United States v. Carter

• Decision Date: 09 January 1963
• Docket Number: No. 14721-14724.,14721-14724.
• Citation: 311 F.2d 934
• Parties: UNITED STATES of America, Plaintiff-Appellee v. George S. CARTER, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee v. CITY PRODUCTS CORPORATION, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee v. The PILSENER BREWING COMPANY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee v. John J. FELICE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

311 F.2d 934 (1963)

UNITED STATES of America, Plaintiff-Appellee v. George S. CARTER, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee v. CITY PRODUCTS CORPORATION, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee v. The PILSENER BREWING COMPANY, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee v. John J. FELICE, Defendant-Appellant.

Nos. 14721-14724.

United States Court of Appeals Sixth Circuit.

January 9, 1963.

COPYRIGHT MATERIAL OMITTED

William F. Snyder and Edwin Knachel, Cleveland, Ohio (Edwin Knachel, William F. Snyder, Marshman, Hornbeck, Hollington, Steadman & McLaughlin, Cleveland, Ohio, on the brief), for defendant-appellant Carter.

Benjamin C. Boer, Cleveland, Ohio (Benj. C. Boer, Boer, Mierke, McClelland & Caldwell, Cleveland, Ohio, Sidney De Lamar Jackson, Jr., Baker, Hostetler & Patterson, Cleveland, Ohio, on the brief), for defendants-appellants City Products and Pilsener Brewing Co.

Moses Krislov Cleveland, Ohio, P. D. Maktos, Washington, D. C. (Protagoras Dimitrios Maktos, C. Thomas Zinni, Boston, Mass., on the brief; Harry Weinstock, New York City, of counsel), for defendant-appellant John J. Felice.

Philip Wilens, Washington, D. C. (Merle M. McCurdy, U. S. Atty., Cleveland, Ohio, John F. Lally, Atty., Criminal Division, Dept. of Justice, Washington, D. C., on the brief), for plaintiff-appellee.

Before CECIL, Chief Judge, and MILLER and O'SULLIVAN, Circuit Judges.

O'SULLIVAN, Circuit Judge.

This matter involves the appeals of two corporations and two individuals from judgments of conviction for violating § 302(a) and (b) of the Taft-Hartley Act (Title 29, U.S.C.A., § 186(a) and (b)). These sections make it a crime, in industries affecting commerce, for an employer to pay any money to an official of a union representing its employees and for such union official to accept the money. (§ 186(a) (b), Title 29, U.S.C.A.).¹ Exclusions from the Act's applicability are not relevant here.

Defendant-appellant Pilsener Brewing Company operated a brewery in Cleveland, Ohio. It was a wholly-owned subsidiary of defendant-appellant City Products Corporation, whose main offices were in Chicago. Defendant-appellant George S. Carter was, at the time of the alleged offense, president and chief executive officer of Pilsener, as well as a member of its board of directors. He was also a vice-president of City Products. Defendant-appellant John J. Felice was, at the time involved, the president and general manager of Teamsters Union Local No. 293, which was the bargaining representative of some of Pilsener's employees. City Products and Pilsener were engaged in an industry affecting commerce. An indictment returned December 16, 1960, in its first count, charged that on April 17, 1956, City Products, Pilsener, and George S. Carter unlawfully, wilfully and knowingly paid $4,500.00 to defendant Felice and, in its second count, that Felice unlawfully, wilfully and knowingly received such money from City Products, Pilsener and George S. Carter, all in violation of the mentioned statute.

All defendants waived jury trial and the cause was tried to a United States District Judge sitting in Cleveland, Ohio. The District Judge found all defendants guilty as charged and imposed the following sentences: City Products and Pilsener were fined $10,000.00 and $4,500.00, respectively; George S. Carter was sentenced to 90 days in jail; and John J. Felice was sentenced to 90 days in jail and fined the sum of $4,500.00. The respective appellants assert varying grounds for reversal, but common to all is a claim that the evidence was not sufficient to support a finding of guilt.

