Osborne v. United States

• Decision Date: 31 January 1927
• Docket Number: No. 4855.,4855.
• Parties: OSBORNE et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

17 F.2d 246 (1927)

OSBORNE et al. v. UNITED STATES.

No. 4855.

Circuit Court of Appeals, Ninth Circuit.

January 31, 1927.

Le Compte Davis and William B. Beirne, both of Los Angeles, Cal., for plaintiffs in error.

H. L. Arterberry and David H. Cannon, Sp. Asst. Attys. Gen., and Samuel W. McNabb, U. S. Atty., and J. Edwin Simpson, Asst. U. S. Atty., both of Los Angeles, Cal., for the United States.

Before GILBERT and RUDKIN, Circuit Judges, and JAMES, District Judge.

RUDKIN, Circuit Judge.

This is a writ of error to review a judgment of conviction under the mail fraud statute. The indictment charged that the plaintiffs in error devised and intended to devise a scheme and artifice to defraud, and to obtain money and property by means of false and fraudulent pretenses, representations and promises, and that certain letters were placed in the mail to execute the scheme and artifice. The false and fraudulent pretenses, representations, and promises related to the sale of sections or lots for burial purposes in Valhalla Memorial Park and Valhalla Mausoleum Park, owned by the plaintiffs in error, or by corporations dominated and controlled by them. While numerous such pretenses, representations and promises are charged and set forth in the indictment, the plaintiffs in error state in their brief that the government conceded at the trial that there were but two vital elements in the case: "(1) The sale of the same sections to different purchasers, or what were termed `duplications'; and (2) the failure of the defendants to make resales, as contemplated." In view of this concession, and for present purposes, we deem it sufficient to say that the indictment charged that it was a part of the scheme and artifice to defraud that the plaintiffs in error should sell the same numbered lots or sections in Memorial Park or Mausoleum Park to each of two or more persons to be defrauded, as his exclusive property, and without revealing to any of said persons that the plaintiffs in error had sold the same numbered lots or sections to another or others, and should accept payments on the purchase price of the same numbered lots or sections during the same period of time, from each of two or more of the persons to be defrauded, and that the plaintiffs in error falsely and fraudulently represented and pretended that they would resell said lots and sections so purchased from them by the persons to be defrauded, within a short time after such purchase and with great profit to such persons.

The sufficiency of the indictment, the sufficiency of the evidence to sustain the conviction, and the charge of the court, are not called into question on this writ of error. In other words, all of the assignments of error are based upon rulings of the court, admitting or excluding testimony during the progress of the trial. The first and perhaps the principal assignment of error is based upon the ruling admitting in evidence the books and records of the Osborne-Fitz-Patrick Finance Company. This was the holding company that transacted the business of the two cemetery companies, and, while a corporation in form, the only persons substantially interested therein were the two plaintiffs in error. The objections to this testimony were numerous; the principal ones being that the books were not shown to have been accurately kept, that the books were not shown to be in the same condition as when taken from the possession of the finance company, under a subpoena duces tecum, and that the plaintiffs in error were not shown to have had any knowledge of their contents. Ordinarily, before books of account can be received in evidence, a proper foundation must be laid.

"In order to lay the foundation for the admission of such evidence it must be shown that the books in question are books of account kept in regular course of the business, that the business is of a character in which it is proper or customary to keep such books, that the entries were either original entries or the first permanent entries of the transactions, that they were made at the time, or within reasonable proximity to the time, of the respective transactions, and that the persons making them had personal knowledge of the transactions, or obtained such knowledge from a report regularly made to him by some other person employed in the business whose duty it was to make the same in the regular course of the business." Chan Kiu Sing v. Gordon, 171 Cal. 28, 151 P. 657.

In discussing the same question in Chaffee & Co. v. United States, 18 Wall. 516, 21 L. Ed. 908, the court said:

"And that rule, with some exceptions not including the present case, requires, for the admissibility of the entries, not merely that they shall be contemporaneous with the facts to which they relate, but shall be made by parties having personal knowledge of the facts, and be corroborated by their testimony, if living and accessible, or by proof of their handwriting, if dead or insane, or beyond the reach of the process or commission of the court. The testimony of living witnesses personally cognizant of the facts of which they speak, given under the sanction of an oath in open court, where they may be subjected to cross-examination, affords the greatest security for truth. Their declarations, verbal or written, must, however, sometimes be admitted when they themselves cannot be called, in order to prevent a failure of justice. The admissibility of the declarations is in such cases limited by the necessity upon which it is founded."

Measured by this rule it is quite apparent that a proper foundation was not laid for the admission of all the books and records received in evidence; and, unless shown to have been accurately kept, the books of a corporation are not ordinarily admissible against its officers and stockholders, in the absence of evidence tending to show that they had something to do with the keeping of the books, had knowledge of their contents, or such connection with the books as to justify an inference of actual acquaintance therewith. Worden v. United States (C. C. A.) 204 F. 1; Cullen v. United States (C. C. A.) 2 F.(2d) 524.

It appeared in this case that the books were kept under the general direction of the plaintiffs in error, but they had nothing to do with the actual keeping of the...