Price v. United States, 13884.

• Decision Date: 06 January 1953
• Docket Number: No. 13884.,13884.
• Citation: 200 F.2d 652
• Parties: PRICE v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

200 F.2d 652 (1953)

PRICE v. UNITED STATES.

No. 13884.

United States Court of Appeals Fifth Circuit.

January 6, 1953.

Dallas Scarborough, Abilene, Tex., D. A. Frank, Dallas, Tex., for appellant.

David Ferber, Special Counsel, Securities & Exchange Comm., Milton P. Kroll, Asst. Gen. Counsel, Washington, D. C., Frank B. Potter, U. S. Atty., Fort Worth, Tex., for appellee.

Before HUTCHESON, Chief Judge, and BORAH, and RIVES, Circuit Judges.

RIVES, Circuit Judge.

This appeal is from a final judgment of conviction of the offense prescribed by 15 U.S.C.A. 77e(a) (2) and 77x.¹ The indictment consisted of four counts each of which charged that the defendant "did unlawfully, willfully and feloniously cause to be carried through the United States mails for the purpose of sale and delivery after sale to numerous purchasers certain securities, to wit: investment contracts evidenced by oil and gas lease assignments on lands located in Runnels County, Texas, coupled with collateral agreements, promises and undertakings that oil wells would be and were being drilled in order to prove the productivity of the surrounding area, including the acreage conveyed by said lease assignments, no registration statement being in effect as to such securities with the United States Securities and Exchange Commission." Each count further charged that the defendant in effecting the said sale of securities caused to be delivered by the United States Mails a letter enclosing an assignment or assignments of oil and gas leases which evidenced the investment contracts theretofore described. The four letters were dated respectively, (1) May 17, 1948, (2) July 29, 1948, (3) August 3, 1948 and (4) May 17, 1948; the first two letters being addressed to Maumee Oil Corporation, and the third and fourth letters to Evan Marquardt and W. H. Crandall, all of Toledo, Ohio. A jury found the defendant guilty on all four counts and the court sentenced him to thirteen months imprisonment and to pay a fine of $1,000.

Appellant sets forth in numerous specifications of error four principal contentions: (1) that the trial court's sentence was harsh and unjustified because there was no charge of fraud in appellant's handling of the oil leases, and because the court considered appellant's record of prior convictions which he had no opportunity to explain or refute and which were too remote in point of time for proper consideration by the court; (2) that the assignments were not "securities" within the meaning of the statute; (3) that the evidence showed that each of the assignments executed by appellant was a completed transaction by which title passed in San Angelo, Texas; and (4) that the court erred in charging the jury that "if you find and believe from the evidence beyond a reasonable doubt that counsel, George T. Wilson, was empowered and authorized to act as agent for the purchaser of these stocks * * * the defendant would be entitled to an acquittal" (Emphasis supplied), because that charge misplaced the burden of proof.

(1) It was, of course, proper for the judge to consider any prior criminal record of the defendant in connection with the imposition of sentence, Rule 32(c) Federal Rules of Criminal Procedure, 18 U.S.C.A.; Williams v. New York, 337 U. S. 241, 246, 69 S.Ct. 1079, 93 L.Ed. 1337. Fraud is not a necessary constituent of the offense, for disclosure through registration to give investors the means of knowledge was the purpose of this remedial statute. Frost & Co. v. Coeur D'Alene Mines Corp., 312 U.S. 38, 43, 61 S.Ct. 414, 85 L.Ed. 500; Otis & Co. v. Securities and Exchange Commission, 6 Cir., 106 F.2d 579, 583. The sentence was within the statutory limits of punishment and is not subject to review by this court. United States v. Rosenberg, 2 Cir., 195 F.2d 583, 604.

(2) It is now settled that the investment contracts described in the indictment were "securities" within the meaning of the Act and under the decision of the Supreme Court in Securities and Exchange Commission v. C. M. Joiner Leasing Corporation, 320 U.S. 344, 352, 64 S. Ct. 120, 88 L.Ed. 88. See also Mansfield v. United States, 5 Cir., 155 F.2d 952, 954, 955.

(3) The theory of the defense in the District Court was largely that the lawyers who mailed the securities represented and were acting for the purchasers, and hence that title passed in San Angelo, Texas. The statute makes express provision for cases where the securities are carried through the mails "for delivery after sale." Further the Act reaches persons who "directly or indirectly * * * cause to be carried through the mails" unregistered securities for the purposes prohibited. At the time of the enactment of the Securities Act, the mail fraud statute, 18 U.S.C. 1940 ed. Sec. 338, made it a federal offense to "place, or cause to be placed, any letter (etc.) in any post office (etc.) to be sent or delivered by the post office establishment of the United States" for the purpose of executing a scheme to defraud.² The provision "directly or indirectly" was not a part of the mail fraud statute but is a part of the Securities Act. Under this Act explicitly proscribing indirect causation, the holdings should certainly be not less strict than under the...