State v. Swanson
| Decision Date | 07 September 1976 |
| Docket Number | No. 3757--I,3757--I |
| Citation | 554 P.2d 364,16 Wn.App. 179 |
| Court | Washington Court of Appeals |
| Parties | STATE of Washington, Respondent, v. Arthur F. SWANSON, Appellant. |
Kempton, Savage & Gossard, James S. Kempton, Seattle, for appellant.
Christopher T. Bayley, King County Pros. Atty., Michael Cohen, Deputy Pros. Atty., Seattle, for respondent.
The defendant, Arthur F. Swanson, is an attorney at law and certified public accountant who practiced his professions There is no substantial dispute as to the essential facts out of which the charge arose. The defendant's own testimony included the following.
in Spokane, Washington. 1 At a trial in King County, he was convicted of the crime of making and publishing a false report of a corporation. On this appeal, he questions various aspects of the statute under which he was brought to trial in this state and the statute under which he was charged and convicted
Northwest Pacific Capital Corporation was a Washington corporation which officed in Bellevue, Washington. It had approximately 12 shareholders. Each shareholder was a developer or promoter and each of them brought some kind of what were referred to as 'deals' into the corporation with him.
For the most part, these deals consisted of certain contingent rights to purchase a wide variety of properties. The properties that such purchase rights related to included a motel, apartment house, ranch, timber and mining rights, patent, manufacturing and sales rights, and the like.
Some of these deals were evinced by earnest money agreements and others by options to purchase. Some of the options to purchase were oral only.
Each of the deals shared a common characteristic--money was needed to finance it. The shareholders did not individually have the money to exercise their rights of purchase--or to 'close the deals' as they phrased it. It was their expressed hope that by banding together and working through one corporation in this fashion, they could somehow collectively obtain the financing which individually had eluded them.
Each of the shareholders in Northwest Pacific Capital Corporation was also an officer and a director in the corporation. There was a president, a secretary and a treasurer. All of the rest of the shareholders were vice presidents.
The defendant, in addition to being a shareholder who Another of the shareholders, officers and directors, Sheldon Reeves, along with two other persons, went to Canada to negotiate with banks there in an effort to obtain the financing needed by the corporation. On Reeves' return, it was reported that one or more Canadian banks were prepared to commit a line of credit up to $5 million to finance some of the corporation's deals.
had himself brought a real estate deal into the corporation, was the treasurer and a member of the board of directors. The defendant was also attorney for the corporation, and being a certified public accountant was the one who prepared its balance sheets.
The defendant was asked to draw up a financial statement showing the various deals the corporation had under its control so that it could be given to the Canadian bank or banks in connection with obtaining the line of credit. He flew from Spokane to the corporation's Bellevue office where he dictated and directly supervised the typing of a document entitled:
NORTHWEST PACIFIC CAPITAL CORPORATION BALANCE SHEET
In this document, which the defendant prepared, each of the deals the corporation had under its control was listed as a property in the 'asset' column at the value ascribed to the property by the shareholder who had brought in the deal. Each deal was likewise listed in the 'liability' column at the amount it would require to make the purchase or close the particular deal.
Nowhere on the balance sheet was it indicated in any fashion that the properties there listed were merely contingent rights to purchase or that the corporation did not actually own the properties. The result was that the balance sheet showed corporate assets of some $48 million, liabilities of $8 million and a surplus or net worth of $40 million. 2 At the time, the assets which were in fact fully owned by the corporation had a value of less than $30,000.
The defendant wrote a letter addressed to the directors Enclosed is a balance sheet showing the financial condition of Northwest Pacific Capital Corporation as of November 29, 1973.
and over his signature as a certified public accountant. It commenced:
Although the letter did contain some language of qualification and disclaimer, nowhere in it nor on the balance sheet attached to the letter was there any indication that the defendant was also an officer, director and shareholder in the corporation whose balance sheet he had prepared. 3
All of the directors except the defendant signed the balance sheet on lines provided for that purpose.
The defendant knew the letter and balance sheet were prepared for Reeves to take to Canada for presentation to a bank or banks there in connection with efforts to obtain the hoped for $5 million corporate financing. The defendant also testified that he concurred with the corporate decision to send these to Canada.
The record before us reflects little of what transpired in Canada except for a stipulation that the balance sheet 'was The defense presented by the defendant was that the balance sheet was intended to be only an inventory of the corporation's deals and the defendant did not knowingly or otherwise make any false or exaggerated statements therein. As the defendant testified, the document was supposed to be a 'pro forma' balance sheet, but because of the haste with which it had been prepared, the qualifying term 'pro forma' was inadvertently omitted from it.
presented to the Toronto Dominion Bank, City Savings & Trust of Calgary, and Bank of Nova Scotia in Calgary, by Sheldon Reeves, . . .' and the two others, and the fact that all three were promptly arrested by Canadian authorities. Following that, the present charge was filed by the King County Prosecuting Attorney against the defendant. Evidently like charges were filed against several of the other directors as well.
