United States v. Musgrave

• Decision Date: 12 November 1973
• Docket Number: No. 72-2305.,72-2305.
• Citation: 483 F.2d 327
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kenneth L. MUSGRAVE and Marshall Womack, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

483 F.2d 327 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. Kenneth L. MUSGRAVE and Marshall Womack, Defendants-Appellants.

No. 72-2305.

United States Court of Appeals, Fifth Circuit.

June 29, 1973.

As Modified on Denial of Rehearings August 2, 1973.

Certiorari Denied November 12, 1973.

Clifford W. Brown, Lubbock, Tex., for Womack.

Ted M. Kerr, Midland, Tex., J. Edwin Smith, Houston, Tex., for Musgrave.

William S. Sessions, San Antonio, Tex., Ralph Harris, El Paso, Tex., U. S. Attys., Reese L. Harrison, Jr., San Antonio, Tex., for plaintiff-appellee.

Before RIVES, GOLDBERG and MORGAN, Circuit Judges.

Certiorari Denied November 12, 1973. See 94 S.Ct. 447, 450.

RIVES, Circuit Judge:

Appellants, Kenneth L. Musgrave and Marshall Womack, along with Jack Bryant and Homer E. Koon, Jr., were charged in a seven-count indictment¹ with violation of 18 U.S.C.A. §§ 371,² 657³ and 1006⁴ stemming from their involvement in a purported plot to defraud the Home Savings Association of Odessa, Texas. Appellants' convictions in separate, prior trials were both reversed by this Court.⁵ On retrial below, Musgrave was found guilty under Counts 1, 2, 4 and 6 and received a five-year concurrent sentence on each Count. Womack was convicted on Counts 1, 2 and 6 and acquitted on Count 4. He received a three-year concurrent sentence on each Count.

Appellants' able counsel weave a hypertechnical web of ingenious arguments contending that the trial court made at least ten reversible errors. Nonetheless, we find that each appellant received a fair trial and we affirm.

THE PLOT TO DEFRAUD

The complex series of financial transactions which form the heart of the alleged fraud are lucidly delineated in this Court's prior opinions in United States v. Musgrave, 5 Cir. 1971, 444 F.2d 755, and United States v. Womack, 5 Cir. 1972, 454 F.2d 1337. We merely sketch the factual outline necessary for rational discussion of the contested portions of the trial below.

The government alleged, and the jury must have found, the existence of a single multi-stage conspiracy which had as its central purpose defrauding the Odessa Home Savings Association.

According to the prosecution, Musgrave, then Chairman of the Board of the Association, arranged for the granting of two loans — one to Womack and the other to Womack's nominee, Koon.⁶ The loans were designed to enable Womack to purchase Musgrave's controlling interest in the Association 56% of the total outstanding shares. Musgrave's attorney, Bryant, prepared the contract, disbursed the loan proceeds, and collected a large fee.

The two loans, purportedly prompted by Musgrave's manipulations, consisted of a $960,000 loan to Womack secured by Womack's interest in the Trans-American Building in Fort Worth, Texas, and a $500,000 loan to Koon secured by a 1,670 acre farm near Toyah, Texas.

The various charges in the indictment stripped to their core comprise one basic allegation — that the four individuals named in the indictment misled the Association into making two extraordinarily large loans secured by grossly inadequate collateral. The strength of this central allegation rests almost entirely on the testimony of two government, expert witnesses, Charles Herman and E. T. Compere, who calculated the fair market value of Womack's interest in the Trans-American Building to be $145,000 and $232,000, respectively. Compere also placed a $110,000 value on the Toyah farm.⁷

Compared to the testimony of Herman and Compere, the original appraisals submitted to the Association by Musgrave (which set the value of Womack's interest in the Trans-American Building at $1,750,000 and the value of the Toyah farm at $667,000) were outrageously inflated.⁸

ISSUES ON APPEAL

Musgrave raises eight issues on appeal, and Womack raises ten. With a few exceptions, each appellant seeks reversal on the same grounds. Some of the issues overlap, and others are too ephemeral to deserve extended discussion. Those asserted errors which merit appellate consideration are set out below with Musgrave's and Womack's distinct positions noted in the instances where they differ.

I. AIDING AND ABETTING AN ACQUITTED PRINCIPAL

A. Count 4 — Count 4 of the indictment charged Musgrave and Womack with aiding and abetting Bryant who allegedly shared in the proceeds of the fraud. Both Appellants argue on appeal that Bryant's acquittal in the first trial constitutes a binding judicial pronouncement that Bryant's act was innocent, thereby absolving appellants from any crime predicated upon aiding Bryant.

