United States v. Bogy, No. 5040

• Court: U.S. District Court — Western District of Tennessee
• Writing for the Court: William R. Harrison and T. Robert Acklen, both of Memphis, Tenn., for J. O. Spaulding
• Citation: 16 F. Supp. 407
• Parties: UNITED STATES v. BOGY et al. SAME v. SPAULDING et al. SAME v. OGDEN et al.
• Decision Date: 15 September 1936
• Docket Number: 5030,No. 5040,5025.

16 F. Supp. 407

UNITED STATES
v.
BOGY et al.
SAME
v.
SPAULDING et al.
SAME
v.
OGDEN et al.

Nos. 5040, 5030, 5025.

District Court, W. D. Tennessee, W. D.

September 15, 1936.

William McClanahan, U. S. Atty., and R. G. Draper and C. P. J. Mooney, Asst. U. S. Attys., all of Memphis, Tenn., for the United States.

Charles M. Bryan and Blan R. Maxwell, both of Memphis, Tenn., for Benjamin A. Bogy.

William R. Harrison and T. Robert Acklen, both of Memphis, Tenn., for J. O. Spaulding.

Harry Spears and Eric Babendreer, both of Memphis, Tenn., for Thomas J. Coyne.

16 F. Supp. 408

MARTIN, District Judge.

These three criminal cases have been argued and considered together on separate demurrers of three defendants, Bogy, Spaulding, and Coyne. The defendants Bogy and Coyne demur to only the sixth count of the indictments against them, respectively; but the defendant Spaulding demurs to all six counts against him.

Under the established law of the United States courts, the demurrer of Spaulding to the first five counts, involving exclusively the mail fraud statute (18 U.S.C.A. § 338), to the effect that the facts stated do not constitute an offense against the United States or the laws thereof, is so manifestly bad as to merit no discussion. It should suffice to state that the following decisions, among others, negative the correctness of the criticisms of the defendant Spaulding directed against said counts 1, 2, 3, 4, and 5 of the indictment: Chew v. U. S. (C.C.A.) 9 F.(2d) 348; Clark v. U. S. (C.C.A.) 293 F. 301; Preeman v. U. S. (C.C.A.) 244 F. 1; Sandals v. U. S. (C C.A.) 213 F. 569; Emanuel v. U. S. (C.C. A.) 196 F. 317; Byron v. U. S. (C.C.A.) 259 F. 371; U. S. v. Clark (D.C.) 125 F. 92; O'Hara v. U. S. (C.C.A.) 129 F. 551; Stokes v. U. S., 157 U.S. 187, 15 S.Ct. 617, 39 L.Ed. 667; Culp v. U. S. (C.C.A.) 82 F. 990; Lehman v. U. S. (C.C.A.) 127 F. 41; Horn v. U. S. (C.C.A.) 182 F. 721; Crane v. U. S. (C.C.A.) 259 F. 480; Whitehead v. U. S. (C.C.A.) 245 F. 385; Wheeler v. U. S. (C.C.A.) 77 F.(2d) 216; Cowl v. U. S. (C.C.A.) 35 F.(2d) 794; McNear v. U. S. (C.C.A.) 60 F.(2d) 861; Brady v. United States (C.C.A.) 24 F.(2d) 397; Havener v. U. S. (C.C.A.) 49 F.(2d) 196; Fournier v. U. S. (C.C.A.) 58 F.(2d) 3; Robinson v. U. S. (C.C.A.) 33 F.(2d) 238; Krotkiewicz v. U. S. (C.C.A.6) 19 F.(2d) 421; Wheeler v. U. S. (C.C.A.9, 1935) 77 F.(2d) 216.

In Hagner v. United States (1932) 285 U.S. 427, 431, 52 S.Ct. 417, 419, 76 L.Ed. 861, the Supreme Court, speaking through Mr. Justice Sutherland, said: "The rigor of old common-law rules of criminal pleading has yielded, in modern practice, to the general principle that formal defects, not prejudicial, will be disregarded. The true test of the sufficiency of an indictment is not whether it could have been made more definite and certain, but whether it contains the elements of the offense intended to be charged, `and sufficiently apprises the defendant of what he must be prepared to meet, and, in case any other proceedings are taken against him for a similar offense, whether the record shows with accuracy to what extent he may plead a former acquittal or conviction.' Cochran and Sayre v. United States, 157 U.S. 286, 290, 15 S.Ct. 628, 630, 39 L.Ed. 704; Rosen v. United States, 161 U.S. 29, 34, 16 S.Ct. 434, 480, 40 L.Ed. 606."

The sixth count of the indictments charges conspiracy to commit the "offenses charged against said defendants in the several counts of this indictment preceding this count, made offenses by section 215 of the Criminal Code (section 338, title 18 U.S.C.A.) and section 17 of the Securities Act of 1933 (section 77q, title 15 U.S.C.A.)" in the manner and by the means stated in detail.

The demurrers to this count are placed upon three grounds, and will be considered in the numerical order presented.

I. The first ground of demurrer charges broadly that the challenged conspiracy count of the indictment "does not state facts sufficient to constitute an offense against the United States or the laws thereof."

Section 37 of the United States Criminal Code (18 U.S.C.A. § 88), provides: "If two or more persons conspire either to commit any offense against the United States, or to defraud the United States in any manner or for any purpose, and one or more of such parties do any act to effect the object of the conspiracy, each of the parties to such conspiracy shall be fined not more than $10,000, or imprisoned not more than two years, or both."

