Miller v. United States, 2222.
| Decision Date | 12 June 1941 |
| Docket Number | No. 2222.,2222. |
| Citation | 120 F.2d 968 |
| Parties | MILLER et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Glenn Porter, of Wichita, Kan. (Getto McDonald, Dwight S. Wallace, and William Tinker, all of Wichita, Kan., on the brief), for appellants.
A. W. W. Woodcock, of Salisbury, Md. (Summerfield S. Alexander, U. S. Atty., of Topeka, Kan., on the brief), for appellee.
Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.
U. R. Miller, T. C. Miller and Charles Miller were charged in the District Court of the United States for the District of Kansas with violating Sections 88 and 338, 18 U.S.C.A. The indictment contained eleven counts. The first ten counts charged the formation of a scheme to defraud by use of the mails, in violation of 18 U.S.C.A. § 338. The eleventh count charged a conspiracy to defraud by use of the mails in furtherance thereof, in violation of 18 U.S.C.A. § 88. They were found guilty and sentence was imposed, from which they have appealed.
The transactions out of which the prosecution arose resulted from a copper mining venture in Arizona, and extended over a long number of years. The mining company involved was known as the Keystone Copper Mining Company. The defendants were the principal stockholders and were officers in the corporation. In general, the indictment charged that they used the mails to defraud by making inflated and fictitious valuations of the property and by misrepresenting the mining operations that had been carried on, in order to sell stock and procure loans of money which they converted to themselves; that they engaged in fraudulent stock gambling operations on the Chicago Stock Exchange, through which large sums of money were dissipated; that by various fraudulent schemes they attempted to freeze out many of the stockholders, to their own ultimate benefit.
One of the unlawful acts charged is that they made a false and fraudulent application to the Blue Sky Board of Kansas for the purpose of obtaining permission to sell $25,000 of collateralized notes. The application to the Blue Sky Board was signed and verified by U. R. Miller, president, and C. W. Miller, secretary. It contained a statement of the number of shares of stock held by various stockholders and the actual cash they had invested in the company. Insofar as material herein, the statements concerning the amount of cash invested by various stockholders were as follows:
T. C. Miller $40,000
U. R. Miller 60,000
C. W. Miller 10,000
Across the face of the application appeared the following, written in long-hand: This writing was placed on the application by John W. Blood, an attorney and director in the company, prior to the time it was signed and verified.
C. W. Miller testified that there was a discussion by those present at the time the application to the Blue Sky Board was prepared as to what was meant by the statement in the application that he had invested $10,000 cash in the company; that this discussion preceded his signature on the application. He was asked to state what was said in that discussion as to the meaning of this statement in the application. An objection was sustained and he was not permitted to answer.
Intent is an essential element of fraud. 23 Am. Jurisprudence, p. 773; Yusem v. United States, 3 Cir., 8 F.2d 6; Smith v. Bridgeport Machine Co., 151 Kan. 444, 100 P.2d 65. Whenever the belief of a person or the motive of his act or conduct is material, he may not only directly testify that he had no intent to defraud, but he may buttress such statement with testimony of relevant circumstances, including conversations had with third persons or statements made by them, tending to support his statement that he had no intent to defraud. Buchanan v. United States, 8 Cir., 233 F. 257; Gardom v. Woodward, 44 Kan. 758, 25 P. 199, 21 Am.St.Rep. 310; Potter v. United States, 155 U.S. 438, 15 S.Ct. 144, 39 L.Ed. 214; Hyde v. United States, 4 Cir., 15 F.2d 816; Sparks v. United States, 6 Cir., 241 F. 777.
One of the grave charges lodged against the defendants was that they falsely and fraudulently stated in writing that they had themselves actually invested cash in the company in the sum of $110,000, when in fact they had invested no cash at all. In their attempt to refute the charge of fraud, they were not limited to a denial of intent to defraud. It was proper for them, especially in view of the statement written in long-hand across this part of the application, to state what was meant by these statements. Conversations had between the parties and statements made by the attorney who prepared the application, tending to show their understanding of the transaction and thus negativing any intent to defraud, were competent. A jury would be more inclined to give weight and consideration to statements and conversations upon which a conclusion was based than to a mere statement by the accused of his conclusion, unsupported by such statements.
The indictment further charged that the defendants fraudulently stated in the application to the Blue Sky Board that the only liens and mortgages against the property consisted of a judgment of $2,400, on which $1,000 had been paid, whereas the defendants well knew that there were at all times other judgments in force and effect which they themselves held against the company. Defendant U. R. (Bert) Miller testified that these judgments had been released prior to the execution of the application to the Blue Sky Board by written instrument which had been executed by the defendants holding the judgments, and that the release had been delivered to the company. The written release was introduced in evidence and reads as follows:
Defendant offered to prove by John W. Blood, a director and attorney of the company, that the release was prepared at his instance and request and was delivered to the directors of the company at a meeting at which he was present. An objection was sustained to this testimony on the ground that it was hearsay and that the instrument was not a valid release. Whether the Board of Directors received this release is a question of fact. The execution and delivery of the release had a vital bearing on the charge that defendants intended fraud when they omitted any mention of these judgments in the application to the Blue Sky Board. Defendants were permitted the testimony of Bert Miller that the release was executed and delivered. They were permitted to introduce the release, but they were denied the corroborating testimony of Mr. Blood, a director and attorney for the corporation, that the company actually received the release. It might well be that the jury doubted the testimony of the witness that the release was delivered to the company. Had Mr. Blood been permitted to testify that the company actually received and had the release, they might have viewed the transaction in a different light in considering the motive or intent of the defendants.
The defendants introduced a number of substantial witnesses, men prominent and influential in their community, who testified to the good reputation of the defendants in the community in which they resided. Defendant Charles Miller submitted three requests for instructions relative to the weight to be accorded character testimony. These requests were denied by the trial court. No request for such an instruction was made by the remaining defendants. The court instructed the jury that: ...
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