U.S. v. Garth

• Decision Date: 08 October 1985
• Docket Number: No. 85-1126,85-1126
• Citation: 773 F.2d 1469
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Lawrence Wayne GARTH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1469

773 F.2d 1469

UNITED STATES of America, Plaintiff-Appellee, v. Lawrence Wayne GARTH, Defendant-Appellant.

No. 85-1126.

United States Court of Appeals Fifth Circuit.

Oct. 8, 1985.

John F. Arens, Richard P. Alexander, Fayetteville, Ark., for defendant-appellant.

Marvin Collins, U.S. Atty., Clinton E. Averitte, Asst. U.S. Atty., Lubbock, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before GOLDBERG, JOLLY and HIGGINBOTHAM, Circuit Judges.

GOLDBERG, Circuit Judge:

Emerson once wrote that "[t]he farmer is covetous of his dollar, and with reason. It is no waif to him. He knows how many strokes of labor it represents. His bones ache with the day's work that earned it." ¹ In the years since Emerson penned these words, air-conditioned combines have in most instances replaced horse and harness, but farmers, like any other workers in a troubled industry, remain covetous of their dollars.

In this case, the jury found in essence that appellant's covetousness of the dollar exceeded the bounds of the criminal law. In particular, the jury found appellant Lawrence Wayne Garth guilty of five counts ² of conversion, in violation of 18 U.S.C. Secs. 658 and 2. ³ All five counts alleged the conversion to his own use of property mortgaged to the Farmers Home Administration ("FmHA"). Count 1 charged Garth with the conversion of 10,000 cwt. of grain sorghum; Counts 2, 3, and 4 charged the conversion of 15, 8, and 98 head of cattle respectively; and Count 6 charged him with the conversion of 136 bushels of wheat. The district court sentenced Garth to two years in prison on each of the five counts, which sentences were to run concurrently.

Appellant raises five grounds of error: (1) that his conviction violates his constitutional right to equal protection of the laws and due process; (2) that 18 U.S.C. Sec. 658 is void for vagueness; (3) that the government had impliedly consented to his conduct and is therefore estopped from prosecuting him; (4) that the trial court erred in refusing to admit defendant's proffered exhibit 10; and (5) that the evidence at trial is insufficient to support his conviction. Finding all five arguments meritless, we affirm.

I. Factual and Procedural Background

Wayne Garth is a farmer who raises cattle and hybrid seed on over 3,000 acres near Dumas in the Texas Panhandle. In 1978 the counties where Garth farmed were declared disaster areas due to drought. Saddled with losses from the drought and other debts, Garth applied to the FmHA for a $400,000 economic emergency loan in September, 1978. Charles Taylor, then FmHA county supervisor in Amarillo and a witness for the government at trial, recommended that Garth withdraw his application. Taylor had concluded that Garth's outstanding debts would limit his ability to repay the loan.

Garth then refiled in December, 1978 for emergency loans, which, after another assessment of his farming operations and his ability to pay, the FmHA approved for the sum of $1,650,640.00. ⁴

The loan was evidenced by four promissory notes, all dated June 19, 1979. The first loan was in the amount of $95,130, payable over twenty years at three percent interest. This loan covered actual production losses from the drought. The second loan was for $169,520, payable over seven years at eight-and-one-half percent interest. This loan was a major adjustment emergency loan to restructure chattel-type debt. The third loan was also a major adjustment emergency loan, but it restructured real estate-type debt. It was for $873,090, payable over forty years at eight-and-one-half percent interest. The fourth loan was an annual operating loan for the purpose of financing Garth's projected operating expenses for 1979. It was for $512,900, payable in one year at eight-and-one-half percent interest. To pay for his 1980 operating expenses, FmHA loaned Garth $623,400 on June 19, 1980, payable in one year at fourteen percent interest. Apparently, Garth has paid in full only the loan for $512,900.

On June 19, 1979, Garth signed an agreement that secured all four notes and any future indebtedness to FmHA. The security agreement provided that Garth's crops, then or thereafter planted, and all livestock, then owned or thereafter acquired would secure the four notes and any future notes. No new security agreement was made for the 1980 loan of $623,400.

Garth's course of misconduct began on October 26, 1980, when he sold his seed milo crop to Advanced Quality Seed Company, of which he was a partner, without reporting to FmHA the sale or the disposition of the proceeds. Only after Weldon Rainey, who succeeded Taylor in supervising Garth's account, had written to Garth on July 9 and July 17, 1981 about the crop did Garth bring in the settlement sheets for those sales. When Garth did not account for the milo proceeds, Rainey reported the conversion of the milo on August 4, 1981. The milo crop was valued at $100,184. These facts form the basis of Count 1.

