Sears v. United States, 1447-1449.

• Decision Date: 23 March 1920
• Docket Number: 1447-1449.
• Citation: 264 F. 257
• Parties: SEARS v. UNITED STATES (three cases).
• Court: U.S. Court of Appeals — First Circuit

264 F. 257

SEARS v. UNITED STATES (three cases).

Nos. 1447-1449.

United States Court of Appeals, First Circuit.

March 23, 1920

Charles F. Choate, Jr., of Boston, Mass. (William H. Garland, of Boston, Mass., on the brief), for plaintiff in error.

Lewis Goldberg, Asst. U.S. Atty., of Boston, Mass. (Thomas J.

Boynton U.S. Atty., of Boston, Mass., on the brief), for the United States.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

ANDERSON Circuit Judge.

The defendant, Sears, was convicted under three indictments charging him jointly with one Sherwood with conspiracy to defraud the United States and to bribe two government inspectors, Smith and Honen.

The three cases were tried together. On the day of the trial Sherwood retracted his former plea of not guilty and pleaded guilty to each of the three conspiracy indictments. The two inspectors, Smith and Honen, who were also separately indicted for receiving the bribes alleged to have been given by Sears and Sherwood, were not put to trial, but were called by the government as witnesses at the trial of the defendant Sears.

Sears was sentenced to imprisonment in the House of Correction at Greenfield for a term of one year and one day on each of the three indictments, the sentences to run concurrently.

The alleged fraud and bribery took place with relation to the performance by A. J. Bates Company of a contract with the government dated October 13, 1917, for the manufacture and delivery to the United States of 114,000 pairs of shoes for army use. Sears was vice president and general manager of the Bates Company. He signed this contract and was familiar with its elaborate and minute specifications in respect to the kind and quality of the materials to be used in the manufacture of the shoes. Sherwood had been in the employ of the Bates Company over 20 years, during the last 7 of which he was foreman of the sole leather room and assistant to Sears in purchasing sole leather. Smith and Honen were government inspectors placed in the Bates plant in order to inspect the shoes while in the process of manufacture and to reject any materials or workmanship not conforming to the requirements of the contract; such action, however, was in an advisory capacity only; final inspection was made at the time and place of delivery.

The indictment for conspiracy to defraud the United States charged in substance that Sears and Sherwood conspired to buy and use outer and inner soles inferior to those called for by the contract. The contract called for outer soles of a thickness of 9 iron. 'Iron' means 1/48 of an inch in thickness. About the time the contract for these shoes was placed, in October, 1917, the defendant Sears instructed Sherwood to purchase, and Sherwood did purchase, a large quantity of outer soles graded as 8 1/2 iron outer soles.

These outer soles were purchased at an average price of about 65 cents. There was evidence tending to show that the average market price of 9-iron soles at that time was about 75 or 76 cents. Sears himself put the market price at about 72 cents. There was also evidence tending to show that a large part of the 8 1/2-iron outer soles thus purchased were used in manufacturing the shoes called for by the government contract. There was also evidence that in October, 1917 Sherwood, under instructions from Sears, bought inner soles of a lower grade than that required by the contract, at prices ranging from 15 1/2 to 17 cents per pair, whereas inner soles of the contract grade had at that time a market price of about 25 cents per pair.

The defendant, who testified in his own behalf, admitted the purchase of the 8 1/2-iron soles, but contended in effect that at the time of this purchase the market had been stripped of 9-iron outer soles, because the government had contracted for large quantities of shoes specifying 9-iron soles; that he purchased in the aggregate some 200,000 pairs of outer soles graded at 8 1/2-iron, expecting therefrom to cull enough 9-iron soles to enable his company thus substantially to perform its contract with the government, using the balance of thinner soles on shoes intended for civilian use.

