U.S. v. Foster, s. 77-5079

• Decision Date: 05 December 1977
• Docket Number: 77-5080,Nos. 77-5079,s. 77-5079
• Citation: 566 F.2d 1045
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. D. Wayne FOSTER and Elmore Harmon, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1045

566 F.2d 1045

UNITED STATES of America, Plaintiff-Appellee, v. D. Wayne FOSTER and Elmore Harmon, Defendants-Appellants.

Nos. 77-5079, 77-5080.

United States Court of Appeals, Sixth Circuit.

Argued June 17, 1977.

Decided Dec. 5, 1977.

Edward P. A. Smith, McDonald, Kuhn, Smith, Gandy, Miller & Tait, Memphis, Tenn., for defendants-appellants.

W. J. Michael Cody, U. S. Atty., Glen G. Reid, Jr., Asst. U. S. Atty., Memphis, Tenn., for plaintiff-appellee in No. 77-5079.

Thomas F. Turley, Jr., U. S. Atty., Glen G. Reid, Jr., Asst. U. S. Atty., Memphis, Tenn., for plaintiff-appellee in No. 77-5080.

Before PHILLIPS, Chief Judge, EDWARDS, Circuit Judge, and CECIL, Senior Circuit Judge.

CECIL, Senior Circuit Judge.

This is an appeal by D. Wayne Foster and Elmore Harmon, appellants, from their convictions in the United States District Court for the Western District of Tennessee, Western Division on several counts of a multiple count indictment charging them with violations of various sections of the federal banking laws. There were thirty-six counts in the indictment.

Thomas W. Murrey, officer of the Union Planters National Bank of Memphis, Tennessee, and Foster and Harmon, were jointly indicted on count twelve and Murrey was not indicted on counts twenty-five and twenty-eight. The trial judge dismissed count thirty-five and the jury returned not guilty verdicts on counts five, six, seven, eight, ten, sixteen, twenty-five, thirty and thirty-two. Convictions were had on all other counts of the indictment. Barr and Murrey voluntarily dismissed their appeals before submission to the Court and they are not now before us.

Briefly, the facts are that Foster and Harmon were partners in the business of constructing and operating franchised motels. They made Barr and Murrey partners in these ventures and made arrangements with them for the approval of loans from the bank. Foster and Harmon received loans from the Union Planters National Bank in excess of $17,000,000. Barr and Murrey each received, as a result of these loans, $117,000 in cash, $66,900 in tax credits, plus some lesser amounts for other things.

Foster, Harmon, Barr and Murrey were defendants in the District Court and will be so designated here.

Count one of the indictment charged each of the four defendants with conspiracy in violation of Section 371, Title 18, U.S.C., ¹

" * * * to commit certain offenses against the United States of America, among them the following:

"Foster and Harmon aided, abetted, counseled * * * and caused Barr and Murrey, employees of the Bank, to stipulate for, receive, consent and agree to receive fees * * * and things of value otherwise than as provided by law, from Foster and Harmon and their enterprises for Barr and Murrey procuring and endeavoring to procure from the Bank loans and extensions and renewals thereof and other extensions of credit for Foster and Harmon and their enterprises, in violation of Title 18, United States Code, Section 215 and Section 2." 1

It is alleged that in furtherance of the conspiracy the bank, between April 1972 and December 1974, made to Foster and Harmon, for their various enterprises, approximately 193 loans aggregating approximately $20,000,000, and 289 renewals and extensions. These loans in nearly every instance were made on the approval of either Barr or Murrey. During substantially the same period, Barr and Murrey were paid or received from Foster and Harmon, in cash or its equivalent, $117,500. The evidence supported these allegations.

We consider first count one of the indictment.

It is claimed on behalf of the defendants that there can be no charge of conspiracy to violate Title 18, Section 215, U.S.C. as a matter of law. The basis of this claim is that such a conspiracy is in conflict with the Wharton Rule.

This rule is,

"an exception to the general principle that a conspiracy and the substantive offense that is its immediate end are discrete crimes for which separate sanctions may be imposed." ²

(The rule) "owes its name to Francis Wharton, whose treatise on criminal law identified the doctrine and its fundamental rationale." 2

In the current edition of Wharton, it is defined,

"An agreement by two persons to commit a particular crime cannot be prosecuted as a conspiracy when the crime is of such a nature as to necessarily require the participation of two persons for its commission." (Note 5) 2

The four defendants were all indicted in count one of the indictment. They not only relied upon themselves and the agreements between them to carry out the purposes of the conspiracy but they gave false credit information to other members of the bank and they gave credit information to outsiders, all of which advanced the purposes of the conspiracy. This raised the issue of the third party exception to the Wharton Rule. See Iannelli v. United States, supra, p. 775, 95 S.Ct. 1284; Gebardi v. United States, 287 U.S. 112, 122 n. 6, 53 S.Ct. 35, 77 L.Ed. 206 (1932); United States v. Finazzo, 407 F.Supp. 1127, 1130 (E.D.Mich.1975).

