Brown v. United States
| Decision Date | 07 April 1924 |
| Docket Number | 197. |
| Parties | BROWN et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Second Circuit |
James Mercer Davis, of Camden, N.J., and Arthur N. Sager, of New York City, for plaintiff in error Atkin.
W. C Van Slyke and Aaron C. Thayer, both of New York City, for plaintiffs in error Brown, Davis, and Kalor.
E Bright Wilson, of New York City, for plaintiff in error Boetzel.
George D. Zahm, of New York City, for plaintiff in error Morse.
William Hayward, U.S. Atty., and Maxwell S. Mattuck, Asst. U.S Atty., both of New York City.
Before ROGERS, HOUGH, and MAYER, Circuit Judges.
Plaintiffs in error, with others, were indicted for using the mails in the execution of a scheme to defraud (a stock-swindling enterprise), under C.C. Sec. 215 (Comp. St. Sec. 10385). The usual conspiracy count under C.C. Sec. 37 (Comp. St. Sec 10201), was added. The persons now seeking review are such of the defendants as were convicted upon any of the counts. Atkin, Kalor, and Boetzel were convicted of conspiracy only. This case must be remitted for a new trial, as we are convinced that prejudicial error exists, rendering it impossible to avoid the result indicated.
The story of this scheme, for our purposes, may be given very briefly. The plan of operations was to form a corporation and sell its stock, par $5 a share. The nominal business of the concern was the manufacture and/or sale of cereal foods. The part of the scheme constituting fraud and wrongful use of the mails was the sort of representation made by letter to the persons called in the indictment the 'victims' concerning the actual, probable, and even possible measure of success earned or sure to come to the corporations, and there was more than one corporation projected, if not actually given legal entity.
The method of proving this well-known kind of offense did not vary in the main form from that ordinarily followed, and too familiar to require description. One of the episodes testified to, or at least asserted as true by, the prosecution, was that some of the defendants sold this stock on a 50 per cent. commission and charged and received for it 50 per cent. above par. Another incident of this case, unusual in such prosecutions and material to the result we have reached, is that the general outline of the scheme, if not its detail, was conceived in the brain of one Elsworth, who died before indictment found. This man was plainly the leader, and a man of fertile intellect, who had been concerned with the manufacture and/or sale of cereal foods for a considerable number of years, who was said to have been previously identified with one or two very well known businesses of that kind. It is not too much to say on this record that, if the scheme was fundamentally honest or radically dishonest, it was legitimate or illegitimate in accordance with Elsworth's purpose and intent. In fact, this dead man's character and mental make-up furnished the frame and surrounding containing the efforts of the men who were actually brought to trial.
Under these circumstances a witness who had been in the same employment with Elsworth, and had worked with and under him, was asked this question:
'Did any company controlled by Mr. Edward Elsworth succeed under his management?'
Over due objection the witness was permitted to give his opinion that none of Elsworth's enterprises had succeeded. This is a typical question and ruling. We think this was clear and prejudicial error, and obviously affected several of the defendants very directly. The defense of some of them was in the main that they relied on Elsworth, admired him, and trusted him. If such defendants chose to take the stand, cross-examination as to what they knew or ought reasonably to have suspected concerning Elsworth, his history, and his business was entirely proper; but to bring in a stranger to the indictment, and permit him to tell what he thought of Elsworth's financial history, was not only immaterial (which is frequently a frivolous objection), but it was trying the defendants above indicted on another man's opinion concerning one deceased.
The plaintiff in error Atkin is a lawyer, though apparently...
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