The defendant defined 'pro forma' as a kind of forecast--what the balance sheet would look like if certain conditions happened in the future--the conditions in this case being the exercise by the corporation of the various options to purchase. The defendant also testified that the document was not intended for the use of the public or for the use of anyone in the state of Washington except the corporate directors themselves.
This case presents five basic issues.
ISSUE ONE. Was sufficient evidence introduced to sustain the defendant's conviction of violating RCW 9.24.050, making it a crime to make and publish a false report of a corporation?
ISSUE TWO. Do courts of this state have jurisdiction of the offense charged since there was no publication of the balance sheet inside the state of Washington to anyone except the corporate directors who concurred in it?
ISSUE THREE. Are either RCW 9.24.050, defining the offense charged, or RCW 9.01.050(1), under which the courts of this state took jurisdiction of the offense, unconstitutional or otherwise invalid?
ISSUE FOUR. Did the trial court err in its instructions to the jury or in failing to give defendant's proposed instructions?
ISSUE FIVE. Did the trial court err in permitting it to be established on cross-examination of a defense witness that the witness stood separately charged with the same offense as the defendant?
ISSUE ONE.
CONCLUSION. The trial court did not err in denying defendant's challenge to the sufficiency of the state's evidence and in refusing to direct a verdict for the defendant.
The defendant challenges the sufficiency of the evidence to sustain the conviction and seeks dismissal of the charge on various bases. This requires some analysis of the nature of the offense charged.
The statute under which the defendant was prosecuted reads:
False report of corporation. Every director, officer or agent of any corporation or joint stock association, and every person engaged in organizing or promoting any enterprise, who shall knowingly make or publish or concur in making or publishing any written prospectus, report, exhibit or statement of its affairs or pecuniary condition, containing any material statement that if false or exaggerated, shall be punished by imprisonment in the state penitentiary for not more than ten years, or by a fine of not more than five thousand dollars.
RCW 9.24.050.
This statute has heretofore been construed in only two appellate opinions, State v. O'Brien, 143 Wash. 636, 255 P. 952 (1927) and State v. Pierce, 175 Wash. 461, 27 P.2d 1083 (1933).
Considering those two opinions together, we synthesize their rationale and holdings as to RCW 9.24.050 as follows: (a) this statute, which makes it a crime to make and publish a false report of a corporation, was enacted for the purpose of protecting members of the public who may have occasion to rely on such statements but not be conversant with the corporation's affairs; (b) it does not apply to statements made to shareholders and directors; (c) it does not apply to statements which are not published at some time and in some manner; (d) before there can be a violation of the statute, it must be proven that the statement was willfully, knowingly and falsely made, published and concurred in; and (e) the statute does not require that an intent to deceive or defraud be proven as an element of an offense thereunder. State v. O'Brien, supra; State v. Pierce, supra.
The trial court instructed the jury concerning the elements of the offense as follows:
To convict the defendant, Arthur (F.) Swanson, of the crime of making and publishing a false report of a corporation the state must prove beyond a...
To continue reading
Request your trial
-
State v. Jones, 720
...559, 385 A.2d 480, 483 (1978); Texas, Roberts v. State, Tex.Cr.App., 619 S.W.2d 161, 164 (1981); Washington, State v. Swanson, 16 Wash.App. 179, 554 P.2d 364, 370 (1976), cert. denied, 434 U.S. 967, 98 S.Ct. 509, 54 L.Ed.2d 453 (1977). See also, Model Penal Code, § 1.03 (Territorial Applica......
-
State v. Grissom
...zones affording safe haven to persons who commit offenses partly within this state and partly without it." State v. Swanson, 16 Wash.App. 179, 189, 554 P.2d 364 (1976), cert. denied 434 U.S. 967, 98 S.Ct. 509, 54 L.Ed.2d 453 In Smith v. State, 101 Nev. 167, 697 P.2d 113 (1985), the defendan......
-
Becker v. Cmty. Health Sys., Inc.
...of the public who may rely on such reports or statements but are not conversant with the corporation's finances. State v. Swanson, 16 Wash.App. 179, 185–86, 554 P.2d 364 (1976) (citing State v. Pierce, 175 Wash. 461, 467, 27 P.2d 1083 (1933); State v. O'Brien, 143 Wash. 636, 639, 255 P. 952......
-
State v. Lane
...of the criminal jurisdiction statute, when an "essential element" of the offense has been committed here. 16 In State v. Swanson, 16 Wash.App. 179, 189, 554 P.2d 364 (1976), review denied, 88 Wash.2d 1014, cert. denied, 434 U.S. 967, 98 S.Ct. 509, 54 L.Ed.2d 453 (1977), our Court of Appeals......