Petition — Jones v. United States

| Supreme Court U. §, 7

(i= FILED

f

MAY 19 i977 |

; i

Supreme Court of the United States

OCTOBER TERM, 1976

NO.

76-1586

AMY EVERSTON JONES,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GERALD A. KROOP

800 Court Square Building

Baltimore, Maryland 21202

(301) 547-1670

Attorney for Petitioner

ee

The Pauli M. Harrod Company, Baltimore, Masyland 21234

INDEX

TABLE OF CONTENTS

Page

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QUESTION PRESENTED FOR REVIEW ............. 2

STATUTES INVOLVED ..... Se ere mr 2

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REASONS RELIED ON FOR THE

GRANTING OF THE WRIT .................- 6

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| PEPE TETT TEC EERE LT TTT ee 29

ii

TABLE OF CITATIONS

Cases

Ex Parte Hibbs, 26 F. 421, 432 (D. Ore. 1886)...

Gilbert v. United States, 370 U.S. 650, 655 (1962)

Greathouse v. United States, 170 F.2d 512,

2 L SS Poe E eT CUEeSEeTe

In Re Court De Toulouse Lautrec, 102 F. 878,

CF Ge, Te howd cbsvesesedactesecces

Lemke v. United States, 211 F.2d 73 (9 Cir.)

cert. denied, 347 U.S. 1013 (1954).........

Quick Service Box Co. v. St. Paul Mercury Ind. Co.,

§* BB BSB sig S Frees

United States of America v. Amy Everston Jones,

FER. FEED ccc cnc cwewececesesevevds

SD Dis BOOS oc on ctecceersestctosecesees

Se Gis SUED cc ccc cet oeercocweceseeenes

IN THE

Supreme Court of the United States

OCTOBER TERM, 1976

NO.

AMY EVERSTON JONES,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

1. The Petitioner, Amy Everston Jones, prays that a

Writ of Certiorari issue to review the judgment of the

United States Court of Appeals for the Fourth Circuit,

entered in this case on April 12, 1977.

2

(a) OPINIONS BELOW —

The opinion of the Court of Appeals below was

reported. (Appendix A, A. 1). The opinion of the United

States District Court for the District of Maryland was

entered on May 13, 1976 and is unreported. (Appendix B,

A. 13).

(b) JURISDICTION

The judgment of the Court below was entered on April

12, 1977. The jurisdiction of this Court is involved under

28 U.S.C. 1254(1).

(c) QUESTION PRESENTED FOR REVIEW

Whether or not a check issued by a computer without

the authority of the drawer is a “falsely made, forged,

altered, counterfeited or spurious” security within the

meaning of the exclusionary clauses of Title 18, United

States Code, Sections 2314 and 2315?

(d) STATUTES INVOLVED

1. Title 18, United States Code, Section 2314

(Appendix C, A. 29).

2. Title 18, United States Code, Section 2315

(Appendix C, A. 29).

3

(e) STATEMENT OF THE CASE

On December 9, 1975, the United States Attorney for

the District of Maryland charged the Petitioner, Amy

Everston Jones, with five counts of transportation in

interstate commerce of stolen, converted or fraudulently

obtained securities valued at more than $5,000 in violation

of Title 18, United States Code, Section 2314 and with five

counts of receiving, selling or disposing of these securities

knowing the same to have been stolen, converted or taken

by fraud, in violation of Title 18, United States Code,

Section 2315. On January 7, 1976, the Petitioner filed a

motion to dismiss alleging that the exclusionary clause

within each respective section precluded prosecution. On

February 17, 1976, a hearing was held before the Honorable

R. Dorsey Watkins, of the United States District Court for

the District of Maryland. On May 13, 1976, a memorandum

opinion and order granting the motion to dismiss was filed

and on May 17, 1976, the indictment was ordered

dismissed. On June 16, 1976, a notice of appeal was timely

filed by the United States of America and on December 10,

1976 argument was held before the United States Court of

Appeals for the Fourth Circuit. Robert A. Rohrbaugh, an

Assistant United States Attorney for the District of

Maryland, presented the case for the United States of

America. Petitioner did not retain counsel and presented no

argument. On April 12, 1977 the Court of Appeals reversed

the order of the vVistrict Court.

