United States v. Blane

• Decision Date: 08 April 1967
• Docket Number: No. 16737.,16737.
• Citation: 375 F.2d 249
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Morris R. BLANE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

375 F.2d 249 (1967)

UNITED STATES of America, Plaintiff-Appellee, v. Morris R. BLANE, Defendant-Appellant.

No. 16737.

United States Court of Appeals Sixth Circuit.

April 8, 1967.

James J. Carroll, and John R. Jewitt, Jewitt & Jewitt, Cleveland, Ohio, for appellant.

Dominic J. Cimino, Asst. U. S. Atty., Cleveland, Ohio, for appellee, Merle M. McCurdy, U. S. Atty., Cleveland, Ohio, on brief.

Before WEICK, Chief Judge, O'SULLIVAN, Circuit Judge, and TAYLOR, District Judge.

O'SULLIVAN, Circuit Judge.

This is an appeal by Morris R. Blane from a judgment of the United States District Court for the Northern District of Ohio, entered upon a jury verdict finding him guilty of bankruptcy fraud as charged in four counts of a five count indictment. Blane is a Cleveland lawyer, specializing in bankruptcy practice. He acted as attorney for the Sterling Jewelry and Appliance Company, Inc., of Cleveland at the time of, and prior to, that company's filing of a petition on August 30, 1961, for an arrangement of debts under Chapter XI of the Bankruptcy Act, and its subsequent adjudication of bankruptcy on October 16, 1961.

Counts I and II charged generally that Blane, in contemplation of his client's bankruptcy, had obtained from Sterling described jewelry and other assets and transferred and concealed the same from the trustee in bankruptcy, in violation of 18 U.S.C. § 152. Blane was acquitted of Count III. Count IV charged Blane with conspiring (in violation of 18 U.S.C. § 371) with the president of the bankrupt, Harold I. Slote, to violate 18 U.S.C. § 152 by seeking out various suppliers for Sterling and ordering from them merchandise that would not be paid for, and that would be concealed during bankruptcy proceedings in recently acquired warehouses; it was further charged under this count that Blane would "retain and conceal unto himself assets and property purchased in pursuance of the conspiracy" with intent to defraud the creditors of Sterling after the company went into bankruptcy. Count V charged Blane with conspiring with the said bankrupt's president Slote to use the United States mails to further their fraudulent scheme and purpose, in violation of Section 371 (conspiracy) and Section 1341 (mail fraud) of 18 U.S.C.¹

Appellant does not question the sufficiency of the proofs introduced at the trial to allow the jury to find him guilty beyond a reasonable doubt. The evidence indicated the following: In January, 1961, Sterling Jewelry and Appliance Company of Cleveland was unable to pay its debts, which then totaled about $62,000. Appellant, a lawyer specializing in bankruptcy matters, was consulted. Under his advice and guidance, Slote, president of bankrupt, set about to buy large quantities of new merchandise, notwithstanding his company's perilous financial condition, with the result that between January 1961, when Blane was employed, and the time the bankruptcy proceedings were instituted in August and October of the same year, the Sterling Jewelry Company's accounts payable rose from $62,000 to approximately $175,000. At Blane's suggestion and with his cooperation this merchandise was not paid for and some of it was concealed from the bankruptcy court. There was evidence that Blane took and kept out of the bankrupt's stock a diamond engagement ring, two pearl chokers, a clasp and pin combination of diamonds and pearls, and a pair of binoculars and case; these items were not scheduled as part of the bankrupt's assets, as required by law.

We affirm the District Court judgment and will discuss appellant's citations of error as follows:

1) Cross-examination of character witnesses.

Two of defendant's character witnesses were asked upon cross-examination whether they had read any newspaper articles concerning appellant and whether such articles were considered by them in their evaluation of Mr. Blane's reputation. Parts of that cross-examination we set out in Appendix A. Defendant's attorneys objected to the line of questioning developed by the prosecution, and moved for a mistrial. In denying the motion, the District Judge said to counsel, in part:

"I have suggested that I thought it would have been proper if a witness had disclosed there were rumors. I think it proper for the Government to ascertain of any character witness whether or not he has heard rumors. I believe that this properly embraces the reading of a newspaper.

"But I have suggested I wouldn\'t allow that inquiry to go any further than to ask such a witness whether or not the rumors, or this article, became a part of the discussion between the witness on the stand and the people from whom he states he has obtained Mr. Blane\'s reputation.

