State v. Bellin

• Decision Date: 04 December 1935
• Docket Number: No. 7523.,7523.
• Parties: STATE v. BELLIN et al.
• Court: Rhode Island Supreme Court

181 A. 804

STATE

v. BELLIN et al.

No. 7523.

Supreme Court of Rhode Island.

Dec. 4, 1935.

Exceptions from Superior Court, Providence and Bristol Counties; Charles A. Walsh, Judge.

Henry D. Bellin and others were convicted on an indictment charging conspiracy to defraud, and they bring exceptions.

Exceptions overruled, and case remitted.

John P. Hartigan, Atty. Gen., and Michael De Ciantis, Asst. Atty. Gen., for the State.

Rosenfeld & Hagan and C. Bird Keach, all of Providence, for defendants Pollay & Golden.

George R. Farnum, of Boston, Mass., Frank H. Bellin, of Providence, and Arthur L. Goldman, of Boston, Mass., for defendant Bellin.

CAPOTOSTO, Justice.

The defendants, Henry D. Bellin, Irving Pollay, and Joseph Golden; together with William M. Peacock, Benjamin Saxe, and Arthur Brody, were indicted for conspiracy to cheat and defraud the Rhode Island Mortgage Security Corporation, hereinafter referred to as the corporation. The offense is charged to have been committed from February 1, 1928, and divers other days thereafter from time to time until September 13, 1929. All the defendants waived jury trial under the provisions of Public Laws 1929, chapter 1335.

The case was tried before a justice of the superior court who found the defendants Bellin, Pollay, and Golden guilty, and acquitted Peacock, Saxe, and Brody. The case is before this court on bills of exceptions prosecuted by the three defendants who were found guilty. The underlying contention of the defendants is that the evidence is insufficient to warrant a conviction for conspiracy. Pollay and Golden also urge that the trial justice erred in certain of his rulings during the trial.

The only material question in our view relating to such rulings that was briefed and argued in behalf of Pollay and Golden is raised by a series of exceptions to certain books of account kept by Bellin in his individual and private business, which he carried on under the name of the Bellin Realty Company, and to the records of a local bank in connection therewith. The evidence shows that Bellin, Pollay, and Golden co-operated at the trial in attempting to establish that even though their conduct may have been unethical it was far from being criminal. It also appears that Bellin allowed counsel for Pollay and Golden to have possession of the books connected with his private business in preparation for or during the course of the trial. When counsel for Pollay and Golden sought to introduce these books or their contents in evidence through Bellin's bookkeeper, the state immediately questioned their admissibility, whereupon the trial justice, before making any ruling on the matter before him, inquired of Bellin whether he intended to claim his constitutional rights against self-incrimination. In view of some hesitancy on the part of Bellin in answering this question, and as the incident occurred late in the afternoon session, the trial justice adjourned court to give Bellin ample time to fully consider his rights in the matter.

When the trial was resumed, counsel for Bellin answered the court's inquiry in the following language: "For Mr. Bellin we object to the use of any of his private papers or private books at this time. Mr. Bellin does not intend to take the stand and does not intend to have any construction that will appear to be a waiver of any of his rights, and we feel an examination of any books of Bellin would be, or might be construed in that light, and therefore we object to the introduction or examination of this witness on any of his papers." The court thereupon excluded the books and noted an exception in favor of Pollay and Golden. Counsel for these defendants then asked a series of questions obviously intended to elicit information that was contained in those books. Bellin, apparently relying on his privilege that he had so directly and broadly claimed, remained silent, but the state objected to this line of inquiry in general and to each question in particular, and finally urged upon the court that counsel for Pollay and Golden "should stop from now on examining this witness about these private records." The trial justice replied that ordinarily he would "prevent the counsel from persisting along this line, but, in view of the fact that there is no jury present and he has a right to preserve whatever rights his clients may have, I am going to allow him to ask whatever questions he pleases for the record to show that the questions were asked." It is quite evident from this statement that the trial justice, in permitting the questions to be asked and in refusing to allow an answer to them, was actuated by a sense of commendable fairness towards all the defendants, and that he sought to fully protect the rights of Pollay and Golden as well as of Bellin in respect to his rulings in the matter before him. The objections by the state were apparently treated by him not as objections that would have entitled it to a ruling as a matter of right, but rather as a reminder that the constitutional privilege claimed by Bellin might be inadvertently denied. In view of Bellin's objection to the use of his private papers or any examination thereof, the trial justice was warranted in excluding this testimony even without such reminder by the state. We cannot say, therefore, that the trial justice, who in this case was sitting without a jury at the election of the defendants, committed reversible error merely because after each specific question asked by counsel for Pollay and Golden he did not inquire of Bellin directly if he still continued to claim the privilege that he had so firmly and completely asserted. The exceptions of defendants Pollay and Golden to these rulings of the trial justice are overruled.