4

(f) STATEMENT OF FACTS

The securities at issue are five checks payable to the

order of “A.L.E. Jones”, drawn on the Royal Bank of

Canada against the accounts of Inglis, Limited, a Canadian

appliance firm. It is alleged that these checks were made in

Canada and forwarded to the Petitioner in Maryland where

they were deposited in her Maryland bank account.

On the hearing for the motion to dismiss, Edward

McCormack, Comptroller and Assistant Treasurer of Inglis,

Limited (hereinafter referred to as Inglis), testified to the

manner in which checks were issued by his corporation.

Inglis, through its affiliation with the Whirlpool Corporation,

purchases quantities of household appliances and payment is

initiated by an accounts payable system in which supporting

documents such as invoices are matched in the accounts

payable department by the invoice audit clerks. Invoice

audit clerks collect and record invoice numbers, the amount

due and the vendor code numbers on an accounts payable

distribution slip. The accounts payable distribution slips,

along with the supporting documents, are then transferred

to Andrea Lamothe, an accounts payable audit clerk, who is

responsible for checking that the data placed on the

accounts payable distribution slip is correct and agrees with

the supporting documents. Miss Lamothe then stamps an.

accounts payable register number on the upper right hand

corner of the document and the material then proceeds to

data processing where they are grouped in batches of a

hundred. At that point, keypunch operators, using the

information contained on the accounts payable distribution

slip, keypunch data processing cards. The keypunch cards

and attached documents are placed on a table where a data

control clerk obtains them for processing within the

5

computer. The computer produces a balancing report and

the documents are then returned to Miss Lamothe or other

individuals within the accounts payable department.

Sometime later, usually between 15 and 30 days from the

date that the cards are keypunched, the accounts payable

department issues an instruction to the computer to create a

check run.

On September 3, 1975, a new account for “A.L.E.

Jones” was established by Miss Lamothe at the direction of

Michael Everston, her supervisor. This account, number

99894, was thereafter entered into the computer’s memory

so that any order to pay account 99894 would

automatically result in the issuance of a check payable to

the order of “A.L.E. Jones.” On five occasions between

September, 1975, and November, 1975, certain accounts

payable distribution slips, bearing the account number

99894, were substituted for valid distribution slips ordering

payments to the Whirlpool Corporation, account number

99900. The data on these substituted accounts payable

distribution slips was routinely transferred to keypunch

cards, fed into the computer and stored in its memory. In

due course, when commanded to process a check run, the

computer automatically printed five checks payable to the

order of “A.L.E. Jones” which had been intended to be

made payable to the order of Whirlpool Corporation. These

five checks were then forwarded to the petitioner and

deposited in her account in Maryland.

These five checks, as with all checks issued by the

computer, bear the facsimile signatures of Edward

McCormack and Jean Whitley. These signatures were placed

on the checks by a signature plate which is attached to a

machine through which the checks are run by the computer.

6

(h) REASONS RELIED ON FOR THE

GRANTING OF THE WRIT

The federal statutes under which petitioner was

indicted [18 U.S.C. 2314, 18 U.S.C. 2315] expressly state

their inapplicability “to any falsely made, forged, altered,

counterfeited or spurious representation” of a foreign

security.' The five checks that form the substance of the

indictments against petitioner were drawn on the Royal

Bank of Canada against the account of Inglis, Limited, a

Canadian corporation. These checks were printed entirely by

Inglis’ computer, complete with authorized facsimile

signatures. The amounts on each check were equal to

legitimate business obligations owed to the Whirlpool

Corporation, a United States manufacturer, but, as a direct

result of employee tampering with input data, these five

checks were made payable to the order of “A.L.E. Jones”

instead of “Whirlpool Corporation.”

Both lower courts agreed that the phrase “falsely made,

forged, altered, counterfeited or spurious” referred to the

crime of forgery, Greathouse v. United States, 170 F.2d.

512, 514 (4 Cir. 1948), and that the term “forgery” should

be viewed in light of its common law meaning, Gilbert v.

