People v. Lawson
| Decision Date | 18 February 1987 |
| Citation | 189 Cal.App.3d 741,234 Cal.Rptr. 557 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , Blue Sky L. Rep. P 72,505 The PEOPLE, Plaintiff and Respondent, v. Randy D. LAWSON, Defendant and Appellant. 5 Crim. F005383. |
(1) When, if at all, may the trial court instruct the jury that an element of the crime charged is established as a matter of law?
(2) Assuming the court errs in so doing, what standard of prejudice applies on review?
After the trial in this matter, our high court resolved the first question in a similar case. We will apply the rule of People v. Figueroa (1986) 41 Cal.3d 714, 224 Cal.Rptr. 719, 715 P.2d 680, i.e., instructing as a matter of law that an element of the crime has been established constitutes an impermissible partial directed verdict. Although the court in Figueroa did not decide the applicable standard of prejudice for such error, we will find reversal is required without regard to prejudice in this case. However, we emphasize per se reversal may not be required under different circumstances.
Briefly, the facts in this case are as follows: In September 1981, defendant started a factoring business known as "Freedom Funding." Freedom Funding purchased and sold at a discounted rate 30-day accounts receivable.
In December 1981, defendant acquired Comfy Ray Company, a business desperately short of cash with large accounts receivable and payable. The receivables, as well as the business's warehouse inventory, were already assigned to the Bank of America as security for a $190,000 loan made by the bank to Comfy Ray. Aware of these facts, defendant nevertheless acquired the business in consideration for his agreement to hold the owner of Comfy Ray harmless on all the company's debts. An officer for Bank of America also informed defendant in late January 1982, of the bank's secured interest in the majority of Comfy Ray's accounts receivables and other assets.
In approximately March 1982, defendant directed the development and approved the printing of a brochure to promote and market Freedom Funding. The brochure was inaccurate in several respects; it included misstatements regarding biographical information on defendant, the element of risk in the receivables, and Freedom Funding's offer to repurchase receivables. Those who purchased accounts receivable through Freedom Funding relied on such misrepresentations in making or continuing to make their purchases.
Agents for Freedom Funding sold Comfy Ray's accounts receivable to these "investors" without disclosing the Bank of America's security interest in same.
During the January 1985 jury trial in this matter, both sides submitted requests for jury instructions, including special instructions which raised the following issues: (1) who, the judge or jury, should determine whether the purchases of accounts receivables were "securities"; and (2) whether, in the crime of sale of unqualified securities, the intent with which the crime was committed was material. On the fourth day of trial, outside the presence of the jury, defendant asked the court how it would instruct on these legal issues. As defense counsel explained:
"If the Court in effect rules that the Defendant's actual state of mind is not an issue, and, therefore, would not be a question put to the jury, and if the Court rules that the question whether or not these are securities is not a jury question, we would propose, subject to the balance of the stipulation, to submit to the Court and to the Court alone the [guilt] or innocence of the Defendant on the corporate securities charges."
The court ruled as a matter of law the accounts receivable were securities. Presumably the judge based his ruling on cases which appeared to establish the court exclusively could determine whether something constituted a security because that was a question of law, not fact. (People v. Dutton (1940) 41 Cal.App.2d 866, 873, 107 P.2d 937.) In light of the trial court's rulings, defendant waived his right to jury trial on the charges of sale of unqualified securities and other charges of making an untrue statement in the sale of a security.
The court found defendant guilty of five counts of selling unqualified securities and five counts of making an untrue statement in the sale of securities. On the People's motion, the court dismissed the remaining counts and enhancements.
Each count of which the defendant was convicted included, as an element, the existence of the security. As noted above, the trial court, rather than a jury, decided the issue of whether the documents constituted securities. According to defendant, that was a task for the jury alone.
In People v. Figueroa, supra, 41 Cal.3d at pages 723-735, 224 Cal.Rptr. 719, 715 P.2d 680, the state Supreme Court held, in a prosecution for sale of unqualified securities, the trial court's instruction that certain promissory notes were securities under the corporate securities law was tantamount to a directed verdict on the security element of the offense. In reaching its conclusion the high court dispelled notions that the trial court could so instruct (1) if the evidence left little room for doubt and/or (2) because the issue was solely a question of law.
The court first reiterated the longstanding federal prohibition against directed verdicts no matter how conclusive the evidence. It noted the prohibition emanated from the guarantee of due process and right to a jury trial. It also observed California cases were in general accord with the federal prohibition (e.g., People v. Garcia (1984) 36 Cal.3d 539, 205 Cal.Rptr. 265, 684 P.2d 826; People v. Shavers (1969) 269 Cal.App.2d 886, 75 Cal.Rptr. 334). Further, the court particularly discussed two cases from the federal circuits which held it was error to instruct the jury that a certain instrument was a security within the meaning of the Federal Securities Law. (United States v. Johnson (5th Cir.1983) 718 F.2d 1317; Roe v. United States (5th Cir.1961) 287 F.2d 435.) Figueroa noted, however, federal authorities were conflicting in this regard. (People v. Figueroa, supra, 41 Cal.3d at pp. 724-729, 224 Cal.Rptr. 719, 715 P.2d 680.)
