Beck v. United States

• Decision Date: 11 May 1929
• Docket Number: No. 7993.,7993.
• Parties: BECK v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

33 F.2d 107 (1929)

BECK v. UNITED STATES.

No. 7993.

Circuit Court of Appeals, Eighth Circuit.

May 11, 1929.

Charles P. Williams, of St. Louis, Mo. (N. C. Whaley, of St. Louis, Mo., on the brief), for plaintiff in error.

C. J. Stattler, Asst. U. S. Atty., of St. Louis, Mo. (Louis H. Breuer, U. S. Atty., of Rolla, Mo., on the brief), for the United States.

Before LEWIS, Circuit Judge, and WOODROUGH and McDERMOTT, District Judges.

McDERMOTT, District Judge.

The plaintiff in error (hereafter called the defendant) was a real estate operator in St. Louis, of good character and standing. He conceived the idea of building houses for those desiring homes, letting the purchaser select his lot and general plan of his house. The idea consisted of doing this in a wholesale way; employing a staff of competent architects working on a salary instead of a percentage; employing competent builders to supervise the construction, on a salary instead of a percentage; eliminating subcontractors' profits by direct installation; purchasing materials in wholesale quantities instead of at retail. He believed such a plan would eliminate a considerable part of the duplicated percentage profits encountered by the man who builds on his own, and save a part, at least, of the retail materialman's profit; a saving which could be divided between him and his clients. The plan is in use by many companies, sometimes affiliated with building and loan associations. The client was to advance 10 per cent. or more of the estimated cost; 60 per cent. could be financed through insurance companies or almost any financial channel; the balance to be carried on a second mortgage, for which the market is more limited.

For such purposes he formed a corporation, called the Federal Home Building Corporation, of $25,000 authorized capital. Beck was the president, and one Edward J. Barrett was first a salesman, later sales manager, and then general manager. When the spring opened in 1923, the campaign was launched; advertisements were carried in the St. Louis papers, and salesmen employed. The response was immediate, and, in fact, overwhelming. By late July about 355 contracts had been entered into; about $266,000 was advanced by contract holders; construction of 47 houses was under way, and two of them were practically complete; others were in the course of settling the plans and specifications. It appears that mortgages cannot be floated until the roof is on, and there is no evidence that money, in any appreciable degree at least, had started coming in from the proposed financing, although many of the houses were rapidly approaching the stage when mortgages could be floated. A force of ten or more architects and draftsmen were busily engaged; the labor payroll had reached $9,000 a week; much material had been purchased and paid for. Without any preliminary warning, a contract holder applied for and obtained a receiver; nothing much was salvaged, and the contract holders lost heavily.

In April and May certain letters, set out in the indictment, and purporting to be signed by Barrett, were received through the mail by contract holders. These letters are in themselves inoffensive, notifying a contract holder of acceptance of his contract, or calling for a payment, or making an appointment. Beck turned over to the receiver, from his personal funds, $10,000 in cash for the purpose of an audit; turned over to voluntary trustees for the contract holders trust deeds of a face value of about $43,000, and his equity in certain real estate valued by him at more than $100,000. There was dissension among the contract holders; the deeds of trust were sold by the trustees at a 20 per cent. discount, and the $32,000 cash received is not clearly accounted for, unless it was applied on mortgages on the real estate turned over, which the trustees now say is worse than worthless. At any rate, the $43,000 of securities is gone, which perhaps accounts for the dissension.

In December, 1925, the defendant, Barrett, and four others were indicted under section 215 of the Penal Code (18 USCA § 338) for wrongful use of the mails. There were two trials. On the first trial, the defendants other than Beck and Barrett were dismissed out of the case; the jury convicted Barrett, and disagreed as to Beck. Beck was convicted on the second trial; was sentenced to three years in the federal penitentiary and to pay a fine of $1,000. This appeal follows.

