United States v. Thomas
| Decision Date | 17 November 1943 |
| Docket Number | No. C-3812.,C-3812. |
| Citation | 52 F. Supp. 571 |
| Parties | UNITED STATES v. THOMAS et al. |
| Court | U.S. District Court — District of Washington |
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Edward M. Connelly, U. S. Atty., and Harvey Erickson, Asst. U. S. Atty., both of Spokane, Wash., for plaintiff.
Joseph C. Cheney, of Yakima, Wash., for defendants Thomas and Price.
M. C. Delle and Roy C. Stroud, both of Yakima, Wash., for defendant Lou D. Wilkins.
C. W. Halverson, of Yakima, Wash., for defendant Herm G. Link.
Harold F. Birnbaum, of New York City, Bonsted & Nichoson, of Yakima, Wash., and Roy E. Lowe, of Spokane, Wash., for C. I. T. Corporation.
This is a conspiracy case in which the five defendants now seeking a new trial and six others were charged with having combined and conspired to commit acts and offenses against the United States by making, passing and entering false papers and documents for the purpose of influencing the action of the Federal Housing Administration in order to secure insurance under the modernization of homes provisions of the National Housing Act. Title 18 U.S. C.A. §§ 83-88; Title 12 U.S.C.A. § 1731. The five moving defendants are: C. I. T. Corporation, a corporation engaged in the financing of commercial paper; P. A. Thomas and J. Q. A. Price, who, under the corporation Thomas and Price; operate a fairly large furniture store at Yakima, Washington; Herm G. Link who, at the time involved in the indictment, was sales manager for Thomas and Price; Lou D. Wilkins who, at the time involved in the indictment, was manager of C. I. T.'s branch office at Yakima. The other six defendants, who were acquitted, were salesmen for Thomas and Price.
The Federal Housing Act as amended in 1938 included a home modernization program. Its purpose and objective was to provide employment. It was conceived that during the depression many persons of small financial means had permitted their homes to run down. These persons were not in a financial position to secure financing through regular sources. Private financial agencies were not willing to make one hundred per cent loans covering the costs of materials and labor, particularly when there was no mortgage device by which such loans could be protected since the real estate was, in most instances, already subject to mortgage. So the Congress set up the procedure by which the owners of homes could secure materials and labor for repairs and improvements and give therefor unsecured promissory notes. In order that private industry all along the line might benefit through the program, the participation of the Federal Housing Administration was limited to the insuring of these notes to the per cent felt necessary to protect the financial institutions involved against the risks which experience had proved were incurred in transactions of this kind. In order to encourage the origination of the transactions, dealers in home equipment and building material were permitted to handle them on a non-recourse basis. These dealers were charged with the responsibility of securing the signature upon the application which, while it contained a number of questions to be answered by the home owner, was in no sense complicated. That application was to be subject to check by the financial institution and the checking of the credit background of the applicant was at some stage of the procedure required. The notes signed by the applicants bore a low rate of interest and three years were allowed for the repayment. Financial institutions like the defendant C. I. T. were qualified by the Federal Housing Administration and a contract of insurance was entered into with them. The financial institution furnished the money required by the home-owner. Then, if the home-owner failed to pay, it was the obligation of the Federal Housing Administration to reimburse the financial institution. The primary purpose of the Congress in authorizing the procedure was to stimulate employment through the means of improving and modernizing the homes of individuals whose financial condition was such that, otherwise, that could not be accomplished.
In the beginning the system provided that the money would not be paid out by the financial institution until after the materials had been installed in the house. Under this system, the dealer who arranged the transaction was required to furnish a completion certificate making proof that all of the materials had been actually installed in the house before he could be reimbursed for the materials he had furnished or had secured from other dealers and for the money he had advanced for labor in the installation. This system might have been satisfactory had it worked out so that one dealer furnished all the materials and supplied the labor. It did not work out that way. The modernization of a house involved the furnishing of lumber, bricks, cement, nails, plumbing, furnaces and other supplies. Usually two or three different types of laborers were required on a job. Under the completion certificate system, the dealer who originated the transaction was required to carry the load until the improvement had been completed. This proved too cumbersome and too burdensome. As a result, there was substituted for it an arrangement by which the materials might be paid for as soon as they were all delivered to the premises of the home-owner. There was shifted to the home-owner the responsibility of installation and he was given the opportunity of borrowing a sum sufficient to pay for the labor of installation. Under this system, there was outlined in the application the details of the improvements to be made, the estimated costs of the materials and the names of the suppliers from which such materials were to be secured. The responsibility of seeing that the materials had been delivered to the premises was placed on the originating dealer. He was required to secure from the borrower a receipt entitled "Borrower's Receipt for Merchandise" which read as follows:
He was then required to sign what is called a "Dealer/Contractor/Applicator" statement which reads as follows:
The dealer then turned that, along with the borrower's promissory note, over to the financial institution and got sufficient money to reimburse him for the materials he furnished, to enable him to pay for the materials other dealers had furnished, and to give to the borrower an amount sufficient to pay the labor costs of installation. This simplified system relieved the dealer of all of his responsibility concerning the installation of the materials and enabled him and the other dealers involved to get their money within a short time after the delivery of the materials. It eliminated all risk upon the part of the dealer. All he needed to do was to certify that the materials contracted for had been delivered and he got his cash on non-recourse paper. There was, however, placed upon him the duty and obligation and responsibility in plain, simple, unambiguous terms to certify that all the materials contracted for had been furnished. The contract referred to was the signed application which was solicited by the dealers' salesmen and checked and handled by the dealers' employees.
Prior to August, 1939, Thomas and Price had handled their F.H.A. business through the Yakima Branch of the Seattle First National Bank. That business was done upon the completion-certificate basis. The Bank required of Thomas and Price a credit report from the Yakima Retail Credit Bureau as to the credit standing of each borrower. At that time, a man by the name of Pierson was manager of C.I.T.'s Yakima office. For some reason which was not explained in the testimony, Pierson was supplanted by the defendant Wilkins, who previously had been a collector for C.I.T. In July or August, 1939, Wilkins and Pierson went to Thomas and Price's office and met with defendant Herm Link and defendant Thomas. The purpose of this visit was to convince Thomas and Price that they should transfer their F.H. A. business from the Bank to C.I.T. Other meetings occurred between Wilkins and other representatives of C.I.T. and Thomas and Price and Link. There is a sharp conflict in the testimony as to what was said at these meetings. The C.I.T. witnesses testified that they sold their system to Thomas and Price upon the basis of the actual F.H.A. procedure. They claim that they explained to Thomas and Price that the C.I.T. specialized in this sort of financing, that...
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United States v. Brown
...a general instruction at the end of the trial); Fountain v. United States, 384 F.2d 624, 632 n. 9 (5th Cir. 1967); United States v. Thomas, 52 F.Supp. 571 (E.D.Wash.1943); cf. United States v. Fench, 152 U.S.App.D.C. 325, 332, 470 F.2d 1234, 1241 78 Moreover the instruction was not complete......
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