People v. Rankin

• Decision Date: 26 March 1959
• Docket Number: Cr. 6148
• Citation: 169 Cal.App.2d 150,337 P.2d 182
• Court: California Court of Appeals Court of Appeals
• Parties: , Blue Sky L. Rep. P 70,439 PEOPLE of the State of California, Plaintiff and Respondent, v. Ben I. RANKIN and James H. Morrison, Defendants. James H. Morrison, Appellant.

Page 182

337 P.2d 182

169 Cal.App.2d 150, Blue Sky L. Rep. P 70,439

PEOPLE of the State of California, Plaintiff and Respondent, v. Ben I. RANKIN and James H. Morrison, Defendants James H. Morrison, Appellant.

Cr. 6148.

District Court of Appeal, Second District, Division 1, California.

March 26, 1959.

Rehearing Denied April 22, 1959.

Hearing Denied May 20, 1959.

David H. Caplow, Beverly Hills, for appellant.

Edmund G. Brown, Atty. Gen., Elizabeth Miller, Deputy Atty. Gen., for respondent.

LILLIE, Justice.

Defendant and one Rankin were jointly charged by amended information in Count I, with criminal conspiracy in violation of Section 182, subds. (1) and (4) Penal Code; in Counts II, III, IV, VI, VIII, IX, X, XII, and XIII, with violations of the Corporate Securities Law (Section 26104(a) Corporation Code); and in the remaining counts with grand theft, in violation of Section 487, subd. 1, Penal Code. A motion to set aside the information under Section 995, Penal Code, having been denied, both defendants pleaded not guilty and personally waived trial by jury as to the counts charging violations of the Corporate Securities Law, which as a group were designated by stipulation as Information A. In addition to the jury waiver, the parties stipulated to the submission of the cause on the transcript of proceedings and the exhibits received on the preliminary hearing, reserving the right to produce additional evidence. At the trial no additional evidence was received, although an agreed statement of facts was filed with the court. Both defendants were found guilty of all the offenses charged in Information A and motions for a new trial were denied. Morrison has appealed from the judgment of conviction and the order denying a new trial; proceedings as to Rankin, who likewise appealed, have abated by reason of his death.

The evidence, necessarily viewed in the light most favorable to the respondent, reveals that defendant's method of operation varied but little in dealing with the several persons, all residents of Los Angeles county, who invested in defendants' enterprises which consisted of mining claims located outside California. The technique employed is illustrated by the activities hereinafter summarized, involving Dr. Pangmen, the prosecution's witness in Count I.

In December of 1954, Morrison made the acquaintance of one Livingston, a securities salesman, who, having indicated an interest in uranium mining, was invited to call at Morrison's office. Livingston met with Morrison the next day. The latter mentioned 'a very spectacular uranium deal' in Wyoming that had been brought to him by one Rankin, referred to by him as 'the big oil man' who, it appears, Livingston had once met casually. After having been shown a copy of a geological report to Rankin, Livingston said he was interested and in response to Morrison's inquiry stated that he had several clients who also might wish to invest if the report stood up under investigation. After a second or third meeting with Morrison, Livingston subsequently contacted Dr. Pangman, one of his customers, and showed him the report. He told Pangman that Morrison, ostensibly a reputable business man in the community, had advised him of the availability of a group of claims controlled by Rankin in a certain section of Wyoming; that 'the ore was right on the ground' and ready for immediate loading and hauling to the buying station eighty miles away. According to Livingston, a five percent interest was obtainable for $2,000, such interest to be reflected by instruments, which would secure clearance from the Corporation Commissioner with whom Rankin had assertedly conferred. At the same time, Livingston explained to Pangman that he himself was investing $1,000 and securing an equal interest for the lesser sum by way of a bonus or commission.

Shortly thereafter Pangman met with Morrison and Livingston; he was told by Morrison that Rankin had a group of claims in the Crooks Gap area of Wyoming and that by arrangement with Rankin they were going to 'break out' twenty of these claims which had a commercial grade of uranium that 'could be simply scooped up and taken to the buying station.' Upon Livingston's recommendation, and after other attractive features of the claims had been described, Pangman indicated his willingness to invest. For $2,000 he was to receive a 5% interest on a limited partnership basis in the group of twenty claims. Pangman testified: 'I insisted that this was going to be a limited partnership because I didn't want to be a general partner in something I didn't know too much about.' With that understanding (the papers to be drawn up later), Pangman issued two checks for $1,000 to the order of Rankin and gave them to Livingston.

