Smith v. United States, 12528

• Decision Date: 05 March 1956
• Docket Number: No. 12528,12529.,12528
• Citation: 230 F.2d 935
• Parties: Troy Cheair SMITH, Appellant, v. UNITED STATES of America, Appellee. Evander Frierson SMITH, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

230 F.2d 935 (1956)

Troy Cheair SMITH, Appellant, v. UNITED STATES of America, Appellee.

Evander Frierson SMITH, Appellant, v. UNITED STATES of America, Appellee.

Nos. 12528, 12529.

United States Court of Appeals Sixth Circuit.

March 5, 1956.

C. P. J. Mooney, Memphis, Tenn. (Carlton N. Wilkes, James T. Haynes, Memphis, Tenn., on the brief), for appellants.

Robert E. Joyner, Memphis, Tenn. (Warren Olney, III, Washington, D. C., Millsaps Fitzhugh, Edward N. Vaden, Memphis, Tenn., on the brief), for appellee.

Before ALLEN, McALLISTER and MILLER, Circuit Judges.

ALLEN, Circuit Judge.

This is an appeal from a judgment and a sentence entered on a jury verdict against defendants under an indictment charging violation of Title 18, U.S.C., Section 1010, for knowingly making false statements in applications for Federal Housing Administration loans. The indictment contained two counts; one count charged Troy Smith with violation of Title 18, U.S.C., Section 1010, the other count charged Troy Smith jointly with his brother, Evander Smith, with violation of the same statute.¹ The first count was based upon an application for a loan of $1,200 made by Troy Smith on August 14, 1952, the second count upon an application for a loan of $1,650 made by Troy Smith December 30, 1952. The statement made in each application charged to be false was that the loan was sought for the purpose of improving a house belonging to Troy Smith in Memphis, Tennessee. The application of August 14, 1952, stated that the proceeds of the loan would be used upon this property through improvements consisting of an "Addition of one room" and "Attic Fan," the estimated cost of which was given as $1,200. On the application for the loan of December 30, 1952, the improvement covered by the application was described as "Build Garage & HWH" (hot water heater), the estimated cost to be $1,650.

The jury found Troy Smith guilty on both counts and Evander Smith guilty on the second count.

The defendants contend that a motion for acquittal should have been granted, that reversible error existed in the charge of the court and in the instructions to the jury made in connection with the jury's request for additional instructions.

Troy Smith had purchased a bungalow on South Wellington Street in Memphis under the benefit of the FHA Title I Credit Plan. He and his wife were employed at the Firestone plant in Memphis. His testimony in general is not disputed. Troy Smith had incurred various loans prior to the period involved and had promptly taken care of his payments. He, his wife, his mother, and two children lived in the inadequate house. In April, 1952, Troy Smith borrowed $370 from the Rubber Workers' Federal Credit Union and employed his next door neighbor, a carpenter, to change an open porch into a bedroom. To make this usable a large attic fan was installed and ducts were built through the house. Most of this work had been completed before August 14, 1952, when Troy Smith applied for an FHA loan of $1,200.

He negotiated the loan through Mr. Mosteller, head of the FHA department of the Commercial & Industrial Bank in Memphis. Troy Smith testified that Mosteller informed him he could borrow money for improvements already completed. This testimony is undisputed. A unit manager of the Commercial & National Bank with which Mosteller was connected testified that Mosteller had instructed those under him in the FHA department "to make as many loans as possible, and if the applicant stated that the improvements were to be used for something that was not considered eligible for FHA loans, that we were to refer them to Mr. Mosteller himself, or Mr. Jimmy Cooper, who was his assistant, in the absence of Mr. Mosteller, and as they knew how to handle these particular cases * * *." During this period FHA loans yielded 5½% while the banks were lending money for 6% and the FHA loans were substantially insured by the FHA, the borrower paying for the insurance.

When Troy Smith executed the application of August 14, 1952, he filled in the details that Mosteller told him to insert. At that time Mosteller told Troy Smith "You had better get enough the first time because you can't get another loan to build your room with." The application was referred by Mosteller to the United Service and Research Company, which, after securing a history of Troy Smith's obligations and financial status, accepted the loan.

Seven hundred and nine dollars of the loan received was paid to retire a prior FHA loan and $200 was paid to the Rubber Workers' Credit Union to wipe out the balance of a debt incurred for improvements on the home. The entire loan of August 14, 1952, was promptly paid in accordance with the note.

On count 2 both Troy Smith and his brother Evander Smith were found guilty of making a similar false statement on December 30, 1952, in violation of the statute.

Early in December, 1952, Troy Smith had talked with Cooper, Mosteller's assistant, about a second loan with which to build a garage. This loan was handled directly by the bank. On December 30th, Evander Smith, who was an employee of the Commercial & National Bank in a department in no way connected with FHA applications, went to his brother's house with an application for a loan of $1,650 arranged for with Cooper, and secured the signatures of Troy Smith and his wife. After returning the application to the bank Evander Smith on December 31st secured the check for $1,650 and delivered it to his brother. On December 31 Evander Smith used the proceeds of the loan to buy an automobile. He claimed that he did not know the automobile was available until that day.

The application of December 30, 1952, with the exception of the signatures, was filled out by Cooper, the assistant of Mosteller, who had been designated by Mosteller to receive applications when Mosteller himself was not there. The handwriting on the application was identified by an official of the bank in which Cooper was employed.

There is uncontradicted evidence to the effect that Troy Smith contemplated building a garage and installing a hot water heater, as stated in the application of December 30, and then feared to proceed with the improvement because of a possible layoff. Several disinterested witnesses testified that layoffs in the Firestone plant always took place after Christmas. Mosteller and Cooper are now in the penitentiary, but neither of them was called as a witness. The fact that the government did not put them on the stand gives rise to a reasonable inference that Troy Smith's testimony as to the circumstances under which these loans were negotiated would not have been refuted by Mosteller or Cooper.

The motion for acquittal was properly denied, jury questions being presented on both counts. The charge of the court is claimed to be prejudicially erroneous.

Title 18, U.S.C., Section 1010, reads as follows:

"Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Federal Housing Administration for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by such Administration, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of such Administration, makes, passes, utters, or publishes any statement, knowing the same to be false, or alters, forges, or counterfeits any instrument, paper, or document, or utters, publishes, or passes as true any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully overvalues any security, asset, or income, shall be fined not more than $5,000 or imprisoned not more than two years, or both."

Under this statute two basic elements of the crime are the making of a material false statement and the knowledge of the maker that the statement is false.

The court instructed the jury in substance as follows: that if it was convinced beyond a reasonable doubt that the defendant well knew on August 14, 1952, that the money or proceeds to be obtained from the loan would not be used for the addition of a room and the...