Various assignments of error are urged, the principal ones of which will be discussed. One of them challenges the sufficiency of the proof. Knowing that this would require an examination of the entire record of this ten days' trial, counsel have made no effort to lighten the labors of the court by a narrative statement of the evidence, although the matter has been called to the attention of the bar many times. Stunz v. U. S. (C. C. A.) 27 F.(2d) 575; Marr v. U. S. (C. C. A.) 8 F.(2d) 231. The case at bar is peculiarly aggravated. A great many contracts were introduced in evidence; counsel must have known they were identical, except as to name and amount; but this court did not know it, and must read the same contract again and again, all printed in full; long leases for office rooms are copied verbatim, although only the dates and amounts are important. An auditor was put on the stand to show the total receipts of the company, the totals expended in construction, in commissions, in salaries, in advertising, etc. Yet 88 printed pages of cross-examination, as to $5 checks and the like, are in the record, to say nothing of pages of bank records and checks read into the record and not even listed. The court's admonitions to the jury on each separation are carefully preserved for our judicial review, although no error is predicated thereon. If in this garbled mass of irrelevant detail there should be a kernel of fact overlooked by the court, counsel are not in position to complain. Such practice is a totally unnecessary drain on the resources of the client who pays the bills. To counsel who may be interested, reference is made to Barber Asphalt Paving Co. v. Standard Asphalt & Rubber Co., 275 U. S. 373, 48 S. Ct. 183, 72 L. Ed. 318, where the court ordered a new transcript printed, and assessed the offending attorneys $5,000 for their error; and to Fairbanks, Morse & Co. v. American Valve & Meter Co., 276 U. S. 305, 48 S. Ct. 317, 72 L. Ed. 737.

1. The Indictment. The indictment was originally in ten counts. The first count set out a scheme to obtain money by false pretenses; counts 2 to 9 set out the mailing of the letters, incorporating the allegations of the first count by reference; the tenth count charges a conspiracy to violate section 215, incorporating by reference the allegations of the first count.

The tenth count was dismissed before submission to the jury on the first trial. Eight of the remaining counts allege the mailing of the letters; incorporate by reference the averments of the first count; and allege that such letters were mailed for the purpose of executing the scheme set out in the first count. We turn then to the first count to find the charge relied upon.

Section 215 defines several crimes, among them a "scheme or artifice * * * for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." The indictment alleges, in part, that the defendants, "having devised and intended to devise a scheme to obtain money and property by means of false and fraudulent pretenses, representations and promises from numerous and sundry persons including the public generally and particularly those, who by the means hereinafter described, could be induced to give, pay and send their money and property to said defendants under the name of Federal Home Building Corporation, a corporation organized and existing under the laws of the State of Missouri, and at all times mentioned herein under the management and control of said defendants, for subscribing for and purchasing contracts with said defendants under the name of Federal Home Building Corporation, all of said persons being hereinafter referred to as the persons to be defrauded, and all of said persons residing within the territorial limits of the United States, and which said scheme to obtain money and property by means of false and fraudulent pretenses, representations and promises was in substance and effect as follows, to-wit."

There follows five printed pages of "representations," all of which are alleged in the most general terms to be false and untrue. It is not alleged wherein they are false. It is true, as claimed by appellant, that there are many instances where, in order to comply with the constitutional requirement of certainty in the accusation, a pleader should not only allege the falsity of the misrepresentation, but "allege affirmatively in what the falsehood consisted." 25 C. J. 628. But the particular vice of this indictment reaches farther than that; the unfair part of it is that the defendant is charged with falsely representing many things which counsel for the government assure the court are not false at all. For example, the indictment solemnly charges the defendant with falsely asserting that he had a "workable plan"; it charges as false the representations that the corporation could build cheaper, could save middlemen's expense, and could build on a small down payment; yet, on argument, the government assures that the plan failed because it was underfinanced. Other representations are charged as false, which the evidence showed were true. It is possible that the government believed these representations were false when the case was presented to the grand jury, although the presence of other allegations indicates the possibility, at least, that the government charged misrepresentations without much regard to whether the evidence would support them. This possibility is strengthened by the presence of a clause which is...