He then spoke to the jury as follows:

"The Court: At this time, ladies and gentlemen, I wish to comment upon and instruct you regarding the witnesses who have appeared to give testimony as to reputation of the defendant, Mr. Blane.

"The Defendant has offered testimony of witnesses as to general reputation of the Defendant for truth and veracity or honesty and integrity.

"Later in my general instructions I will instruct you further upon this subject, however, at this time I instruct you that since the Defendant has offered witnesses to prove his good name, it is permissible and proper for the prosecution to cross examine these witnesses to test the sufficiency of the witnesses\' knowledge to determine if they are qualified to give an opinion by inquiry into the extent of the acquaintance of the witnesses with the Defendant, the community in which he has lived, and the circles in which he has moved, so that the Court and jury can determine if the witnesses are qualified to speak with authority of the terms in which generally the Defendant is regarded.

"Although the prosecution has asked the witnesses certain questions, there is no proof in this case as to the content of any rumors concerning the reputation of Mr. Blane, nor of the contents of any newspaper articles concerning Mr. Blane.

"Therefore, you are not permitted to draw any inference or assumption as to contents of any rumors or newspaper articles from the questions asked by the prosecution of the character witnesses.

"The cross examination by the prosecution of the character witnesses is limited to testing the sufficiency of the opinions of the witnesses as to general reputation of the Defendant and can be considered by you only in determining what weight you shall give to the testimony of the character witnesses."

We are of the view that the accused rulings of the District Judge were, in their context, an exercise of discretion which was not abused. In affirming him there would be little profit in our attempting meticulous analysis or distinction of the recited cross-examination vis-a-vis cross-examinations in other cases which have been held to be impermissible. Compare, e. g., Pittman v. United States, 42 F.2d 793, 795-798 (CA 8, 1930); United States v. Phillips, 217 F.2d 435, 443, 444 (CA 7, 1954). This much should be said, however: the specific contents of any newspaper report were not disclosed and we discern no government effort to do so; and the jury was carefully warned that the prosecution's questions could only be used to test whether the witnesses' avowed familiarity with the defendant's reputation was broad enough to include an awareness that reports of certain incidents, derogatory of that reputation, had been carried in the newspapers. Newspaper accounts may be as much a part of a community's thinking regarding the reputation of an individual as rumors and suspicions that circulate orally among his neighbors and associates. To the extent that Sloan v. United States, 31 F.2d 902, 905, 906 (CA 8, 1929), appears to hold differently, we advise our disagreement with its conclusion. We consider that the legitimate scope of the cross-examinations here involved was a matter for the trial judge's discretion. See Mannix v. United States, 140 F.2d 250, 251 (CA 4, 1944). It would be presumptuous for us to attempt improvement on the learned dissertation of the subject by Mr. Justice Jackson in the majority opinion in Michelson v. United States, 335 U.S. 469, 69 S.Ct. 213, 93 L.Ed. 168 (1948); he said, in part, therein:

"Both propriety and abuse of hearsay reputation testimony, on both sides, depend on numerous and subtle considerations, difficult to detect or appraise from a cold record, and therefore rarely and only on clear showing of prejudicial abuse of discretion will Courts of Appeals disturb rulings of trial courts on this subject." 335 U.S. at 480, 69 S.Ct. at 221, 93 L.Ed. at 176.

Having in mind the content of the accused cross-examinations and the District Judge's careful admonition to the jury as to the limits to their consideration of them, we are satisfied that he acted discreetly.

2) Alleged error in denial of request for instruction.

In his request for instruction No. 3, which was denied by the District Court, appellant set out at length his theory of defense. Therein he recited, relevant to the charge of his obtaining, transferring and concealing certain jewelry and other assets of the bankrupt, his claim that he had received these items as payments on account of attorney fees for the services he rendered or would render to his client, Sterling Jewelry and Appliance Company. The request would have told the jury that attorney fees could be paid in property as well as cash; that even though payment of attorney fees for services not germane to, or in anticipation of, bankruptcy within four months of bankruptcy might be a preference, it would not thereby be a criminal offense; that if attorney's fees were paid in property or money for services rendered or to be rendered, in contemplation of bankruptcy, such payments were sanctioned by the Bankruptcy Act, subject to re-examination as to their reasonableness, and were not criminal offenses. Further expatiation of the circumstances under which Blane's acquisition of the...