United States, 370 U.S. 650, 655 (1962). Therefore,

whether these five computer-issued checks can be deemed

forgeries is the question and one which the District Court

of Maryland considered novel in the case law. Additionally,

‘Except for mincr differences in punctuation, the

exclusionary language is the same in both statutes. (See

Appendix C, A. 29, last paragraph of each statute).

7

as noted by the Court of Appeals in its opinion (footnote

6), the use of computers in crime is rapidly increasing.

Therefore, since the question presented to this Court is

novel and likely to appear with increasing frequency in this

age of computers, a resolution of the question at this time

would avoid inevitable conflicts among the circuit courts

and, more specifically, as in the instant case, between the

circuit courts and the district courts. Furthermore, even a

cursory examination of the lower courts’ opinions reveals

that the Court of Appeals in reversing the District Court

avoided key arguments made by the district court judge.

Petitioner asserts that the Court of Appeals, by not

adequately responding to the opinion of the District Court,

“so far departed from the accepted and usual course of

judicial proceedings”* that review by this Court is

warranted. e

The initial error by the Court of Appeals lay in its

mistaken belief that the holding of the District Court was

premised on the view that the name of the fictitious payee

on the checks did not constitute a false statement.*? Using

this erroneous assumption, the Court of Appeals then

disagreed with this view and held the checks to be genuine

instruments containing false statements. However, in

actuality the District Court stated that “even assuming that

2Supreme Court Rules, Rule 19(b).

3 United States of America v. Amy Everston Jones, No.

76-1815, United States Court of Appeals for the Fourth

Circuit, (opinion), page 12, (See Appendix A, A.1).

*Id., at p. 13 (See Appendix A, A.1).

8

the mere presence of the payee’s name on the instrument”

can be considered a true or false assertion, “the rule as to

falsity of content has no application where the documents

were in fact- falsely made.”* This statement, which the

Court of Appeals completely avoided, formed the basis for

the decision of the District Court. Indeed, if the Court of

Appeals had realized what the District Court had — that an

instrument could be both falsely made and contain false

statements, then the Court of Appeals would not have

reversed the District Court. For, once one realizes that these

computer-issued checks contain both the making of a false

writing and false statements, an argument can no longer be

advanced that these instruments are only the product of a

fraud or false pretense. While these checks arguably may

have resulted from a fraud or false pretense (a proposition

that the District Court did not accept®), they nevertheless

were also the product of a forgery due to their being falsely

made.

The second error in the opinion of the Court of

Appeals becomes evident when that Court does not attempt

to explain its disagreement’ with the argument advanced by

the District Court that the computer-produced forgery is the

5United States of America v. Amy Everston Jones,

Criminal No. W-75-0854, United States District Court for

the District of Maryland, (opinion) page 10. (See Appendix

B, A. 13).

*Id., at p. 10 (See Appendix B, A. 13).

7Opinion of the Court of Appeals, supra, p. 11 (See

Appendix A, A. 1).

9

result of an one-party transaction without any deception or

fraud practiced upon another party. The District Court felt

that, due to Inglis’ system of issuing checks by computer, it

was entirely possible (as is evidenced from the facts of this

case) for one man to produce the forged checks without the

necessity of involving a second party, much less fraudulently

convincing a second party to issue the checks. It is evident

that the Circuit Court avoided this argument when it found

that “as the result of Everston’s misconduct the accounting

department of Inglis was defrauded into believing that the

company owed a bona fide obligation to ‘A.L.E. Jones’.’”®

Such a view is not only in total disagreement with the

findings of the District Court but it is also unsupported hy

the trial record.

Under the facts of the case, it was a physical

impossibility for the accounting department to have been

defrauded. Michael Everston picked up a batch of one

hundred accounts payable distribution slips from Miss

Lamothe, a clerk in the accounting department. He allegedly

altered or substituted a fictitious vendor number on five

slips and then handed the entire batch back to Miss

Lamothe who, without opening the batch, immediately

forwarded the batch to the computer. At no time were the

alterations or substitutions made by Michael Everston viewed

by ‘any person’. His plan did not necessitate deceiving Miss

Lamothe or any other employee of the accounting

department; he merely utilized her to convey the altered or

substituted slips to the computer. Once these slips were

entered into the computer, his prior programming of the

®/d., at pgs. 12 and 13 (Appendix A, A. 1).

