State v. Kreminski

Citation178 Conn. 145,422 A.2d 294
CourtSupreme Court of Connecticut
Decision Date26 June 1979
Parties, Blue Sky L. Rep. P 71,506 STATE of Connecticut v. Paul D. KREMINSKI.

Jack R. Pirozzolo, Boston, Mass., with whom, on the brief, was Andrew G. Messina, Jr., Windsor, for appellant (defendant).

Stephen J. Solomonson, Asst. State's Atty., with whom were Warren A. Gower, Asst. State's Atty., Wallingford, and, on the brief, Linda J. Sullivan, law student intern, for appellee (state).

Before COTTER, C. J., and LOISELLE, PETERS, PARSKEY and SHEA, JJ.

DAVID M. SHEA, Associate Justice.

After a trial by the court upon a written stipulation of facts the defendant was convicted of five counts of violating General Statutes § 36-334, 1 a provision of the Connecticut Securities Act. Four of the counts were based upon the prohibition against a "registered salesman" acting as a salesman of securities "except on behalf of the registered broker or dealer by whom he is employed as a registered salesman." The fifth count charged the defendant with selling securities through various salesmen and acting as a broker or dealer without being properly registered. The defendant has appealed from the judgment and has raised questions concerning the interpretation and the constitutionality of the statutory provisions involved. His principal claim is that a business regulatory statute not involving unethical conduct under traditional moral tenets cannot be classified as a felony and subject him to the consequences of a felony conviction. Additional grounds raised are whether the items sold by the defendant were "securities" as defined by the Connecticut Securities Act and whether the provisions involved are constitutionally infirm because of vagueness.

The stipulation of facts submitted to the trial court may be summarized as follows: The defendant was registered as a salesman with the state banking commission and was employed by an investment company in Meriden. He was not registered as a broker-dealer. He employed three other persons as salesmen for the purpose of selling short-term notes of Federal Financial Services, Inc., and he received commissions on their sales of such notes to Connecticut residents. He himself also sold such notes to five Connecticut residents. In these activities the defendant was not acting on behalf of the investment company which employed him. Federal Financial Services, Inc., whose notes were the subject matter of the offenses, was not registered as a broker-dealer with the state banking commission. The court imposed sentences of thirty days upon each of the five counts, the execution of which was suspended with probation for one year. In addition, a fine of $1000 was imposed on each count. A more detailed recital of the facts is unnecessary for a consideration of the issues in this appeal.

I

The first claim of the defendant is that, because of the felony classification given to a violation of § 36-334, the requirement of mens rea or evil intention should be effectively read into the statute. It is not clear what the nature of this mental state would be, whether it would involve some species of fraud or simply a knowledge that the activities engaged in by the defendant were prohibited without a license. A separate provision of the Connecticut Securities Act, § 36-338, 2 establishes a much more severe penalty for fraud in the sale of any security and would render § 36-334 superfluous if it required a fraudulent intention to be proved. We also have no reason to suppose that the legislature wished to create an exception to the axiom that ignorance of the law is no excuse by conditioning a violation of the statute upon awareness of the necessity for a license.

"While the general rule at common law was that the scienter was a necessary element in the indictment and proof of every crime, and this was followed in regard to statutory crimes, even where the statutory definition did not in terms include it ... there has been a modification of this view in respect to prosecutions under statutes the purpose of which would be obstructed by such a requirement." United States v. Balint, 258 U.S. 250, 251-52, 42 S.Ct. 301, 302, 66 L.Ed. 604 (1922). "(T)he legislature may, if it so chooses, ignore the common-law concept that criminal acts require the coupling of the evil-meaning mind with the evil-doing hand and may define crimes which depend on no mental element, but consist only of forbidden acts or omissions." State v. Husser, 161 Conn. 513, 515, 290 A.2d 336, 337 (1971). "Whether or not a statutory crime requires 'mens rea' or 'scienter' as an element of the offense is largely a question of legislative intent to be 'determined from the general scope of the act and from the nature of the evils to be avoided.' " Ibid.; State v. Gaetano, 96 Conn. 306, 316, 114 A. 82, 85 (1921).

