People v. Weitz
| Decision Date | 26 February 1954 |
| Docket Number | Cr. 5460 |
| Citation | 42 Cal.2d 338,267 P.2d 295 |
| Court | California Supreme Court |
| Parties | PEOPLE v. WEITZ. |
O'Gara & O'Gara and Paul P. O'Gara, San Francisco, for appellant.
Edmund G. Brown, Atty. Gen., Gail A. Strader, Deputy Atty. Gen., Chester E. Watson, Dist. Atty. (San Joaquin), William Biddick, Jr., Deputy Dist. Atty., Stockton, and Richard B. Daley, Deputy Dist. Atty., San Diego, for respondent.
Defendant Reuben B. Weitz was indicted on ten counts of grand theft, one count of conspiracy to commit grand theft, two counts of forgery and two counts of violation of the Corporate Securities Act. Corporations Code, § 25000 et seq. The jury returned a verdict against him on all counts except that of conspiracy, and he has appealed from the judgment of conviction and from an order denying him a new trial. The principal questions relate to the sufficiency of the evidence to support the convictions of grand theft and forgery.
In April 1949 Weitz was instrumental in forming a California corporation called Zesto Dairy Products, Inc. The proposed plan of operation was to establish and license retail ice cream stores to be operated by private individuals. At the time of incorporation Weitz was vice president and one of three directors, the others being Henry Nelson, who was president, and Walter D. Golding, who was secretary-treausurer. 1 When permission for issuance of stock was southt, the Commissioner of Corporations notified Weitz that the stock would have to be held in escrow if he were to remain an officer of the corporation. On May 20, 1949, Weitz filed a statement to the effect that he was resigning as vice president and director and that he was waiving all right, claim or interest in the corporation, and a permit to issue stock was granted because of his statement of withdrawal. About that time O. A. McCarty, a friend of Weitz, was ostensibly substituted as vice president and director in his place. There is evidence that McCarty did not attend any directors' meetings prior to 1950, although the minutes state that he was present at a number of meetings and participated in the action taken. He was present at two meetings in January or February of 1950. The minutes originally showed Weitz as making or seconding various motions, but they were subsequently rewritten at his request to substitute McCarty's name for his. Weitz claimed to be acting for McCarty and told Nelson that McCarty's name had to appear because Weitz was not an officer.
After the granting of a permit to sell stock one hundred and thirty shares were issued, of which one hundred were in the name of McCarty and fifteen each were in the names of Nelson and Golding. Nelson paid $500 for five shares of stock, and there is evidence that this was the only actual capital contributed by stockholders and that the rest of the stock was paid for by money which in fact belonged to the corporation and which came from sales of subdistributorships or from deposits made by prospective retailers. Although no stock was issued in the name of Weitz, he claimed to have furnished the money for most, if not all, of the McCarty shares. He stated that he controlled that stock by proxy, and he apparently exercised control over the corporation in that manner. While he did not appear of record as an officer, he told auditors from the Commissioner of Corporations, some months after the company was formed, that he was the president or the vice president, and he signed some checks as president and signed others in McCarty's name as vice president. He handled sales and negotiated for locations and operations, and he stated that he had 'about all duties' and 'did about everything that come along.' Under all the evidence it seems clear that he had actual control and management of Zesto.
Weitz also controlled and operated through other persons the F. A. W. Sales Company. Most of its stock was issued in the name of McCarty and the balance in the name of Sloan, neither of whom invested any money in the corporation. Weitz also operated the Plains Distributing Company and the Plains Oil Company, which he testified were his own individual companies.
Zesto held an exclusive franchise from the Taylor Freezer Corporation, a nationwide making machines, to sell the machines in several western states, including California. According to Weitz, the plan of Zesto was to sell a 'package deal' to prospective operators of retail ice cream outlets, and he did most of the actual selling for Zesto. The 'package' consisted of the lease or sub-lease from Zesto of a specially designed building at a satisfactory site, the sale and installation of one of the ice cream machines and related equipment, a license to use the machine for ten years, and the sale of raw materials and other products as directed and supplied by Zesto. A person desiring to become a retailer made a down payment of about $2,500 on the purchase price of the equipment to be installed, the total price of which was about $11,000. In many instances he made an additional deposit, usually $1,500, for rental to be paid for the lot and the building. As will be discussed hereinafter, various promises, which were not kept, were made by Weitz on behalf of Zesto with respect to establishing stores or refunding the deposits. The corporation entered into from 100 to 200 preliminary agreements and accepted deposits thereunder. Total receipts of the corporation were over $500,000, but only 25 or 30 stores were built and equipped, and only five or six of the store buildings were constructed with funds supplied by Zesto. Although Weitz and Golding testified, and the books of Zesto showed, that over $65,000 was refunded to depositors, only a few instances of small refunds appear to be substantiated by other evidence.
In September 1950 the Taylor company cancelled Zesto's franchise. At the end of that month Zesto signed a petition for reorganization under the bankruptcy laws of the United States, and the accompanying schedules stated that the assets were $98,461.56 and that the debts amounted to $201,133.75. In December a petition for involuntary bankruptcy was filed by Zesto's creditors, and it was declared bankrupt.
Weitz was convicted of grand theft under section 484 of the Penal Code. This section provides in part that any person who shall by 'any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property * * * is guilty of theft.'
The People contend that the convictions of grand theft may be supported upon the theory that the evidence shows that Weitz took money from prospective retailers with no intention to perform the promises which he made on behalf of Zesto. We have recently held that a promise made with intent not to perform it is a 'false or fraudulent representation or pretense' within the meaning of the statute. People v. Ashley, Cal.Sup., 267 P.2d 271. It was also pointed out there that in order to support a conviction in such a case
The procedure of Weitz, in the sale negotiations, was to exhibit a sales kit which pictured in detail an ice cream store with its necessary equipment. The kit also contained a chart estimating probable profits and a copy of the standard operating agreement. Deposits made by prospective retailers were acknowledged by means of a uniform printed receipt which stated, in part, that Zesto would diligently endeavor to find a location and that the deposit money would be refunded if no suitable location was found within a specified time. From the evidence it appears that the usual transaction involved not only an express promise by Zesto to refund the deposits if a suitable location was not found within the specified time, but also an implied promise, conditioned on the finding of such a location and the execution by the retailer of the standard operating agreement and the standard form of lease, that the necessary equipment would be delivered at that location and installed in a store building which Zesto would obtain and lease to the retailer.
The transactions involved in the ten counts of grand theft took place in the usual manner, and, in addition to the promises noted above, Weitz also orally promised five of the retailers that their stores would be ready within a specified time. Eight of the transactions were handled by Weitz personally and the remaining two by persons who acted under his direction. In each of the ten instances the promises to find locations and furnish stores and equipment were performed only partly or not at all, and none of the complainants received an ice cream machine. Further, no refunds were made in most of the ten transactions, and in the others there were only partial refunds.
There was evidence that there had been a very extensive 'kiting' operation and that the money withheld from Zesto by this method 'could be ten thousand or a hundred thousand' dollars. In a number of cases it appears that funds which came from retailers other than the persons named in the ten counts, and which actually belonged to Zesto, went instead to F. A. W. and were shown on the books of F. A. W. as having been received from McCarty for the purchase of stock and as having been disbursed by F. A. W. for the purchase of materials,...
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