People v. Comstock

• Citation: 147 Cal.App.2d 287,305 P.2d 228
• Decision Date: 28 December 1956
• Docket Number: Cr. 5634
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE of the State of California, Plaintiff and Respondent, v. Harry Thomas COMSTOCK and Winifred June Clark, Defendants, Harry Thomas Comstock, Defendant and Appellant.

Page 228

305 P.2d 228

147 Cal.App.2d 287

The PEOPLE of the State of California, Plaintiff and Respondent, v. Harry Thomas COMSTOCK and Winifred June Clark, Defendants Harry Thomas Comstock, Defendant and Appellant.

Cr. 5634.

District Court of Appeal, Second District, Division 2, California.

Dec. 28, 1956.

Simpson, Wise & Kilpatrick, George E. Wise, and Adrian Kuyper, Long Beach, for appellant.

Edmund G. Brown, Atty. Gen., Norman H. Sokolow, Deputy Atty. Gen., Adolph Alexander, Chief Deputy Dist. Atty., acting as Dist. Atty. of Los Angeles County; Herman L. Arterberry, Deputy Dist. Atty., Los Angeles, for respondent.

MOORE, Presiding Justice.

Defendant appeals his conviction on the charges of conspiring with Winifred June Clark (who died prior to the trial of the action) to cheat and defraud by criminal means, to make false promises with the fraudulent intent not to perform them, to commit grand theft, to violate the Corporate Securities Law, Corporations Code, § 25000 et seq., and to violate section 3020, subdivision (b) of the Corporations Code relating to the falsification of corporate records (Count I); commission of grand theft (Counts II, III, IV, V, VI, X and XI); and fraudulently falsifying corporate records (Counts VII, VIII and IX).

The basic facts underlying the perpetration of the foregoing offenses may best be set forth in the consideration of the evidence supporting the conspiracy count. Appellant advises us that in considering the record we should not apply the familiar 'substantial evidence test' but rather should satisfy ourselves beyond a reasonable doubt as to the guilt of appellant. The reasoning suggested is as follows: The rule that an appellate court will not upset the judgment of a trial court where substantial evidence supports it is based upon the premise that the trier of fact is deemed to have had the superior advantage in appraising witnesses and in evaluating their credibility, Maslow v. Maslow, 117 Cal.App.2d 237, 243, 255 P.2d 65; therefore, where the case is submitted to the trial court upon the transcript of the preliminary hearing, as here, the cited rule no longer should prevail. Civ.Code, § 3510. However, the accused had his choice as to how the facts were to be presented to the trial court. There might have been a complete hearing with oral testimony or confrontation, or a consideration of a written transcript or, perhaps, testimony taken by deposition. His choice of submitting his defense upon the transcript of the preliminary does not entitle him to a virtual new trial in the appellate court. A situation similar to submission upon a preliminary transcript may be found in the civil cases. When an appellate court reviews the findings of a trial court following a trial de novo of a matter adjudicated by an administrative agency, the substantial evidence test prevails regardless of whether the only evidence before the trial court was a transcript of the administrative proceeding. See Hutchinson v. Contractors' State License Board, 143 Cal.App.2d 628, 300 P.2d 216.

The Conspiracy

Appellant promoted the organization and incorporation of a company known as Finance Control of Long Beach in July 1952. The primary business purpose of the corporation was purportedly to factor automobile accounts receivable paper.

Approximately one year later, appellant promoted the formation of a concern known as Finance Clearing of Beverly Hills to engage in the business of 'buying and selling notes, conditional sales contracts, and other negotiable paper and choses in action of all kinds.' It is his activities in the management of this corporation which provide the substance of the information filed against him.

In promoting these ventures, appellant refrained from occupying an openly official status in the corporations. They were formed by dummy incorporators. Appellant 'appointed' officers of the several concerns without regard to the legal amenities that are customarily observed in the election of corporate officers. He was careful to people the responsible offices of his several concerns with persons of no experience in business management and particularly unversed in conducting a factoring enterprise. A veritable parade of secretaries, stenographers and bookkeepers were 'installed' by appellant as officers of the corporations at one time or another. For example, appellant designated one Frank Maierhofer as president of Finance Clearing for a period of time during which extensive financial mismanagement occurred. Mr. Maierhofer's previous business experience had been, primarily, employment as a head waiter. Miss Aida Ferrera, then nineteen years of age, was appointed secretary-treasurer five weeks after her employment as a securetary through an employment agency. Throughout, appellant maintained sole control over the management of the enterprise under the generic title of 'General Manager.' The evidence leaves no doubt that Finance Clearing was merely the right arm of appellant Comstock.