Responding to arguments by the Attorney General that the instruction was justified, the Figueroa court reasoned if a judge were permitted to instruct the jury that an element had been established due to supposedly undisputed evidence, the right to a jury trial would become a hollow guarantee. (People v. Figueroa, supra, 41 Cal.3d at p. 730, 224 Cal.Rptr. 719, 715 P.2d 680.) The court also explained that although the definition of a security is a matter of law, whether a particular item satisfies the definition is a question of fact. (People v. Figueroa, supra, 41 Cal.3d at pp. 730-734, 224 Cal.Rptr. 719, 715 P.2d 680.) In this way, the Figueroa court expressly disapproved those California appellate decisions which held a trial court could instruct a particular instrument was a security.
The court emphasized prior justifications for holdings in California failed when viewed "under more modern concepts of due process and the right to a jury trial." (Id. at p. 731, 224 Cal.Rptr. 719, 715 P.2d 680.) In a particularly conclusive paragraph the court apparently foreclosed further debate:
(People v. Figueroa, supra, 41 Cal.3d at p. 733, fn. omitted, 224 Cal.Rptr. 719, 715 P.2d 680.)
A concurring opinion summarized the Figueroa holding: "[T]he majority distills an absolute rule that apparently would prohibit in criminal trials, regardless of the state of the evidence, such instructions as one that a particular automobile is a motor vehicle or one that a particular gun is a firearm." (Id. at p. 742, 224 Cal.Rptr. 719, 715 P.2d 680.)
The concurring justices preferred to postpone "such judicial rule-making until the need arises." (Ibid.) The response of the majority is found in its footnote 24 which criticized the concurring opinion as recasting the old "law/fact" distinction which would lead to a case-by-case review the majority intended to reject. (Id. at p. 734, 224 Cal.Rptr. 719, 715 P.2d 680.)
From Figueroa we gather these practical rules:
(1) No matter how conclusive the evidence, the court may not directly inform the jury an element of the crime charged has been established. (See Konda v. United States (7th Cir.1908) 166 Fed. 91.)
(2) The trial court determines what law applies to the charges to be deliberated by the jury, and to the extent possible, should state the law in "abstract legal principles." (People v. Figueroa, supra, 41 Cal.3d at p. 741, 224 Cal.Rptr. 719, 715 P.2d 680.)
(3) Absent a stipulation by defendant that an element of the crime has...
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People v. Moore
... ... The following year, this court undertook an analysis of Figueroa. In People v. Lawson (1987) 189 Cal.App.3d 741, 234 Cal.Rptr. 557, we concluded that instructing the jury that an element of the offense is established as a matter of law constitutes an impermissible partial directed verdict. (Id. at p. 744, 234 Cal.Rptr. 557.) Thus, no matter how conclusive the evidence, a trial ... ...
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People v. Yarbrough
... ... Absent a stipulation by the defendant that an element is established or is admitted, the trial court must submit that question to the jury." ( People v. Moore (1997) 59 Cal.App.4th 168, 181 [69 Cal.Rptr.2d 56]; see also People v. Lawson (1987) 189 Cal.App.3d 741, 747 [234 Cal.Rptr. 557].) " `The prohibition against directed verdicts "includes perforce situations in which the judge's instructions fall short of directing a guilty verdict but which nevertheless have the effect of so doing by eliminating other relevant considerations ... ...
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People v. Hedgecock
... ... 730-734, 224 Cal.Rptr. 719, 715 P.2d 680.) ... The trial in this case, however, occurred before Figueroa was decided. We are thus confronted with the question whether Figueroa applies retroactively. That issue was addressed recently by the court in People v. Lawson (1987) 189 Cal.App.3d 741, 234 Cal.Rptr. 557. Like Figueroa, Lawson involved a trial court instruction that certain financial instruments were "securities" as a matter of law. Relying on the Supreme Court's extensive retroactivity discussion in People v. Guerra (1984) 37 Cal.3d 385, 208 ... ...
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People v. Hutchins
... ... Rodriguez (1986) 42 Cal.3d 730, 765, 230 Cal.Rptr. 667, 726 P.2d 113; People v. Figueroa (1986) 41 ... Cal.3d 714, 724-741, 224 Cal.Rptr. 719, 715 P.2d 680; People v. Lawson (1987) 189 Cal.App.3d 741-748, 234 Cal.Rptr. 557). While both types of situations constitute error however, they do not both result in per se reversal ... When a verdict of guilt is directed, the error is automatically reversible. ( Rose v. Clark, supra, 478 U.S. at p. 571, 106 ... ...