and operation of what are ordinarily known as ‘bucket shops' and transactions such as are carried on by those institutions. There are two counts in the indictment, each under a separate provision of the section; but on the trial consideration of one of these was dismissed, and the defendant was convicted simply and solely under subdivision 1 of said section, which, so far as material, reads as follows:

‘Any person, * * * whether acting in his, their or its own right, or as the officer, agent, servant, correspondent or representative of another, who shall (1) make or offer to make, or assist in making * * * any contract respecting the purchase or sale, either upon credit or margin, of any securities * * * shares in any corporation or association * * * intending that such contract shall be terminated, closed or settled according to, or upon the basis of the public market quotations or prices made on any board of trade or exchange * * * without intending a bona fide purchase or sale of the same,’ shall be guilty of a felony.

On evidence which on its face fully justified its action the jury found that the defendant was guilty of violating this section and that action has been unanimously affirmed by the Appellate Division. The evidence, however, upon which appellant was convicted was largely supplied by two witnesses named Livingston and Erlich and, by exceptions which were sufficient for that purpose, the question was presented whether these witnesses were not accomplices and their evidence, therefore, subject to all of the limitations and infirmities which are imposed by law upon the evidence of accomplices. The trial court not only refused to submit to the jury the question whether they were such accomplices but affirmatively ruled as matter of law that they were not, and we are therefore led to a consideration of the question whether he was correct in his view of their status.

[1] For the purpose of carrying on his obnoxious and unlawful operations the defendant organized a corporation which was known as S. M. Livingston & Co., Incorporated. The title which was adopted thus employed the name of one of the witnesses referred to. The corporation was a mere shell and cover, most of the small number of shares of stock being issued to some person who is assumed to have been a dummy for the defendant and one share being issued to the witness Livingston, who was made president of the corporation. The transactions conducted by it with one inconsequential exception were purely and wholly of the bucket shop order. No stock was actually bought or sold on the orders of customers whose moneys were taken, but at the close of each day, from some newspaper market report a buying customer was charged with the highest price at which his stock had sold during the day and a selling customer credited with the lowest price at which his stock had sold. In order to carry on these unlawful transactions and maintain an appearance of reality, a customer was charged or credited with amounts thus made up against two fictitious accounts, which were carried on the books, and it is not too much to assume, in view of the regular custom of stockbrokers, that transcripts of these fictitious accounts were furnished to customers and settlements made on the faith of them.

Livingston was undoubtedly more or less under the domination and orders of the defendant, but nevertheless he performed substantial acts in carrying on this business. In addition to allowing the use of his name in what purported to be a bona fide corporation and accepting the presidency thereof, he was present in the office, talked with customers, made and indorsed checks, and affixed his name to purported confirmation letters sent to customers and to market letters, which were sent out presumably for the purpose of alluring prospective customers into the trap which had been prepared for them, and, in addition to all of this, at times he took and kept part of the money which was paid in by customers on the transactions carried on with this establishment. The witness Erlich as her principal duty had charge of the books of the concern, whereon were carried the fictitious and misleading accounts to which reference has been made, and she also at times received the money which was paid in by customers and made out receipts therefor. She was not a novice in matters of this kind, and apparently, after leaving this office, united with Livingston in organizing another similar business. Both of these people understood perfectly well, for some time before the occurrence of the particular transactions under review in this case, that the business which was being carried on and in the conduct of which they were taking part was of the unlawful character prohibited by the Penal Law.

The specific transactions upon which rests the conviction of appellant occurred with a man named Eibach. This man on two separate occasions attempted to purchase through Livingston & Co. a small amount of stock and made payments on account of such attempted purchases. Livingston was present in the office when Eibach made his first payment, and, as the jury could find, wrote him a letter, pursuant to the general plan which has been outlined, advising him of the purported purchase of the stocks. The money paid by Eibach on the second transaction apparently...