Lemon v. United States

• Decision Date: 11 November 1908
• Docket Number: 2,761.
• Citation: 164 F. 953
• Parties: LEMON et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

164 F. 953

LEMON et al. v. UNITED STATES.

No. 2,761.

United States Court of Appeals, Eighth Circuit.

November 11, 1908

Oscar L. Miles, for plaintiffs in error.

Ira D Oglesby (James K. Barnes, on the brief), for defendant in error.

Before VAN DEVANTER and ADAMS, Circuit Judges, and PHILIPS, District judge.

ADAMS Circuit Judge.

The plaintiffs in error, Lemon and Waller, were indicted for devising a scheme or artifice to defraud, were tried, found guilty and sentenced, and by this writ of error seek a reversal of the judgment against them. There were two indictments, which were consolidated for the purpose of the trial. One contained two and the other three counts, each charging the same general scheme, but charging the mailing of different letters or writings to different persons in the way of executing the scheme. Two other defendants jointly charged with Lemon and Waller were convicted, but, as they are not complaining, our attention is confined exclusively to those named. The several counts of the indictment charge in effect that the defendants, being officers and directors of the Southern Bank & Trust Company, of Ft. Smith, Ark., devised a scheme or artifice to defraud involving the making of false statements of the financial condition of their bank, and sending the same by mail to different persons whom they intended to defraud. The scheme was that they would represent and pretend that they were engaged in the management and conducting of a solvent banking business; that their bank was in a prosperous condition and financially able to respond to the demands of their depositors and customers; that it had capital stock amounting to $600,000, deposits amounting to $76,475, loans and discounts amounting to $393,322.83, stocks and bonds amounting to $269,520, and other attractive items unnecessary now to mention; that such representations and pretenses were made for the purpose of inducing certain persons named, and others to the grand jurors unknown, to purchase their stock, deposit money with and make loans to them, with the real intent and purpose on their part to convert the money so to be paid, deposited, and loaned to their own use.

The first count, which is fairly representative of all, charges that the defendants, on a given date and at a stated place 'did then and there voluntarily and feloniously devise a scheme and artifice to defraud, and did then and there conspire, combine and agree together to commit the act made an offense by section 5480 of the Revised Statutes of the United States (U.S. Comp. St. 1901, p. 3696); that is, the said defendants conspired, confederated and agreed together in devising and in intending to devise a scheme and artifice to defraud various persons and companies out of their money,' etc. The indictment proceeds with averments constituting equally a description of a scheme to defraud within the purview of section 5480 of the Revised Statutes (U.S. Comp. St. 1901, p. 3696), and a description of a substantive offense required to be pleaded in an indictment for conspiring to commit an offense within the purview of section 5440 (U.S. Comp. St. 1901, p. 3676). The allegations touching the mailing of letters to individuals named served well the double purpose of mailing letters 'in and for executing the scheme to defraud' as required by section 5480, and also the purpose of the overt act 'to effect the object of the conspiracy' as required by section 5440.

Seventy-four errors were originally assigned, but those relied on for reversal have been appropriately reduced to five. They are as follows: That the court erred (1) in overruling the demurrer to the indictment and declining to instruct a verdict for defendants; (2) in admitting and excluding evidence over defendants' objection; (3) in making prejudicial remarks in the presence of the jury; (4) in its charge to the jury; and (5) in refusing to charge as requested by defendants. These will be considered in the order mentioned.

Should the demurrer to the indictment or motion for an instructed verdict, both of which present the same questions, have been sustained? It is not necessary to set them out in full. They challenge the sufficiency of the indictment for numerous reasons, which will be noticed as we proceed.

