State v. Duncan

• Decision Date: 16 May 1979
• Docket Number: No. 14141,14141
• Parties: , Blue Sky L. Rep. P 71,514 The STATE of Montana, Plaintiff and Respondent, v. Norman B. DUNCAN, Defendant and Appellant.
• Court: Montana Supreme Court

Page 1026

593 P.2d 1026

181 Mont. 382, Blue Sky L. Rep. P 71,514

The STATE of Montana, Plaintiff and Respondent, v. Norman B. DUNCAN, Defendant and Appellant.

No. 14141.

Supreme Court of Montana.

Submitted Jan. 30, 1979.

Decided April 19, 1979.

Rehearing Denied May 16, 1979.

Berg, Angel, Andriolo & Morgan, Bozeman, Richard J. Andriolo appeared, Bozeman, Pickard & Singleton, Sante Fe, N. M., Lynn Pickard argued, Sante Fe, N. M., Marchiondo & Berry, Albuquerque, N. M., for defendant and appellant.

Mike Greely, Atty. Gen., Helena, Charles E. Erdmann appeared, Asst. Atty. Gen., Helena, Donald E. White, County Atty., argued, Bozeman, Thomas J. Beers, Deputy County Atty., argued, Missoula, for plaintiff and respondent.

SHEEHY, Justice.

Defendant Norman Duncan appeals from his conviction following a nonjury trial in the District Court, Gallatin County, of deceptive practices and the sale of unregistered securities.

Defendant was president of Smart Pak, Inc., of Montana, which produced and marketed a dry granulated charcoal lighter (Smart Start) and a combination package of Smart Start and charcoal briquettes (Smart Pak). Smart Pak, Inc., was one of five corporations set up by defendant in different states to produce and market these products. The parent corporation was Survival Heat Products, Inc., of Idaho Falls.

In the fall of 1975 and spring of 1976, defendant discovered that automated packaging machines could not properly seal the special "child-proof" paper used to package his products. Thereafter, he and other company employees began selling "package sealer agreements" in Gallatin County. The buyers of these contracts paid from $500 to $5000 to become package sealers for Smart Pak. The company supplied them with manual sealing machines and rolls of package paper depending on the amount paid by the sealer. After the sealers sealed the bags on three sides, they sold all properly sealed bags back to the company for 5cents per bag.

The operation worked smoothly for a short time, but then, due to a series of mix-ups, the sealers did not receive their quota of bags to be sealed. These mix-ups, as asserted by defendant, included a paper shortage and errors in printing the bags.

In March 1976 Smart Pak came under investigation by both the Federal Securities Exchange Commission and the State Auditor's Office in which securities sold in Montana are to be registered. At that point the focus of these investigations concerned only whether the package sealer agreements were in fact investment contracts which defendant had failed to register.

Although neither agency told defendant to cease operations beyond ceasing to advertise and sell the questioned package sealer agreements, defendant did in fact close down his entire operation and refused to accept or pay for any sealed bags from the sealers or to send any more bags to be sealed. The reason defendant gave for his action was that the adverse publicity concerning the investigations had dried up the sales of these products.

In June 1976 defendant filed a receivership petition for Smart Pak. The sealers were thus left holding the "bags." After the initial few months, they did not receive payment for their work or recoupment of their investment.

On July 9, 1976, the State filed an information against defendant. The information consisted of four counts: Count I charged deceptive practices in violation of section 94-6-307, R.C.M.1947, now section 45-6-317 MCA; Count II charged fraudulent securities practices in violation of section 15-2005(1), R.C.M.1947, now section 30-10-301 MCA; Count III charged failure to register securities violation of section 15-2007, R.C.M.1947, now section 30-10-202 MCA; and Count IV charged issuing a bad check in violation of section 94-6-309(1), R.C.M.1947, now section 45-6-316 MCA. Defendant filed a motion to dismiss the information. On February 22, 1977, the court dismissed Count IV and defendant pleaded "not guilty" to the remaining three counts. On that same day, defendant signed a written waiver of his right to trial by jury.

The case then came on for a hearing, on February 23, 1977, to the court sitting without a jury. On April 4, 1977, the District Court, in open court, found defendant guilty of Counts I and III. The court dismissed Count II. On May 6, 1977, the court entered written findings of fact and imposed sentence of five years imprisonment on Count I and three years imprisonment on Count III, the sentences to run concurrently. Defendant, thereafter, brings this appeal.

Additional facts are discussed as they become pertinent.

