Thomas v. State

• Court: Texas Court of Criminal Appeals
• Writing for the Court: Price, J.
• Citation: Thomas v. State, 65 S.W.3d 38 (Tex. Crim. App. 2001)
• Decision Date: 21 November 2001
• Docket Number: No. 108-00.,108-00.
• Parties: Jimmy Wayne THOMAS, Appellant, v. STATE of Texas.

65 S.W.3d 38

Jimmy Wayne THOMAS, Appellant, v. STATE of Texas.

No. 108-00.

Court of Criminal Appeals of Texas.

November 21, 2001.

Paul G. Kratzig, Corpus Christi, for appellant.

Anne B. Wetherholt, Assist. DA, Dallas, Jeffrey L. Van Horn, First Assist. St. Att., Matthew Paul, State's Attorney, Austin, for state.

OPINION

PRICE, J., delivered the unanimous opinion of the Court.

A jury found the appellant guilty of securities fraud. The Court of Appeals reversed the conviction and concluded that the term other "evidence of indebtedness", as used in the definition of security in the Texas Securities Act, requires a writing. We granted review to determine whether the term other "evidence of indebtedness" requires a written instrument.¹ Because the cases that we have found all involve some form of writing, the term is part of a group of securities that are all written instruments, and the common understanding of the term seems to envision a writing, we hold that the term other "evidence of indebtedness" requires a writing. Accordingly, we shall affirm the Court of Appeals.

FACTS

The appellant met Don Edwards through Sunday school classes at their church. Through his corporation United Media Group, Inc. (UMG), the appellant attempted to develop and market electronic kiosks that could dispense videotapes. The appellant suggested that Edwards become a salesman for UMG and further convinced Edwards to invest in the corporation. The appellant said that Edwards could expect the return of his original principal in thirty to sixty days, would receive five times the original investment in several months, and would receive an additional five times his investment within a year. Throughout June of 1991, Edwards invested a total of $50,000. The only document signed by the appellant and Edwards was a June 26, 1991, letter of agreement that described Edwards's kiosk distribution territory. The letter of agreement mentions a $50,000 equity deposit for the territory, but nowhere mentions Edwards's actual investments.

About a month later, the appellant informed Edwards that further investment, up to $20,000, had become available because a family in Tennessee needed the return of its principal immediately. On August 2, 1991, Edwards invested an additional $10,000. Like the other investments, neither the appellant nor UMG signed any agreement concerning the investments; issued any shares, notes, or bonds; or paid Edwards any profits on his investments. It was later discovered that the appellant had filed for personal bankruptcy and had used funds invested in UMG to cover his personal expenses. The appellant disclosed neither fact to Edwards.

The appellant was indicted and later convicted for violations of the Texas Securities Act concerning the August 2, 1991, transaction. Tex.Rev.Civ. Stat. art. 581. Specifically, a jury found the appellant guilty of two counts of securities fraud in "the sale or offer of sale" of a security, namely an "evidence of indebtedness", by: 1) failing to disclose that he had previously spent funds invested in UMG for purposes unrelated to UMG and 2) failing to disclose that he had filed for personal bankruptcy.

On direct appeal, the Court of Appeals reversed the trial court's judgment and entered a judgment of acquittal in an unpublished opinion. Thomas v. State, No. 05-92-01844-CR, 1994 WL 605946 (Tex. App.-Dallas Oct. 31, 1994) (not designated for publication). The Court of Appeals rejected a definition of the term "evidence of indebtedness" used by the Texas Supreme Court in Searsy v. Commercial Trading Corp., 560 S.W.2d 637, 641 (Tex. 1977) (adopting the definition of "evidence of indebtedness" from United States v. Austin, 462 F.2d 724, 736 (10th Cir.1972)), and held instead that the term referred to a mortgage certificate. Thomas, No. 05-92-01844-CR, slip op. at 10.

We reversed the Court of Appeals decision upon the State's petition for discretionary review and adopted the Searsy definition of "evidence of indebtedness". We held that an "evidence of indebtedness" was "all contractual obligations to pay in the future for consideration presently received." Thomas v. State, 919 S.W.2d 427, 432 (Tex.Crim.App.1996) (Thomas II). We remanded the case to the Court of Appeals with instructions to consider whether an "evidence of indebtedness" requires a writing under the act.

