State v. Comes, 48291

• Citation: 245 Iowa 485,62 N.W.2d 753
• Decision Date: 09 February 1954
• Docket Number: No. 48291,48291
• Parties: STATE v. COMES.
• Court: United States State Supreme Court of Iowa

Page 753

62 N.W.2d 753

245 Iowa 485

STATE v. COMES.

No. 48291.

Supreme Court of Iowa.

Feb. 9, 1954.

Arthur N. Neu, Carroll, and Page & Nash, Denison, for appellant.

Leo A. Hoegh, Atty. Gen., Raphael R. R. Dvorak, Asst. Atty. Gen., and Ralph M. Crane, County Atty. of Carroll County, Carroll, for appellee.

SMITH, Justice.

The indictment in effect accused defendant of having ('on or about July 18, 1950') obtained from one Joe Wernimont by false pretenses a check of $1,300, bearing the signature of W. S. Robinson, payable to and the property of said Wernimont.

The claimed false pretenses related to the organization of a burial benefit society called Pilgrim Fathers Benefit Association. Wernimont testified that defendant and one Joe Zitzlsperger first talked with him the 'latter part of May or the first part of June, 1950.' He said they told him 'they had the Pilgrim Fathers incorporated and that there was money to be made out of this corporation and wondered whether I would be interested in buying in with them. They had an offer of $15,000, they considered it was worth a lot more * * * over a period, and that they had time to go and solicit memberships * * * but they hadn't finances enough to do so. If I was to buy a third interest * * * it would give them sufficient money to go ahead and organize * * * by putting a branch office in several different towns and have memberships there.' He also testified they told him defendant was the president and Zitzlsperger secretary-treasurer. There were numerous talks, according to his testimony, but this briefly summarizes the claimed false pretenses.

It appears that defendant, having learned an organization called the Colonial Benefit Association, Council Bluffs, Iowa, 'had closed its books,' was prompted to organize a similar burial benefit society which he called 'Pilgrim Fathers Benefit Association.' He had articles of incorporation drawn by attorney Thomas O. Tacy of Council Bluffs, and from him he also procured a copyrighted lodge ritual of the defunct Association. The articles were executed (May 18, 1950) by defendant Comes, Zitzlsperger, and defendant's son, L. H. Comes, before Arthur N. Neu, notary public, Carroll, Iowa, but they were not recorded.

Defendant testified: 'The reason for procuring the right to use the ritual was that it pertains to the lodge which was connected with the Pilgrim Fathers Benefit Association which was to be partly in the nature of a fraternal organization and it would give a representative form of government, ritualistic work and a lodge system.'

Both defendant and Wernimont live in Carroll, Iowa, but defendant said his place of business as a 'mineral-insecticide salesman' was in Council Bluffs. Zitzlsperger lives in Denison. According to Wernimont's testimony he had known both defendant and Zitzlsperger since about May, 1950. He employed them indirectly through attorney Tacy 'to do some investigation work for me.' He said they went to Waterloo and later to Dubuque and Sioux City. 'We worked together the three of us.'

He also testified 'Mr. Comes and I went to Fonda, Iowa, on business pertaining to organizing a company to manufacture hammocks.' His testimony reveals the 'investigation' trips to Waterloo, Dubuque and Sioux City were 'to find records' pertaining to an indictment against him in Federal court to which he later entered a plea of nolo contendere. It also appears Wernimont owned and was interested in renting a building in Carroll, space in which was then rented to the Moose Lodge under a lease about to expire. He testified 'I finally agreed on a lease with Mr. Comes * * *.'

Wernimont says that relying on the representations he bought a one-third interest in the Pilgrim Fathers venture for $5,000 upon which he made a down payment of $1,300, borrowed by him upon his life insurance. The payment was represented by a check of W. S. Robinson payable to Wernimont and by him endorsed and delivered to defendant. It was later cashed. Zitzlsperger testified 'I took the money along home to Denison and put it in a safety deposit box in the First National Bank at Denison and it is still there. * * * I made no claim that the money belongs to me. It belongs to the association, if we get started.'

Other details may be referred to as we proceed. The jury found defendant guilty and he appeals from the resulting judgment.

