Morris v. United States

• Decision Date: 20 October 1925
• Docket Number: No. 6854.,6854.
• Parties: MORRIS v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

7 F.2d 785 (1925)

MORRIS v. UNITED STATES.

No. 6854.

Circuit Court of Appeals, Eighth Circuit.

July 24, 1925.

Rehearing Denied October 20, 1925.

Frank J. Looney, of Shreveport, La., and H. S. Powell, of El Dorado, Ark. (Powell, Smead & Knox, of El Dorado, Ark., and Foster, Looney, Wilkinson & Smith, of Shreveport, La., of counsel), for plaintiff in error.

James D. Shaver, Sp. Asst. U. S. Atty., of Texarkana, Ark. (S. S. Langley, U. S. Atty., of Ft. Smith, Ark., and H. L. Arterberry and Sylvester R. Rush, Sp. Asst. Attys. Gen., on the brief), for the United States.

Before KENYON and BOOTH, Circuit Judges, and AMIDON, District Judge.

KENYON, Circuit Judge.

Plaintiff in error (designated herein as defendant) together with a number of other persons, was indicted on December 12, 1923, in the District Court of the United States for the Western District of Arkansas. All were charged in eighteen counts of the indictment with a violation of section 215 of the Criminal Code (Comp. St. § 10385), by having devised a scheme to obtain money and property by false pretenses, and in carrying it out to have used the United States mails. The indictment occupies eleven pages of print in describing the scheme. The nineteenth count of the indictment charges a conspiracy of the same defendants under section 37 (Comp. St. § 10201) to violate said section 215 of the Criminal Code, and as a part of said violation to commit the offenses set forth in the first eighteen counts thereof. Some fifty-one overt acts in pursuance of the scheme to defraud are alleged, none of which relate to the placing of any letter or package in the mails, or receiving one therefrom.

At the conclusion of all the evidence, a motion was made to direct a verdict of not guilty. No grounds for such motion were specified. This was overruled by the court.

On June 6, 1924, the jury returned a verdict of guilty as to defendant on the nineteenth or conspiracy count, and a verdict of not guilty on the first eighteen counts charging violations of section 215 of the Criminal Code.

The alleged scheme to defraud and conspiracy so to do were based on certain promotion organizations under the guise and in the form of trust estates supposedly to engage in the production of oil and the sale to the public of shares or units therein. These organizations were designated, "Harry N. Morris, Trustee," "Workingman's Syndicate," "Harry Morris Guaranteed Gusher No. 2," and "Harry Morris Guaranteed Gusher No. 3," which seems to have been a general merger of all of the other promotion companies. The Mid-Continent Brokerage Company and the Morris Drilling Company were organized as subsidiary concerns, in both of which defendant was an owner. It is alleged in the indictment that the Mid-Continent Brokerage Company was nothing but the mouthpiece of defendants in sending out market letters quoting fictitious prices on the units or certificates of interest of said companies.

An intensive campaign of advertising was carried on for the purpose of selling shares or units of interest in these companies. $187,695.03 was spent for advertising the promotion ventures, and underwriters' commissions of $321,360.76 were paid for selling units. Nearly $2,000,000 of stock, or units of interest, were sold in Harry Morris Guaranteed Gusher No. 3. These advertisements were inserted in various papers throughout the country through the instrumentality of a certain advertising agency. To illustrate the character of the claims made by these various promotion companies, we quote extracts from a few of the exhibits introduced in the case, either letters or advertisements, viz. letter of Harry N. Morris of February 3, 1922, Exhibit No. 521:

"My Guarantee

"To the Man or Woman Who Can't Afford to Lose.

"I guarantee a producing oil well — I guarantee it positively, absolutely, unequivocally — without the quivering of an eyelash, or the batting of an eye —

"I back my guarantee by saying to you:

"Don't send me a thin dime — send it to the Guaranty Bank & Trust Company, El Dorado, Arkansas, with instructions: `When Harry Morris, Trustee, well in Sec. 20-18-15 produces oil — that oil hits the crown block or goes out the side — turn my money over to Harry Morris.'"

From Exhibit No. 67A, an advertisement of the Dallas Oil News, July 28, 1922, the following:

"Exhibit No. 67A.

"The Dallas Oil News, July 28, 1922.

"Harry Morris Guaranteed Gusher Syndicate No. 2 5 Proven El Dorado Acres Morris Actual Cost Plan.

"His Record.