In a three-pronged response, the government argues that Bryant's acquittal does not preclude conviction of Musgrave and Womack in a subsequent trial under Count 4 because:

1) Conviction of a principal is not a prerequisite to conviction of the principal\'s aider or abettor; the only indispensable element in the conviction of the aider is the existence of a criminal act.

2) The holding in United States v. Musgrave, supra, that no substantial evidence existed to support the jury\'s verdict on any of the counts against Bryant established only that the government had failed to prove its case against Bryant beyond a reasonable doubt; it did not clothe Bryant\'s act with a permanent cloak of innocence.

The testimony of Nathan Brown App. pp. 333-370, not available at Bryant\'s trial, produced additional evidence at the second trial shedding new light on Bryant\'s link with the alleged fraud.

3) The court in United States v. Musgrave, supra, after ordering Bryant acquitted and reversing the conviction of Musgrave, remanded the case against Musgrave as to Count 4 impliedly endorsing reprosecution of Musgrave as Bryant\'s abettor, or at least recognizing the possibility of such reprosecution.

We agree with the government. Bryant's acquittal does not foreclose appellants' convictions under Count 4.

Neither of the two principal cases upon which the appellants rely — Shuttlesworth v. Birmingham, 1963, 373 U.S. 262, 83 S.Ct. 1130, 10 L.Ed.2d 335, and Edwards v. United States, 5 Cir. 1960, 286 F.2d 681 — are dispositive of the issue presented here.

The two petitioners in Shuttlesworth, Negro ministers charged with inciting and aiding Negro students in a "sitdown demonstration," were held incapable of being guilty of aiding principals whose own convictions had been overturned on the ground that their peaceful sit-down demonstration was a constitutionally protected act. Hence, the court merely reiterated the long-standing maxim that "there can be no conviction for aiding and abetting someone to do an innocent act."

In Edwards v. United States, this Court reversed Edwards' conviction for aiding and abetting the principal, Evans, on the ground that the trial court's charge to the jury erroneously directed a verdict of guilty against Edwards by referring to Evans' guilty plea when no documentation establishing the existence of the guilty plea had been introduced.

Neither of these cases control a situation like the instant case. Shuttlesworth stands for the proposition that an express judicial ruling that the principal's act was constitutionally protected i. e., innocent precludes any convictions for aiding that act. In the present case, there has been no immutable ruling that Bryant's act was innocent; only a holding that insufficient evidence was developed in the first trial to establish Bryant's guilt beyond a reasonable doubt. Edwards merely requires that sufficient evidence be presented to the jury to provide a basis for establishing the guilt of the principal before anyone can be convicted of aiding that principal. In the instant case, the prosecution did present evidence purportedly implicating Bryant in the scheme to defraud and some of that evidence was not available at the prior trial of Bryant.

The government is, of course, barred by the Sixth Amendment from re-trying Bryant, but Bryant's acquittal is not res judicata as to Musgrave and Womack.

A judgment in a criminal case operates as res judicata in a second criminal case only where the parties to both proceedings are identical. Smith v. United States, 6 Cir. 1957, 243 F.2d 877; United States v. Wapnick, D.C.N. Y. 1961, 198 F.Supp. 359, aff'd 2 Cir. 1963, 315 F.2d 96, cert. denied, 374 U.S. 829, 83 S.Ct. 1868, 10 L.Ed.2d 1052. See 9 A.L.R.3rd 203, 215. A judgment of acquittal of one defendant in a prior trial does not operate as res judicata in the prosecution of a second defendant in a later trial, even where the same transaction is involved and the second defendant is charged as an accessory to the first. Roberts v. People, 1938, 103 Colo. 250, 87 P.2d 251, cited in Annotation, 9 A.L.R.3rd 203, 218.

In the instant case, the doctrine of res judicata is inapplicable. The defendants in the two prosecutions are not identical. New evidence was presented at the second trial from which the jury could properly determine that the principal, Bryant, had sufficient knowledge of the fraud to establish his commission of a criminal act.⁹

B. Count 1 — In Count 1 of the indictment, all four defendants were charged with conspiring to defraud the Odessa Home Savings Association. Of the twenty-three overt acts assertedly committed in furtherance of the conspiracy, eight were attributed to Bryant and Koon.

Citing Herman v. United States, 5 Cir. 1961, 289 F.2d 362, as authority, appellants argue that the trial court committed reversible error in sustaining their convictions while their coconspirators were acquitted in a prior trial on the same charge. Appellants further contend that, even if they can properly be found guilty of conspiring with acquitted codefendants, the prosecution is precluded from proving the conspiracy through overt acts attributable solely to the acquitted conspirators.

The appellant in Herman v. United States, supra, was indicted along with two others for conspiring to receive stolen goods in interstate commerce. The conspiracy count alleged two overt acts. One was...