Kelly v. United States

• Decision Date: 07 January 1919
• Docket Number: 2978.
• Parties: KELLY et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Sixth Circuit

258 F. 392

KELLY et al. v. UNITED STATES.

No. 2978.

United States Court of Appeals, Sixth Circuit.

January 7, 1919

A. T Seymour, of Columbus, Ohio, Ralph Crews, of New York City and H. J. booth, of Columbus, Ohio, for plaintiffs in error.

Robert W. Childs, Sp. Asst. Atty. Gen.

Before WARRINGTON and DENISON, Circuit Judges, and WESTENHAVER District Judge.

WARRINGTON Circuit Judge.

Two indictments were returned in the court below, September 4, 1914, charging plaintiffs in error and certain other persons with violation of section 37 of the Criminal Code (Act March 4, 1909, c. 321, 35 Stat. 1096 (Comp. St. Sec 10201)) and of the Oleomargarine Act (Act Aug. 2, 1886, c. 840, 24 Stat. 209). The offense charged in the first indictment was conspiracy, and that in the second was fraud as respects the internal revenue tax of 10 cents a pound imposed upon oleomargarine manufactured and sold with artificial coloration, causing 'it to look like butter of a shade of yellow. ' The plaintiffs in error, Dennis Kelly, Michael Leo Corbett, William H. ******, and William H. Kelley (hereinafter called defendants), were respondents in both indictments, with Cornelius A. Hayes and Otto S. ********** and, in the first indictment, were named with Mansfield B. *******, who, having testified before the grand jury, was not indicted; Hayes is dead, and **********, having been called by the prosecution to testify, was not placed on trial. The cases were consolidated for purposes of trial. Under the conspiracy indictment or count, a verdict of not guilty was returned in favor of each defendant; but under the second indictment or count (comprising in itself a number of counts) a verdict of guilty was returned against each defendant. Sentences were pronounced, and the defendants prosecute error.

The oleomargarine in dispute was sold and distributed in the name of the Capital City Dairy Company. This company was organized under the laws of New Jersey in 1903, and its factory was located and maintained at Columbus, Ohio. The amount of oleomargarine manufactured at its plant grew rapidly, and the taxes alleged to have legitimately accrued to the government and which were not paid amounted to large sums. The validity of the indictments was tested upon motions to quash and upon demurrers. The trial occupied several weeks, and at the close of the testimony motion to direct was denied, whereupon a well-considered charge was delivered. Motions notwithstanding the verdict under the second indictment, for new trial, and in arrest of judgment, were overruled. Upon the motions to quash and the demurrers, and likewise on the motion for new trial, the court rendered elaborate opinions. One hundred and thirty-five assignments of error are presented. It is not necessary to call distinct attention to all these assignments; indeed, this could not be done within space at all reasonable. But the nature and effect of the assignments will be sufficiently understood from those specifically commented on.

1. Verdicts Claimed to be Inconsistent.-- It is urged in behalf of defendants that the conspiracy and overt acts alleged in the first indictment so far involved the frauds alleged in the second one as to require acquittal also under it, and hence that the findings and the verdict of the jury under the second indictment are 'in fundamental and irreconcilable conflict with the findings and verdict of the jury' under the first one. In thus speaking of the indictments we, of course, have in mind the consolidation of the conspiracy case, numbered 798, with the fraud case, numbered 800, for purposes of trial; but it will be convenient occasionally to distinguish the cases by their original numbers, regardless of any effect the consolidation had in converting the two indictments into counts of a single indictment. We may say, further, that while the legal sufficiency of 798 is not now important, in view of the verdict thereunder, we cannot very well dispose of the question of claimed inconsistency without alluding to the schemes, respectively, of both indictments, and at the same time disclosing our view of the sufficiency in law of 800; and this view must also be determinative of the motion to quash 800 also of the demurrer thereto, and, in connection with the question of inconsistency, the motions non obstante and in arrest of judgment.

