Edgerton v. United States, 10136.

• Decision Date: 30 June 1944
• Docket Number: No. 10136.,10136.
• Citation: 143 F.2d 697
• Parties: EDGERTON et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

143 F.2d 697 (1944)

EDGERTON et al. v. UNITED STATES.

No. 10136.

Circuit Court of Appeals, Ninth Circuit.

June 30, 1944.

Otto Christensen and Gordon Lawson, both of Los Angeles, Cal., for appellant Edgerton.

Francis D. Adams, of Los Angeles, Cal., for appellant Twombly.

Charles H. Carr, U. S. Atty., and James L. Crawford, Clyde C. Downing, and Mildred L. Kluckhohn, Asst. U. S. Attys., all of Los Angeles, Cal., for appellee.

Before WILBUR, DENMAN, and STEPHENS, Circuit Judges.

DENMAN, Circuit Judge.

This is an appeal from a judgment of the district court in which the defendants, J. Howard Edgerton and Clifford W. Twombly, were convicted of using the mails to defraud in violation of 18 U.S.C.A. § 338. They have brought separate appeals to this court.

Appellants and five other persons were jointly charged by indictment on fifteen counts with devising a scheme and using the mails to obtain money and property from the investors in a building and loan association which was organized and conducted business under the laws of the State of California. The general nature of the alleged scheme as set forth in the indictment (and ostensibly shown by the evidence) was the creation of a corporation, First Security Deposit Corporation, hereafter called the Deposit Corporation, for the purported purpose of liquidating the former building and loan association. Thereafter a series of independent or subsidiary corporations were created and controlled by the defendants, through which they would repurchase, at depressed market prices, interests in the Deposit Corporation held by those to be defrauded, and resell such interests at par value to the latter corporation, which they likewise controlled, thus depleting its assets in favor of themselves. It was further alleged that in the course of the scheme, certain misrepresentations were made by the defendants to induce the persons to be defrauded to invest in the Deposit Corporation.

Finally it was charged that the defendants mailed letters in furtherance of the scheme. Each of the fourteen substantive counts of the indictment set forth a separate such letter, after incorporating by reference all of the charges of the first count.

Appellant Twombly was found guilty of eight of the substantive counts. Appellant Edgerton was found guilty of twelve of the substantive counts. The other five defendants were acquitted on all counts. Edgerton has assigned several errors on this appeal. By stipulation and with the approval of the trial court, Twombly has incorporated by reference into his record these assignments of error and has also assigned other errors. But in our view of the case, we need not discuss more than one of the several errors claimed.

Of the two misrepresentations set forth in the indictment, one was that "* * * the defendants * * * did represent to the persons intended to be defrauded that the First Security Deposit Corporation the liquidating corporation would and did loan or advance money only upon security or properties theretofore approved as legal investments by the Superintendent of Banks or the Commissioner of Corporations of the State of California; whereas in truth and in fact, as the defendants * * * well knew, large sums of money * * * were loaned * * * without any security * * *."

On the trial there was proof that Edgerton and Twombly had participated in the making of Deposit Corporation loans entirely unsecured, but no proof that either had represented that the loans would be only upon the security and property described or on any security or property.

Upon submission of the case to the jury after the government had rested and the defendants had declined to introduce evidence, the court instructed the jury, "I have already told you that I would strike out a certain portion of the allegation which is in the indictment, being the first paragraph thereof of page 5. I strike out that portion which says: `* * * theretofore approved as legal investments by the Superintendent of Banks or the Commissioner of Corporations of the State of California * * *.'" and in a later reference to this portion of the indictment the jury was "* * * instructed to disregard" the stricken words and to read the allegation as "That the defendants * * * did represent to the persons intended to be defrauded that the First Security Deposit Corporation would and did loan or advance money only upon security or properties; whereas in truth and in fact, as the defendants * * * well knew, large sums of money * * * were loaned * * * without any security * * *." It was the opinion of the trial judge that the portion deleted was surplusage and should be stricken for want of proof.

Appellants contend that by these instructions the trial court worked an amendment of the indictment, for the nature of one of the alleged representations was altered by the deletion of the phrase describing the type of investment promised to be made, and that the result of this deletion was to try the defendants on a charge different from that found by the grand jury. We agree with this contention.

It has been long established that federal courts are without power to alter or amend indictments found by a grand jury, for otherwise the rights of persons charged with crimes would be at their mercy and control and the protection afforded by the Fifth Amendment of the Constitution would be defeated. Ex parte Bain, 121 U.S. 1, 13, 7 S.Ct. 781, 30 L.Ed. 849. The government does not deny this basic principle, but asserts that the trial court here merely withdrew from the consideration of the jury extraneous averments unsupported by evidence. In this assertion it relies upon Salinger v. United States, 272 U.S. 542, 47 S.Ct. 173, 71 L.Ed. 398.

In that case the Supreme Court, 272 U.S. at page 548, 47 S.Ct. at page 175, 71 L.Ed. 398, held the withdrawal of all but one of several counts for want of proof did...