Morris v. United States, 9092.

• Decision Date: 08 July 1940
• Docket Number: No. 9092.,9092.
• Citation: 112 F.2d 522
• Parties: MORRIS et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

112 F.2d 522 (1940)

MORRIS et al. v. UNITED STATES.

No. 9092.

Circuit Court of Appeals, Fifth Circuit.

June 11, 1940.

Rehearing Denied July 8, 1940.

COPYRIGHT MATERIAL OMITTED

Frank J. Looney, of Shreveport, La., Robert E. Cofer and John D. Cofer, both of Austin, Tex., and Maury Hughes, of Dallas, Tex., for appellants.

Harvey G. Fields, U. S. Atty., and Malcolm E. Lafargue, Asst. U. S. Atty., both of Shreveport, La., for appellee.

Before HOLMES and McCORD, Circuit Judges, and MIZE, District Judge.

MIZE, District Judge.

The appellants, T. L. Morris, L. Hugh Morris, M. N. Morris, Z. B. Freeman, and J. L. F. Beasley, were indicted along with others in the Western District of Louisiana by an indictment containing eleven counts charging them with using the mails to defraud. The defendants filed a demurrer to this indictment challenging its sufficiency and their chief grounds were that the indictment was duplicitous in that it attempted to charge two schemes to defraud in one count; that the allegations of the indictment were repugnant; that it contained prejudicial language; that it was vague and uncertain; and that it failed to charge any crime whatsoever. The indictment charged in substance that T. L. Morris, L. Hugh Morris, M. N. Morris, R. C. McCoy, Jr., H. R. O'Guinn, Z. B. Freeman, J. L. F. Beasley, American Benefit Association, The Southern Protective Union, The Guardian Benefit Association, and The Imperial Life Insurance Company, well knowing the facts in this indictment set forth, did devise and intend to devise a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent representations, pretenses and promises from * * * and divers and sundry other persons to the grand jurors unknown, approximately 55,000 in number, that is to say, from the numerous classes of persons who were then desirous of obtaining policies of insurance on the lives of persons then living, either themselves or others, for the benefit of designated beneficiaries, principally of that class of aged persons who were unable to secure and obtain life insurance from any legitimate life insurance company, and particularly that class of persons who could be induced to purchase said policies by reason of the proposed low rate and lack of requirement for medical examination, and generally from the class of persons herein specified and the general public throughout the United States who could be induced to send, give and pay their money, property and other valuable things to the said defendants under the name of the American Benefit Association, The Southern Protective Association, The Guardian Benefit Association, The Imperial Life Insurance Company, and The Imperial Protective Union, and other names, all of which persons hereinafter being referred to in this indictment as the persons to be defrauded, said scheme and artifice being in substance and effect as follows: That the defendants would represent that they had organized and caused to be organized a corporation known as the National Protective Union, a mutual insurance organization organized under the National Trade Union Charter under the Act of Congress of the United States governing the issuance of such charter, which Act has been since repealed by its home office at Washington, D. C., and that they had organized and caused to be organized a corporation charter under the non-profit statute of the State of Colorado on or about February 21, 1931, to be known and designated as the American Benefit Association, and under the non-profit statute of the State of Delaware, corporation to be known and designated as The Imperial Protective Union and the Guardian Benefit Association, for the purported purpose of enrolling as members persons desirous of obtaining insurance, and issue to said members certificates for the maximum sums of from $240 to $10,000, under so-called "plan of maximum protection at minimum cost", said certificates to require the payment by said members of such fees and premiums as the by-laws of said organizations may direct, and purporting to provide for the payment from the funds thus accumulated, after the payment of expenses, money, and benefits to the widows, orphans, heirs and devisers of the deceased members of said organization in the amount and to the extent provided for in the by-laws and for such other purposes as authorized by the laws of the United States and of the States of Colorado and Delaware governing corporations organized not for pecuniary profit; and that the said defendants would establish executive offices for said organizations in the City of Shreveport, La., and would thereafter advertise by circular letters and otherwise throughout the United States for agents and representatives to sell said memberships and benefit certificates under the names of the American Benefit Association, The Imperial Protective Union and The Guardian