In Iannelli, supra, 420 U.S. p. 782, 95 S.Ct. p. 1292-93, the Court said,

"This Court's prior decisions indicate that the broadly formulated Wharton's Rule does not rest on principles of double jeopardy. (Citations omitted.) Instead, it has current vitality only as a judicial presumption, to be applied in the absence of legislative intent to the contrary. The classic Wharton's Rule offenses adultery, incest, bigamy, duelling are crimes that are characterized by the general congruence of the agreement and the completed substantive offense. The parties to the agreement are the only persons who participate in commission of the substantive offense, and the immediate consequences of the crime rest on the parties themselves rather than on society at large. (Citation omitted.) Finally, the agreement that attends the substantive offense does not appear likely to pose the distinct kinds of threats to society that the law of conspiracy seeks to avert. It cannot, for example, readily be assumed that an agreement to commit an offense of this nature will produce agreements to engage in a more general pattern of criminal conduct."

If there is any part of the national economy that society in general is interested in, it is the banks. The concern is that the banks be operated honestly and without failures. Any one living in the early thirties can testify how demoralized the country was when banks all over the country fell like clay pidgeons. While, fortunately, the Union Planters National Bank, involved here, did not lose any money, the manipulations of the defendants could have caused its failure.

We conclude that the type of conduct engaged in by these defendants is the type of conduct the crime of conspiracy is designed to reach, separate and apart from any substantive violations that might be committed.

Finally, the defendants, at the end of their argument on count one, request that either count one or the substantive counts of the indictment dealing with the transactions described as overt acts in the conspiracy count be dismissed. We affirm the convictions of Foster and Harmon under count one of the indictment and will consider the substantive counts later in this opinion.

The defendants were each sentenced to five years imprisonment on count one to run concurrent with sentences on other counts.

The defendants Foster and Harmon were convicted on counts eleven, twelve, fourteen, fifteen, eighteen, twenty-four, twenty-eight and thirty-four, all of which charged substantive offenses in violation of Title 18, Section 215, U.S.C. It is claimed on behalf of the defendants that they have received dual punishment by being sentenced on both the substantive counts and the conspiracy count. There is ample evidence to support the convictions on these counts. The question thus presented is whether the convictions can stand on both the substantive counts and the conspiracy count.

In Pereira v. United States, 347 U.S. 1, 11, 74 S.Ct. 358, 364, 98 L.Ed. 435 (1954), the Court said in an opinion by Chief Justice Warren,

"It is settled law in this country that the commission of a substantive offense and a conspiracy to commit it are separate and distinct crimes, and a plea of double jeopardy is no defense to a conviction for both. See Pinkerton v. United States, 328 U.S. 640, 643-644, (66 S.Ct. 1180, 1181-82) 70 L.Ed. 1489 and cases cited therein. Only if the substantive offense and the conspiracy are identical does a conviction for both constitute double jeopardy. (Emphasis added) Cf. Gavieres v. United States, 220 U.S. 338, 31 S.Ct. 421, 55 L.Ed. 489."

We said in United States v. Austin, 529 F.2d 559, 562 (6th Cir. 1976),

"Yet it is clear that the Fifth Amendment comes into play to prohibit double punishments where the substantive and conspiracy counts of an indictment charge essentially the same offense. (Citations omitted) * * * As the Supreme Court has held, whenever it appears that the proof of one offense proves every essential element of another growing out of the same act, the Fifth Amendment limits the punishment to a single act." (Emphasis added)

Keeping in mind the law as above stated, we are confronted with the question of whether the conspiracy in count one could be proved without proof of the offenses charged in the counts under consideration.

Counts eleven, twelve, fourteen, fifteen, eighteen, twenty-four, twenty-eight and thirty-four, in question here, each charge a separate offense of consenting and agreeing to receive things of value otherwise than as provided by law. For example, count eleven charges that defendants Foster and Harmon caused, aided, abetted, counseled and induced defendants Barr and Murrey, who were employees of the Union Planters National Bank, to knowingly stipulate for, consent and agree to receive things of value from the defendants Foster and Harmon, otherwise as provided by law, for procuring and endeavoring to procure...