Brady v. United States

• Decision Date: 18 June 1928
• Docket Number: No. 5165.,5165.
• Citation: 26 F.2d 400
• Parties: BRADY v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

26 F.2d 400 (1928)

BRADY v. UNITED STATES.

No. 5165.

Circuit Court of Appeals, Ninth Circuit.

May 14, 1928.

Rehearing Denied June 18, 1928.

Roy L. Daily, of San Francisco, Cal., for plaintiff in error.

Geo. J. Hatfield, U. S. Atty., and T. J. Sheridan, Asst. U. S. Atty., both of San Francisco, Cal.

Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.

DIETRICH, Circuit Judge.

Adjudged guilty upon 12 counts charging the unlawful use of the mails in the promotion of a scheme to defraud, defendant brings error. The charges all relate to a single enterprise.

Defendant organized in California an unincorporated trust, known as the "Brady Sure Shot Oil Company." capitalized at $800,000, divided into 8,000 unit shares, of the par value of $100 each. He held the controlling interest, was its president, and dominated its activities. Under his guidance it acquired six oil and gas leases upon divers tracts of land in California. The object of the company was to develop these lands, the value of which was unknown, into productive properties, and the funds for that purpose were to be secured by the sale of shares or units in the trust to the public. These sales were to be and were promoted, so the indictment alleges, by divers false and fraudulent representations and promises, the details of which it is unnecessary to explain, for the sufficiency of the indictment was not and is not questioned, nor at the trial was the sufficiency of the evidence challenged by a motion for a directed verdict or in any other manner.

If, without appropriate ruling and exception thereto, we consider the contention now made for the first time that the evidence was insufficient, we find that the only point urged is that, in respect to the majority of the counts, the use of the mails consisted in transmitting, to persons who had subscribed and paid for trust units, certificates thereof, or letters, circulars, and other matter for the purpose of allaying discontent, restoring confidence, and stimulating active support for the enterprise; the argument is that the fraud, if any there was, was fully consummated when the units were sold and paid for, and hence such use of the mail was not had in furtherance of the fraudulent scheme. But that is to ignore the fact that the scheme alleged was not to sell specific units to designated persons, but fraudulently to sell stock generally to the public. It was continuously in the course of execution, after as well as before the mails were so used, and that the specific uses alleged and proved tended to contribute to subsequent execution cannot be doubted. Such being the nature of the case, manifestly, United States v. Kenofskey, 243 U. S. 440, 37 S. Ct. 438, 61 L. Ed. 836, relied upon by the defendant, is inapplicable.

Specification 1, involving permission by the court to ask certain leading questions, 4, involving the declination of the court to require certain preliminary information before permitting a witness to relate a conversation he had with the defendant, and 7, criticizing the reference to certain persons as being "successful" rather than "practical" oil men, are thought to be too unsubstantial to require discussion.

Specifications 2, 3, and 8 relate to the use of certain books purporting to be, and identified by a witness as being, the account books and records of the company. The identifying witness was a bookkeeper employed by the defendant for the company, to set up its books. She acted under his direction, and made the entries from sources and data furnished or designated by him. If they were measurably fragmentary, that was for the reason, as explained by her, that the information he supplied was incomplete. They were offered only as a preliminary to the testimony of an accountant, who had analyzed and summarized their contents, and apparently they did not go to the jury, but were produced in order that from them the defendant could check the tabulated data so prepared and used by the accountant in giving his testimony. Substantially the only purpose of the testimony was to show the relation between the receipts from unit sales and the sales expenses. Technically, at least, the company was not a corporation, but aside from that consideration we think that what was done finds warrant in Cullen v. United States (C. C. A.) 2 F.(2d) 524, and Osborne v. United States (C. C. A.) 17 F.(2d) 246. It may be added that one of the duties of defendant as a trustee was to cause to be kept complete and accurate books of account, and if, as a result of...