Sell v. United States, 7468

• Decision Date: 09 October 1964
• Docket Number: No. 7468,7518.,7468
• Citation: 336 F.2d 467
• Parties: Aaron SELL, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

336 F.2d 467 (1964)

Aaron SELL, Appellant, v. UNITED STATES of America, Appellee.

Nos. 7468, 7518.

United States Court of Appeals Tenth Circuit.

September 3, 1964.

Rehearing Denied October 9, 1964.

Byron M. Gray, Topeka, Kan. (Marion D. Sell, Denver, Colo., on the brief), for appellant in No. 7468.

Elmer Hoge, Asst. U. S. Atty. (Newell A. George, U. S. Atty., on the brief), for the United States in No. 7468.

Marion D. Sell, Denver, Colo., for appellant in No. 7518.

David L. Rose, Atty., Dept. of Justice (John W. Douglas, Asst. Atty. Gen., Lawrence M. Henry, U. S. Atty., and Alan S. Rosenthal, Atty., Dept. of Justice, on the brief), for the United States in No. 7518.

Before PHILLIPS and BREITENSTEIN, Circuit Judges, and CHRISTENSEN, District Judge.

Rehearing Denied October 9, 1964, in No. 7468.

ORIE L. PHILLIPS, Circuit Judge.

I — No. 7468

Sell was charged by indictment in the United States District Court for the District of Kansas with a violation of 15 U.S.C.A. § 714m(a). The indictment in part read:

"That on or about January 1, 1956, * * * Aaron Sell did make a statement knowing it to be false, for the purpose of influencing the action of the Commodity Credit Corporation, an agency of the Department of Agriculture and the United States of America, and for the purpose of obtaining for himself money and property and other things of value, in that he did make, file and cause to be filed with the said Commodity Credit Corporation through the Greeley County Committee of the Farmers Home Administration, pursuant to regulations governing the Emergency Feed Program a certain application for assistance under the said Emergency Feed Program wherein he stated (1) that he had practically no feed at all; (2) that he did not have a supply of feed on hand to maintain his basic herd of livestock until March 1, 1956; (3) that he needed 259,000 pounds of surplus grains designated by the Commodity Credit Corporation; (4) that without the assistance applied for under the Emergency Feed Program he would be unable to maintain his basic foundation herd, which statements and representations therein made the said defendant then and there knew were false."

On a trial to the court Sell was found guilty, fined $7,500, sentenced to a term of imprisonment of one year and one day, execution of which was suspended, and placed on probation for a period of two years. He has appealed.

At all times here material Sell was the owner of large amounts of farm lands in Kansas and Colorado. He also owned a herd of pedigreed cattle in Greeley County, Kansas, which he had built up over a period of 20 years.

In 1955, as the result of a severe drought, parts of Eastern Colorado and Western Kansas, including Greeley County, Kansas, were declared by the President of the United States to be disaster areas entitled to share in the Emergency Feed Program.

On January 1, 1956, Sell, on a form provided by the Farmers Home Administration, made the application alleged in the indictment. In such application Sell represented that he had a basic beef herd of 431; that he owned no other livestock; that his tons of hay on hand were "practically none — only what shipped in recently"; that his tons of silage on hand were "limited"; and that he had no feed crops growing. A space on the form on which "other" feed on hand was to be indicated was left blank.

The application contained the following certification, which Sell executed:

"I certify that the above information is correct and that my principal occupation is farming or ranching, and that I do not have a supply of feed on hand to maintain my basic herd of livestock, * * * until March 1, 1956. In order to provide a supply of feed for this livestock, I will need * * * 259000 pounds of SURPLUS GRAINS DESIGNATED BY THE COMMODITY CREDIT CORPORATION in addition to the feed I have on hand and that to be harvested during that period, and hereby make application for the purchase of that amount of feed under the Emergency Feed Program. Without the assistance applied for under the Emergency Feed Program I will be unable to maintain my basic foundation herd and to continue the livestock operation which I have been conducting for 20 years."

The Greeley County Committee considered such application and on January 4, 1956, determined that Sell was eligible for assistance under the Emergency Feed Program. It approved his application to the extent of 156,400 pounds of surplus grains designated by the Commodity Credit Corporation. Sell was then issued Farmers Purchase Order No. 147 and Farmers Purchase Order No. 148, each of which authorized him to purchase 78,200 pounds of designated surplus feed grains from a feed dealer who had entered into a "Feed Dealers Agreement — 1955 Emergency Feed Program" with the Commodity Credit Corporation, applying such certificates to the purchase price to the extent of $1.00 per hundred-weight.