In view of the prominence given in section 5480, as amended by the act of March 2, 1889, c. 393 (25 Stat. 873 (U.S. Comp. St. 1901, p. 3696)), to the scheme or artifice 'to sell * * * any counterfeit or spurious coin * * * to obtain money by what is commonly called 'sawdust swindle,' 'bills,' 'paper goods," etc., defendants' counsel urge that no offenses different from those just specified are contemplated by the section as amended. In this he is clearly in error. The section starts out: 'If any person having devised or intending to devise any scheme or artifice to defraud;' then follows in the disjunctive the specification relied on, denouncing the schemes or artifices to sell or deal in counterfeit or spurious money, etc. There is an obvious difference between schemes to defraud and those to sell or deal in counterfeit money. The one necessarily involves a scheme to defraud some person or persons, while the other may or may not involve such scheme. It may be only a scheme to do an unlawful act in which all concerned knowingly participate. Mr. Justice Gray, speaking for the Supreme Court, in the case of Streep v. United States, 160 U.S. 128, 132, 16 Sup.Ct. 244, 246, 40 L.Ed. 365, which concerns the construction and meaning of section 5480 as amended, says:

'The statute in very words as well as in manifest intent applies to any person who devises either a scheme to defraud or a scheme to sell counterfeit money or counterfeit obligations of the United States, provided the scheme is intended to be effected, and is effected, by communications through the post office. This indictment charged not a scheme to defraud, but a scheme to sell counterfeit obligations of the United States, and therefore no proof of a scheme to defraud was necessary to support it.'

The amendment of 1889, instead of limiting, expanded the operation of the statute. It brought within its comprehension, in addition to what was there before, the subject of dealing in counterfeit and spurious money and other articles there specified. Culp v. United States, 27 C.C.A. 294, 82 F. 990; Milby v. United States, 57 C.C.A. 21, 120 F. 1; Durland v. United States, 161 U.S. 306, 313, 16 Sup.Ct. 508, 40 L.Ed. 709.

It is also contended that the indictment is bad (1) because it is not charged that the scheme or artifice as originally designed contemplated the use of the post office establishment of the United States in its execution; (2) because no averment is found in the indictment to the effect that defendants knew of the condition of their bank at the time they are alleged to have devised the scheme to defraud; and (3) because it affirmatively appears from the statements and letters set out in the several counts of the indictment that no fraudulent scheme was contemplated. These contentions, we think, are without merit. The several counts of the indictment, instead of employing the formula of the statute in describing the scheme and artifice by the use of the words, 'to be effected by opening or intending to open correspondence,' etc., employ language of similar and equally efficacious import. They contain the following:

'That the post office establishment of the United States was to be used for the purpose of executing such scheme and artifice to defraud as aforesaid pursuant to said design and conspiracy by opening correspondence with * * * and by inciting such persons, * * * ' etc.

Again, it is averred, in describing the scheme and artifice to defraud, in substance, that the defendants were to make and circulate through the United States mails a false statement of the financial condition of their bank. These are sufficient averments that the scheme and artifice as originally devised contemplated the use of the post office establishment of the United States to accomplish its purpose. It is not necessary to follow the language of the statute. If the averments bring the charge within the substance and true meaning of the statute, it is sufficient.

There was no need of a definite averment that defendants knew that their bank was insolvent at the time they made the alleged false pretenses concerning it. This is not an action for deceit or a criminal action for making false reports touching the condition of the bank where the scienter is indispensable; but it is a criminal charge, the essential elements of which are (1) the devising of a scheme or artifice to defraud, (2) contemplating the employment of the mail service of the United States in its execution, and (3) the actual employment of the mail service in the execution or attempted execution of the scheme. The scheme as laid in the indictment, stripped of much verbiage, is that the defendants would pretend that they were engaged in a certain solvent banking enterprise, and would hold out and pretend that they had assets in excess of liabilities, and would make other alluring pretenses of like kind, when in fact their pretenses were false and their real purpose was, through and by means of the pretenses, to induce the unwary to deposit money with them and thereby enable them to convert the same to their own use. The averments of the indictment thus epitomized disclose a scheme or artifice well designed and adapted to deceive and describe it with sufficient certainty to show its existence and character and to fairly acquaint the accused with what they were required to meet. Such, without the certainty and particularity required in describing a substantive offense in a criminal charge, is all that is...