Gold v. United States

• Decision Date: 06 November 1929
• Docket Number: No. 8383-8386.,8383-8386.
• Citation: 36 F.2d 16
• Parties: GOLD v. UNITED STATES (two cases). HUSTON v. SAME (two cases).
• Court: U.S. Court of Appeals — Eighth Circuit

36 F.2d 16 (1929)

GOLD v. UNITED STATES (two cases).

HUSTON v. SAME (two cases).

Nos. 8383-8386.

Circuit Court of Appeals, Eighth Circuit.

November 6, 1929.

George W. Morgan, of St. Paul, Minn., and Abbott W. Sawyer, of Winona, Minn. (Leslie L. Brown, of Winona, Minn., Cleon Headley, of St. Paul, Minn., George D. Welles, of Toledo, Ohio, Stephen H. Somsen, of Winona, Minn., and Christian J. Laurisch, of Mankato, Minn., on the brief), for plaintiffs in error and appellants.

James A. Wharton, Asst. U. S. Atty., of St. Paul, Minn., and S. R. Rush, Sp. Asst. to the Atty. Gen. (Lewis L. Drill, U. S. Atty., of St. Paul, Minn., on the brief), for the United States.

Before STONE, BOOTH, and GARDNER, Circuit Judges.

BOOTH, Circuit Judge.

By separate writs of error and by separate appeals William H. Gold and Guy Huston seek to reverse a judgment of conviction against them for making use of the United States mail in violation of section 215 of the Criminal Code (18 USCA § 338).

The judgment against Gold was entered December 3, 1927, the judgment against Huston on December 5, 1927. On January 28, 1928, petitions for writs of error, accompanied by assignments of error, were filed by Gold and Huston respectively. On the same day orders were filed allowing the writs of error. Thereafter, on February 25, 1928, petitions for allowance of appeals were filed by the parties respectively, and orders were entered allowing the same.

Inasmuch as the act of Congress (45 Stat. 54, § 1, title 28, § 861a, U. S. C. 28 USCA § 861a), abolishing writs of error and substituting appeals, was not approved until January 31, 1928, the proper method of review in these cases was by writ of error. The appeals are accordingly dismissed.

The indictment under which the two plaintiffs in error were convicted was filed in the court below on January 18, 1927. It contained 12 counts. The first count charged that William H. Gold, Glenn W. Gold, Donald W. Gold, William G. M. Smith, Guy Huston, and John E. Huston, on June 15, 1925, and prior thereto, did devise a scheme to obtain money and property from a certain class of persons, called "persons to be defrauded," by means of false and fraudulent pretenses, representations, and promises. It alleged further that it was a part of said scheme that certain of the documents and papers to be used in connection with said scheme should be transmitted through the United States mail. It alleged further that for the purpose of executing the scheme the defendants did on June 2, 1925, place a certain letter, postage prepaid, in the post office at Redwood Falls, Minn., addressed to the New York Joint Stock Land Bank, 61 Broadway, New York, N. Y.

Counts 2 to 10 were similar, but included the mailing of different letters.

Count 12 was based upon section 37 of the Criminal Code (18 USCA § 88), and charged that the defendants continuously from February 1, 1924, to October 5, 1925, at Redwood Falls, Minn., conspired to commit divers offenses against the United States, viz. violations of section 215 of the Criminal Code (18 USCA § 338), and among them the offenses charged in the preceding counts of the indictment; that thereafter the defendants to effect the object of the conspiracy, did do divers acts, to wit, not only the acts of placing letters in the post office of the United States at Redwood Falls, Minn., as charged in the preceding counts, but also certain other acts. Sixteen other acts are set out, some of them consisting of making use of the United States mail, others not.

Counts 1 and 12 of the indictment are set out in the margin.¹

All of the defendants pleaded not guilty. They were tried together, the trial lasting between six and seven weeks. During the trial the government dismissed as to the defendant Smith. The jury acquitted defendants Glenn W. Gold, Donald W. Gold, and John E. Huston on each count of the indictment. William H. Gold was convicted on the first count and acquitted on the others. Guy Huston was convicted on the first 11 counts and acquitted on the twelfth. The present writs of error followed.

The record is voluminous, consisting of more than 2,500 printed pages. The assignments of error are very numerous. It will not be possible to discuss them in detail. They may be grouped, however, around a comparatively few topics, and we shall take up such of these as we deem the more important.

I. Was the Evidence Sufficient to Sustain the Finding of the Devising of the Scheme Alleged in the Indictment?

(a) Prior History of the Southern Minnesota Joint Stock Land Bank.

