People v. Martin
| Decision Date | 24 October 1962 |
| Docket Number | Cr. 8116 |
| Citation | 208 Cal.App.2d 867,25 Cal.Rptr. 610 |
| Court | California Court of Appeals Court of Appeals |
| Parties | The PEOPLE, Plaintiff and Respondent, v. Clelland L. MARTIN and LaVerne Rauh, Defendants and Appellants. |
Taylor, Sherman & Heller, Los Angeles, for defendants and appellants.
Stanley Mosk, Atty. Gen., William E. James, Asst. Atty. Gen., Gilbert F. Nelson, Deputy Atty. Gen., for plaintiff and respondent.
Defendants Clelland L. Martin, LaVerne Rauh and Joseph Stonehouse were jointly charged by indictment of the Grand Jury of Los Angeles County in 29 counts, certain of which charged the defendants with issuing checks without sufficient funds, others with grand theft, forgery and conspiracy. A jury found the defendants Martin and Rauh guilty on all counts as charged and acquitted defendant Joseph Stonehouse. Probation was denied and defendants were sentenced to state prison, sentences on all counts to run concurrently with each other. Defendants Martin and Rauh appeal from the judgments of conviction and purportedly appealed from the order of the court of January 5, 1962, denying their motions for new trial.
Defendant Martin was the sole owner of an automobile agency known as 'Martin Motors' in Compton, California. Defendant Rauh was the general manager of the business and the acquitted defendant Joseph Stonehouse was the sales manager. Martin maintained a checking account for his business in the Compton branch of the Bank of America. This account was opened October 27, 1959, and closed May 6, 1960. After April 25, 1960, Martin Motors was financially unable to continue and was no longer in business.
Martin Motors financed its car purchases with Universal CIT Corporation (CIT) in Inglewood under an over-all flooring contract covering the sales of both new and used automobiles. Under the contract CIT would finance the purchase of and take title to the cars until they were paid off.
The People's evidence relating to Count I, the conspiracy count, Counts II and IV, issuing checks without sufficient funds, and to Counts III and V grand theft, may be summarized as follows:
On the 14th of April 1960 the sales manager of Martin Motors called the sales manager of another automobile agency and requested a dealer trade of one Rambler automobile for a different model of the same car. The other agency agreed to the trade, issued its check payable to Martin Motors for the car being purchased, and the bill of sale covering the car being traded by it. The check issued to Martin Motors was deposited in its account. The automobile delivered by the other agency was immediately put on the flooring contract by Martin Motors and financed by CIT. Martin Motors in turn issued a bill of sale of the car it traded and its check to the other agency. The latter check was returned unpaid by reason of insufficient funds in the Martin Motors account on which it was drawn. Defendant Rauh advised the bookkeeper of the other agency that the check did not clear because the bank had confused the accounts and asked that it be put through a second time. However, the check was again returned by the bank unpaid.
On April 18 a similar dealer trade was made of automobiles between Martin Motors and the same automobile dealer and again cars and checks were exchanged with the same results; Martin Motors collected a good check in exchange for a bad one.
In proof of Counts VI through XVII, the People's evidence disclosed similar dealer trades between Martin Motors and other automobile agencies.
The People's evidence on Counts XVIII, XIX and XX involved a rather complicated dealer trade whereby another Rambler agency delivered a car that Martin Motors wanted together with invoice and bill of sale in exchange for a check issued by the latter. Martin Motors sent a car together with invoice and bill of sale in exchange to the other agency and received a check covering that car. When it arrived the other agency was not satisfied with the condition of the car that it had received in the trade. Accordingly, it issued new papers and sold the car back to Martin Motors. In exchange for this rejected car the other agency got a new car from Martin Motors for which they issued a second check. Two checks were also received from Martin Motors, one for the new car furnished by the other agency and the other for the replacement for the rejected car. Both Martin Motors' checks failed to clear, whereas they collected on the checks issued by the other agency.
