Canella v. United States

• Decision Date: 31 October 1946
• Docket Number: No. 10955.,10955.
• Citation: 157 F.2d 470
• Parties: CANELLA et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

157 F.2d 470 (1946)

CANELLA et al. v. UNITED STATES.

No. 10955.

Circuit Court of Appeals, Ninth Circuit.

September 16, 1946.

Rehearing Denied October 31, 1946.

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Otto Christensen and John J. Irwin, both of Los Angeles, Cal., and Otto A. Jacobs, of Santa Ana, Cal., for appellant Canella.

Forgy, Reinhaus & Forgy, of Santa Ana, Cal., for appellant McCormac.

J. E. Simpson, of Los Angeles, Cal., for appellant Wyckoff.

Charles H. Carr, and James M. Carter, U. S. Attys., and Arthur Livingston, Asst. U. S. Atty., all of Los Angeles, Cal., for appellee.

Before DENMAN, HEALY, and ORR, Circuit Judges.

ORR, Circuit Judge.

This is an appeal from a conviction upon an indictment charging in one count a single general conspiracy to defraud the United States by (1) depriving the United States of its right to have the lawful functions of the various offices held by Colonel Canella (one of the appellants here) administered free from corruption and fraud; and, (2) by depriving the United States of its right to the faithful action of Canella in the discharge of his offical duties free from corruption and fraud.

The questions presented are: (1) Whether the proof submitted to the jury conformed to the charge of a single conspiracy, or whether the proof showed several separate similar conspiracies; and (2) if there was such a variance between proof and indictment whether or not that variance constituted fatal error.

The facts, which involve numerous people, are both lengthy and complex. We, therefore, set them forth in some detail.

Appellant Canella, a Regular Army officer, reported to the Santa Ana Army Air Base, to which we shall hereafter refer as the Base, in California, on December 10, 1941, as the Post Quartermaster. As such his duties included the hiring of civilian personnel and the procuring of some of the food and other supplies used on the Base.

The record discloses that Canella and one Campbell, a Santa Ana real estate broker, became friends soon after Canella arrived at the Base, and that Canella, in conversations with Campbell, said he would be hiring many civilian employees and letting out numerous contracts for supplies at the Base but that he (Canella) was going to be paid for awarding those jobs and contracts, and that Campbell should find people who wanted jobs and who wanted to sell milk and other products and services to the army and who were willing to pay Canella for giving them these jobs and contracts. Campbell agreed.

Thus there was formed the conspiracy charged in the indictment.

The following transactions are involved:

A. Sale of three civilian jobs: Three civilian employees at the Base were hired by Canella under the following circumstances:¹

(1) One Miller applied to Canella for the position of Assistant Fire Chief at the Base. There were two other applicants for this post. Canella told Campbell that Miller was not going to get the job unless Miller paid Canella $200 to $250, and that Campbell should pass this information on to Miller. Canella later told Miller that his chances for the post looked "a little worse." Thereupon Miller agreed to pay $100 for the job, gave the money to Campbell who in turn gave it to Canella. Canella then appointed Miller over a veteran applicant with a higher civil service rating for the position than Miller.

(2) One Jensen inquired of Campbell whether Jensen's brother, Anton, could get a job at the Base as an electrician. Campbell, after talking with Canella, told Anton Jensen he could have a job if he would pay $100 for it. Campbell sent Anton Jensen to Canella's office, having previously told Canella that Jensen would pay for the job. Canella hired Jensen, who then paid Campbell $100. Campbell turned this over to Canella.

(3) Campbell, at the request of a friend, took one Elliott to Canella's office to talk about a job as painter on the Base. Elliott was not employed then but was told to come back. Before he returned to the Base Elliott borrowed $50 and paid this to Campbell who in turn gave it to Canella. On Elliott's next visit to Canella's office he was employed as a painter.

Miller, Jensen, Elliott and Campbell were all described as co-conspirators in the indictment, but none of them was indicted. There was no evidence to indicate Miller, Jensen or Elliott knew of the other's transactions with Campbell and Canella, nor that they knew of any of the transactions set out below.

B. The Excelsior Creamery Company Milk contract transactions.

When the Campbell-Canella conspiracy was formed, Canella asked Campbell to find people who would be interested in paying a percentage of the gross profits to obtain the contract to supply milk and dairy products, among other items, to the Base. Campbell, after unsuccessfully approaching one Todd, who operated a dairy in Santa Ana, interviewed officials of the Excelsior Creamery Company sometime between February 11 and 15, 1942.

