Troutman v. United States

• Decision Date: 09 January 1939
• Docket Number: 1672.,No. 1671,1671
• Citation: 100 F.2d 628
• Parties: TROUTMAN v. UNITED STATES. YOUNG v. SAME.
• Court: U.S. Court of Appeals — Tenth Circuit

100 F.2d 628 (1938)

TROUTMAN v. UNITED STATES.

YOUNG v. SAME.

Nos. 1671, 1672.

Circuit Court of Appeals, Tenth Circuit.

December 8, 1938.

Rehearing Denied January 9, 1939.

COPYRIGHT MATERIAL OMITTED

Ralph J. Cummings, Ira L. Quiat, and Julius F. Seeman, all of Denver, Colo., for appellants.

Thomas J. Morrissey, U. S. Atty., and Ivor O. Wingren, Asst. U. S. Atty., both of Denver, Colo.

Before LEWIS, BRATTON, and WILLIAMS, Circuit Judges.

BRATTON, Circuit Judge.

The indictment in this case contains 15 counts and covers 45 pages in the printed record. Counts 1 to 13, inclusive, each charge that on or about January, 1934, Percival H. Troutman, Sidney W. Clark, Ralph L. Young, and Lawrence L. Young used the mails in furtherance of a scheme to defraud. These were the major features of the scheme as charged. The Union Trust Company was organized under the laws of Colorado, with authority to receive certain kinds of property for safekeeping and storage, to rent safety deposit boxes, and to act as trustee; The Union Deposit Company was likewise organized under the laws of Colorado, with authority to receive moneys for savings, and to promote and encourage the teachings and practices of thrift and frugality; The Union Deposit and Savings Company was organized under the laws of Delaware, with authority to act as a holding company for the stocks of other companies, and to carry on a general banking and financial business; Union Distributors, Inc., was likewise organized under the laws of Delaware, with authority to do a general brokerage and commission business, and to sell investment trust units sponsored and issued by The Union Deposit Company; the four corporations were known as the "Union Group"; Troutman was the president of each of them; Clark was vice-president and treasurer of The Union Trust Company, The Union Deposit Company, and The Union Deposit and Savings Company, and was treasurer of Union Distributors, Inc.; Troutman and Clark managed and controlled all of such corporations; and Troutman was executor of the estate of Ella A. Troutman, deceased. Bankers National Securities Corporation was a corporation organized under the laws of Colorado, with authority to do a general brokerage business, Ralph L. Young was its president and Lawrence L. Young was secretary and treasurer, and they managed and controlled it. For a long time prior to January, 1934, The Union Deposit Company had engaged in the business of issuing and selling to the public investment trusts called units in various series, each consisting of a participating share and a trust certificate. The sale price of a unit was $800, payable in a single sum or in equal monthly installments over a period of 12½ months, of which the first $96 was allocated to the purchase in full of the participating share, and $704 was allocated to the purchase of the trust certificate. The $704 was to be invested in authorized corporate securities listed in such certificate and in obligations of the United States, and within thirty days after the maturity of all units in a given series, the trust was to be liquidated and the proceeds distributed in the manner specified. It was further provided in the units that upon ten days notice the owners thereof would have the privilege of withdrawing from time to time any sum of money not to exceed the full amount paid thereon, exclusive of the payments allocated to the participating shares. Troutman and Clark as managing officers in control of the Union Group entered into a scheme with Ralph L. Young and Lawrence L. Young, as managing officers in control of Bankers National Securities Corporation, in which it was agreed that Bankers National Securities Corporation would solicit and persuade owners of units issued by The Union Deposit Company to surrender such units, withdraw the money paid thereon, and with such withdrawals purchase capital stock in Union Distributors, Inc., and investment trust units of series I and K; that for such purpose card lists showing the names and addresses of such owners of units would be furnished the Youngs; and that for the purpose of fraudulently inducing and persuading such persons to make the change certain false and fraudulent statements and representations would be and were made concerning the management, success, and solvency of Union Distributors, Inc., the ownership of the stock being offered for sale, its value, and the circumstances necessitating its sale. Each count charges that in furtherance of such scheme a written communication was sent through the mail. Count 14 charges that the defendants were engaged in the sale of securities, as defined in the Securities Act of 1933, 15 U.S.C.A. § 77a et seq., by the use and means of instruments of transportation and communications in interstate commerce, and by the use of the mails; and that in connection therewith, they employed the device, scheme, and artifice to defraud described in the first count, they obtained money and property from the sale of units by means of untrue statements of material facts and omissions to state material facts necessary in order to render the statements made not misleading, and they engaged in transactions, practices, and courses of business which would and did operate as a fraud and deceit upon such owners of units; and count 15 charges that they entered into a conspiracy to form a fraudulent scheme and to use the mails in furtherance of it, and to engage in the business of selling securities in violation of the Securities Act.

