U.S. v. Dunn, 85-5572

• Decision Date: 24 November 1986
• Docket Number: No. 85-5572,85-5572
• Citation: 805 F.2d 1275
• Parties: 21 Fed. R. Evid. Serv. 1383 UNITED STATES of America, Plaintiff-Appellee, v. Walter Carson DUNN, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1275

805 F.2d 1275

21 Fed. R. Evid. Serv. 1383

UNITED STATES of America, Plaintiff-Appellee, v. Walter Carson DUNN, Jr., Defendant-Appellant.

No. 85-5572.

United States Court of Appeals Sixth Circuit.

Argued Jan. 24, 1986.

Decided Nov. 24, 1986.

Kemper B. Durand (argued) (court-appointed), Thomason, Hendrix, Harvey, Johnson, Mitchell, Blanchard, Adams, Memphis, Tenn., for defendant-appellant.

W. Hickman Ewing, Jr., U.S. Atty., Memphis, Tenn., Dan L. Newsom (argued), for plaintiff-appellee.

Before ENGEL, KENNEDY and RYAN, Circuit Judges.

RYAN, Circuit Judge.

Walter Dunn appeals his jury conviction of three counts of mail fraud in violation of 18 U.S.C. Secs. 1341-1342. Six poultry buildings on Dunn's farm were destroyed by a fire which was intentionally ignited. The government's theory was that Dunn set the fire and committed the mail fraud offenses when he mailed insurance claims for the losses to three insurers.

On appeal, Dunn cites three grounds for reversal:

(1) The admission into evidence of his prior criminal conduct;

(2) The district court's refusal to order the United States attorney to supply him with the transcript of a polygraph examination administered to a prosecution witness prior to trial;

(3) The district court's undue emphasis on Dunn's testimony in its charge to the jury.

We conclude that Dunn's argument on the first issue is well taken. We therefore reverse the conviction and remand the case for a new trial.

On March 7, 1981, six poultry buildings were destroyed by fire on Dunn's property, known as the Sugar Hill Farm, located in Fayette County, Tennessee. Dunn was in the wholesale egg supply business, and the buildings were used to house the producing hens. The buildings destroyed were roughly the same size, 32 feet wide and 456 feet long, and of the same construction, wood frame with chicken-wire sides and a tin roof. While no chickens were in the buildings at the time of the fire, each building could house approximately forty thousand chickens.

Dunn did not dispute the government's claim that the fires were intentionally set, but argued that they were started by someone seeking revenge against him. Fire investigators concluded that six to eight fires were started in each of the six buildings. The fires were ignited by piling paper egg containers, known as egg flats, against the interior walls of the buildings, soaking the egg flats with diesel fuel and lighting the flats from outside the building using rolled-up newspapers introduced through the chicken-wire wall of the building.

Dunn operated as a contract egg producer for Delight Egg Farms (Delight). Under the agreement, Delight supplied Dunn with chickens and feed, while he furnished the poultry buildings, equipment, and labor to collect the eggs and deliver them to Delight's warehouses. Delight owned all the eggs produced by its chickens and paid Dunn five and one-half cents for each dozen eggs delivered to its warehouses.

In December 1980, Delight notified Dunn that it was losing money on its investment at Sugar Hill Farm and that it was contemplating termination of the egg-producing agreement. On February 25, 1981, Delight terminated the contract with Dunn and sent crews in to collect the hens on his land. By March 3, 1981, Delight had reclaimed all but twenty of its hens.

It was, of course, necessary to the government's case that it be shown that Dunn was the arsonist. The evidence against him was essentially circumstantial. By his own admission, he was having financial difficulties. At the time of the fires, he had debts of more than one million dollars. When Delight cancelled the contract, Dunn was left with no income and substantial debts outstanding on the poultry buildings and egg-producing equipment. Because his debts exceeded the insurance value of the buildings, Dunn would not receive any of the insurance proceeds payable because of the loss of the buildings, but the proceeds would reduce the amount of his debts.

Dunn kept a number of back issues of the Wall Street Journal in his office, which was located in one of the poultry buildings. A partially burned, rolled-up Wall Street Journal was found inserted into the wire wall of one poultry building. In the days preceding the fire, Dunn purchased seven or eight five-gallon containers of diesel fuel. While a solution of diesel fuel and water could be used to clean the chicken coops, the quantity of diesel fuel Dunn purchased exceeded the amount necessary for a normal cleaning of the six poultry buildings.