Appellant Wyckoff, plant superintendent and wholesale sales manager of this concern, had previously inquired of army personnel as to how his company could obtain business when the Base was opened. He had been introduced to Canella and they had discussed the procedure of submitting bids and prices.

Until May 1942 the milk contracts were awarded by a system of competitive, sealed bidding. After May 1942 the contracts were awarded by negotiation. On February 6, 1942, Excelsior put in its first bid for business at the Base, and although all the bids opened were tied, Arden Farms, a competitor of Excelsior, was awarded the contract. Thus, it was shortly after Excelsior lost its first contract at the Base that Campbell approached them, saying that he knew "a fellow who had authority" to give them the milk and dairy products contract if they were willing to pay for it. Wyckoff and Ranney² asked if 2% of the gross business a month would be satisfactory, and Campbell, after reporting the proposition to Canella and receiving the latter's acquiescence, reported to Ranney and Wyckoff that 2% would be agreeable.

Campbell also told them that "his man" at the Base would have access to all bids before they were opened and that he could thus tell Excelsior what they would have to bid on the various dairy products³ in order to win the contracts for the succeeding months. Campbell then obtained the figures for the next bid, gave them to Excelsior, and on February 17, 1942 Excelsior won the contract for the March business because it was low bidder on cream, buttermilk and cottage cheese. Excelsior's bid on ice cream was considered and accepted despite the fact that it was an "alternate bid." The army's request for bids expressly declared "alternate bids" would not be considered.

In March Excelsior's bid for the April business was the same as Arden Farms, but because Arden put in an "alternate bid" it was not recognized and Excelsior won the April contract despite the fact that Excelsior's alternate bid had won the preceding month.

In April Arden delayed bringing in its bid for the May contract until a few minutes before the bids were to be opened and because it bid an unheard of low price on ice cream Arden won the May contract. In May Arden and Excelsior turned in identical bids but Excelsior won the June contract.

From June on, changed army regulations permitted contracts to be awarded by negotiation rather than competitive bidding and Excelsior and Arden, and later other dairies (when the demand exceeded Excelsior's and Arden's capacity) divided the business at the Base.

The evidence as to Excelsior's payments to Canella for his services in connection with the award of these contracts was as follows:

After Excelsior won the March contract, Canella told Campbell he needed some money and wanted an advance payment. Campbell said he went to the creamery offices and that either Wyckoff or Ranney gave him an envelope with some cash and Campbell gave this to Canella. At the end of March the balance due on the basis of 2% of Excelsior's gross sales to the Base was given Campbell in the same way, with a slip in the envelope showing the amount of business done at the Base for that month.

The month that Excelsior failed to win the bid it nevertheless paid a small amount "to keep up their agreement."

Each month thereafter until May 1943, Campbell went to the Excelsior plant and received the money for Canella. On two occasions Wyckoff sent Campbell down to get the money from appellant McCormac who was cashier and wholesale accounts receivable bookkeeper of Excelsior.

Campbell never signed a receipt for any of those sums. McCormac kept a record of the monthly payments in a small notebook kept entirely separate from the other books of Excelsior and of a ranch company owned and operated by Excelsior. The notebook showed "cash paid to Campbell as commissions" on one side, with a total amount of $7,092.98 indicated as paid to Campbell. On the other side the book showed as "cash received" items sold by the ranch company and amounts received therefrom. These amounts covered approximately the same dates as the payments to Campbell and the amounts of cash received exactly equalled the amounts paid to Campbell.

Although Excelsior and the ranch company kept a standard, customary set of business books, the transactions recorded in the small notebook kept by McCormac do not appear elsewhere in any of those books and there is no other record of the sale by the ranch company of the items listed in the notebook nor of the receipt of any money from those sales. Loose sheets in the book showed Excelsior's sales to the Base from March 1942 to May 21, 1943, and it was from these figures that the 2% paid Canella through Campbell was computed.

The notebook was never seen by Excelsior's regular bookkeeper and the cost accountant did not figure the cost of Campbell's commissions into the cost of the dairy's products, yet he did for other salesmen.⁴

In May 1943 Wyckoff told Campbell that Canella had...