Peel v. United States

• Decision Date: 15 June 1963
• Docket Number: No. 20003.,20003.
• Citation: 316 F.2d 907
• Parties: Joseph A. PEEL, Jr., John Joseph Crane, Robert Bernard Sills, Robert Zane and Herbert Gilmore, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

316 F.2d 907 (1963)

Joseph A. PEEL, Jr., John Joseph Crane, Robert Bernard Sills, Robert Zane and Herbert Gilmore, Appellants, v. UNITED STATES of America, Appellee.

No. 20003.

United States Court of Appeals Fifth Circuit.

May 8, 1963.

Rehearing Denied June 15, 1963.

Harry W. Fogle, St. Petersburg, Fla., E. Coleman Madsen, Stewart D. Allen, Louis M. Jepeway, Miami, Fla., Jepeway & Gassen, Miami, Fla., for appellants.

Edward W. Boardman, U. S. Atty., Miami, Fla., Arnold D. Levine, Asst. U. S. Atty., Tampa, Fla., for appellee.

Before TUTTLE, Chief Judge, and JONES and BELL, Circuit Judges.

TUTTLE, Chief Judge.

These are separate appeals on behalf of the five appellants who were tried and convicted in the Southern District of Florida for violating the anti-fraud provisions of the Securities Act of 1933, 15 U.S.C.A. § 77q(a), the Mail Fraud Statute, 18 U.S.C.A. § 1341, and the conspiracy provisions of the criminal Code, 18 U.S.C.A. § 371. A sixth alleged conspirator, Holzapfel, named in the indictment, was granted a continuance and severance for trial. Certain counts of the indictment and certain overt acts of the conspiracy count were dismissed on motion of the Government prior to the submission of the case to the jury. The jury then found the appellants guilty on all nine counts submitted to them.

The grounds of the appeal may be divided generally into three categories. The first, applicable to all the appellants, is their contention that the indictments and convictions were based on evidence which was obtained by the Government as the fruits of an illegal seizure. The second is the contention, made separately, on behalf of all except Peel, that the evidence was insufficient to warrant submission of their respective cases to a jury. The third is based on alleged errors of the trial court having to do with overruling objections to the introduction of testimony and on other actions of the trial court.

We deal first with the contention of the defendants that the trial court erred in not suppressing, and in not excluding from evidence, the books and records of Insured Capital Corporation, the corporate vehicle through which the Government sought to prove the defendants carried on their fraudulent scheme. These books and records were obtained from the office of Insured Capital Corporation in Orlando, Florida, where they were in the formal custody of a Miss Edminson, who was the Secretary-Treasurer of the corporation. The record made before the trial court on the motion to suppress, and in support of subsequent objections to the introduction of the records in evidence, shows that none of the appellants was an officer or director of the corporation at the time the records were obtained. Evidence which both the trial court and the jury could believe tended to prove that three persons, Peel, Holzapfel and one Miles, who testified on behalf of the Government and who was named as a co-conspirator, but not as a joint defendant in the prosecution, were the principal operators of the business that had been transacted at the office of Insured Capital Corporation. There was also evidence that Sills and Crane had both been engaged under the direction of the first named three persons in carrying on certain of the functions of the business, and that Zane and Gilmore had been present in Orlando or the office of the corporation only once or twice and held no office or position with the company.

In this state of affairs, the County Solicitor of Orange County, Florida, acting under a Florida statute, Section 32.20, F.S.A.,¹ caused a subpoena duces tecum to be served on Miss Edminson to produce all of the books, ledgers, stock certificate books, bank records, and all other documents relating to the operation of Insured Capital Corporation. Miss Edminson complied with this subpoena and turned the corporation's books over to the state officer without demur or complaint. These records were retained in the office of the County Solicitor for approximately a year and a half without any demand being made for their return or any effort being made by the corporation, any of its officers, or any of the appellants seeking a return of the books. It does not appear that there was any office of the corporation maintained thereafter to which the books could be returned, or that there was any officer of the corporation who was interested in receiving them.

During the period of their custody by the County Solicitor's office, they were made available to investigators from the Securities & Exchange Commission and other federal agencies. Based at least in part on information obtained from the records, indictments were drawn and presented to the Federal Grand Jury, charging these appellants and Holzapfel with the offenses on which they have now been convicted. The books and records were actually subpoenaed by the United States Attorney a short time before the trial, after they had been physically surrendered by the County Solicitor's office to the United States Attorney's office for use on the trial.

Appellants contend that the acquisition of the records in this manner was an illegal seizure in violation of the Federal Constitution, and that under the principle announced in Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 4 L.Ed.2d 697, and Henzel v. United States, 5 Cir., 296 F.2d 650, a decision by this Court, they have sufficient standing as "aggrieved persons" to have the documents suppressed when sought to be used against them.

It is clear that the Jones case, while greatly relaxing the requirement as to the interest an accused must have in order to have standing to attack an illegal search or seizure, does not cover the factual situation such as here before us. In Henzel v. United States, this Court found that where a Federal Investigating Officer, by agreement with a state court receiver of a corporation which was wholly owned and wholly operated by the accused, obtained delivery of all of the corporation's and some of the accused's personal papers in an investigation that was being conducted against the accused, the seizure of the papers was illegal and the accused had adequate standing to attack the seizure. In arriving at this conclusion, however, this Court made the following caveat:

"This is not to say that every employee of a corporation can attack the illegal seizure of corporate property if the fruits of the search are proposed to be used against him. Each case must be decided on its own facts. We only hold that, under the facts presented here, the appellant had a sufficient interest in the property seized and premises searched to enable him to challenge the propriety of the Government\'s conduct under Rule 41(e)."

Here the subpoena duces tecum ran to the corporation and was served on the Secretary-Treasurer, the only person in charge of the corporation at the time of service. Appellants did not allege in the trial court that this acquisition of the records by the County Solicitor's office was itself illegal under the laws of the state of Florida. Nor did they allege that the Florida statute authorizing it violated the Federal Constitution. They do here in the Court of Appeals for the first time seek to attack the legality of this seizure by the state officials. Nevertheless we do find that the trial court, in passing on the motion to suppress, made a finding to the following effect:

"The property in controversy was possessed by an official of the state of Florida pursuant to legal process. The Court further finds and holds that the property thus seized was obtained in (sic) the possession of officials of Orange County, Florida, until it was delivered to the United States Securities & Exchange Commission for use in the prosecution of this case, and that such property is now lawfully in control and

...