United States v. Grady, 10145.

• Decision Date: 15 November 1950
• Docket Number: No. 10145.,10145.
• Citation: 185 F.2d 273
• Parties: UNITED STATES v. GRADY.
• Court: U.S. Court of Appeals — Seventh Circuit

185 F.2d 273 (1950)

UNITED STATES v. GRADY.

No. 10145.

United States Court of Appeals, Seventh Circuit.

Argued October 25, 1950.

Decided November 15, 1950.

Maurice J. Walsh, Chicago, Ill., for appellant.

Otto Kerner, Jr., U. S. Atty., Joseph E. Tobin, Asst. U. S. Atty., Frank A. Gallagher, and Gilbert A. Horn, U. S. Dept. of Agriculture, all of Chicago, Ill., for appellee.

Before MAJOR, Chief Judge, and DUFFY and FINNEGAN, Circuit Judges.

MAJOR, Chief Judge.

Defendant was charged in an information containing nine counts, signed by the United States Attorney, with a violation of various sections of the Commodity Exchange Act, Title 7 U.S.C.A. §§ 6b(A) and (B) and 6d(2). Count 9 was dismissed by the government and ordered detached by the court. The case has twice been tried. On the first trial, a jury disagreed, and on a second trial (the instant case), a jury returned a verdict of guilty on all eight counts. Motions for a new trial and in arrest of judgment were denied. Thereupon judgment was entered on the verdict, from which the appeal comes to this court.

In the view which we take of the case, we need consider only a single ground relied upon for reversal, which makes it unnecessary to relate in detail either the allegations contained in the various counts of the information or the proof offered in support thereof. In substance, defendant, charged with being a registered future commission merchant, was alleged to have received funds from customers for the purpose of margining trades in commodity futures for the account of such customers and unlawfully defrauding them in connection with such transactions; with failing to treat and deal with the funds so received as belonging to such customers in accordance with the requirements of the Commodity Exchange Act; and with making false reports to such customers with respect to such transactions. The government presented the testimony of four customer witnesses who stated that they had placed specific sums of money totaling $25,225.00 with defendant, which money was to be used to margin transactions in commodity futures for their accounts. It was also shown by these witnesses that defendant informed them that transactions in commodity futures had been executed for them. The government also offered in evidence authenticated copies of Department of Agriculture records showing the Chicago Open Board of Trade as having been designated by the Secretary of Agriculture as a contract market under the Commodity Exchange Act. It was also shown by the Secretary of the Chicago Open Board of Trade that the defendant was a member of that organization.

This brief description of the nature of the charges, as well as the proof relied upon by the government, is pertinent only as a prelude to the matter which follows. There was attached to the information the following affidavit:

"Northern District of Illinois | > ss. Eastern Division |

"George Livingston, being first duly sworn, on his oath deposes and says that the facts stated in the foregoing Criminal Information are true.

George Livingston (Seal)

"Subscribed and Sworn to before me this 6th day of October, A.D. 1948. Roland C. Kumb Dep. Clerk of the District Court of the United States for the Northern District of Illinois, Eastern Division."

(George Livingston was not a witness at the trial.)

The jury was permitted to take with it to the jury room the information with the affidavit attached. The court gave to the jury the usual cautionary instruction, that the information was not to be considered as evidence against the defendant, that it was simply the formal charge made by the government and should not be considered by the jury in any other light. No mention of the affidavit was made by the court in its instructions or otherwise, and no objection was made by defendant to the submission of the affidavit. In fairness to court and counsel, however, it should be stated that there is nothing in the record to indicate that either was informed or had knowledge that the affidavit was being submitted. Defendant's counsel assert that the first knowledge they had of its submission was subsequent to the trial, and the question relative thereto was first raised by defendant on motion for new trial.

Thus, our problem is whether the submission of this affidavit constitutes reversible error. Defendant, as might be expected, relies heavily upon a previous decision of this court, United States v. Douglas, 7 Cir., 155 F.2d 894. The government makes no criticism of our holding in the Douglas case but attempts to distinguish it from the instant situation. We think, however, there is no distinction in the principle involved and such as there is relates only to the form and content of the affidavit. In addition to its contention that the instant case is distinguishable from the Douglas case, the government argues that the defendant is in no position to raise the question because of a failure to object at the appropriate time, points to the cautionary instruction which the court gave as to the effect to be given to the information...