With respect to Counts XXI through XXIV, inclusive, Martin Motors completed two additional dealer trades on April 21, exchanging bills of sale, invoices and checks as had been done on the other occasions with the same results. On one of the cars involved in these counts no trust receipt was signed by Martin Motors disclosing to CIT that the car had already been sold by it with the result that CIT was never paid for that car. CIT charged it off to loss.
Counts XXV through XXIX concerned a dealer trade of foreign import cars which was handled in the same general manner that the cars in the other dealer trades had been handled and with the same results. However, no bills of sale accompanied delivery of the four cars being received from the other agency by Martin Motors. Four bills of sale were made out by Martin Motors and when delivered to CIT contained a purported signature of a representative of the other agency. However, the other agency denied ever having seen the bills of sale or ever having authorized anyone to execute them. Relying on the bills of sale CIT floored the cars for Martin Motors.
Defendant Rauh admitted that the bills of sale had been made up by her or under her direction and acknowledged that she had signed the trust receipts transferring the four automobiles in trust to CIT with the bills of sale attached. She stated that she could have signed the bills of sale but couldn't remember that she did do so; that if she did sign them she was instructed by some one to do so. A handwriting expert testified that he could not give a firm opinion that the writing involved in the signatures to the bills of sale was her handwriting.
The evidence showed that it was a practice of Martin Motors to execute bills of sale for other agencies on cars being sold to them upon verbal authorization from representatives of the other agencies, which was usually secured over the telephone.
The transactions in the specific charges referred to above were dealer trades wherein a new car dealer trades automobiles with another new car dealer in order to satisfy a customer demand for a particular type of car or to maintain a balanced inventory.
The acquitted defendant Stonehouse was sales manager until April 16, 1960, at which time he was succeeded by Mr. Emery. Stonehouse testified that in January 1960 he had a discussion with defendant Martin in which he suggested that Martin go out and borrow operating capital and cut out his dealer trades; Martin stated he had to have these dealer trades in order to raise money. Defendant Rauh testified that she discussed with Martin the fact that their checks were being returned unpaid for insufficient funds; he told her to keep up the dealer trades. Defendant Martin testified that Stonehouse had stated to him he was going to try to cut down dealer trading and that he, Martin, asked Stonehouse not to do so; that he needed the trades and that any trades that came in he wanted to accept.
The evidence discloses that Martin Motors, acting through defendants Martin and Rauh by the issuance of checks in amounts in excess of funds on hand, was overdrawn in a total sum of $276,000 by the end of March 1960. Faced with a hopeless financial situation, the defendants attempted to secure funds to keep the business going at the expense of those who were transacting business with them, mainly through the method of dealer trades. In making these trades, Martin Motors would issue checks which at the time of their issuance they knew were not covered by sufficient funds in their account. The bank would give them credit on the checks they received from other dealers at the moment of their deposit under an arrangement whereby the bank would charge Martin Motors interest at 4 or 4 1/2 per cent on the so-called 'float.' This float was in fact a temporary loan of the bank's money to Martin Motors to cover the two or three days that would normally be required for the bank to collect on the checks from the other dealers from the date of deposit to the date of collection. In their last few days of operation the bank refused to give immediate credit to Martin Motors on certain checks whose value they began to question. The number of dealer trades was constantly being increased, thus supplying a continuous deposit of good checks in the Martin Motors account, and even though an increasing number of Martin Motors checks to the dealers were not being paid the appearance was given to their finance company, CIT, that they were conducting a responsible and profitable business. Financial statements prepared by their accountants which disclosed overdrafts were altered, under the direction of Martin and Rauh, to conceal these overdrafts. These financial statements were furnished to CIT and to American Motors, the manufacturer of Rambler automobiles, Martin Motors' principal source of supply.
Both Martin and Rauh admitted that they knew they were drawing checks against an account in which there were insufficient funds. When the checks to dealers started bouncing the dealers would be advised that there was some confusion in Martin Motors' bank accounts and to redeposit the checks a second time. In these transactions many persons were defrauded, numerous automobiles were acquired from other dealers without being paid for, and upon acquisition would be immediately put under flooring contract by CIT with the money thereon...
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