U.S. v. Neary

• Decision Date: 31 March 1977
• Docket Number: No. 75-1781,75-1781
• Citation: 552 F.2d 1184
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Joseph J. NEARY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1184

552 F.2d 1184

UNITED STATES of America, Plaintiff-Appellee, v. Joseph J. NEARY, Defendant-Appellant.

No. 75-1781.

United States Court of Appeals Seventh Circuit.

Argued Feb. 26, 1976.

Decided March 31, 1977.

Thomas D. Decker, Federal Defender Program, Chicago, Ill., for defendant-appellant.

Samuel K. Skinner, U. S. Atty., Chicago, Ill., William C. Brown, Atty., U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, PELL, Circuit Judge, and STECKLER, Chief District Judge. ^*

FAIRCHILD, Chief Judge.

On January 28, 1975 the defendant was indicted for concealing and disposing of securities moving in interstate commerce, valued at $5,000 or more, knowing them to have been stolen, in violation of 18 U.S.C § 2315. Under § 2315, the maximum term of imprisonment for this offense is ten years. On April 25, 1975, before trial, the government filed notice of its intention to seek an enhanced sentence under 18 U.S.C § 3575, the dangerous special offender section of Title X of the Omnibus Crime Control Act of 1970. The maximum possible sentence under § 3575 is 25 years.

The defendant was tried by jury and convicted under § 2315. Following trial, the district court conducted hearings as provided under § 3575 and found that the defendant was a special and dangerous offender, and sentenced the defendant to ten years and one day imprisonment. From that conviction and sentence the defendant appeals. We affirm.

The defendant raises the following issues: whether the government properly proved the value of the securities to be in excess of $5,000; whether the trial court erred in denying defendant's motion for a new trial because of alleged incompetence of a juror revealed by events subsequent to verdict; and whether 18 U.S.C § 3575 is unconstitutional on its face or as applied in this case. We find that there was sufficient proof to establish the value of the securities to be greater than $5,000. The facts revealed after trial did not raise any issue of juror competency. Although questions of due process could arise in certain contexts in implementing the provisions of § 3575, the application of the statute did not violate defendant's constitutional rights in this case.

I. THE VALUE OF THE SECURITIES

On July 23, 1974 the office of William R. Isaacs in Berea, Kentucky was burglarized. Stock certificates for 21,263 shares of Kentucky Family Security Group Insurance Company (hereafter referred to as Kentucky Shares) and 34,884 shares of American Family Security Group, Inc. (hereafter referred to as American Shares) were taken. On August 8, 1974 the defendant met with an undercover agent of the Federal Bureau of Investigation in Chicago and asked the agent if he had a connection for disposing of stolen securities. After the agent indicated that he might be able to arrange a sale of the securities, the defendant gave him envelopes containing the stock certificates stolen from Mr. Isaac's office in Kentucky. Prosecution under 18 U.S.C § 2315 followed.

The defendant challenges the validity of designating par value of securities as a criterion for the offense charged and raises other arguments with respect to the determination of the market value of the stocks involved.

Value is defined in 18 U.S.C § 2311 as "face, par, or market value, whichever is the greatest . . . ." At trial, the government offered several measures of value of the stock, among them par value. ¹ While the American Shares had no par value, the Kentucky Shares had a par value of one dollar per share. Thus, aggregate par value of the Kentucky Shares alone was $21,263.

Defendant concedes that par value greater than $5,000 was established, but asserts that par value is an unreasonable standard of valuation, having no substantial relation to the purpose of the statute. The thrust of defendant's challenge is that par value has little or no bearing on the value of a share of stock.

In essence defendant claims that Congress had made an invalid classification among persons concealing and otherwise dealing with stolen securities in commerce, with knowledge of their being stolen. He seems to concede the validity of making the existence of a federal offense depend on market value, but challenges making it depend alternatively on par value.

Congress has great latitude, however, in making statutory classifications. A statutory discrimination will not be set aside as violative of equal protection or due process if any state of facts reasonably may be conceived to justify it. United States v. Weatherford, 471 F.2d 47, 51 (7th Cir. 1972), cert. den., 411 U.S. 972, 93 S.Ct. 2144, 36 L.Ed.2d 695.

