United States v. Rowe

• Decision Date: 14 March 1932
• Docket Number: No. 276.,276.
• Citation: 56 F.2d 747
• Parties: UNITED STATES v. ROWE et al.
• Court: U.S. Court of Appeals — Second Circuit

56 F.2d 747 (1932)

UNITED STATES v. ROWE et al.

No. 276.

Circuit Court of Appeals, Second Circuit.

March 14, 1932.

Theodore R. Jaffe, of New York City (Jeremiah A. O'Leary, of New York City, of counsel), for appellant Lyons.

Myers, Treanor & Keating, of New York City (John Caldwell Myers and John F. Keating, both of New York City, of counsel), for appellant Collins.

Du Bois J. Gillette, of New York City (Benjamin Eisler, of New York City, of counsel), for appellant Rowe.

George Z. Medalie, U. S. Atty., of New York City (Hubert T. Delany, Curtiss E. Frank, and Anthony M. Maoriello, Asst. U. S. Attys., all of New York City, of counsel), for the United States.

Before L. HAND, SWAN, and CHASE, Circuit Judges.

L. HAND, Circuit Judge.

The indictment laid the scheme and conspiracy — for there is no substantial difference between the two when more than one are involved — as follows. Lyons and one Jerome Collins organized two corporations which they called Bureaus, by which through the press and by emissaries they got in touch with persons who had lost money in stocks, and who had, or thought they had, claims against the sellers. They told the claimants that they could secure for them a settlement of their demands, and procured confederates to appear as the sellers and offer to convey lots of land to them in compromise. In these negotiations they attributed a higher value to the lots than they believed them to have, and said that they could sell them in a short time at an increased price, knowing they could not. By these deceits they got the claimants to pay to them the difference between the false value of the lots and the amount of their claims. All this was a deliberately planned scheme to defraud; the lots were of little value; they had not in fact approached the sellers; the supposititious sellers were not real. Rowe and Michael Collins were confederates who assisted in the sale of the lots. The proof came chiefly from one Kliefeld, another confederate, though not indicted; he was corroborated by a number of those practiced upon. The substance of the charges were proved beyond question and the case should clearly have gone to the jury, so that the only questions which can arise upon the appeals are those touching the indictment and the regularity of the trial.

The first is of a variance. Evidence was admitted that part of the plan was to tell the claimants that there were mortgages upon the lots, which it was necessary to release. Though there were in fact such mortgages, the defendants represented them as greater than they were, and required of the claimants a larger amount than was necessary for the releases. This was not laid in the indictment, and is the variance alleged. Literally it was; the evidence cannot be defended on the theory that it merely proved intent, and was competent because collateral transactions may be admitted upon that issue, as in cases of receiving stolen goods. The deceit as to the mortgages was a part of the scheme, though not as laid in the indictment, a term of the actual criminal agreement; and the proof varied from the charge pro tanto. But such variances have long been disregarded in trials for conspiracy, though apparently pleaders still try to fend against them by alleging that the details specified were only "part of the scheme"; which would not serve if the point were a good one, since defendants are entitled to a true statement of the agreement. The answer is that as to the conspiracy a strict correspondence between pleading and proof is not required Schouweiler v. U. S., 27 F.(2d) 515 (C. C. A. 9); Shepard v. U. S., 236 F. 73, 81, 82 (C. C. A. 8); Kepl v. U. S., 299 F. 590 (C. C. A. 9); and indeed in modern times variances are in general disregarded which do not mislead the defense Meyers v. U. S., 3 F.(2d) 379 (C. C. A. 2); Sotorios Targakis v. U. S., 12 F.(2d) 498 (C. C. A. 5). This was such a case.

The indictment is itself challenged, because as part of the fraud, it laid promises to procure sales of the lots at an advance. The objection is ill taken. Promises, if made without intent to perform, have for long been regarded as frauds in such prosecutions. Durland v. U. S., 161 U. S. 306, 313, 16 S. Ct. 508, 40 L. Ed. 709; United States v. Comyns, 248 U. S. 349, 39 S. Ct. 98, 63 L. Ed. 287; Bentel v. U. S., 13 F.(2d) 327 (C. C. A. 2); Knickerbocker Merchandising Co. v. U. S., 13 F.(2d) 544 (C. C. A. 2); Van Riper v. U. S., 13 F.(2d) 961 (C. C. A. 2). The same is true as to false representations of value made with fraudulent intent. Southern Trust Co. v. Lucas, 245 F. 286 (C. C. A. 8); Taylor v. Burr Printing Co., 26 F.(2d) 331 (C. C. A. 2); Gardiner v. Equitable, etc., Corp., 294 F. 496 (C. C. A. 2); Byers v. Federal Land Co., 3 F.(2d) 9, 11 (C. C. A. 8); Keller v. Ley, 49 F.(2d) 872 (C. C. A. 1). True, the law still recognizes that in bargaining parties will puff their wares in terms which neither side means seriously, and which either so takes at his peril (Vulcan Co. v. Simmons, 248 F. 853 C. C. A. 2); but it is no longer law that declarations of value can never be a fraud. Like other words, they get their color from their setting, and mean one thing when exchanged between traders, and another when uttered by a broker to his customer. Values are facts as much as anything else; they forecast the present opinions of possible buyers and sellers, and concern existing, though inaccessible, facts. Such latitude as the law accords utterances about them, depends upon the hearer's knowledge that the utterer expects him to use his own wits; and while it may once have been true that one might safely use them to stuff any gull one brought to hand, liability has expanded as the law has become more tender towards credulity. The defendants at bar inveigled their victims into a position of confidence by pretending that they would collect their claims, and offering them a settlement which they recommended as advisers. The game was enticed into the trap by dangling the hope of profit. A jury alone could say whether in such a setting the hearer ought to have understood that the utterances were not to be taken at their face; had we been upon the panel, we should not have hesitated to find as they did. The rule is no different in criminal causes from civil.

The indictment did not allege that the claimants suffered any loss. In Miller v. U. S. (C. C. A.) 174 F. 35, the Seventh circuit held the defect fatal, but it has since changed its ruling Moore v. U. S. (C. C. A.) 2 F. (2d) 839, because of the amendment to the statute made in 1909 (Criminal Code § 215 18 USCA § 338). We need not consider whether this required the change, for we have never accepted the doctrine (Wilson v. U. S., 190 F. 427); nor has the Eighth circuit Cowl v. U. S. (C. C. A.) 35 F.(2d) 794. Cf. United States v. Hersey (D. C.) 288 F. 852. Civilly of course the action would fail without proof of damage, but that has no application to criminal liability. A man is none the less cheated out of his property, when he is induced to part with it by fraud, because he gets a quid pro quo of equal value. It may be impossible to measure his loss by the gross scales available to a court, but he has suffered a wrong; he has lost his chance to bargain with the facts before him. That is the evil against which the statute is directed.

Coming to the conduct of the trial, the defendants complain of the charge upon the question of fraud, especially in relation to value, and the...