Sparrow v. United States, 9739.

• Decision Date: 18 December 1968
• Docket Number: No. 9739.,9739.
• Citation: 402 F.2d 826
• Parties: Robert Dahle SPARROW, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

402 F.2d 826 (1968)

Robert Dahle SPARROW, Appellant, v. UNITED STATES of America, Appellee.

No. 9739.

United States Court of Appeals Tenth Circuit.

November 5, 1968.

Rehearing Denied December 18, 1968.

Arthur L. Fine, Denver, Colo., for appellant.

Lawrence M. Henry, U. S. Atty., and John J. Kelly, Jr., Atty., S.E.C., Denver, Colo., for appellee.

Before LEWIS, SETH and HICKEY, Circuit Judges.

SETH, Circuit Judge.

The defendant was indicted under a multiple count indictment charging violation of the fraud provisions of the Securities Act of 1933, 15 U.S.C. § 77q(a), and of the Mail Fraud Statute, 18 U.S.C. § 1341. The charges were tried to a jury and the jury returned a verdict of guilty as to two counts. The defendant was found not guilty on the remaining counts in the indictment. Defendant's motion for new trial was denied, and he was sentenced on each count, the sentences to run concurrently.

The defendant on this appeal urges that the trial court was in error in failing to give a proper instruction relating to the defendant's "good faith"; in failing to grant a new trial for the reason that the use of the mails as to count VII occurred after the purchaser there involved had paid for the property sold to him by the defendant, and was in error in several other respects including the failure to establish the use of the mails in regard to count II.

The record shows that the defendant and others devised or used a plan to sell trailer locations in trailer parks in order to raise money to purchase trailer park properties. The business varied from time to time, but basically the defendant and others sold to the investor what was referred to as a "slab" in a particular trailer court. This slab would be a prospective location which would be rented by some owner of a trailer or mobile home. Under the plan the investor was to receive a deed for this location and would receive a portion of the rents paid to the trailer park by the person who occupied it, and thus an income from the property conveyed by deed would be realized. The investor would also receive shares of stock in the corporation which was promoting the enterprises. The counts which are here involved concern lots which were to be located in a trailer park in Las Vegas, Nevada. The evidence showed that neither the defendant nor any corporation through which he was doing business owned a trailer park in Las Vegas. The indictment charging offenses under either the Mail Fraud Statute or the Securities Act was based upon the particular transactions with the particular investors concerned. Defendant was convicted on a count under each Act.

The first point urged by the defendant on this appeal is that the trial court was in error in refusing the instruction which he tendered relative to his "good faith." The defendant also asserts as a portion of the same point that the instruction which the court did give relative to the issue of the defendant's good faith as a defense was not adequate.

The record shows that the defendant based much of his case upon the theory of "good faith" and especially his good faith as to the ownership of certain property to be used for the trailer court enterprise he was selling. It is apparent that a defendant is entitled to adequate instructions on his theory of the case if sufficient evidence is presented to support it. Beck v. United States, 305 F.2d 595 (10th Cir.). The record in the case before us shows that the evidence presented by the defendant showed that an instruction on his good faith theory of the case was called for as a fact question had been developed.

In considering the issues raised by the defendant on this appeal it is necessary to consider what the term "good faith" as used by the parties and in the previous decisions refers to, or to determine in what the defendant must have this "good faith." An examination of the cases previously decided by this court demonstrates that the basic reference in the opinions is to the defendant's good faith that the entire plan or scheme which has been devised and which is the subject of the promotion is economically sound. The references are not to the defendant's good faith as to the existence of any particular fact or situation; instead, as indicated above, it is good faith that the entire plan will be successful as a business.

In Steiger v. United States, 373 F.2d 133 (10th Cir.), a conviction under the Mail Fraud Statute was reviewed with particular consideration of the instructions given by the trial court on the issue of "good faith." We there said that the defendant had interposed the defense of good faith, and that there was evidence from which the jury could have found that the plan there promoted was practical and would succeed, and that the promises given would be kept. We there said: "Good faith is a complete defense to a charge of using the mails to defraud in violation of § 1341, supra, and a defendant is entitled to proper instructions on the theory of his defense, if, as here, there is evidence to support such theory." The case was there reversed for the reason that such an instruction had not been given, and we said:

"The fact that the scheme, viewed in retrospect, would be regarded as impractical and visionary by reasonable persons of ordinary judgment and prudence does not defeat a defense of good faith, if the defendant asserting such defense actually believed that the plan was practical and would succeed."

A similar statement appears in Hawley v. United States, 133 F.2d 966 (10th Cir.), where the court approved a trial court's instruction which directly covered the matter of good faith in the plan as a whole. The court there cautioned, as we do here, that no matter how firmly the defendant may believe in the plan, his belief will not justify baseless, false, or reckless representations or promises. Elbel v. United States, 364 F.2d 127 (10th Cir.).

We also held in Beck v. United States, 305 F.2d 595 (10th Cir.), that "good faith" is a complete defense to a mail fraud prosecution. The court there looked to the instructions as a whole and found that the issue of the honesty and of good faith was "squarely presented" to the jury. We also in the Beck case observed that it there could be argued that it was merely a legitimate venture that did not work out, but this was a question of fact for the jury. Thus again the court referred to the good faith of the defendant in the plan. This court has considered...