In defining the federal offense of concealing and disposing of stolen securities moving as interstate commerce, Congress need not have specified any minimum value, or could have chosen any amount other than $5,000. The purpose of its choice was not really to absolve those who deal culpably with such securities of lesser value, but to impose a limit which would avoid overtaxing the federal justice system. United States v. Gardner, 516 F.2d 334, 349 (7th Cir. 1975).

Of course, it could be true in particular instances that securities with a par value of $5,000 or more in fact would be worthless, and dealing with the certificates would be a federal offense under this and related sections. Stock with no par value could have a market value of $4,999 and one dealing with it with knowledge would not be subject to federal prosecution.

Perfect logical consistency is not essential. It is only necessary that the standard have some rational relationship to the purpose of protecting interstate commerce, yet limiting the exercise of federal jurisdiction in terms of the significance of the offense.

Use of par value has a rational relationship to the purpose to be served. At the time of original issue of stock, most jurisdictions require that the consideration paid into the corporation for shares having par value shall be at least equal to that par value. W. Cary, Corporations, p. 1111 (4th ed. 1969). At that point, par value has some relationship to intrinsic value. As time goes by, it becomes less valid an indication. Even though this is true, we think that in seeking to eliminate from federal prosecution the least substantial interference with interstate commerce, a limitation in terms of par value is not so meaningless as to violate standards of due process, including equal protection.

Because par value of the Kentucky Shares exceeded $5,000, and the law making par value a criterion is valid, it is not really necessary to deal with defendant's arguments concerning the proof of market value. United States v. Weinberg, 478 F.2d 1351, 1354 (3rd Cir. 1973), cert. den., 414 U.S. 1005, 94 S.Ct. 363, 38 L.Ed.2d 242.

In any event, adequate market value was clearly proved. Defendant argues that although the government proved sales of Kentucky Shares at $2.75 per share, it failed to prove that a block of 21,263 shares could have been sold, or that there were any sales aggregating as much as $5,000. We think proof of the price per share was sufficient to make a prima facie case, and there were no facts tending to show that this price could not have been obtained for the shares involved.

Defendant also argues that the certificates were not marketable because they were registered and because the owner had placed a stop transfer order on them. We think that in the light of the purpose of this statute, market value is the value of the shares evidenced by the certificates stolen, and is not affected by the fact that forgery would be necessary to transfer them, or that a stop transfer order had been placed by reason of the theft. See United States v. McMahon, 548 F.2d 712 (7th Cir., 1977).

II. COMPETENCE OF THE JUROR

During the week following the defendant's trial, a juror who served in the defendant's case appeared as a member of the panel of prospective jurors in another matter. On voir dire examination in the later case, the individual stated that she had served as a juror in a civil case the preceding week. She was evidently referring to defendant's trial. Defendant brought this incident to the attention of the court in his motion for a new trial, but the court declined further inquiry. Defendant contends that this statement reveals that the juror had been incompetent to serve in defendant's case. The argument is that she must not have realized, or perhaps was not capable of realizing, the extent of the government's burden of proof in defendant's case. Perhaps the juror misspoke or recalled the case inaccurately. Her reference to this case as a civil case does not demonstrate that she failed to follow, or was incapable of following the instructions with respect to reasonable doubt and the like.

In any event, a juror will not be heard to impeach the verdict by testimony concerning his misconception of the court's instructions. United States v. Stacey, 475 F.2d 1119, 1121 (9th Cir. 1973). Defendant's position that this juror's statement was the kind of clear and incontrovertible evidence of incompetence permitting further inquiry is untenable. See United States v. Dioguardi, 492 F.2d 70 (2d Cir. 1974), cert. den., 419 U.S. 829, 95 S.Ct. 49, 42 L.Ed.2d 53.

III. APPLICATION OF THE DANGEROUS SPECIAL OFFENDER STATUTE

After the defendant was indicted and before the defendant was tried, the government filed a petition against the defendant under 18 U.S.C. § 3575, entitled: "Increased sentence for dangerous special offenders," Title X of the 1970 Omnibus Crime Control Act. The petition alleged that the defendant was a special offender within § 3575(e)(1) on the basis of prior felony convictions; ² the government offered to prove numerous allegations in support of its claim that the defendant was a dangerous offender under § 3575(f). ³

The court deemed defendant a special offender under (e)(1), on the basis of his previous convictions and...