300 F. 769 (8th Cir. 1924), 6424, Stewart v. United States

Docket Nº:6424.
Citation:300 F. 769
Case Date:June 12, 1924
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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300 F. 769 (8th Cir. 1924)




No. 6424.

United States Court of Appeals, Eighth Circuit.

June 12, 1924

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[Copyrighted Material Omitted]

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R. R. Brewster, of Kansas City, Mo. (M. J. Henderson, A. R. McClanahan, and William B. Bostian, all of Kansas City, Mo., on the brief), for plaintiff in error.

W. H. Hallett, Sp. Asst. U.S. Atty., and Charles C. Madison, U.S. Atty., both of Kansas City, Mo.

Before SANBORN, Circuit Judge, and BOOTH and REEVES, District Judges.

SANBORN, Circuit Judge.

The plaintiff in error below, and henceforth the defendant Stewart, was indicted, tried, convicted, and sentenced for attempting to use and using the Post Office Department of the United States in the attempted execution and in the execution of an alleged scheme to obtain money and property by means of false pretenses, representations, and promises, in violation of section 215 of the Criminal Code (Compiled Statutes, Sec. 10385). He demurred to the indictment, the court overruled the demurrer, and that ruling is assigned as error. The chief averments of this indictment were:

(1) That defendant Stewart and the other defendants, between August 15, 1919, and July 6, 1920, devised a scheme to defraud 23 persons specifically named in the indictment, and others to the grand jurors unknown, of their money and property for the use and benefit of the defendants and of the W. E. Stewart Land Company and the Stewart Farm Mortgage Company, two corporations owned and controlled by Stewart, by inducing the persons intended to be defrauded by false representations, pretenses, and promises which the defendants did not intend to perform, made by the defendants orally and by statements, circulars, letters, maps, advertisements, and papers so worded as to deceive them to purchase arid lands owned by Stewart or some of his corporations in Hidalgo county, Tex., which were of little or no value, at prices of from $300 to $425 an acre, and to pay one-half of these purchase prices in cash and give vendor's liens secured by trust deeds on the land for the other half to the Stewart Farm Mortgage Company, a corporation, and by causing such notes and deeds of trust to be assigned to the Farm Mortgage & Loan Company, a corporation owned or controlled by one Zumbrunn, or to Zumbrunn himself, so as to defeat any defenses of the persons intended to be defrauded to actions that might be brought against them for the collection of their notes.

(2) That it was a part of this scheme that Stewart and the other defendants, in order to induce the intended purchasers to buy these lands and pay for them, should take them in Pullman cars from Kansas City, Mo., to Hidalgo county, Tex., entertain them for several days on the trips with dinners, stories, songs, and speeches, keep them from communicating with or securing information from others than the defendants, their agents and servants, should falsely pretend, represent, and promise to the intended purchasers, first, that the lands offered for sale to the several intended purchasers from the W. E. Stewart Land Company were under and would be irrigated and operated under the American Rio Grande Land & Irrigation Company's system of irrigation, otherwise known as and henceforth called the Mercedes

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system, which was an efficient system of irrigation, that furnished to the lands under it an abundance of water when needed, when the fact was that the lands offered and to be sold to the intended purchasers specified in the indictment were under and would be irrigated, if at all, under the Edinburg system, which was an inoperative, broken down, and inefficient system that could not and would not furnish sufficient water when needed, without repairs, reconstruction of parts of it, and extensions at great expense; second, that the intended purchasers of such lands could and would receive all the water they needed or wanted whenever they needed or wanted it for irrigation on any of the lands they bought from the defendants or from the W. E. Stewart Land Company, and that all they would have to do to get it was to telephone the plant for it, when this entire representation was known by the defendants to be false; third, that the lands offered for sale and sold to the persons intended to be defrauded by the defendants and the W. E. Stewart Land Company were splendidly adapted to the growing of alfalfa, that an alfalfa crop planted on said lands would be ready to cut the first time within 12 or 14 weeks after the planting, when the fact was that the land offered and to be sold to the persons intended to be defrauded was not specially adapted to the growing of alfalfa, that a crop of alfalfa planted on such land would not be ready to cut the first time within 12 or 14 weeks after its planting, and it was difficult, if not impossible, to raise profitable crops of alfalfa upon the land generally.

