Beaux Arts Dresses v. United States

• Citation: 9 F.2d 531
• Decision Date: 09 November 1925
• Docket Number: No. 59.,59.
• Parties: BEAUX ARTS DRESSES, Inc., et al. v. UNITED STATES.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

9 F.2d 531 (1925)

BEAUX ARTS DRESSES, Inc., et al. v. UNITED STATES.

No. 59.

Circuit Court of Appeals, Second Circuit.

November 9, 1925.

Zalkin & Cohen, of New York City (Kenneth M. Spence and Moses Cohen, both of New York City, of counsel), for plaintiffs in error.

Emory R. Buckner, U. S. Atty., of New York City (Morris D. Reiss and Ben Herzberg, Asst. U. S. Attys., both of New York City, of counsel), for the United States.

Before HOUGH, MANTON and HAND, Circuit Judges.

MANTON, Circuit Judge.

This indictment charged each of the above-named defendants below of crime in three counts. The first charged a conspiracy to conceal assets from the trustee in bankruptcy of Beaux Arts Dresses, Inc.; the second charged the corporation with concealing assets, and the defendants Todd and Mondshein with aiding and abetting in such concealment; and the third count charged the use of the mails in execution of a scheme to defraud by obtaining credit with the aid of a false financial statement. The first count was dismissed by the court. The Beaux Arts Dresses, Inc., and Frank Mondshein were convicted on the second and third counts, and James F. Todd was convicted on the second count and acquitted on the third. The defendant Todd alone presses his writ.

The Beaux Arts Dresses, Inc., was a domestic corporation organized in December, 1920. There were four stockholders. Mondshein and Todd were copartners when the corporation took over their business, and were engaged in manufacturing dresses. Todd was president and Mondshein was treasurer from the inception of the corporation until its bankruptcy. In September, 1922, Todd and Mondshein became the sole stockholders; the other two having sold their stock and resigned as officers and directors of the company. Prior to this, there was a discussion with reference to winding up the business, dissolving the corporation, paying the creditors in full, and dividing what was left among the stockholders. In August, 1922, the corporation entered into an agreement with a discount company by the terms of which it assigned its accounts receivable to that company for advances of money. This agreement was signed by Todd and Mondshein. Various accounts were assigned up to December 1, 1922.

In October, 1922, the corporation issued a financial statement to the trade and to commercial agencies. These were sent through the mail from October, 1922, to January, 1923, and up to ten days before the date of failure, which occurred January 26, 1923. The financial statement was false. It stated that the corporation had cash in bank, when in fact it had overdrawn its account. It stated its receivables at $49,877.78, none of which it claimed were assigned. The fact was that the accounts receivable amounted to $79,083.28, of which $72,843.06 were assigned to the discount company. The statement did not mention its liability to the discount company of $52,409.04. It showed a surplus, when in fact there was a deficit of $17,730.15. Within seven weeks before the failure, it purchased merchandise amounting to $47,000 a large part of which purchases were made in the three weeks before the failure. Of this amount, $14,653.62 worth were not recorded in the books of the corporation. The charge book of the corporation, beginning November, 1922, and ending January 26, 1923, contained entries of charges totaling approximately $27,000 to concerns in different parts of the country, when in fact none of these concerns were in existence. The plant of the corporation, consisting of machinery, and fixtures was transferred to one Vogel under some agreement with the defendants below, which they claimed they had with him. The machinery and fixtures were removed from the premises occupied by them in January, 1923, and resulted in no manufacturing being done on the premises during the last three weeks prior to the failure. During December, 1922, and January, 1923, about $2,500 worth of merchandise was sent out to contractors.

The business of the defendants below was manufacturing and selling dresses, and during the last three weeks before the failure they sold approximately $10,000 worth to various concerns whose addresses were not given, and who, it appeared on the trial, did not exist. A new set of books of account was opened December, 1922, and on the date of failure a number of important books of account were missing. The purchases during the seven weeks prior to the bankruptcy amounted to about $71,401.63, and deductions from sales of garments to $28,608.48; raw material amounted to $10,075.73, and goods sent to contractors to $2,473.96 — making a total of $41,158.17. This left unaccounted for by the defendants below about $30,243.46. At bankruptcy it had liabilities of $67,435.25 and assets of $1,064.14.

Todd, one of the defendants below, argued that this judgment should be reversed because error was committed in failing to dismiss the indictment because of a misjoinder of offenses charged. This defendant below was acquitted by direction of the court on the first count and by the jury's verdict on the second count. He stands convicted on the second count only. The question of misjoinder of offenses was raised at the opening of the trial, and the motion was renewed at the end of the government's case, and again when the defendants below rested. In each instance the motion was denied. The question of law thus presented was sufficiently raised. The rule governing the joined of several charges in one indictment is stated in section 1024 of the Revised Statutes (Comp. St. § 1690), which provides that, when there are several charges against any person for the same act or transaction, or for two or more acts or transactions connected together, or for two or more acts or transactions of the same class of crimes or offenses which may be properly joined, instead of having several indictments the whole may be joined in one indictment on separate counts, and if two or more indictments are found in such cases the court may order them to be consolidated.

There are two classes of crimes that can be thus joined: (1) Where the same act constitutes two or more crimes; and (2) where the crimes are so connected in respect of time, place, and occasion that it would be difficult, if not impossible, to separate the proofs of one charge from the proofs of the other. McElroy v. United States, 164 U. S. 76, 17 S. Ct. 31, 41 L. Ed. 355; Pointer v. United States, 151 U. S. 396, 14 S. Ct. 410, 38 L. Ed. 208. This court said in De Luca v. United States, 299 F. 741: "It is a general rule that the counts for several felonies of...