I. The false pretenses relied on by the state are two: (1) The representation that the Pilgrim Fathers Benefit Association was incorporated; and (2) that the business thereof would be profitable. Defendant contends neither constitutes a representation as to a material existing fact.

The law relating to this crime and the nature of the 'false pretenses' sufficient to convict is quite well settled. The pretense must be not only false but also a representation as to a material existing fact or past event. 35 C.J.S., False Pretenses, § 8; 22 Am.Jur., False Pretenses, § 12; State v. Hollingsworth, 132 Iowa 471, 109 N.W. 1003. It must be 'of [a] past event or existing fact * * * calculated to deceive'. State v. Carter, 112 Iowa 15, 20, 83 N.W. 715, 716; 22 Am.Jur., False Pretenses, § 2, note 7, citing State v. Foxton, 166 Iowa 181, 189, 147 N.W. 347, 52 L.R.A.,N.S., 919; 35 C.J.S., False Pretenses, §§ 1, 6, 15.

We have definitely repudiated the old doctrine that the pretenses must be such as to deceive a 'prudent and intelligent man', saying 'the law will afford protection to the dull, stupid, confiding, and imbecile against the acts of a cheat.' State v. Fooks, 65 Iowa 196, 198, 452, 21 N.W. 561, 562, 773.

But there is no claim made here by the State, and could not be made under the evidence, that Wernimont was not a person of ordinary or average intelligence. Nor is there anything in the record to suggest that mere filing of the articles was considered by any of the parties as anything but a routine detail. Wernimont admitted on cross-examination that Comes and Zitzlsperger did not actually tell him the articles were filed. Of course that is technically implied in the representation that the organization was incorporated.

It is clear the statement that the Pilgrim Fathers was incorporated was technically a misstatement concerning a present, existing condition. The representation that its business would be profitable was just as clearly a mere expression of an opinion concerning the future--a hope or expectation--not a fact.

Can either, or can the two taken togehter, constitute a statement of a material past event or existing fact, 'calculated to deceive' and sufficient to sustain the verdict of guilty?

In the Hollingsworth case, supra, 132 Iowa at page 473, 109 N.W. at page 1004, we said: 'Yet a promise to do something in the future may be so connected with a statement as to an existing fact as that the statement of fact only becomes effective because of the promise, and in such cases the two may be considered together in determining the character of the pretense.' In a similar manner may we hold here that the two alleged misrepresentations so supplement each other as to create a misrepresentation of existing fact, calculated to result in fraud under our false pretense statute?

We hardly think so. Wernimont's testimony makes clear he understood the organization was only in the promotion stage. Other than these two representations his whole account of his conversations with defendant and Zitzlsperger pertains to what they told him of their plan of future procedure; the organization was to operate 'similar' to the Moose and Elks Lodges, there would be a death benefit provision that when one of the members would die all would be assessed $1 each; they planned to have self-supporting club rooms in every town where they organized with initiation dues, etc. None of these is shown to have been false.

Wernimont understood the situation. He knew the organization was not yet working. He claims he never saw or even asked to see the articles of incorporation. He neither received nor demanded a stock certificate to represent an interest in a business corporation. There was no representation that the 'corporation' had any physical assets. No investment had been made on its account except an attorney fee for drawing the articles, and paying for use of the copyrighted ritual, a small rent payment and some printing of forms. The expectation of future profit was under the record the persuading fact so far as Wernimont was concerned. Whether the articles of incorporation were presently recorded or merely drawn and ready to record had no relation to the hope or promise or prediction of future profit.

II. The state argues that defendant represented the 'Pilgrim Fathers' was 'incorporated for profit.' If by this is meant there was a representation that it was a corporation 'for pecuniary profit' under Code chapter 491 (Iowa Code, 1950, I.C.A.) we find in the evidence no factual basis for the argument.

While it was represented 'there was money to be made,' the proposed operation of the association was fully disclosed, according to the witness' own testimony. The representations made to him by defendant were substantially in accord with the provisions of the articles of incorporation already drawn and executed. There was no misrepresentation of fact except the statement that the association was 'incorporated.'

Whether the proposed corporation would be technically one for profit, or a non-profit corporation under Code chapter 504, was a matter of legal opinion and could not be the subject of false pretense so long as the facts themselves were not misrepresented. Long ago this court said: 'The authorities are agreed that upon mere matters of...