On remand, the Court of Appeals held that, because the particular provision of the Act under which Thomas was convicted is penal in nature, the statute should be narrowly construed. Thomas v. State, 3 S.W.3d 89, 92-93 (Tex.App.-Dallas 1999) (Thomas III). The Court of Appeals then held that, under the Texas Securities Act, an "evidence of indebtedness" requires a writing. Id. at 95. The Court of Appeals relied largely on the common law doctrine of ejusdem generis and on our observations from Thomas II that the Act's purpose and context limits how the term is construed. Id. at 93. It concluded that because "evidence of indebtedness" is grouped with written instruments that all acknowledge the owing of money by agreement, an "evidence of indebtedness" must also be in writing. Id. at 94. Since there was no writing constituting an "evidence of indebtedness" admitted into evidence, and because there is no evidence that the appellant offered to sell such an instrument, the Court of Appeals once again entered a judgment of acquittal. Id. at 96.

DISCUSSION

The Texas Securities Act defines "security," in part, as:

any share, stock, stock certificate under a voting trust agreement, collateral trust certificate, equipment trust certificate, preorganization certificate or receipt, subscription or reorganization certificate, note, bond, debenture, mortgage certificate or other evidence of indebtedness, any form of commercial paper, certificate in or under a profit sharing or participation agreement, certificate or any instrument representing any interest in or under an oil, gas or mining lease, fee or title, or any certificate or instrument representing or secured by an interest in any or all of the capital, property, assets, profits or earnings of any company, investment contract, or any other instrument commonly known as a security, whether similar to those herein referred to or not....

TEX.REV.CIV. STAT. art. 581-4(A) (emphasis added).

Strict Construction and Ejusdem Generis

Before addressing the question of whether a writing is required, several related issues need to be addressed.²

The State argues that the Court of Appeals's use of ejusdem generis was inappropriate because the doctrine had not been discussed since Judge Davidson's dissenting opinion in Dossey v. State, 165 Tex.Crim. 652, 310 S.W.2d 321 (1958). We disagree that the use of ejusdem generis was inappropriate.

Ejusdem generis means "of the same kind, class, or nature." Black's Law Dictionary 464 (6th ed.1990). The doctrine states that when interpreting general words that follow an enumeration of particular or specific things, the meaning of those general words should be confined to things of the same kind. Lefevers v. State, 20 S.W.3d 707, 711 (Tex.Crim.App.2000); Perez v. State, 11 S.W.3d 218, 221 (Tex. Crim.App.2000).

In Thomas II, we tacitly approved of the ejusdem generis doctrine in determining the meaning of "evidence of indebtedness" without using that exact phrase. We viewed other "evidence of indebtedness" as "expanding upon the grouping `note, bond, debenture, mortgage certificate.' In other words, notes, bonds, debentures and mortgage certificates are types of evidence of indebtedness, but `other' evidence of indebtedness might also fall within the act." Thomas II, 919 S.W.2d at 430. Furthermore, we emphasized that the definition was "limited by the purposes of the Act itself and by the context in which it appears .... an evidence of indebtedness is a similar type of security as a note, bond, debenture, and mortgage certificate." Id. at 432. The word type is similar to kind, class, or nature, and our analysis is consistent with ejusdem generis, which gives "effect to both the particular and the general words, by treating the particular words as indicating the class, and the general words as extending the provisions of the statute to everything embraced in that class, though not specifically named by the particular words." Lefevers, 20 S.W.3d at 711-12. The application of ejusdem generis was not improper.³

Finally, relying on our holding in Vernon v. State, 841 S.W.2d 407 (Tex.Crim. App.1992), the State argues that reviewing courts must not employ definitions of relevant statutory words that are different from or more restrictive than the jurors are legally entitled to use. In Thomas II, however, we held that within the context of the definition of security, an "evidence of indebtedness" must be of a similar type of security as a note, bond, or debenture. Thomas II, 919 S.W.2d at 430. "evidence of indebtedness" is grouped together with terms that have both technical and judicial meanings within securities law. Cf. Reves v. Ernst & Young, 494 U.S. 56, 110 S.Ct. 945, 108 L.Ed.2d 47 (1990) (discussing definition of the term note); Thomas II, 919 S.W.2d at 432 n. 7 (noting that an "evidence of indebtedness" must be an investment to fit within the act); LOSS & SELIGMAN, SECURITIES REGULATION, v. II p. 962 (3d ed.1989) (suggesting that like the term note, "evidence of indebtedness" might be so broad as to preclude a literal reading and suggesting that the criteria developed for "notes" may be helpful). While "evidence of indebtedness" may have a broad meaning, it nevertheless has meaning within the particular subject matter of investments and securities law; Vernon, therefore, does not apply. Cf. Medford v. State, 13 S.W.3d 769, 772 (Tex.Crim.App. 2000) (holding that the word arrest has an established and technical meaning that precluded the application of Vernon); Thomas II, 919 S.W.2d at 430, 432 n. 7 (holding that an "evidence of indebtedness" must be...