JAMESON, District Judge.
Appellants were convicted on three counts of an indictment charging the use of mails to defraud in violation of Title 18 U.S.C. § 1341,
In each of the first three counts it was charged in substance that prior to April 16, 1959, and continuing to the date of the indictment (June 23, 1960) the defendants devised a scheme and artifice to obtain money and property from purchasers of merchandise, including folding plastic boats, from Aqua Trailers, Inc., one of the appellants, by means of false and fraudulent pretenses, representations and promises, in that the defendants represented to purchasers that shipments of merchandise would be made upon the payment of a specified down payment and the balance be collected after shipment by sight drafts drawn upon a purchaser through banks designated by the purchasers; that defendants represented to employees of the Spokane and Eastern Branch of the Seattle-First National Bank that defendants were making shipments of merchandise and desired to collect therefor through banks designated by the purchasers by sight drafts drawn on the purchasers, with attached bills of lading, including invoices and shipping documents evidencing shipment; that the defendants caused sight drafts to be drawn and sent by said bank with spurious, false and fictitious bills of lading, invoices, and other documents purporting to evidence shipments of merchandise; that defendants received payment of said drafts, well knowing that they did not intend to, would not, and did not ship the
In furtherance of this scheme and artifice, it is charged in Count One that on or about June 11, 1959, defendants placed or caused to be placed in an authorized depository for mail an envelope containing a sight draft for $400.00 payable to Aqua Trailers, Inc. and drawn on Catron Motors, Inc. of Pomona, California, and a false and fictitious bill of lading for "one carton of merchandise", the envelope and contents to be sent by the post office establishment of the United States to the Pomona Branch of the Bank of America at Pomona, California. It is charged in Count Two that on August 21, 1959, the defendants placed or caused to be placed in an authorized depository for mail an envelope containing a sight draft for $5,850.00 payable to Aqua Trailers, Inc., drawn on Dana Motors, Sacramento California, and an invoice purporting to evidence shipment of 15 Aqua Trailers, Serial No. 301 through 315, for a total amount of $5,850.00, said envelope and contents to be sent by the post office establishment of the United States to Crocker-Anglo Bank, Capitol Office, Sacramento, California. It is charged in Count Three that on or about June 11, 1959, the defendants placed or caused to be placed in an authorized depository for mail an envelope containing a sight draft for $379.50 payable to Aqua Trailers, Inc. and drawn on Rivers Boat Mart, Tempe, Arizona, and an invoice purporting to evidence shipment of one Aqua Trailer unit, Serial No. 210, the envelope and contents to be sent and delivered by the post office establishment of the United States to the First National Bank of Arizona at Tempe, Arizona.
Motions for acquittal were made and denied at the close of plaintiff's case and again at the close of all the evidence. The sole question presented on appeal is the sufficiency of the evidence to sustain the conviction, appellants contending (1) that the Government failed to sustain its burden of proving a scheme to defraud; (2) that the circumstantial evidence did not exclude every reasonable hypothesis of innocence; (3) that the Government failed to prove that the mails were used; and (4) that the Government failed to prove criminal intent.
In 1957 appellant Stanley Chester Bolen was operating an appliance repair and sand blasting company. He invented a folding "boat trailer", to be made of fiberglass. In 1958 a corporation, the appellant Aqua Trailers, Inc., was organized to manufacture and sell the boats. Bolen and his wife, Delores Bolen, the third appellant, conveyed to the corporation their assets, including the manufacturing rights for the boat trailer and certain equipment and supplies. Each received in exchange 5,000 shares of the capital stock of the corporation,
Early in 1959 appellants applied to the Spokane and Eastern Branch of Seattle-First National Bank for a loan to obtain funds for financing production of the boats. This application was rejected by the bank. Around May 1, 1959, appellants and the bank agreed upon a method of "accounts receivable financing", whereby Aqua Trailers, Inc. would assign accounts as collateral for loans made by the bank. The Bolens individually executed a written guarantee of all loans. This method of financing was new to the Bolens, but was explained to them by
The first loan of $1,500.00 was made on May 8, 1959. Mr. and Mrs. Bolen brought four bills of lading and four invoices to the bank. Kearns inspected all of these instruments. Later he "spot checked." He did not at any time find an instrument where there was no bill of lading, except on the Dana transaction (Count Two), which did not involve a loan by the bank.