The factual story of this case, which for the most part is undisputed, is as follows. For some years prior to April, 1956, Carter, as president of Pilsener and Felice as head of the Teamster Local, participated in the labor negotiations between Pilsener and the Teamsters Union. Each signed the resulting bargaining agreements in their respective capacities for Pilsener and Teamsters. While Carter and Felice described their relationship as that of intimate and social friends, their association and acquaintance had beginning in labor negotiations in which they had both participated. Sometime prior to April 17, 1956, Felice arranged to purchase two homes, one for himself and one for his son, who was vice-president of the Teamster local. The price to be paid for these houses was $79,000.00. Felice expected to finance such purchase by a mortgage on the houses being purchased as well as a mortgage on the home then owned by him. In addition to the proceeds of such mortgages, Felice was required to put up some cash. Felice told Carter of his contemplated acquisition of the new homes and said that he would likely need some cash to close the purchase. As testified by Felice, Carter replied, "If you do, see me." Later Felice told Carter that he needed $4,500.00. Carter according to Felice, replied, "Give me a few days. See me at the office." (Pilsener office) Carter's account of these preliminary talks was that in telling Carter of his planned purchase, Felice said that "he might need a few thousand dollars for a short period of time" and "I said `all right' or something to that effect." Carter's further testimony was that when later he was told of the amount needed, he stated to Felice, "All right. Will you give me a couple of days and I will see what I can do about it." We mention these details because they bear on Felice's claim, later discussed, that he did not know the source of the money he took, other than his claimed assumption that it came from Carter's personal funds.

Following the above talks, Carter, according to his testimony, called one William Zeidler at the Chicago office of City Products and told Zeidler that Felice wanted to borrow some money and asked whether "we should loan him the money." The next day, again as stated by Carter, Zeidler called him back and said, "Go ahead, make the loan." Zeidler, who was vice-president and treasurer of City Products, as well as secretary and director of Pilsener, denied approving the transaction as claimed by Carter. There was evidence that many transactions by Pilsener were cleared in advance with City Products.

On April 16, 1956, Carter advised the controller of Pilsener, one Nero, that Pilsener was making a loan to Felice of $4,000.00. He advised Nero that a company check should not be used to transfer the funds, but that payment was to be made with an official bank check or in cash. Pursuant to such instructions, Nero issued Pilsener's check for $4,000.00 to the Cleveland Trust Company and with it purchased a Cleveland Trust Company "official check" payable to the order of John Felice. On April 17, 1956, Nero delivered the above check and a blank promissory note to Carter who then advised that the amount should be $4,500.00. Five hundred dollars was withdrawn from petty cash and given to Carter. Later that day, Felice arrived at the Pilsener office and was given the $4,000.00 check and $500.00 in cash. He signed a promissory note, which had been prepared by Carter. The note was payable to Carter and called for repayment of $4,500 ninety days after date, with interest at the rate of three percent per annum. Felice said there was no discussion as to when he was to repay the loan or the interest to be charged. He only was aware of the amount of the note and that Carter's name was on it. He said, "Our understanding was that when I got it I would pay him," and that, "I told him that whatever interest he would charge, that I would take care of it."

In directing and completing the transaction, Carter told Pilsener's controller, Nero, that the transaction was to be kept "confidential" and that no attempt should be made to collect the note; that he, Carter, "would handle it." The note to Carter was not endorsed by him to Pilsener, but was delivered to its controller, retained by it and entered on the company's books under notes receivable. The $4,500 received by Felice was, as a part of the cash required, delivered to the bank at which his purchase of the two houses was completed. Although carried as a note receivable on the company's books and appearing as past due after its maturity, no effort was ever made to collect it and in 1959 it was charged off. This was done by direction of the then officials of the Pilsener division of City Products, the Pilsener corporation having in June, 1956, been dissolved and its business thereafter carried on as the Pilsener Brewing Division of City Products. Notwithstanding such charge-off, it was not claimed as a bad debt deduction on the income tax return of City Products. Pilsener Brewing Division of City Products will also be referred to herein as Pilsener.

Carter left the employ of Pilsener in 1958 and became associated with another brewery in Cleveland. Prior to his leaving Pilsener, and at the request of its auditors, Carter signed a paper reciting that although "not endorsed to the company for bona fide business reasons" the Felice note was the property of Pilsener. In 1959, when his 1956 tax return was under review, Felice advised Internal Revenue agents that the $4,500.00 received by him in 1956 was a loan obtained from Carter. In 1960, however, under advice of counsel, he consented to such amount being added to his 1956 income and paid the resulting tax deficiency. He testified that he argued the point with his attorney, but followed his advice in allowing its inclusion in his 1956 income.

In 1960, when first asked by FBI agents about the transaction of 1956, Carter denied giving or making a loan of $4,500.00 to Felice. As a witness before the Grand Jury, he recanted such denial and told of making the payment to Felice, claiming that it was a bona fide loan to Felice from Pilsener. Felice testified that he assumed that the claimed loan was made to him from Carter's own funds. Carter testified that he did...