In considering the question of inconsistency between the verdicts, it is to be observed that indictment 798 charges that continuously from September 10, 1911, to the date of presentation of the indictment (September 4, 1914), the defendants, with Hayes and **********, and also the 'coconspirator' *******, had unlawfully and feloniously conspired, combined, confederated, and agreed to defraud the United States of a large sum of money ($1,000,000), being the aggregate of divers sums accruing from day to day as the internal revenue tax of 10 cents a pound upon oleomargarine 'not free from artificial coloration that caused it to look like butter of a shade of yellow,' which the defendants and their coconspirator 'were to cause to be manufactured and produced' during such period of time, 'while engaged as officers, agents and employes of the Capital City Dairy Company, a corporation, in causing that corporation to carry on the business of a manufacturer of oleomargarine * * * and from day to day unlawfully and knowingly to cause the same to be removed * * * and sold, vended and furnished to and for the use and consumption of others * * * and to dealers in oleomargarine,' without affixing or causing to be affixed any coupon stamps representing such internal revenue tax, and without otherwise paying or accounting to the United States for such tax; and a large number of transactions are set out by dates, within the time above mentioned, as alleged overt acts committed in execution of such conspiracy.

Indictment 800 comprises nine counts. Count 1 charges that from March 10, 1913, to May 1, 1914, the defendants, with Hayes and ********** (omitting *******), 'unlawfully and feloniously did defraud the United States of a large sum of money' ($1,000,000), 'being the aggregate of divers sums * * * which became due and payable to the United States from day to day during said period of time * * * as and for the internal revenue tax of 10 cents a pound upon oleomargarine * * * not free from artificial coloration that caused it to look like butter of a shade of yellow'; that the oleomargarine was manufactured by defendants 'while engaged as officers, agents and employes of said the Capital City Dairy Company * * * in carrying on, for and in the name of said corporation, the business of a manufacturer of oleomargarine'; that on each week day they manufactured 20,000 pounds and removed the product and sold it for use and consumption 'otherwise than upon their own several family tables,' knowing it to be 'oleomargarine not free from such artificial coloration,' without affixing any coupon stamps representing payment of the internal revenue tax of 10 cents per pound, and without paying or otherwise accounting to the United States for such tax or any part of it. The difference between count 1 and count 2 is that the latter charges that on May 1, 1914, the defendants as individuals, not as officers or employes, though in the name of the Dairy Company, manufactured 20,000 pounds of oleomargarine with artificial coloration, as stated in the first count, and sold it for use and consumption by others without paying or making any provision for payment of the internal revenue tax of ten cents a pound. Count 3 is the same as count 2, except that the date is May 5, 1914, and that the defendants are charged with committing the acts individually, and not in the name of the Dairy Company; count 4 same as count 3, except that the date is June 6, 1914, and the amount 9,600 pounds; count 5 same as count 1, except that the date is May 11, 1914, and the amount 30,000 pounds; count 6 same as count 5 except that the date is May 15, 1914, and the amount 18,000 pounds; count 7, same as counts 3 and 4, except that the date is June 22, 1914, and the amount 18,000 pounds; count 8 same as counts 3, 4, and 7, except that the date is July 2, 1914, and the amount 24,000 pounds; count 9 differs (if it be a difference amounting to a distinction) from count 1 only in charging that defendants, as officers, agents and employes of the Dairy Company 'caused' to be committed acts similar to those stated in count 1, instead of directly committing such acts themselves.

There is an obvious and substantial distinction between the two indictments, in that the gist of the first is the alleged conspiracy (Williamson v. United States, 207 U.S.at page 447, 28 Sup.Ct. 163, 52 L.Ed. 278), and that of the second, in each of its counts alike, is the alleged fraud. The declared object of the conspiracy alleged, it is true was to defraud the government of taxes identical in kind with those of which it is alleged in the second indictment the government was actually defrauded; but it is perfectly plain that two distinct offenses were alleged. Conspiracy alleged may fail in proof, as well as proved conspiracy may fail in execution. Failure, then, to prove the existence of a conspiracy alleged to have been formed to commit a particular character of fraud cannot affect the right, regardless of conspiracy, to prove that fraud of the same character was actually committed. This is well within settled principles of the doctrine of conspiracy. As Judge Sater pointed out in overruling the motions to quash and the demurrers to the indictments, overt acts are something apart from the mere conspiracy, citing, among other decisions, Joplin Mercantile Co. v. United States, 236 U.S. 531, 535, 35 Sup.Ct. 291, 293 (59 L.Ed. 705),...