Subsequently Pangman and Livingston received and signed two instruments captioned 'Agreement' and 'Agreement of Limited Partnership.' By the terms of the first mentioned document, dated January 17, 1955, one Frost (therein referred to as 'grantor') undertook to sell to Rankin, Livingston, Pangman, Morrison and Lee Luecke (referred to as 'grantees') all of his interest in 20 mining claims therein described for the agreed price of $40,000, payable $12,000 upon the execution of the instrument and the balance payable monthly, but not less than $1,000, in the form of a percentage royalty on all minerals produced. Upon the receipt of the full purchase price, Frost agreed to convey title to the claims (although his ability to do so must be gravely suspect), reserving for himself and his predecessors in interest a 20% overriding royalty. Rankin and the other 'grantees' undertook to do all assessment work necessary to keep the claims in full force and effect and to diligently mine the claims in a good and workmanlike manner for not less than ten days per month unless prevented by forces beyond their control. The second instrument, 'Agreement of Limited Partnership,' was likewise effective January 17, 1955, and formed a limited partnership under the firm name of Ponderosa Uranium Company to engage in the business of mining, selling and dealing generally in uranium and other minerals on the claims conveyed to the partners by Frost, all of which claims were in turn transferred to the partnership. Rankin and Morrison were declared to be general partners, having a 60% and 25% interest, respectively, in the net profits; Luecke, Livingston and Pangman were listed as limited partners, each with a 5% interest. Article VII of the agreement provided, in part, that the general partners 'shall have the sole control and management of the partnership business' whereas '(t)he limited partners shall not take part in the management of the business or transact any business for the partnership,' unless and until there be a disagreement between the general partners incapable of settlement.

Shortly after they had financially committed themselves to the first of defendants' enterprises, Livingston and Pangman had another meeting relative to a further investment in Rankin's ventures. Morrison had previously represented to Livingston that Rankin had a second group of 20 claims known as the Blue Moon Uranium group and would give them a larger interest, ten per cent, for the same amount of money. At about the same time, another prospective investor, one Holmes, was told by Morrison that he ought to receive a return of $50 a day for five days a week, and possibly $250 a day. Subsequently, Pangman delivered to Livingston two checks for $1,000 each; Livingston issued a check in the sum of $1,000 payable to Rankin. Pangman, Holmes and Livingston later signed and received copies of two documents containing provisions substantially similar to the Ponderosa agreements--the partnership was named Blue Moon Uranium Company; Rankin and Morrison being designated general partners, and Livingston, Pangman and Holmes limited partners with interests of 15%, 10% and 5%, respectively.

The record reveals, and it is not otherwise contended, that during the next six months ten more companies were organized in much the same manner. In every instance, Rankin and Morrison were designated as general partners (sometimes being joined in that capacity by Livingston), and the investors as limited partners obtained specified percentages of the profits of the business, ranging upward from 2 1/2 per cent for each $1,000. Asked to relate the role he or she expected to play in the partnership, each witness thus concerned testified substantially as did Pangman in the regard. It is undisputed that neither defendant nor any of the partnerships in question sought or secured a permit from the Corporation Commissioner.

Morrison, the sole appellant, contends that (1) the information failed to give him due notice of the offenses charged; (2) sections 26104 and 26104(a) of the Corporations Code are unconstitutional in that they are vague, deny appellant the right to obtain and dispose of his property, impose a previous restraint and fail to set up proper standards for the granting of permits; (3) the evidence failed to show either a sale or a security; (4) the court had no jurisdiction over the subject matter of the transactions; (5) the court lacked jurisdiction to try appellant on Counts III, IV, VI and VIII because there was no finding by the magistrate as to probable cause; (6) the judgment is contrary to the law and the evidence; (7) there exists a fatal variance between the proof and the information; and (8) the court improperly denied the motion to dismiss the information (Penal Code, section 995).

Section 26104 of the Corporations Code declares that '(E)very officer, agent, or employee of any company and every other person, who does any of the following acts is guilty of a public offense punishable by imprisonment * * * or by a fine * * * or by both such fine and imprisonment.' There then immediately follows a series of subdivisions, (a) through (g), appellant being charged with...