The scheme is alleged to have been formed "on June 15, 1925, and prior." The first letter relied upon as having been mailed in execution of the scheme is dated June 23, 1924. The details of the alleged scheme centered around the Southern Minnesota Joint Stock Land Bank, hereafter sometimes called the Southern Minnesota Bank. It will therefore be helpful in examining the evidence as to the alleged scheme to know the prior history of this bank.

The Federal Farm Loan Act was passed July 17, 1916 (12 USCA § 641 et seq.). It provided for Federal Land Banks and Joint Stock Land Banks. Both were placed under the supervision of the Farm Loan Board. The Southern Minnesota Joint Stock Land Bank of Redwood Falls, Minnesota, obtained its charter from the Federal Farm Loan Board pursuant to the above act on June 25, 1919. The organizers of the bank were defendant William H. Gold, his brother J. A. Gold of Big Stone City, South Dakota, and J. P. Cooper of Redwood Falls. The stock of the bank was originally $250,000 (2,500 shares, par value $100 each), of which J. A. Gold, his two sons, and two others of Big Stone took $125,000; defendants William H. Gold and Glenn W. Gold, his son, and J. P. Cooper took $125,000. All of the stock was paid for in cash. The bank was authorized to do business in Minnesota and South Dakota. Prior to the formation of the bank the defendant William H. Gold and J. P. Cooper had been in the business of making farm loans at Redwood Falls.

The practical working of a joint stock land bank, as described by one of the government witnesses, is, we think, substantially correct. He testified as follows:

"Neither Federal nor Joint Stock Banks are banks of deposit. They are not commercial banks; they are simply a means for making loans for agriculture along the lines provided by Congress."

"Before any loan is made, there must be an application for a loan from the borrower. The law requires such application and does not require it to be sworn to, but this bank did so require. That application states the amount of land, kind of land, how farmed, number of acres in crops, number of acres rough land, and the applicant's estimate of value, and a very great mass of information. The Southern Minnesota Joint Stock Land Bank required this application to be signed and sworn to by the applicant himself before the bank would do anything about the loan at all.

"The application comes into the bank and is usually checked over roughly by someone in charge of loans in the bank. If he finds it isn't in territory where they want to operate, or can see it is a loan he doesn't want, or it is not in proper form, then it goes back, refused, or to be put in form. Then it is given to a Federal Appraiser who goes out and personally inspects the land. This appraiser, under the law, is appointed by the Federal Farm Loan Board, itself — works under regulations and rules given him by the Farm Loan Board, is responsible to the Farm Loan Board, but is carried on the payroll of the bank. The Board directs him how to do his work, and if he does not comply with the rules and regulations of the Farm Loan Board, or proves himself incompetent, then the power to remove him is in the Board, which has the right to hire and fire him. That appraiser is responsible to nobody, but the Farm Loan Board.

"The Federal Appraiser personally inspects the farm and character of the applicant, and reports back, covering in detail a large number of questions with reference to the land, and the loan, and the man asking for it, and in that report the appraiser is required to make a statement, or recommendation, as to how much he considers should be loaned on that application, if any."

"After the appraiser's report is made, the application goes to the Loan Committee or directors of the bank, who have to pass on these loans, who can cut down or reject as to the amount recommended by the appraiser, but cannot allow a higher amount.

"The law requires satisfactory title or which may be by abstract, insurance certificate or Torrens certificate; the title must be certified to be good by an attorney.

"After the application has passed through the foregoing procedure, the loan papers are made out, note and mortgage, mortgage recorded, recording shown on the abstract. The abstract then goes back to the attorney for his certificate, and having gotten all that done, the bank can give the money to the borrower."

In regard to bonds issued against these mortgages, the witness said:

"In depositing mortgages with the Registrar as security for bonds, the mortgages must be assigned to the Registrar, and bonds can be issued against them after securing approval of the security by the Federal Farm Loan Board. If they are approved mortgages, you may borrow up to their face. The bonds may be sold at par, or at premium, or at a loss, if the Farm Loan Board approves. The law allows the bank a difference of one per cent. between the amount of interest the bank pays on its bonds and what it gets on the mortgages, provided the mortgage rate must not exceed 6 per cent. By the machinery that Congress has provided, by the Farm Loan Act, a bank with a capital of a quarter of a million dollars to start with, by loaning and putting up mortgages, borrowing on bonds, and loaning again, and repeating this process, can loan not only the original capital, but the original capital, and fifteen times...