U.S. v. Young, No. 81-1536

• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)
• Writing for the Court: Before SETH, and McWILLIAMS, Circuit Judges, and BRIMMER; PER CURIAM; McWILLIAMS
• Citation: 736 F.2d 565
• Docket Number: No. 81-1536
• Decision Date: 22 February 1983
• Parties: 15 Fed. R. Evid. Serv. 1018 UNITED STATES of America, Plaintiff-Appellee, v. Billy G. YOUNG, Defendant-Appellant.

Page 565

736 F.2d 565 15 Fed. R. Evid. Serv. 1018 UNITED STATES of America, Plaintiff-Appellee,
v.
Billy G. YOUNG, Defendant-Appellant. No. 81-1536. United States Court of Appeals,
Tenth Circuit. Feb. 22, 1983.
Certiorari Granted Feb. 21, 1984.
See 104 S. Ct. 1271.

Page 566

Burck Bailey, Oklahoma City, Okl., for defendant-appellant.

David L. Russell, U.S. Atty., F. Michael Ringer, Asst. U.S. Atty., Oklahoma City, Okl., and William J. Hardy, Trial Atty., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Before SETH, and McWILLIAMS, Circuit Judges, and BRIMMER, District Judge ^*.

PER CURIAM.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Circuit R. 10(e). The cause is therefore ordered submitted without oral argument.

Appellant Young, as vice-president and general manager of Compton Petroleum Corporation (Compton Petroleum), entered into a contract to sell crude oil to Apco Oil Corporation in late 1976. Deliveries under

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the contract were made between January 1977 and September 1977; but what Apco Oil Corporation actually received from Compton Petroleum consisted of a mixture of fuel oil and condensate crude oil, even though the product had been designated and certified throughout as low sulpher, or Oklahoma "sweet" crude. The evidence indicated that about half of the oil delivered under the contract, approximately 117,250 barrels, was actually fuel oil. Additionally, in reliance on the designation of the oil purchased from Compton Petroleum as crude, Apco filed tallies of the amount of crude oil that it believed it was refining with the Federal Energy Administration, in compliance with government regulations. These incorrect figures were used by the FEA in establishing the national averages of tier categories of oil refined each month for purposes of equalizing the cost of crude oil under its entitlements program.

Compton Petroleum and Billy G. Young, the Appellant, were charged by indictment with eleven counts of mail fraud under 18 U.S.C. Sec. 1341, three counts of willfully and knowingly making false statements to a government agency under 18 U.S.C. Sec. 1001, one count of interstate transportation of stolen property under 18 U.S.C. Sec. 2314, and were also charged with aiding and abetting in the commission of all fifteen counts under 18 U.S.C. Sec. 2. A plea of nolo contendere was accepted from Compton Petroleum on the entire indictment and a fine was imposed. Young was tried before a jury in the Western District of Oklahoma. At the close of evidence, Count Ten of the Indictment, alleging mail fraud, was dismissed. Subsequently, the jury returned a verdict of guilty on the mail fraud and false statement charges. The Appellant was acquitted of interstate transportation of stolen property. On appeal, Appellant argues that the trial court erred in admitting statements made out of court by a person no longer living at the time of trial. It is further contended that the Appellant was unfairly prejudiced by remarks made during closing rebuttal argument by the prosecutor.

During the course of the trial, statements made out of Court by Homer Reves, the chief accountant and office manager at Compton Petroleum during the period that the alleged criminal activity took place, were received as evidence, despite the fact that Homer Reves had died more than three years prior to the trial. These were statements Reves had made to accountants working under him, which the Government claims were properly admitted as admissions of an agent of a party opponent under Fed.R.Evid. 801(d)(2)(D). Appellant contends that there is no indication that Homer Reves was his employee or agent and that the Court improperly considered Reves as such simply because the Appellant, as vice-president of Compton Petroleum, was higher in the corporate chain of authority.

Ordinarily the statement of an accountant made regarding his employment with a party will not be considered hearsay under Rule 801(d)(2)(D), even in a criminal case. United States v. Diez, 515 F.2d 892, n. 4 (5th Cir.1975); Hayes v. United States, 407 F.2d 189 (5th Cir.1969). The fact that the statement was made by a corporate employee to another corporate employee, rather than to a third party, would not preclude the admission of that statement against the corporation under Rule 801(d)(2)(D). Mahlandt v. Wild Canid Survival & Research Center, Inc., 588 F.2d 626 (8th Cir.1978). However, when such a statement is offered against another corporate employee, instead of the corporation, proper admission under Rule 801(d)(2)(D) will necessarily depend on the nature of the relationship between the declarant and the defendant. United States v. Pacelli, 491 F.2d 1108 (2d Cir.1974), cert. denied, 419 U.S. 826, 95 S.Ct. 43, 42 L.Ed.2d 49; United States v. Coppola, 479 F.2d 1153 (10th Cir.1973).

Obviously, expanding the rule to include statements made by any person who is subordinate to a party opponent may create a loophole in the hearsay rule through which evidence not contemplated by the authors of Rule 801 could be admitted.

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On the other hand, if the factors which normally make up an agency relationship are present, the evidence should not be excluded simply because the statement is offered against a corporate officer, rather than the corporation. Here the prosecution inquired into the relationship between Billy Young and Homer Reves on examination of the two accountants who worked under the deceased declarant during the period in question. Johnnie Milton Huff testified as follows:

Q. Allright, sir. Who was your boss at Compton Corporation?

A. I worked primarily for Bill Young.

Q. And who made the decisions at Compton Corporation so far as you knew?

A. So far as I knew making contract negotiations Bill did that. Bill was in charge of the operations. (Tr. 201.)

Lennox K. Bird also worked as an accountant under Mr. Reves. He testified as follows:

Q. Who told you what to do?

A. Homer Reeves.

Q. And who told Homer Reeves what to do?

A. After--well, that would come from Bill Young.

Q. All right. And is that Mr. Young seated over here in the gray suit?

A. Yes.

Q. All right. May the record show he's identified...