Association; that said defendants would then offer for sale to the persons to be defrauded throughout the United States, by and through the agents and representatives thus obtained and otherwise, the said membership and benefit certificates under the so-called "plan of maximum protection", and that said defendants would then cause to be printed, issued and distributed by United States mail and otherwise, to the persons to be defrauded, said memberships and so-called benefit certificates in the American Benefit Association, The Imperial Protective Union, and the Guardian Benefit Association, which certificates would be so worded as to induce and cause said persons to be defrauded to believe that said certificates offered maximum life insurance benefits and protection at minimum cost, as said defendants would intend said persons to be defrauded to believe at the time of the issuance thereof and at all subsequent times during the life of said members and said persons to be defrauded, and upon all occasions when the monthly and other dues and premiums would become due and payable. The indictment then alleges that it was part of the scheme and artifice that on or about April 19, 1934, the defendants would transfer to the American Benefit Association, with the exception of the liability which had previously been created by the business of the Southern Protective Union, a corporation, operating a business similar to that of the American Benefit Association, and that the defendants would, as the American Benefit Association, receive all funds due the expense fund of the Southern Protective Union. The indictment then continued to set out the numerous other parts of the alleged scheme and artifice to defraud in detail, defining the methods by which the defendants would enrich themselves at the expense of the alleged policy holders or certificate holders, and set out in detail the false representations that would be made in order to carry out the purposes of the alleged scheme. Among other things, there was alleged as a part of the scheme that the defendants having persuaded a great many persons to purchase the aforesaid membership certificates, would then appropriate to the use and benefit of the defendants and their association, in the guise of expenses, more than three-fourths of all the money collected from the members and actually used for the payments of claims less than one-fourth of all the money collected from the members, thus causing a great percentage of policy lapses, by which the defendants would benefit and the members would lose to the extent of all remittances received from such members. The defendants would then transfer the remaining members to another corporation, or organization, and repeat the procedure from time to time, by which the defendants gained large sums of money at the expense of persons trying to obtain protective insurance. The indictment then details the various false representations and promises that were made and that the defendants knew that the promises were false and made with the intent to defraud; that the false representations were made without any intent on the part of the defendants of fulfilling the proposed obligation of the Association to pay to the members and persons to be defrauded any sums of money by reason of the certificates. The first count further alleged that the defendants, having devised said scheme, and artifice to defraud, and for obtaining money and property by reason of false representations and for the purpose of executing same, did unlawfully, wilfully and feloniously place and cause to be placed in the United States mails a certain envelope bearing the necessary uncanceled postage and containing a certain premium receipt to one of the parties to be defrauded, this being charged to have been mailed on or about the 20th of August, 1934.

The second count adopted the allegations of the first count, containing all the averments with reference to the scheme and artifice to defraud, etc., and then charged that on or about October 31, 1935, the defendants again used the means of addressing a certain envelope with uncanceled postage on it and mailing it for the purpose of executing the fraudulent scheme, etc.

The third count charged that the defendants on or about May 27, 1936, in substance used the same means in furtherance of the scheme to defraud, by use of the United States mails, and the other counts likewise adopted the allegations of the first count with reference to the scheme and artifice to defraud and then charges the unlawful use of the mail as hereinbefore stated in substance. It would unduly prolong this opinion to set out the indictment in detail, as it is necessarily lengthy.

The alleged scheme to defraud was large and necessarily had many angles to it. It is natural that a scheme of this magnitude would have many parts and in order to set it out properly, extensive averments were required. The indictment, however, embraces only one scheme.

The demurrer was overruled, the defendants entered pleas of not guilty,...