In United States v. Rabinowich, 238 U. S. 78, 85, 86, 35 S.Ct. 682, 683, 59 L.Ed. 1211, the Supreme Court said:

"It is apparent from a reading of section 37, Crim.Code (section 5440, Rev. Stat.), and has been repeatedly declared in decisions of this court, that a conspiracy to commit a crime is a different offense from the crime that is the object of the conspiracy. Callan v. Wilson, 127 U.S. 540, 555, 8 S.Ct. 1301, 32 L.Ed. 223, 228; Clune v. United States, 159 U.S. 590, 595, 16 S.Ct. 125, 40 L.Ed. 269, 271; Williamson v. United States, 207 U.S. 425, 447, 28 S. Ct. 163, 52 L.Ed. 278, 280; United States v. Stevenson No. 2 215 U.S. 200, 203, 30 S.Ct. 37, 54 L.Ed. 157, 158. And see Burton v. United States, 202 U.S. 344, 377, 26 S.Ct. 688, 50 L.Ed. 1057, 1069, 6 Ann.Cas.

16 F. Supp. 409

362; Morgan v. Devine, 237 U.S. 632, 35 S.Ct. 712, 59 L.Ed. 1153. The conspiracy, however fully formed, may fail of its object, however earnestly pursued; the contemplated crime may never be consummated; yet the conspiracy is none the less punishable. Williamson v. United States, 207 U.S. 425, 447, 28 S.Ct. 163, 52 L.Ed. 278, 290. And it is punishable as conspiracy, though the intended crime be accomplished. Heike v. United States, 227 U.S. 131, 144, 33 S.Ct. 226, 57 L.Ed. 450, 455, Ann.Cas. 1914C, 128

"Nor do we forget that a mere conspiracy, without overt act done in pursuance of it, is not criminally punishable under § 37, Crim.Code. United States v. Hirsch, 100 U.S. 33 34, 25 L.Ed. 539, 540; Hyde v. Shine, 199 U.S. 62, 76, 25 S.Ct. 760, 50 L. Ed. 90, 94; Hyde v. United States, 225 U. S. 347, 359, 32 S.Ct. 793, 56 L.Ed. 1114, 1123, Ann.Cas.1914A, 614. There must be an overt act; but this need not be of itself a criminal act; still less need it constitute the very crime that is the object of the conspiracy. United States v. Holte, 236 U.S. 140, 144, 35 S.Ct. 271, 59 L.Ed. 504, L.R.A.1915D, 281; Joplin Mercantile Co. v. United States, 236 U.S. 531, 535, 536, 35 S.Ct. 291, 59 L.Ed. 705. Nor need it appear that all the conspirators joined in the overt act. Bannon v. United States, 156 U.S. 464, 468, 15 S.Ct. 467, 39 L.Ed. 494, 496. A person may be guilty of conspiring, although incapable of committing the objective offense. Williamson v. United States, and United States v. Holte, supra. And a single conspiracy might have for its object the violation of two or more of the criminal laws, the substantive offenses having, perhaps, different periods of limitation. See Joplin Mercantile Co. v. United States, 236 U.S. 531, 547, 548, 35 S.Ct. 291, 59 L.Ed. 705, for an instance of a conspiracy with manifold objects."

In the light of this clear-cut statement of the law, further illuminated by the authorities cited below (selected from many to the same effect), a plainly discernible offense against the laws of the United States is charged in the sixth count of the indictments. Stokes v. United States, 157 U.S. 187, 15 S.Ct. 617, 39 L.Ed. 667; Baker v. United States (C.C.A.) 10 F.(2d) 60; Rudner v. United States (C.C.A.) 281 F. 516; Dahl v. United States (C.C.A.) 234 F. 618; Grace v. United States (C.C.A.) 4 F.(2d) 658; Hedderly v. United States (C.C.A.) 193 F. 561; Mendelson v. United States, 61 App.D.C. 127, 58 F.(2d) 532; Zucker v. United States (C.C.A.) 288 F. 12; Belvin v. United States (C.C.A.) 12 F.(2d) 548; Taylor v. United States (C.C.A.) 2 F.(2d) 444; Ching v. United States (C.C.A.) 118 F. 538; United States v. Cella, 37 App.D. C. 423; Lehman v. United States (C.C.A.) 127 F. 41; Robinson v. United States (C. C.A.) 172 F. 105; Morris v. United States (C.C.A.) 7 F.(2d) 785; McKelvey v. United States (C.C.A.) 241 F. 801; Riddle v. United States (C.C.A.) 279 F. 216; United States v. Olmstead (D.C.) 5 F.(2d) 712; United States v. Herzig (D.C.) 26 F.(2d) 487; Crawford v. United States, 212 U.S. 183, 29 S.Ct. 260, 53 L.Ed. 465, 15 Ann.Cas. 392.

II. (A) Upon the predicate that the first five counts of the indictment charge no violation of the Securities Act of 1933 (15 U.S.C.A. § 77q), but charge only a violation of the mail fraud statute (18 U.S.C.A. § 338), followed by the contention that the offenses defined in the Securities Act must be based upon "sales," the demurrer thus challenges the sufficiency of the indictment: "The indictment does not allege that any sale was actually made by the use or means of instruments of transportation in interstate commerce, but merely alleges that in pursuance of the plan to defraud instrumentalities of interstate commerce were employed. Therefore, if the Securities Act of 1933 was a valid and constitutional enactment, a violation thereof has not been charged by the first five counts of the indictment, and therefore the reference to said counts as setting out said violation does not describe an offense against the Securities Act of 1933."

This argument is rejected by the terms of the act itself. The Securities Act of 1933 (15 U.S.C.A. § 77b (3), provides: "The term `sale,' `sell,' `offer to sell,' or `offer for sale' shall include every contract of sale or disposition of, attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value; except that such terms shall not include preliminary negotiations or agreements between an issuer and any underwriter."

This definition of the words "sale," "offer to sell," and "offer for sale" cannot be ignored, but must be read into the subsequent section of the act defining the criminal offenses constituting a...