There was little dispute as to the facts concerning the payment of money to the inspectors. Frank Smith was inspector at the Bates Company factory of outer soles and inner soles and sole leather from some time in the fall of 1917 until about April, 1918. There was evidence that about November 17, 1917, the defendant Sears told Sherwood that Smith was a pretty good old scout and had not caused much trouble, and that he (Sears) was going to make Smith a little present, and desired Sherwood to give it to him. Sherwood said that he did not--

''like the idea. I don't want to do it.' Sears replied, 'What, have you got cold feet?' I replied, 'No.' He said, 'Do you know what they would do with you, if they had you in the army?' I said, 'No;' and he said, They would take you out and shoot you.' He said, 'You come with me;' and I went. He took me into the office to the cashier's desk. He went up and spoke with Miss Hawley, or he said-- I don't know just what he said, but Miss Hawley got some money and a yellow slip which they call a voucher. The yellow slip was handed over to me, and I was requested to sign it. I signed the yellow slip-- put my name on it, and I was handed $50, which I took in to Mr. Smith. As soon as I got the money, Mr. Sears left and went into his office.'

That he gave Smith the money. That about a week before Christmas Sherwood had another talk with Sears, in which Sears said:

''Tom, it is pretty near Christmas, and I want to make Smith a Christmas present, and I want you to hand it to him, and you come over to Miss Hawley and get the money.' We went in to Miss Hawley and got $50, and I signed a yellow slip, took the money, and gave it to Smith as a Christmas present.'

There was evidence of other similar gifts to Smith, making an aggregate of $190 in all.

Honen was also an inspector of sole leather who came to the factory in the fall of 1917 and remained until some time in the spring of 1918. Sherwood testified in effect that shortly before Christmas, 1917, he had a conversation with the defendant Sears concerning Honen, in which Sears said in effect that Honen 'has not used us very good. He hasn't given us anything. Perhaps if we give him a little Christmas present it will sweeten him up. ' 'I am going to make him a little present and a little later on I will give him more. ' Accordingly, Sears took Sherwood into the office, got $25 from the cashier, and Sherwood gave the money to Honen. Two other similar gifts were made, making an aggregate of $75 given Honen. While it is not in dispute that such payments were made to Inspectors Smith and Honen, and charged to profit and loss, the defendant says that the suggestion of making presents to the inspectors originated with Sherwood, and that Sherwood said it was to be in lieu of an allowance which might otherwise be made to these inspectors if transferred to some other factory.

From the foregoing it appears that there was no dispute that Sears and Sherwood intended to buy, and did buy, outer soles graded as 8 1/2-iron for use in manufacturing army shoes under specifications which called for 9-iron outer soles, and also bought and used inner soles on the same contract of a grade lower than that called for by the specifications, and that money was paid to the government inspectors as charged in the indictments. There was, therefore, except in minor particulars, no dispute as to the basic facts. The case turned upon the interpretation to be put by the jury upon these facts and upon the intent of the defendant.

Other facts of minor importance will be hereafter referred to in dealing with the assignments of error.

(1) Learned counsel for the defendant urges as the defendant's chief reliance an alleged error arising under the twenty-eighth assignment. This, in effect, is that under the indictments for bribing the inspectors the court should have ordered verdicts for the defendant, on the ground that these inspectors were not, as matter of law, exercising official functions within the meaning of section 39 of the Penal Code (Comp. St. Sec. 10203). Defendant contends that the right and duty of these inspectors to inspect were created only by the contract between the government and the Bates Company, and that the inspectors were therefore not exercising official functions.

It is true that the contract provides that the government--

'shall have the right at any time to inspect in the manner deemed necessary, by duly authorized officer or agent, the articles in process of manufacture and to reject any materials or workmanship not conforming to requirements; the action of such inspector to be in an advisory capacity only, the final inspection to be made at the place where delivery is required.'

Also that in a later clause the contract provides for final inspection as soon as practicable after delivery, at which time the shoes were to be either accepted or rejected.

But defendant's counsel have fallen into serious error in assuming that the contract is the only basis for the presence and activity of these inspectors in the factory of the Bates Company. The relations between the government and the Bates Company in time of war were quite other than those which accrue between private parties out of ordinary contracts. If the Bates Company had declined to contract with the government on terms satisfactory to its representatives, the government might have taken possession of and operated the factory under the provisions of the National Defense Act of June 3, 1916, c. 134, Sec. 120, Barnes' Federal Code, Sec. 10151 (Comp. St. Secs. 3115f-3115h).

Moreover,...