The issues presented for our consideration are:

1. Whether the evidence is sufficient to sustain defendant's conviction of deceptive practices?

2. Whether the Smart Pak Sealer Agreements are "securities" within the meaning of section 15-2007 to sustain defendant's conviction of failing to register such "securities"?

3. Whether defendant voluntarily, knowingly and intelligently waived his right to a jury trial?

4. Whether alleged references to defendant's bankruptcy proceedings in his criminal trial constitutes grounds for reversal of his convictions?

5. Whether defendant was properly charged and convicted of deceptive practices?

6. Whether the failure of the District Court to state in its findings that defendant had been proven guilty beyond a reasonable doubt or that he purposely and knowingly committed deceptive practices is sufficient grounds for reversal?

Before proceeding to a discussion of the enumerated issues, this Court must dispose of a preliminary issue raised by defendant concerning the proper scope of review of a criminal bench trial. Defendant urges us to apply a broader standard of review than that normally applied in criminal appeals from jury trials.

We set forth the proper standard of review in criminal bench trials in State v. Longacre (1975), 168 Mont. 311, 313, 542 P.2d 1221, 1222:

"It is the function of the trier of the facts, in this case the trial judge, to determine the credibility of the witnesses and the weight to be given their testimony and he may pick and choose which of the witnesses are to be believed from a consideration of all the evidence. State v. Medicine Bull, Jr., 152 Mont. 34, 445 P.2d 916. On appeal we simply determine if there is substantial evidence to support the defendant's guilt beyond a reasonable doubt. State v. Stoddard, 147 Mont. 402, 412 P.2d 827; State v. White, 146 Mont. 226, 405 P.2d 761."

Thus the "substantial evidence" test applies to appeals from both judge and jury convictions. Therefore, in determining whether there is substantial evidence to support the verdict entered by the trial court, this Court will examine the evidence in the light most favorable to the State. State v. Pascgo (1977), Mont., 566 P.2d 802, 805, 34 St.Rep. 657, 660; State v. Stoddard (1966), 147 Mont. 402, 408, 412 P.2d 827, 831.

The determination of the proper standard of review relates most directly to defendant's first issue on appeal wherein he challenges the sufficiency of evidence to sustain his conviction of deceptive practices. We find sufficient evidence and therefore affirm his conviction on this count.

Defendant was convicted of violating section 94-6-307, R.C.M.1947, now section 45-6-317 MCA. This Court has not construed this statute since its enactment in 1973. Defendant would have us apply the same elements to this statute as we found in its predecessor, "Obtaining money, property or services by false pretenses", section 94-1805, R.C.M.1947. Under the former statute, we held it was necessary to prove four elements for a conviction:

". . . (1) The making by the accused to the person injured, of one or more representations of past events or existing facts; (2) that such injured party believed such representations to be true and, relying thereon, parted with money or property, which was received by the accused; (3) that such representations were false; and (4) were made knowingly and designedly, with the intent to defraud such other person." State v. Bratton (1919), 56 Mont. 563, 566, 186 P. 327, 328.

The new statute clearly modifies the elements of proof necessary for conviction and for that reason the cases cited by defendant are inapplicable. Breaking the new statute down into its elements, we determine the State need prove only that:

(1) the defendant acted "purposely or knowingly" in

(2) making or directing another to make a false or deceptive statement

(3) addressed to the public or any person

(4) for the purpose of promoting or procuring the sale of property or services.

Gone are any requirements that the statements relate to past events or existing facts or that the injured party relied thereon in parting with money or property. In addition, "(s)ection 94-6-307 is designed to cover a greater variety of deceptive practices than were formerly proscribed by Montana law." Commission Comment, section 94-6-307, R.C.M.1947. The legislative intent to expand the spectrum of criminal activities in the area of false pretenses previously punishable under Montana law is obvious. It is against these guidelines that we measure defendant's actions.

Initially we note that no real challenge is made by defendant to elements 1, 3, and 4 listed above. Defendant concedes he deliberately sought people to enter into these contracts at specified costs (elements 1 and 4) and that in so doing he caused to be broadcast and published various advertisements asking people to contact him or his employees (element 3). The only question concerns whether his statements to potential sealers were false or deceptive.

The State in its information alleged that defendant or defendant's employees acting at his direction repeatedly made five false statements with the purpose to induce persons to enter into the package sealer contracts at a cost of between $500 and $5000. Proof beyond a reasonable doubt of any one of these five false statements is sufficient to...