The main issue of fact before us narrows to a consideration of the dealings by and between these defendants with reference to 1,000 shares, no par value, of the voting stock of the corporation. The claim of the state is that these defendants, from the earliest days of the corporation, conspired to secure this block of stock for illegal purposes, and that through subterfuge they did in fact divert these 1,000 shares from the legitimate purposes of the corporation to their own collective and individual pecuniary advantage. It maintains that the appropriation of these shares by the defendants was conceived in fraud and collusively executed with a felonious intent. The defendants stoutly deny any conspiracy or intent to defraud the corporation and insist that their conduct, collectively and individually, in respect to these shares was both legal and proper. Their contention is that this block of stock represents a bonus to one of the defendants and that he used it, as he had a right to do, for his own purposes. Reduced to its simplest terms, the question is whether the transfer of the 1,000 shares was in fact an honest bonus, or whether the handling of that stock constituted a fraudulent segregation by the defendants of that number of shares from the corporate assets with the intent, whenever opportunity offered, to convert them into cash for their personal benefit.

A fair approach to this question demands that we start with the negotiations that led to the creation of the corporation itself and follow its management, with special reference to these 1,000 shares, through the period covered by the indictment in this case. Unless otherwise indicated, the dates hereinafter mentioned refer to the year 1928.

In December, 1927, Golden was the treasurer and Pollay the sales manager of the Franklin Mortgage Corporation of Boston, Mass. Both of these men had wide experience in promoting the sale of securities. About this time Bellin became interested with Pollay in the formation of a local concern along the lines of the Massachusetts corporation. Following a number of written communications, telephone calls, and personal consultations between Bellin and Pollay, the Rhode Island Mortgage Security Corporation was incorporated in this state in March, 1928, for the primary purpose of lending money principally on the security of second mortgages. The capital structure of the corporation is not involved in the questions before us. It is sufficient for our purposes to state that the corporation was authorized to issue two classes of common stock, both with voting power; class A stock of no par value and class B stock with a par value of $1, and also preferred stock of the par value of $50.

On April 10, Bellin met Pollay and Golden in the office of the Franklin Mortgage Corporation in Boston. At this meeting these three men discussed various matters including organization expenses, bonus stock, and the necessity of securing $3,000 in order, as they claim, to protect their interests in the proposed corporation. The scattered bits of testimony on this point show that Pollay and Golden finally agreed to advance $1,500 apiece to make up this sum. One week later, Pollay, who came to Providence with Golden, gave Bellin $400 for organization expenses. Two days later Bellin wrote Pollay that "our" corporation was formed, and on April 23 informed him that certain responsible persons of this city might be interested as directors. On April 26 he wrote again to Pollay, saying: "Since you stated over the telephone yesterday that you thought that we ought to build up our Board to ten, I have been working on two other names." April 30 the Rhode Island bank commissioner was consulted as to the sale of the corporation's stock to the public, and on May 3 Pollay and Golden, after a long conference with Bellin in his office, gave him the $3,000 that had been previously discussed at their meeting in Boston on April 10.

Turning our attention to the corporation itself, we find that the real incorporators were this defendant Bellin, A. Henry Klein, his brother-in-law, Augustus A. Greene, an aged and retired jeweler, and William H. Bowker, who was in reality a representative of Bellin. These...