The court directed a verdict of not guilty as to Lawrence L. Young, and the jury acquitted Clark. Troutman was found guilty on all counts, except number 11; Ralph H. Young was found guilty on count 15, and acquitted on all others; and they appealed from the respective judgments and sentences imposed upon them.

It is argued that count 14 is duplicitous in that it charges separate and distinct violations of the Securities Act, 48 Stat. 74, 15 U.S.C.A. § 77a et seq. Section 17 of the act, 15 U.S.C.A. § 77q, provides that it shall be unlawful for any person in the sale of securities by the use of means or instruments of transportation or communications in interstate commerce or by use of the mails (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statement made not misleading, or (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. The statute thus embraces in the disjunctive three separate and distinct acts as a crime. The indictment charges the three offenses in the language of the statute, but they are charged in the conjunctive. An indictment charging a statutory offense must follow the statute creating it; but where the statute denounces several acts as a crime, they may be charged in one indictment or in a single count if they are connected in the conjunctive. An indictment drawn in that manner is not duplicitous, and it suffices to prove any one or more of the charges. Crain v. United States, 162 U.S. 625, 16 S.Ct. 952, 40 L. Ed. 1097; Ackley v. United States, 8 Cir., 200 F. 217; Simpson v. United States, 9 Cir., 229 F. 940; Dell Aira v. United States, 9 Cir., 10 F.2d 102; Chapman v. United States, 5 Cir., 10 F.2d 124; O'Neill v. United States, 8 Cir., 19 F.2d 322; Poffenbarger v. United States, 8 Cir., 20 F. 2d 42; Collins v. United States, 8 Cir., 20 F. 2d 574; Wolpa v. United States, 8 Cir., 86 F.2d 35.

It is further contended that count 15 is duplicitous for the reason that it charges a conspiracy to commit two separate offenses, the first being to violate the statute forbidding the use of the mails in furtherance of a scheme or artifice to defraud, and the second being to violate the Securities Act. The essence of the crime of conspiracy is two or more persons combining with the intent and purpose of committing a public offense by doing an unlawful act or doing a lawful act in an unlawful manner. It is a distinct offense from that which the parties intend to accomplish as the result of the conspiracy, and it is complete when the agreement has been formed and one or more overt acts have been done in furtherance of such unlawful design. And a single conspiracy may have for its object and purpose the violation of two or more criminal laws. To illustrate it would be one offense for two or more persons to enter a post office and kill the postmaster or other person having custody of the public moneys, and it would be another to rob the office of such moneys. But a single conspiracy may have both for its object and purpose. And an indictment charging a single conspiracy to violate two or more separate criminal statutes is not vulnerable for duplicity. United States v. Rabinowich, 238 U.S. 78, 35 S.Ct. 682, 59 L.Ed. 1211; Frohwerk v. United States, 249 U. S. 204, 39 S.Ct. 249, 63 L.Ed. 561; Anderson v. United States, 8 Cir., 273 F. 20; Taylor v. United States, 7 Cir., 2 F.2d 444; Bailey v. United States, 5 Cir., 5 F.2d 437; Perry v. United States, 5 Cir., 39 F.2d 52; Dowdy v. United States, 4 Cir., 46 F.2d 417; Blum v. United States, 6 Cir., 46 F. 2d 850; Center v. United States, 4 Cir., 96 F.2d 127.

The action of the court in admitting the testimony of the witness Hollister, in admitting certain correspondence in connection with such testimony, and in admitting the testimony of the witness Kuempel is challenged. Hollister was trust officer of Metropolitan Trust Company of Los Angeles, California. That company acted as trustee for investment trusts series C and E, issued by The Union Deposit Company in 1930 and 1931, respectively. Stated in outline, the witness testified that in 1932 and again in 1934 The Union Deposit Company failed to forward to the trustee for safekeeping moneys collected from investors or corporate securities...