Sell was the president and majority shareholder of Walkinghood Grain, Inc., hereinafter referred to as Walkinghood. Of the 1,000 shares of outstanding Walkinghood stock, Sell owned 700 shares, his children owned 45 shares, his wife owned 10 shares, his daughter-in-law owned 10 shares, and the corporation held 225 shares as treasury stock. Walkinghood owned and Sell operated for it a grain elevator in Greeley County, Kansas, which purchased, stored and sold grain. The elevator had a capacity of 100,000 bushels. When grain was delivered to the elevator by a farmer, he was credited on the books of Walkinghood with the number of pounds of grain he had delivered, but the grain became the property of Walkinghood and might be sold by it immediately or retained until some later time. The farmer was accorded the privilege of selecting a future date for payment for the grain he had delivered, thereby giving him the benefit of possible increases in market prices. When he did elect a future date for payment, the amount of payment at the market price on that date was entered opposite the entry showing the amount of grain he had delivered. In order to protect itself from such future liability, and for purposes of speculation Walkinghood bought or sold grain short according to its estimate of what the future grain market would be. The secretary of Walkinghood testified that the corporation was in the business of dealing in grain futures and selling grains short.

Sell managed the Walkinghood elevator, accepted delivery of grain brought to the elevator by farmers in the area, and made the entries on the books of Walkinghood showing the quantities of grain delivered to the elevator.

Walkinghood had not entered into a Feed Dealers Agreement with the Commodity Credit Corporation and therefore could not redeem Emergency Feed Program Purchase Orders.

From October 14, 1955, through December 20, 1955, the Walkinghood elevator received 537,955 pounds of milo from 22 farmers in the area and 13 of such farmers were tenants of Sell under share-crop leases. During the same period 212,750 pounds of milo was sold from the Walkinghood elevator, leaving 325,205 pounds in such elevator. Of the 537,955 pounds of milo delivered to the elevator, 130,718 pounds were credited to Sell's own account as his rent share of the crops of his tenants.

In addition, Sell ultimately paid, with his own check, rather than with a Walkinghood check, for 232,701 pounds of the milo delivered to the elevator.

One of Sell's tenants, Meyer, retained 9,880 pounds of milo in bins on his own farm and another tenant, Brunswig, retained Sell's rent share of milo, 7,440 pounds, in a quonset hut on his farm. Neither of such amounts of milo are included in the 537,955 pounds of milo referred to above as having been received by the Walkinghood elevator in 1955. Meyer's tenant share of the 9,880 pounds of milo kept on his farm was ultimately paid for by Sell with his own check.

On January 11 or 12, 1956, Sell contacted the manager of the Greeley County Grain Co., hereinafter referred to as Greeley, a feed dealer authorized to redeem Farmers Purchase Orders, and told the manager that he had some "drought certificates" to exchange for milo, but that the milo in the Walkinghood elevator was of better quality than that available from Greeley and requested Greeley to buy milo from Walkinghood, weigh it on its scale without dumping it, and transfer it to Sell in exchange for his Farmers Purchase Orders and a cash payment. The manager discussed such arrangement with his employer, who stated, "You had better have them dump it through the elevator and that would be legal."

Thereafter, commencing on January 12, 1956, Sell caused 15 truckloads of milo, weighing 166,440 pounds, to be delivered by Walkinghood to Greeley, and in addition one load of 9,880 pounds from Meyer's farm and one load weighing 7,440 pounds from Brunswig's farm, to be delivered to Greeley. As a load was brought in, it was weighed, dumped into a pit, run into an overhead bin, dumped back into the same truck, and hauled to Sell's farm until 156,400 pounds had been delivered.

Greeley paid Walkinghood $1.75 per hundredweight for the milo, with two checks. One of such checks, dated February 21, 1956, in the amount of $2,584.75, was negotiated by Sell and treated by him as a loan to him from Walkinghood. He repaid the loan to Walkinghood on March 14, 1956.

Sell paid Greeley $1.85 per hundredweight for the 156,400 pounds of milo delivered to his farm. The payment was made by redeeming his Farmers Purchase Orders No. 147 and No. 148 at the rate of $1.00 per hundredweight and Sell's check in the amount of $1,329.40.

The evidence showed that Sell completely dominated Walkinghood and dealt with and disposed of the grain stored in the Walkinghood Elevator for his own use and advantage as he saw fit to do.

The trial court found that Sell filed an application for emergency feed with the Greeley County Committee on January 1, 1956; that in his application he represented that he did not have a supply...