Pearlman v. State

Decision Date12 July 1963
Docket NumberNo. 159,159
PartiesWilliam PEARLMAN, William Blank, Blair Brown, Leonard Cohen and Jerome Glass v. STATE of Maryland.
CourtMaryland Court of Appeals

Harold Buchman and Ralph Frier, Baltimore, for William Pearlman, William Blank, Blair Brown and Leonard Cohen, part of appellants.

Clement R. Mercaldo, Baltimore, for Jerome Glass, other appellant.

Robert S. Bourbon, Asst. Atty. Gen. (Thomas B. Finan, Atty. Gen., William J. O'Donnell, State's Atty., Joseph G. Koutz, Deputy State's Atty., Russell J. White, Asst. State's Atty. and Charles E. Moylan, Jr., Asst. State's Atty., for Baltimore City, Baltimore, on the brief), for appellee.

Before BRUNE, C. J., and HAMMOND, PRESCOTT, HORNEY and MARBURY, JJ.

HORNEY, Judge.

The defendants, William Pearlman, William Blank, Leonard Cohen, Blair Brown and Jerome Glass, were convicted by the Criminal Court of Baltimore sitting without a jury of conspiracy to cheat and defraud, and have appealed.

Trading and doing business under various names, the defendants, who were engaged in the business of selling home improvements and in the financing thereof, were indicted (with others) in a two-count indictment for conspiring to cheat and defraud their customers, financial institutions which financed home improvement sales, and stockholders of the corporations the defendants organized for the purpose of doing business, and such other persons and corporations as might thereafter have dealings with them. Both counts charge a conspiracy to cheat and defraud, varying only in the phraseology of the objective or purpose sought to be accomplished by the conspiracy.

Specifically, the first count charged that the defendants unlawfully conspired 'by wrongful and indirect means and divers false pretenses and other false and subtle means and devices to cheat, wrong, defraud and impoverish' such customers, financial institutions and stockholders of their property and money.

The second count--the phraseology of which was similar to the first--charged that the defendants unlawfully conspired 'by wrongful and indirect means and devices to obtain and acquire for themselves' the property and money of such customers, financial institutions and stockholders 'with the intent then and there fraudulently and maliciously to cheat, wrong, defraud and impoverish' such customers, financial institutions and stockholders.

The defendants moved to dismiss the indictment on the grounds that it was vague and indefinite in various respects, but the trial court ina trial memorandum ruled trial court in a trial memorandum ruled defendants that they were charged with a conspiracy to effect an unlawful objective 'by wrongful and indirect means and divers false pretenses' and denied the motions. The defendants then moved for particulars, but the motions therefor were also denied.

One of the corporate entities under which the defendants did business was known as the Reynolds Engineering & Supply Co., Inc. The defendants were the officers and managerial executives of the company. While most of the sales were made by salesmen who were regarded as independent contractors and were paid on a commission basis, some sales were made by company executives and officers. The sales were generally made on credit, the customer paying in installments over a period of time.

Between October of 1956 and November of 1959, the Reynolds Company processed more than twenty-five hundred sales. When a sale was made, the salesman would have the customer sign a contract which set forth the work to be done and the estimated cash price, or, if a time plan was desired, the amount of each monthly payment and the total number of payments were also set forth. In arriving at the cash price, it was customary to double the estimated cost to the company. And on a time plan an additional ten per centum carrying charge per year was added to the cash price. The customer, usually without knowing it, was also required to sign in blank a confessed judgment note, a mortgage securing the note, a fire insurance endorsement, an authorization permitting a credit check and an estoppel form. Subsequently, an officer or executive of the company would check with the customer concerning the order and the adequacy of the proposed price. If the credit of a customer was approved, a typed, clean contract would ordinarily be prepared in final form, to which the customer's signature would be obtained. The company would fill in the terms of the already-signed note and mortgage, the mortgage stating the full 'time' price as the amount secured.