"The record of Harry Morris is one of the most remarkable in the history of the oil industry. His trustee syndicate well, a guaranteed gusher, came in as a big producer and is now paying off every month.

"His Workingman's Syndicate well came in a big gusher and is now earning big dividends every day.

"His Harry Morris Guaranteed Gusher well is on top of the sand and bids fair to be brought in as one of the best producers, of the field.

"His Guaranteed Gusher Syndicate No. 2 his new enterprise, is preparing to drill on five golden acres in the heart of the El Dorado field and should pay enormous returns to all those who buy his units."

From Exhibit 68, advertisement in the National Oil Review, September 22, 1922:

"Harry Morris Huge 424% Cash Dividend Gives Homes and Cars to Unit Holders.

"These letters are living proof to all the world of how Harry Morris keeps faith with his unit holders. Are you one of those whom this man's great work is benefiting? You can be if you will act now and get in before another big Harry Morris pay day comes.

"Here are some letters showing what unit holders in the Guaranteed Gusher Syndicate No. 2 think of Harry Morris and his 424 per cent. cash dividend. Originals of all these letters are on file in Mr. Morris' office, and the names and addresses of their senders will be given on request.

"Winsome Wyoming Lady Receives 424% in cash. Photograph. The above picture shows Miss Ella May Pury of Oakley, Wyoming, who was one of the very very fortunate investors with Harry Morris to receive a cash dividend of 424%."

From the same exhibit the following:

"Warning! Harry Morris has absolutely no connection with any other guaranteed gusher proposition. Harry Morris is sole originator of the guaranteed gusher plan and his syndicates have always secured gushers. The tremendous merit of the guaranteed gusher plan is obvious because of the large number of imitations that have sprung up since Mr. Morris came out with his first guaranteed gusher deal. Mr. Morris is one of the few operators guaranteeing a gusher who is financially responsible and can back up any and all statements. Also make sure that when you are guaranteed a gusher that an oil gusher and not a mere gas gusher or a salt water gusher is meant and that when you are guaranteed dividends, cash dividends are meant. Harry Morris always pays dividends in cash. * * *

"You Can Ride In An Automobile, Too.

"You Must Realize when you come into this syndicate that you are getting in on two wells about which there is no guess work — two wells which are absolutely guaranteed to be huge gushers.

"You Must Realize that one of these wells is in the very core, the very heart, of the old established proven El Dorado field, where a new deep sand has just been found, giving me every reasonable assurance of at least a 5,000 barrel gusher well. * * *

"You Must Realize that I have enabled my unit holders to buy fine automobiles — to pay out their homes — to enjoy all the worth while things of life.

"You Must Realize that if this sale now pending of all or part of my Camden holdings goes through I could pay a dividend far, far greater than my 424 per cent. dividend.

"You Must Realize that the moment such a lease is closed you cannot get into the syndicate.

"You Must Realize that you have a chance here to make 1,000 per cent. or more within 30 days.

"You Must Realize that I am a square man — that when I make these huge sums I pay them out to my unit holders.

"You Must Realize that if you expect to get in on my next winning — and I warn you it may come at any time — you must act now."

Another advertisement from the Texas Oil World of September 30, 1922, contained this:

"This may be my final call! Now, my friends, you stand today at the most important crossroad that you have encountered in the journey of life. You are face to face right now with a decision that can have an unalterable effect upon your future years. Today you are offered the opportunity of joining hands with Harry N. Morris. He guarantees to bring in two gusher wells for you. You know from what he has done in the past that Harry N. Morris will make good his word. He is offering to let you in on an actual cost basis — here is no promotion, no water here. — Harry Morris is six feet of iron manhood — he's dealing with you as a man. Will you go with him? That is the question. To refuse means to throw away the greatest opportunity that you have ever known; to refuse means that you have forgotten your duty to those who look to you to provide them with the comforts and the luxuries of life; to refuse means to abandon hope of having the things that make life worth while; to refuse means to give up ambition — pride. Refuse — and see others profit! Refuse — and deny your loved ones that which is their due! Refuse — and engulf your soul and body in the hopeless gulf of mediocrity! To accept means to come into your own! To accept means to profit beyond your fondest dreams! To accept means to become rich, wealth! To accept means that your loved ones may have all their desires fulfilled! Refuse or accept! Which? The answer is up to you. The decision is your own. Which will it be? Which will it be? Act! for the sake of fortune now!"

Many representations were made, so extravagant as to bear the impress of falsity on their face. The purpose was to show that oil was being discovered and wells were being sunk for the benefit of the unit holders in the various...