The cattle sales that form the basis of Counts 2, 3, and 4 took place in February, March, and April of 1981. Mike Garth, Wayne Garth's son and a partner with his father in Garth and Garth Cattle Company, made the sales to and received the checks from the Texhoma Livestock Commission. Mike Garth sold 15 head of cattle on February 4 for $5,565.86, 8 head of cattle on March 5 for $2,302.13, and 98 head of cattle on April 30 for $23,501.79. Although Wayne Garth had accounted for the proceeds from many previous cattle sales, he did not turn over the proceeds from these sales, nor did he offer any explanation to Rainey when asked about them.

The last act for which the jury found Garth criminally responsible was the conversion of 136 bushels of wheat worth $493.68. Mike Garth sold 181.33 bushels of wheat to Moore County Grain Handling Company in Dumas, Texas, of which his share was 136 bushels. The check from the Grain Handling Company, although payable to Mike Garth, was deposited in Wayne Garth's account on July 13, 1981.

After Rainey had drawn up evidence of conversion, the Office of Inspector General, United States Department of Agriculture, sent special agent Allen Poff to investigate. On May 11, 1982, Poff interviewed Garth at his home regarding the milo, wheat, and cattle sales. Poff reduced the conversation to a written statement and returned on May 13, at which time Garth signed the statement. During the conversation, Garth admitted that he had sold the cattle which later formed the basis of Counts 2, 3, and 4, and that he had not given the proceeds to FmHA. Garth also admitted that he had not turned over to FmHA the proceeds from either the sale of the 1980 seed milo crop or the wheat sale to the Moore County Grain Handling Company.

Garth was indicted August 16, 1984, and trial began on December 7, 1984. The defense conducted its case through cross-examination of the government's witnesses, but it did not call any witnesses of its own. The jury returned guilty verdicts on all five counts on December 13, and on January 16, 1985, the trial judge denied defendant's motion for judgment of acquittal or, in the alternative, for a new trial. Garth was sentenced on February 22, 1985, and timely noticed his appeal that same day.

II. The Merits

A.

Garth asserts as his first point of error that, because he is a member of the Plaintiff class in Coleman v. Block, 580 F.Supp. 194 (D.N.D.1984), that decision bars the government from prosecuting him, and the trial court erred therefore in failing to dismiss the charges. Coleman held that FmHA appeal regulations governing foreclosures did not comport with due process, id. at 203, and enjoined the FmHA, among others, from foreclosing on secured property without adequate notice and hearing. Id. at 211. ⁵

Although we can safely conclude that Garth is a member of the class thus protected, see United States v. Nolder, 749 F.2d 1128, 1130 (5th Cir.1984), we fail to see how his membership provides him any protection against a criminal prosecution under 18 U.S.C. Sec. 658. Coleman does not speak in any manner, shape, or form--by any verb, noun, adverb, adjective, or otherwise--to indicate that it was dealing with any criminal statute. The relief sought and the issues considered were of a wholly civil nature. The only restriction that the court placed on the government in cases of criminal conversion was the requirement that the borrower "be afforded an opportunity to apply for deferral [of the loan] under 7 U.S.C. Sec. 1981a." Id. at 211. This restriction in no way alters the class members' rights under the criminal law, but merely enjoins the government from ignoring class member rights under a distinct, civil law. In effect, Garth asks us to read Coleman as having decriminalized behavior prohibited by 18 U.S.C. Sec. 658. Coleman did nothing of the sort, nor could it have done so.

B.

The defendant next argues that the government is estopped from prosecuting him because FmHA officials had consented to his conduct. In support of this argument, Garth claims that the "evidence at trial established that it was a 'customary practice' to allow appellant and other FmHA borrowers to sell and dispose of crops and livestock and then report the same after the fact." Appellant's Brief at 20. Garth has also directed our attention to an audit report of FmHA practices by the office of the Inspector General of the Department of Agriculture. ⁶ The report, based on a sample of 202 cases nationwide, concluded that the "lack of legal action against known cases of improper dispositions contributes to the impression of implied consent held by many FmHA borrowers as well as the general public." Record Excerpts at 54.

This audit report is subject to the government's motion to strike, which we now grant for the following reasons. The report first appeared in the Defendant's Record Excerpts, well after trial. It was neither admitted nor even offered at...