People v. Taylor

• Citation: 30 Cal.App.3d 117,106 Cal.Rptr. 216
• Decision Date: 23 January 1973
• Docket Number: Cr. 21538
• Court: California Court of Appeals
• Parties: The PEOPLE, Plaintiff and Respondent, v. David Walker TAYLOR, Defendant and Appellant.

Page 216

106 Cal.Rptr. 216

30 Cal.App.3d 117

The PEOPLE, Plaintiff and Respondent, v. David Walker TAYLOR, Defendant and Appellant.

Cr. 21538.

Court of Appeal, Second District, Division 3, California.

Jan. 23, 1973.

Mirecki & Rhodes, George H. Rhodes, Los Angeles, for defendant and appellant.

Evelle J. Younger, Atty. Gen., Edward A. Hinz, Jr., Chief Asst. Atty. Gen., William E. James, Asst. Atty. Gen., Robert F. Katz, William V. Ballough, Deputy Attys. Gen., for plaintiff and respondent.

ALLPORT, Justice.

After a trial by jury defendant was convicted of six counts of violation of section 25540 of the Corporations Code and eight counts of violation of section 487, subdivision 1 of the Penal Code (grand theft). He appeals from the judgment of conviction.

The gravamen of the Corporations Code violations is that between April 16, 1969, and June 23, 1969, defendant caused to be issued and sold securities, to wit, certificates of interest and participation in the Sultan oil lease in Oklahoma, without first having applied for and secured a qualification of such security and transaction from the Commissioner of Corporations of the State of California pursuant to Corporations Code section 25110. The gravamen of the theft charges is that defendant knowingly and designedly, by false and fraudulent representation, defrauded those purchasing the securities of additional sums in excess of $200 each. (Pen.Code § 487, subd. 1.)

It is contended on appeal that the evidence is insufficient to support the convictions of grand theft and of violations of the Corporations Code in that there is no showing that defendant personally defrauded the investors or that he received any personal benefit from the transaction since all of the money obtained was used to pay obligations of the venture incurred by the corporate entity through which the enterprise was being conducted, the Newport Oil and Gas Co. With respect to the grant theft charges defendant suggests that we establish a new interpretation of 'fraud by false pretenses' by requiring that the accused stand to benefit personally by his act before guilt attaches. The applicable law is stated in People v. Ashley, 42 Cal.2d 246, 267 P.2d 271, cert. denied 348 U.S. 900, 75 S.Ct. 222, at 259, 99 L.Ed. 707, as follows:

'To support a conviction of theft for obtaining property by false pretenses, it must be shown that the defendant made a false pretense of representation with intent to defraud the owner of his property, and that the owner was in fact defrauded. It is unnecessary to prove that the defendant benefitted personally from the fraudulent acquisition. People v. Jones, 36 Cal.2d 373, 377, 381, 224 P.2d 353. The false pretense or representation must have materially influenced the owner to part with his property, but the false pretense need not be the sole inducing cause. People v. Chamberlain, 96 Cal.App.2d 178, 182, 214 P.2d 600 and cases there cited.'

(People v. Gibson, 275 Cal.App.2d 198, 200, 79 Cal.Rptr. 693.) Intent to defraud is a question of fact. It may be, and usually must be, inferred circumstantially. (People v. Hedrick, 265 Cal.App.2d 392, 397, 71 Cal.Rptr. 352.) An accused cannot escape responsibility merely because he used an innocent agent as his instrumentality in soliciting through misrepresentation. (People v. Waxman, 114 Cal.App.2d 399, 407--408, 250 P.2d 339.)

The record discloses that on June 18, 1969, investors were advised by memorandum that drilling on the Sultan well had commenced on that date. On July 1, 1969, a memorandum was circulated to investors to the effect that drilling was going on satisfactorily. On July 8, 1969, another memorandum was sent to investors advising them that oil had been found on the Sultan property and on July 10, 1969, an invoice was forwarded soliciting an additional investment designated as a completion fund. On August 12, 1969, a progress report told of finding oil and gas in formations beneath the Sultan property. These representations, although made through an innocent agent, were false, known to defendant to be false and circulated to investors with his knowledge and acquiescence. As a result thereof the investors were relieved of the additional funds purportedly to be used to complete the Sultan well. In fact, nothing had been done on the property prior to September 10, 1969. Drilling on this well was not commenced until September 14, 1969. No oil or gas was discovered. On September 22, 1969, it was determined to be a dry hole and plugged. On the same day the Oklahoma Corporate Securities Commission was so advised and notice sent to defendant. Since the drilling had not commenced and no oil or gas discovered prior to the issuance of the memorandum of July 8 and the request for completion funds July 10, 1969, this additional money was obtained by means of false statements. It is no defense that the criminal acts were actually performed by others or that defendant is not shown to have directly benefited personally.

With respect to the Corporations Code violations Isadore Brodsky, Senior Special Investigator for the state Department of Corporations, testified that a search of that department's records failed to reveal any authorization for defendant or his corporate affiliate Newport Oil and Gas Co. to sell fractional interests in the Sultan well. Defendant argues generally that Brodsky's testimony should be stricken from the record, apparently because the witness was not qualified as an expert on the legal effect of the Corporate Securities Law. We do not agree with this contention. Brodsky was called by the People as to whether or not the Department of Corporations' records contained an authorization for defendant or Newport to sell securities. The objectionable testimony was developed by defendant on cross-examination and further explored by the People on redirect. Under the circumstances it was not error to deny the motion to strike the testimony. (People v. Moran, 1 Cal.3d 755, 762, 83 Cal.Rptr. 411, 463 P.2d 763; Witkin, California Evidence 2d, 1972 Supp., § 1286.) Joseph Noel, hired by defendant to obtain investors for Newport Oil and Gas Co., knew of no communications between the Corporations Commission (Division of Corporations) and defendant regarding the sale of security interests in California, although defendant had stated that the subject was being handled by Newport's attorney. This evidence supports the inference that the security interests in the Sultan lease had never been qualified and that defendant failed to comply with the requirements of section 25110. Such a failure warrants the conviction of violation of section 25540. (People v. Acres, 174 Cal.App.2d 42, 47, 344 P.2d 327; People v. Carr, 156 Cal.App.2d 462, 319 P.2d 445.) There is no merit to the contention of insufficiency of the evidence to support the judgment. (See People v. Reilly, 3 Cal.3d 421, 425, 90 Cal.Rptr. 417, 475 P.2d 649.)

Defendant also argues that the Corporations Code sections of which he stands convicted are unconstitutional in that they are vague, ambiguous and uncertain and that section 25540 on its face places the burden upon one charged with a violation thereof to prove his innocence by establishing that he had no knowledge of the rule or order of which he is charged. We are unimpressed with the latter part of the argument since defendant was not charged with nor convicted of violating...