The paper egg flats used to ignite the fire were no longer used by Dunn in his day-to-day operations. Dunn testified that on the day before the fire, there were no paper egg flats stacked against the interior walls of the poultry buildings. This testimony was contradicted by William A. "Buck" Sides and Jonas Johnson, who entered the poultry buildings on the night of March 5, 1981, with Dunn's permission, to catch stray chickens. They both testified that crates and egg flats were piled at the ends of each building and were stacked against interior walls.

Four insurance policies covering the property destroyed in the fire had been issued to Dunn by three different insurers. After the fire, he submitted proof of loss documents on all four policies to his insurance adjuster, who forwarded the documents on Dunn's behalf to the three insurance carriers by United States mail. Dunn's prosecution for mail fraud followed.

At trial, Dr. William Treat, a principal of Delight, was called as a witness by the government. On direct examination, Dr. Treat stated that Delight cancelled its contract with Dunn because it was losing between $150.00 and $200.00 per day on the contract.

Dr. Treat kept a business diary. On cross-examination, after referring to an entry in the diary on March 7, 1981, defense counsel asked Dr. Treat if he had been responsible for the fire:

"Q. I find it facsinating [sic ] that you, the first entry that you have on March the 7th is "fire--Sugar Hill Farm," is that something that you had planned to do on that date?

"A. I don't know what your reference is to, sir.

"Q. Well, the reference apparently in your book is that you were planning to do something or something happened on March 7th, which is a Saturday, and the very first reference in your book is fire--Sugar Hill Farm, were you planning to burn it?

"A. I think that you are not reading all of what is there.

"Q. Doesn't it say fire--Sugar Hill Farm?

"A. It says Sugar Hill Farm fire per Gurkin's.

"Q. Per Gurkin's, Pit Gurkin is a person who owns a grocery store in that area, owns several grocery stores?

"A. That is correct.

"Q. You don't mean to imply by that entry in your diary that you burned this farm, did you, or had anything to do with it?

"A. No, sir.

"Q. Or that Mr. Gurkin burned it?

"A. Not to my knowledge. My son works for Mr. Gurkin, and has for several years, he works on the weekends, Friday nights and Saturday nights as a clerk, and it has down here per Gurkin's and son, my son called me early Saturday morning after I got to the office to tell me that Mr. Gurkin had told him that the chicken houses out at the Sugar Hill Farm had burned."

In addition, defense counsel asked Dr. Treat about the competition between Delight and RusDun Farms, an egg-producing company owned by Walter Dunn's cousin, Melvin Russell, and, specifically, whether Delight lost two of its biggest customers, Montesi's Market and Seessel's Market, to RusDun Farms just prior to the fire at the Sugar Hill Farm:

"Q. When was it that Mr. Meyer told you that you had just lost the Montesi account, how soon before March the 7th, 1981?

"A. If it was in '81 that Montesi closed, I don't recall.

"Q. I'm not talking about them closing, that was Christmas a year ago, Christmas 1983 approximately. In 1981 in very late February or March, very early March, before March 7th, isn't it a fact that your company lost the account at Montesi?

"A. I don't recall the date, somewhere probably '81 or '82, yes.

"Q. Do you disagree with me or you don't recall?

"A. I don't recall. I don't recall the exact time that the egg purchases were switched from Delight Egg Farms to RusDun Farms. Prior to that switch, however, Montesi had been buying eggs from the RusDun Farm for over a year, probably at least 25, maybe 25 to 30, 40 percent of their eggs.

"Q. All right. RusDun Farms is the name of the egg farm owned by Walter Dunn's cousin, Melvin Russell, isn't that correct?

"A. That is correct.

"Q. Okay. Now, how much before March 7, 1981, did you learn that your company, Delight Eggs, had also lost the Seessel's account?

"A. I don't recall. However, if you are referring to the impact that the Seessel's accounts would have on a business such as ours, it was very, very small.

"Q. And the company that picked up both the Seessel's and the Montesi account was RusDun Farms, Mr. Melvin Russell, isn't that correct?

"A. That is correct."

Dr. Treat was also asked if Delight had hired a private investigator to investigate Melvin Russell immediately after the fire at the Sugar Hill Farm.

After Dr. Treat was excused from the witness stand, the government sought permission to recall him in order to establish that one of the reasons Delight cancelled its contract with Dunn was its suspicion that he was stealing eggs produced by Delight's hens, selling them privately, and retaining the proceeds. The government argued that introduction of evidence that Dunn stole eggs from Delight was necessary to rebut the defense's theory, established on cross-examination of Dr. Treat, that Delight, in reprisal for the loss of two of its largest accounts to Dunn's cousin, cancelled its contract with Dunn and burned the poultry buildings on the Sugar Hill Farm.

The district court ruled that the evidence that Dunn was an egg thief would be received, concluding that the evidence was relevant under Rule 401. The court stated:

"[I]f your position is...