Appellant's co-conspirator Clark was employed by Finance Clearing sometime in October or December 1953. Thereafter, she became vice president of that company. Whatever might be said for the activities of Miss Clark, she was not wholly devoid of previous experience in financial management.

In order to do any business, it was essential for Finance Clearing to obtain money from lenders, or investors as the case may be, so that accounts receivable could be purchased from various merchants. However, a balance sheet of December 31, 1953, probably prepared by Comstock, showed a deficit of $9,000. At least one potential investor informed appellant that he would not consider risking his funds with an organization whose financial statement showed so poor an earnings record. A response to this invitation to do something about the adverse earnings record was not long delayed.

An accountant, Yawdick, hired by Finance Clearing testified that had a balance sheet been prepared for the months of January and February, a deficit would no doubt have been revealed. However, statements prepared by the accountant for March, April, May and June of 1954 on the basis of information furnished on transmittal sheets prepared in the office of Finance Clearing showed a remarkable enhancement in the affairs of the corporation. Earnings multiplied rapidly and a surplus soon mounted. Subsequent investigation revealed that this surplus was entirely the result of fabrication.

The first instance of outright fiscal skullduggery occurred in March. In that month Finance Clearing supposedly purchased over $11,000 in accounts receivable held by E. J. Grau and Son, a plumbing concern, for the consideration of one dollar. These accounts were, at the instance of appellant, carried on the books of the corporation as an asset at their face value of $11,000 instead of one dollar, their purchase price, which would have been the proper accounting practice. Moreover, the testimony of Mr. Grau established that no accounts had ever been sold by his concern to Finance Clearing. They were entirely bogus. The false accounts were apparently first written on some blue and green sheets in the handwriting of Miss Clark. She later admitted to various persons that she had copied the names of the purported debtors from the telephone directory. The accounts were subsequently recorded on account cards in the Beverly Hills office and from there transmitted to the accountant in Long Beach who recorded them on the books of the corporation. No direct evidence was presented as to who directed the transmittal of the Grau accounts to the accountant.

In subsequent months, similar false transactions with Businessmen's Association, Maxwell's Department Store, Central Chevrolet and Utter-McKinley Morticians were recorded. By this time, Miss Ferrera had been employed by Finance Clearing. She testified that both appellant and Miss Clark directed her to copy the accounts directly from the blue and green sheets onto the account cards and the transmittal sheets prepared for the accountant. Therefore, appellant knew that accounts in large sums purchased for an incredibly small consideration were being carried into the books. Furthermore, Miss Ferrera testified that this procedure was not normal in the case of the purchase of accounts. Ordinarily the account cards and transmittal sheets were prepared directly from the very contracts assigning the accounts rather than from a list prepared upon some scratch paper. Appellant was well aware of this highly irregular circumstance. Appellant insists that this very important testimony of the witness Ferrera must be accorded the usual limitations placed upon the testimony of an 'accomplice.' However, if it may reasonably be inferred that a witness is not an accomplice, it is for the trier of fact to determine the question of complicity. People v. Santo, 43 Cal.2d 319, 326, 327, 273 P.2d 249. It will be presumed that the witness was found not to be implicated in the crime where such presumption would further tend to effect affirmation of the judgment. (Ibid.) Here Ferrera denied any knowledge of the fictitious nature of the accounts at the time she entered them upon the records maintained by the corporation. In view of her youth, the short time she had been employed and her inexperience in business matters, it is entirely reasonable to infer that she obeyed orders issued by appellant without consideration of whether or not they were financially sound.

Appellant subsequently employed these falsely inflated financial statements to impress investors with the stability of his enterprise. Although he was the individual primarily responsible for inducing prospects to lend or invest money, Miss Clark accompanied him at least once to the home of a prospect for the purpose of inducing the victim to part with his funds.

However, the Corporation Commissioner had ordered appellant in November 1953 to cease and desist from the sale...