With respect to Count One, it appears from the evidence that on April 16, 1959, John H. Catron, proprietor of Catron Motors, Inc. of Pomona, California, ordered two boat trailers making a down payment of $110.00, the balance to be collected on delivery. On June 11, 1959, Mr. and Mrs. Bolen took to the Spokane and Eastern Branch of Seattle-First National Bank bills of lading and invoices for the Catron and other accounts. A sight draft for $400.00 was drawn on Catron Motors and mailed with the collection notice to Catron's bank. Catron paid the draft and picked up the bill of lading form and invoice. A few days later he called the carrier shown on the bill of lading and thereafter called Aqua Trailers, Inc. in Spokane. He talked with Mrs. Bolen and told her that the carrier had not received the boat for shipment. She informed Catron that the boat had been picked up by the wrong carrier and sent to the wrong place, and that another boat would be shipped the following day. Neither carrier had any record of a shipment to Catron Motors, Inc. from April 1, 1959, through September 30, 1959. In a conversation with Art Hanson, deputy prosecuting attorney for Spokane County, around September 1, 1959, Bolen blamed the carriers for the failure of delivery. Shortly thereafter Catron's money was refunded.
With respect to Count Two, in late July, 1959, Bolen went to Sacramento and discussed possible distributorship and franchise with Robert J. Dana. Dana testified that following further telephone conversations with both Mr. and Mrs. Bolen, Dana told the Bolens in late August that he was not interested in putting out money for the franchise, but would "order 15 boats and * * * pay for them by the bill of lading draft method"; and that it was agreed that the "method of payment was to be by bill of lading sight draft". Mrs. Bolen testified that Dana told "us to send an invoice to Mr. Al Lord, of the Crocker-Anglo Bank in Sacramento, and that is exactly what we did". Dana, in anticipation of the draft, left a signed check for $5,850.00 with his office manager when he left on a trip.
On August 21, 1959, Bolens went to the Spokane bank with Invoice No. 1136 for the 15 boats and drafted Dana Motors for $5,850.00. Dana's office manager paid the draft on August 27, 1959. Upon his return to Sacramento a few days later, Dana found no bill of lading and tried to stop payment on the draft. He was too late and telephoned appellants,
The evidence on Count Three discloses that on April 12, 1959, Kenneth R. Rivers, proprietor of Rivers Boat Mart, Tempe, Arizona, sent a letter to Aqua Trailers, Inc. with a check for $150.00 as a down payment on five boats, to be shipped C.O.D. On June 11 Bolens presented the invoice and bill of lading for one of the boats to the Spokane bank. A few days later the First National Bank of Tempe, Arizona, notified Rivers that it had a sight draft and bill of lading for him. Rivers did not pay the draft immediately but waited a few days, hoping for delivery. On July 2, however, he paid the draft, without delivery, and received the bill of lading and invoice. Near the end of July Bolen called Rivers and asked Rivers how he liked the boat, and expressed surprise that the boat had not arrived. A boat was delivered to Consolidated Freightways for Rivers on July 20, 1959, and delivered to Rivers on July 30, 1959, shortly after the telephone conversation between Bolen and Rivers.
On July 31, 1959, appellants drew another sight draft on Rivers for $1,518.00, and the bank made a loan thereon. In the early part of August the First National Bank of Tempe called Rivers on this draft. Rivers told the bank he would not pay the draft until he had delivery of the four remaining boats. Rivers heard nothing further from any carrier or the bank. Kearns testified that when he questioned Mrs. Bolen regarding this transaction she told him that the boats got misplaced at some terminal and assured him that the "merchandise would get there".
It was incumbent upon the Government to prove to the satisfaction of the jury beyond a reasonable doubt a scheme to defraud and the use of the United States mails in furtherance of the scheme.
The rule for determining the sufficiency of circumstantial evidence on motions for acquittal was stated by this court in Remmer v. United States, 1953, 9 Cir., 205 F.2d 277, 287, as follows:
It is our conclusion from a careful examination of all the evidence that reasonable minds could find that the evidence excludes every reasonable hypothesis but that of guilt. Accordingly the motions for acquittal were properly denied and the verdict of the jury must be sustained
In the Catron transaction (Count One) and Rivers Boat Mart transaction (Count Three) funds were advanced by the Spokane and Eastern Branch of Seattle-First National Bank on spurious bills of lading.
We may assume that appellants intended at some future date to fill the various orders by supplying boats and did not intend to deprive their customers permanently of money or property.
Appellants' defenses of good faith and lack of criminal intent were clearly for the jury.
Use of the mails may be established circumstantially or by proof of general custom.