Kaufmann v. United States

• Decision Date: 11 August 1922
• Docket Number: 2806.
• Citation: 282 F. 776
• Parties: KAUFMANN et al. v. UNITED STATES. [1]
• Court: U.S. Court of Appeals — Third Circuit

282 F. 776

KAUFMANN et al. v. UNITED STATES. ^[1]

No. 2806.

United States Court of Appeals, Third Circuit.

August 11, 1922

Elijah N. Zoline, of New York City, and Louis Little, of Pittsburgh Pa. (Chester H. Krum, of St. Louis, Mo., of counsel), for plaintiffs in error.

Walter Lyon, U.S. Atty., and Arnold M. Replogle, Asst. U.S. Atty both of Pittsburgh, Pa.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

DAVIS Circuit Judge.

The defendants below are here on writ of error to review the judgment of their conviction on an indictment charging them with having devised a scheme or artifice to defraud, and with having used the post office establishment of the United States for the purpose of executing their scheme, in violation of section 215 of the federal Penal Code (Comp. St Sec. 10385). The indictment contains five counts. The first four are substantially alike, and set out the scheme; the difference being in the persons to whom letters are sent in carrying it out. The fifth count charges defendants with having conspired to commit an offense against the United States by violating section 215 of the Penal Code, as set forth in the other counts.

The defendants are charged with having devised a scheme to defraud and obtain money from the Muhlenbruch Glove & Mitten Company, of Decatur, Ill., the Reliance Suspenders Company of Philadelphia, and such other firms and corporations, doing business in the United States, as might be induced to enter into business relations with them. As a part of their scheme, it is alleged, they organized a corporation, the B. B. Kaufmann Company, under the laws of the state of Pennsylvania, with a capital stock of $40,000, divided into 4,000 shares, of the par value of $10 each, with Benjamin B. Kaufmann president and treasurer, F. J. Schellman vice president, Nathan Kaufmann secretary, and Alfred W. Kaufmann assistant secretary, and opened up a wholesale store at 139 Seventh street, in connection with a five and ten cent store at 533 East Ohio street, North Side, Pittsburgh. They were to order large quantities of merchandise, consisting of ladies' and gentlemen's wearing apparel, hardware, notions, etc., from the persons or companies to be defrauded, and, in order to establish a basis of credit and reputation for honesty, fair dealing, and for the payment of their bills, they, in the first instance, were to pay their bills when due, or within a reasonable time thereafter. When their reputation had thus been established, they were to give orders for large shipments of merchandise, with the intention not to pay for it, to be promptly delivered under the promise, however, of immediate payment upon delivery. They were to sell this merchandise to their friends and others at cost, or prices lower than they paid, convert it into cash, and dissipate and put out of the reach of those defrauded the assets of the company, so that it would be forced into bankruptcy, with its property converted to their use and benefit.

The indictment further charges that in executing their scheme the defendants sent letters through the United States mails to the persons mentioned in the four counts of the indictment. The defendants were tried, convicted, and sentenced. Counsel for defendants have presented a carefully prepared brief, alleging error in their conviction, and fully discussing the errors upon which they rely. The questions involved are stated in the following propositions:

1. The indictment does not sufficiently set forth the crimes intended to be charged.

2. The evidence is not sufficient to sustain the conviction of all the defendants.

3. The trial judge erred in: (1) The admission of evidence; (2) his refusal to charge the jury as requested; (3) defining conspiracy.

If the indictment is defective, the demurrer should have been sustained, and the charges, so far as this indictment is concerned, ended then and there.

