Brooks v. United States

• Decision Date: 24 April 1906
• Docket Number: 2,304.
• Citation: 146 F. 223
• Parties: BROOKS v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

146 F. 223

BROOKS v. UNITED STATES.

No. 2,304.

United States Court of Appeals, Eighth Circuit.

April 24, 1906

[Copyrighted Material Omitted]

Chester H. Krum, for plaintiff in error.

David P. Dyer, for the United States.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

ADAMS Circuit Judge.

Defendant was indicted, tried and convicted under the provisions of section 5480, Rev.St. (U.S.Comp.St. 1901, p. 3696), for having mailed a letter in the St. Louis post office in execution of a scheme or artifice to defraud, alleged to have been devised by him, and others, and which he intended to make effective by correspondence conducted by and through the postal establishment of the United States. The scheme as disclosed in the indictment is to the following effect: That the defendant, with others who were not put on trial with him, by means of advertisements published in newspapers and correspondence conducted by and through the United States mail service, would pretend to be engaged, under the name of National Securities Company, in a lucrative and honorable business as a broker, dealing in grain, provisions, and stocks, and would pretend to possess such superior knowledge concerning the business as would render loss improbably and would pretend to pay interest on all sums of money which any one might be induced to deposit with him at the rate of 6 per cent. per month, and permit withdrawal of any deposits at any time the depositors might desire, when in fact, he was not engaged in any lucrative or legitimate business, had no such superior knowledge, did not intend for any great length of time to pay 6 per cent. interest per month or permit withdrawals at the pleasure of the depositors, but did intend by such false pretensions to induce the deposit of money with him for the sole purpose of converting the same, or a great part thereof, to his own use. The judgment of conviction is challenged by the defendant for three prominent reasons: Because the indictment states no offense; because there is no competent evidence showing that defendant mailed either of the letters set out in the three counts of the indictment; and because the trial court admitted irrelevant evidence consisting of certain letters emanating, or purporting to emanate, from defendant's place of business. The argument against the sufficiency of the indictment rests upon the alleged insufficiency of the averments to show a scheme or artifice to defraud.

It is argued that the pretension by defendant that he was engaged in an honorable and legitimate business, and that he had such superior knowledge of the business as to make loss improbable involves only a matter of opinion and does not create legal liability; that the pretension that defendant would pay interest on deposits at the rate of 6 per cent. per month and allow deposits to be withdrawn by depositors at their pleasure, were, in themselves, innocent, amounting only to terms and conditions of a mutual agreement, and that the denial of the reality of these pretensions adds nothing to the scheme because it was a denial of the existence of opinions, so far as they were concerned, and a qualified and evasive denial of the reality of the intention to pay the large rate of interest or to permit withdrawals by depositors when they desired. It is argued that the denials of defendant's intention to pay interest 'for any great length of time' or to permit depositors 'for any great length of time' to withdraw the deposits on demand afford no standard of certainty, and are of no legal significance; and that the alleged intent by means of the pretensions set forth, to secure the money of depositors and convert the greater portion thereof to his own use, states no criminal purpose because the deposit created only the relation of debtor and creditor between defendant and depositors; the money becoming the property of defendant upon the completion of the deposit. This argument is not persuasive; it dissects the averments, showing the separate elements of the scheme to defraud as if they were separately pleaded as the basis of actions at law for deceit or actions in assumpsit for the recovery of money deposited; but such is not the character of the proceeding before us.

Section 5480 denounces as a crime the mailing, among other things, of a letter in the execution or attempted execution of a scheme to defraud. This must not only be a scheme intended for the purpose of defrauding, but must contemplate as one of its essential parts, the use of the post office establishment of the United States in effecting its purpose. The gist of the offense is the mailing of the letter. Congress, under the constitutional grant of power to regulate post offices and post roads, might legislate to prevent the use of the postal establishment in carrying letters for fraudulent purposes but could not legislate for the purpose of preventing or punishing general schemes to defraud. The existence of the scheme to defraud is a necessary prerequisite or condition to the commission of the offense. But as the scheme may be the basis of many offenses under section 5480, dependent upon the number of letters written and mailed in its execution or attempted execution in whole or in part (Brown v. United States (C.C.A.) 143 F. 60; Howard v. United States, 21 C.C.A. 586, 75 F. 986, 34 L.R.A. 509; In re Henry, 123 U.S. 372, 8 Sup.Ct. 142, 31 L.Ed. 174), its averments cannot afford a reliable criterion to determine whether a former acquittal or conviction can be pleaded in bar to a subsequent prosecution for the same offense. For this reason, and because its execution does not constitute the gravamen of the offense, it need not necessarily be pleaded with all the certainty as to time, place and circumstance requisite in charging the writing and mailing the letters in execution of the scheme which does constitute the gravamen of the offense. Sharp v. United States (C.C.A.) 138 F. 878. Nevertheless, the particulars of the scheme are matters of substance, and must be set out with sufficient certainty to show its existence and character, and to fairly acquaint the accused with what he is required to meet. United States v. Hess, 124 U.S. 483; 8 Sup.Ct. 571, 31 L.Ed. 516; Stokes v. United States, 157 U.S. 187, 15 Sup.Ct. 617, 39 L.Ed. 667; Stewart v. United States, 55 C.C.A. 641, 119 F. 89, 94; Miller v. United States, 133 F. 337, 66 C.C.A. 399.

Does the description of the scheme found in the indictment under consideration measure up to this requirement?

In Durland v. United States, 161 U.S. 306, 16 Sup.Ct. 508, 40 L.Ed. 709, counsel for defendant argued much as is done in this case, that the statute only contemplates such cases as come within the definition of 'false pretenses'; that the representation must be of some existing fact, and not a mere promise as to the future; that the fraudulent purpose must be something more than an intention not to carry out a contract, etc. The court, speaking by Mr. Justice Brewer, says:

'We cannot agree with counsel. The statute is broader than is claimed. * * * Some schemes may be promoted through mere representations and promises as to the future, yet are none the less schemes and artifices to defraud. * * * But beyond the letter of the statute is the evil sought to be remedied, which is always significant in determining the meaning. It is common knowledge that nothing is more alluring than the expectation of receiving large returns on small investments. * * * In the light of this the statute must be read, and so read, it includes everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future. The significant fact is the intent and purpose.'

See, also, United States v. Flemming (D.C.)18 F. 909.

The section in question read in the light of the foregoing exposition of its meaning, in our opinion, contemplates any scheme involving matters of enforceable or unenforceable contract, representation of facts, expression of opinions, or assurances of past, present or future conditions, provided only it was designed and reasonably adapted to deceive and defraud. The most successful schemes to defraud are those dressed in the garb of honesty and hedged about with all the appearances of legal and enforceable undertakings. If the intent and purpose is to deceive and defraud the unwary it matters not what form the project is made to take.

Tested by the foregoing, we think the scheme alleged to have been devised by the defendant comes fairly within the statute, and is sufficiently outlined to show its design and adaptability to deceive, to inform defendant of its character and enable him to take issue thereon and prepare to meet it. It appeals to one of the strongest of human passions-- the love of speedy and large returns on small investments. It assures the public of such a superior knowledge and experience as usually guarantees success. It offers that most seductive privilege of...