Reynolds had arrangements with financial institutions for the discounting of its paper. It would assign the notes and mortgages to the financing institution with recourse, and, after it had accumulated a specified reserve, it would receive a part of the cost of a job from the lending institution. If an account became delinquent, the lender would return the note and reassign the mortgage to Reynolds. Reynolds would then be required to replace the delinquent account with a new note and mortgage or the institution could withdraw the amount of the delinquent account from the reserve. When a loan was paid in full, the mortgage would be reassigned to Reynolds and released.

One of the company salesmen testified that the defendants Pearlman (president of the company) and Blank (its secretary-treasurer) had told him and other salesmen at a sales meeting not to let customers know that they were in fact signing mortgages; that the salesmen were to so arrange the papers to be signed as to conceal the text of the mortgage; and that if a customer asked what the instrument was, they were to say it was mortgage insurance. Two other salesmen also testified that Pearlman and Blank had told them not to let customers know they were signing mortgages, but to tell them, if they asked, that the instruments were insured mortgages. A bookkeeper-secretary employed by Reynolds for a short time testified that she asked Pearlman how they got customers to sign mortgages, and he replied they were told that they were signing for loan insurance to pay the loan in case the customer died.

The State also called sixty-four of the customers who testified, in substance, that they did not know, at the time of signing, that they had signed mortgages, and, in some cases, that they had been told that they were not executing mortgages.

Two attorneys (holding notary commissions), who were employed by Reynolds to visit customers and obtain their acknowledgments to the previously signed mortgages, or secure so-called 'confirmatory' mortgages, as the case might be, testified that they were instructed to, and did, explain to the customers the nature of the mortgage instruments. Other evidence was produced by the defendants to contradict or refute that produced by the State.

In its trial memorandum, the court, in speaking of the unlawful means employed to carry out the unlawful object of the conspiracy, found, among other things, that the five defendants who appealed had formulated a scheme to overcome the general reluctance of customers to execute mortgages for home improvements by inducing them to sign blank forms which they did not know were mortgages; that home improvements had been sold and mortgages fraudulently obtained from customers 'by concealment, trickery and misrepresentation'; that when the defendants had a legal obligation to speak, they 'spoke falsely'; and that the signing by customers of blank mortgages had 'facilitated the operation of the illegal plan and its objectives,' and entered verdicts of guilty against each of the defendants.

On appeal the defendants contend (i) that the indictment is so vague and indefinite that they were inadequately informed of the accusations against them in violation of the constitutional requirements; (ii) that the denial of particulars was prejudicial error; (iii) that the convictions violate the due process clauses of the state and federal constitutions because there were such variances between the conspiracy alleged and the conspiracy found that the defendants were convicted of a crime not charged; and (iv) that the evidence does not support the convictions, particularly that of the defendant Blair Brown.

(i)

The indictment was so framed as to adequately inform the defendants of the charge against them.

Of course, the obtaining of the money and property of others with intent to cheat and defraud is per se an illegal objective. Here, the means employed by the defendants--concealment, trickery and misrepresentation to obtain the signing of security instruments--were also unlawful. See State v. Buchanan, 5 Har. & J. 317 (1821). The question, then, is whether the indictment was sufficient to inform the defendants that they were charged with having used unlawful means to accomplish an unlawful objective.

'[A]n indictment must be so framed as to inform the defendant of the charge against him in order that he may prepare his defense and may also protect himself against a subsequent prosecution for the same offense.' Seidman v. State, 230 Md. 305, 312, 187 A.2d 109, 113 (1962). This right is guaranteed by Article 21 of the Maryland Declaration of Rights and the due process clause of the Fourteenth Amendment to the Constitution of the United States.

Nevertheless, the general rule with respect to a conspiracy indictment is that it 'need state only the conspiracy and the object of it; the means by which it was intended to be accomplished are only matters of evidence to prove the charge.' Piracci v. State, 207 Md. 499, 516, 115 A.2d 262, 269 (1955). See also Archer v. State, 145 Md. 128, 125 A. 744(1924); State v. Buchanan, supra. But it has been held that this rule does not apply to conspiracies to do a lawful act by unlawful means and that in such cases it must appear by the indictment that the means to be employed are unlawful....

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  • Jones v. State, 40
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