The defendant concedes that there are many instances where the requirement of criminal intent has been omitted from police regulatory or public welfare statutes. Morissette v. United States, 342 U.S. 246, 255-58, 72 S.Ct. 240, 96 L.Ed. 288 (1952). He maintains, however, that such laws involve inherently evil actions or relatively minor penalties, unlike § 36-334 where the same conduct by a duly authorized person is lawful and the substantial penalty of two years imprisonment or a two thousand dollar fine or both is provided. With respect to inherent evil, in the sense of the degree of moral culpability of the actor implicit in the offense, there is a growing recognition that regulatory legislation may exclude the conventional requirement of awareness of wrongdoing for criminal conduct by placing the "burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger." United States v. Dotterweich, 320 U.S. 277, 281, 64 S.Ct. 134, 136, 88 L.Ed. 48 (1943); see United States v. Park, 421 U.S. 658, 673, 95 S.Ct. 1903, 44 L.Ed.2d 489 (1975). The touchstone is not the reprehensibility of the offender but the "nature of the evils to be avoided," and the extent of the probable frustration of the regulatory scheme which a requirement of scienter would create. United States v. Balint, supra, 258 U.S. 254, 42 S.Ct. 301. Personal blame on the part of the actor, except in the general sense that he should have known better or exercised a greater degree of care, is not a necessary element of many offenses where protection of the public against the harm which would result in the absence of regulation is the principal legislative concern. United States v. Balint, supra (possession of narcotics); United States v. Park, supra, 674 (failure to implement food sanitation standards); State v. Husser, supra (selling narcotic drugs); State v. Guerra, 151 Conn. 159, 165, 195 A.2d 50 (1963) (unauthorized delivery of liquor into a jail); State v. Sul, 146 Conn. 78, 86, 147 A.2d 686 (1958) (possession of obscene literature); State v. Gaetano, 96 Conn. 306, 315, 114 A. 82 (1921) (keeping a house of ill fame); State v. Kinkead, 57 Conn. 173, 180, 17 A. 855 (1889) (allowing minors to loiter upon premises where liquor is sold); Barnes v. State, 19 Conn. 398, 404 (1849) (selling liquor to a common drunkard). The due process limitation upon this principle, where the conduct involved is wholly passive, such as the failure of a convicted felon, with no notice of such a requirement, to register within a certain time after coming into a municipality having a criminal registration ordinance, is not applicable here. Lambert v. California, 355 U.S. 225, 228, 78 S.Ct. 240, 2 L.Ed.2d 228 (1957). "(P)ublic policy may require that in the prohibition or punishment of particular acts it may be provided that he who shall do them shall do them at his peril, and will not be heard to plead in defense good faith or ignorance." Shevlin-Carpenter Co. v. Minnesota, 218 U.S. 57, 70, 30 S.Ct. 663, 666, 54 L.Ed. 930 (1910).

In cases dealing specifically with the state, "blue sky" laws and provisions similar to § 36-334 forbidding security sales by unlicensed persons, it has been held that scienter or awareness of a licensing requirement is not essential for a violation. People v. Terranova, 38 Colo.App. 476, 482, 563 P.2d 363 (1977); State v. Burrow, 13 Ariz.App. 130, 132, 474 P.2d 849 (1970). "(S)tate of mind is of as little relevance in a charge of sale of an unregistered security by an unlicensed person ... as it would be in a prosecution for a speeding violation." People v. Terranova, supra, 38 Colo.App. 485, 563 P.2d 367. Federal security laws typically impose criminal liability only for "wilful" violations under the express terms of the penalty provisions of the statutes involved. 3 15 U.S.C. §§ 77k(a), 77yyy, 78ff. No particular mental state is necessary for civil liability of the issuer for untrue statements in the registration documents. 15 U.S.C. § 77k(a); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 200, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). Although protection of the financial interest of the public may not be as paramount as safeguarding its health and morals by suppressing activities which endanger those interests, nevertheless, it is a matter of serious concern and the legislature might reasonably have concluded that strict criminal liability was appropriate.

The repeal of the Connecticut Securities Act and the substitution of the Uniform Securities Act, which became effective after the offenses involved here had occurred, is of no benefit to this defendant. 1977 Public Acts, No. 77-482; General Statutes, c. 662. The new enactment imposes criminal penalties only for wilful violations. General Statutes § 36-497. If this change has any significance in construing the earlier act, it can only be that, without the word "wilfully," the legislative intention as expressed was that no such mental element was necessary for a violation. Willoughby v. New Haven, 123 Conn. 446, 455, 197 A. 85 (1937).

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2 books & journal articles
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