The object of an indictment is, first, to furnish the accused with such a description of the charge against him as will enable him (1) to prepare his defense and (2) to plead his acquittal or conviction in bar of further prosecution for the same offense; and, second, to inform the court of the charges, so that it may decide whether or not they are sufficient in law to support a conviction. United States v. Cruikshank et al., 92 U.S. 542, 558, 23 L.Ed. 588. Does the indictment under consideration meet these requirements? It not only states the crime in the language of the statute as a foundation for the charge, but it sets out the scheme in detail which the defendants had devised, and shows explicitly how and when it was carried out by use of the mails. We think the defendants were in no wise deceived, but were fully apprised of the charge which they were called upon to meet. They do not cite any particular in which they were misled or unprepared for trial. They may plead their conviction in bar of further prosecution for the same offense. United States v. Hess, 124 U.S. 483, 8 Sup.Ct. 571, 31 L.Ed. 516. The statute provides:

'Whoever, having devised or intending to devise any scheme or artifice to defraud, * * * shall, for the purpose of executing such scheme * * * place or cause to be placed, any letter * * * in any post office, * * * shall be fined, ' etc.

The indictment charges that the defendants 'devised and intended to devise a scheme and artifice to defraud. ' Counsel says:

'Defendants are charged with having in the past devised a scheme, and in the same breath with intending to devise in the future the scheme which in the past they had already devised,' and that 'such a repugnance and contradiction' does not 'advise persons accused of the nature and cause of the accusation, to the end, among other essentials, that they may prepare their defense.'

The charge that they 'devised and intended to devise,' or that they 'had unlawfully devised and intended to devise,' does not refer to the past and future; but the tense, past-perfect, in both 'had devised' and (had) 'intended to devise' is the same. In neither case does the pleader look to the future. The defendants not only devised, but they intended to devise; they succeeded in their intention. They did not devise a scheme innocently, but they did just what they intended to do. This is really in accordance with what counsel for defendants later says:

'It is obvious that Congress meant 'having devised' to involve the intent to devise, thus seeking to exclude the idea of mistake, but resting the whole matter on a fraudulent or criminal purpose.'

The words 'intending to devise' are the legal scales by which the scheme devised must be weighed. However impractical and visionary a scheme may be, the use of the mails to execute it does not constitute a crime, if it was devised in good faith. On the other hand, if a scheme is devised with the intention of defrauding, and the mails are used in executing it, it makes no difference that there is not a misrepresentation of a single existing fact.

'It was with the purpose of protecting the public against all such intentional efforts to despoil, and to prevent the post office from being used to carry them into effect, that this statute was passed. ' Durland v. United States, 161 U.S. 306, 314, 16 Sup.Ct. 508, 511 (40 L.Ed. 709).

The question of intent was a fact to be found by the jury from all the evidence, and the verdict settles the fact, if the evidence is sufficient to sustain it. The indictment did not leave the defendants in a dilemma as to whether they were to prepare to defend a scheme already devised in the past, or a scheme which they intended to devise in the future, but which never came into actual existence. There was only one scheme which the defendants had to prepare to meet, and that was the scheme, intentionally devised, set out with reasonable particularity in the indictment, and for the execution of which the post office establishment of the United States was used as charged.

While the fifth count for conspiracy does not expressly state that the defendants conspired to use the mails in executing the scheme, it does state that they conspired to commit an offense against the United States, and then sets out, both by reference and expressly, the scheme and the execution of it, by specifying the particular use of the mails by which it was carried out, without which there would not have been any crime. So the allegation that they conspired to 'commit an offense,' with the statement of the complete offense, was in fact an allegation that they conspired to commit both elements of the offense-- a devised scheme and use of the mails in executing it.

We are satisfied that the defendants were not misled, but that they knew just what charges they were to meet, and went to trial armed with the fullest preparation they could make for their defense. The indictment was sufficient, and the demurrer was properly overruled.

The government produced at the trial evidence showing that the business of the Kaufmann Company was poor during the early part of 1920, but within that period the defendants sent out hundreds of letters requesting samples and inviting firms, before never dealt with, to sell merchandise to them, or the company through which they were operating; that in May and June of that year as many as 150 orders were given for merchandise of the value of $120,000, and only a small part of it was ever paid for; that the receipt of merchandise from orders placed in these months of depression was much larger than usual; that it was immediately sold, much of it below cost, and reshipped without being unpacked. John J. Scott, an employee, testified:

'I don't know the volume of merchandise that was coming in there during that time to the B. B. Kaufmann

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