The indictment contains averments that it was a part of the fraudulent scheme to make other false representations, pretenses, and promises to induce the intended purchasers to buy these lands, which it is unnecessary to recite at this time. After alleging the devising of this scheme and the specific false representations, pretenses, and promises the defendants planned to make as a part of it, the indictment charged that the defendants, in and for executing this scheme and attempting so to do, on October 29, 1920, placed and caused to be placed in a post office in Kansas City, Mo., a letter postpaid, directed to James Duffy, at Post Oak, Mo., one of the persons specified in the indictment as one of those whom the defendants planned to defraud, and set forth the letter, the substance of which was that the Stewart Farm Mortgage Company, the signer of the letter, held Duffy's first series of vendor's lien notes for $6,060, and that if he would take them up at that time it would allow him a discount of 5 per cent. on the face amount thereof, and would also waive the accrued interest from the last interest-paying date, thereby enabling him to save $333. Following this letter, which concludes the first count of the indictment, that instrument sets forth in separate counts, under like averments to those which have been stated, 15 letters, all but 4 of which are of the same general character as is that to Duffy.

Counsel for the defendant Stewart attacked these counts of the indictment upon the grounds that there was no allegation in the indictment that any of the persons to whom the letters were written had purchased lands on the Edinburg tract, nor that the letters were written to collect vendor's liens given on any such land, nor that they were written to purchasers upon any particular tract of land, nor that the persons to whom the letters were written bought their lands from the

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Stewart companies. But these objections are clearly untenable in the face of the facts that the indictment sets forth the name of each one of the 12 persons to whom these letters were addressed and sent, and contains averments to the effect that it was a part of the fraudulent scheme of the defendants to obtain the money and property of each of these intended victims, by inducing them by the false representations and promises alleged to buy lands on the Edinburg tract on the terms specified in the indictment; that each of the 12 letters was sent to the addressees through the mails, in and for executing or attempting to execute the alleged scheme, and by the further fact that each of these letters appears on its face to have been written and sent by the Stewart Farm Mortgage Company to obtain money from each one of these intended victims, on account of his alleged liability on the lien notes of the character of those contemplated in the alleged scheme and described in the indictment.

Another objection strenuously urged to these counts of the indictment is that the letters were not written or sent until after the scheme had been completely executed. Counsel argue that, when the sales of the respective tracts of land had been made, half of the purchase price had been paid in cash, and lien notes and a trust deed had been given by the purchasers, the alleged scheme was consummated; that the letters show that all this had been done before they were written or mailed; and that, therefore, they could not have been placed in any post office or other station or letter box of the United States, to be sent or delivered 'for the purpose of executing such scheme or artifice or attempting so to do. ' Section 215, Criminal Code.

It is conceded that, if the first premise of this contention is true, the conclusion is sound (Lonabaugh v. United States, 179 F. 476, 479, 103 C.C.A. 56; Stewart v. United States, 119 F. 95, 96, 55 C.C.A. 641), and that there are authorities that tend to sustain and possibly do sustain such an interpretation of alleged schemes to defraud and their execution as counsel for the defendants contend should prevail in this case (Ex parte Black (D.C.) 147 F. 832, 839, 840; United States v. Dale (D.C.) 230 F. 750). But upon consideration our opinion is that the statement that the alleged fraudulent scheme in this case was completely executed and consummated in any case when the deed was delivered, the cash paid, and the notes and trust deed were executed and delivered rests upon too narrow a view of the scheme alleged in the indictment. The basic averment is that the defendants devised this scheme and artifice 'to defraud said persons, intended to be defrauded, of their money and property, they, the said defendants, intending to convert the same to the use and gain of the said defendants, * * * without giving, or intending to give, the persons intended to be defrauded anything of an equivalent value, or of any value, in return for their said money and...

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