10

computer resulted in checks being issued to a fictitious

payee (A.L.E. Jones). Since, only the computer “viewed”

the slips, and a computer is not susceptible of being

deceived or defrauded, then the resultant checks could not

possibly have been the product of a fraud.

Since the Court of Appeals premised its holding on the

existence of two parties and the reliance by one on

fraudulent misrepresentations of the other, which as the

preceding facts demonstrate could not have possibly

existed,? then the District Court was correct in its view that

the computer, “like a checkwriting machine or a ball point

pen”'®, was simply an instrument utilized by Michael

Everston to issue checks. Furthermore, as Inglis did not give

Everston the authority to issue checks, he clearly acted

outside the scope of his authority when he compelled the

* Therefore, the Court of Appeals’ reliance on Lemke v.

United States, 211 F.2d 73 (9 Cir.), cert. denied, 347 U.S.

1013 (1954), is unfounded. Lemke presents a classic two

party situation where the manager of a cafeteria attempted

to deceive his bookeeper into issuing a check upon phony

invoices. Clearly, such a factual situation is inapposite to the

one-party transaction at bar wherein a computer is

singlehandedly compelled to issue checks to a fictitious

payee.

Additionally, the Court of Appeals’ attempt to

distinguish Jn Re Court De Toulouse Lautrec, 102 F. 878

(7 Cir. 1900), from the instant case is also in error since

the Court of Appeals in declaring that Inglis, not Michael

Everston, issued the checks once again erroneously assumes

a two-party transaction.

'°Opinion of the District Court, supra, p. 11

(Appendix B, A. 13).

11

computer to issue checks. “By executing documents without

authority in such a way that they appeared to be the

solemn act of his principal, Everston committed forgery,” !

and therefore, the five checks payable to ‘A.L.E. Jones’ are

forgeries and not subject to prosecution under 18 U.S.C.

2314 and 18 U.S.C. 2315.

CONCLUSION

In that the issue presented herein is a novei one and

likely to appear with frequency in the future, and since it is

evident that the Court of Appeals did not confront several

crucial arguments made by the District Court, Petitioner

respectfully prays that this Honorable Court issue a Writ of

Certiorari to review the judgment of the United States

Court of Appeals for the Fourth Circuit.

Respectfully submitted,

GERALD A. KROOP

Attorney for Petitioner

'l]q, at p. 15 (Appendix B, A. 13).

For decisional support of this proposition, see Ex Parte

Hibbs, 26 F.421, 432 (D. Ore. 1886); also Quick Service

Box Co. v. St. Paul Mercury Ind. Co., 95 F. 2d 15, 17 (7

Cir. 1938).

A.l

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 76—1815

UNITED STATES OF AMERICA,

Appellant,

versus

AMY EVERSTON JONES,

Appellee.

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

R. Dorsey Watkins, District Judge.

Argued December 10, 1976 Decided April 12, 1977.

Before WINTER and CRAVEN, Circuit Judges,

and FIELD, Senior Circuit Judge.

Robert A. Rohrbaugh, Assistant United States Attorney

(Jervis S. Finney, United States Attorney on brief) for

Appellant. No argument for the Appellee.

A.2

FIELD, Senior Circuit Judge:

A ten-count indictment was returned against Amy

Everston Jones, charging her with five counts of transporting

in interstate or foreign commerce securities' valued at more

than $5,000.00, knowing the same to have been “stolen,

converted or taken by fraud” in violation of 18 U.S.C.

§ 2314; and five counts of selling or receiving these same

securities knowing them to have been stolen, unlawfully

converted or taken by fraud, in violation of 18 U.S.C.

§ 2315. The defendant moved to dismiss the indictment,

contending that the securities involved in the case were

forgeries and thus excluded by the limiting language of

_ sections 2314 and 2315.7 The district court agreed with the

defendant and dismissed the indictment.* The Government

has appealed.*

1 The securities here were checks and fall within

sections 2314 and 2315. See 18 U.S.C. § 2311.

2 The limiting language of section 2314, basically

mirrored in section 2315, provides that:

“This section shall not apply to any falsely

made, forged, altered, counterfeited or spurious

representation of an obligation or other security of

the United States, or of an obligation, bond,

certificate, security, treasury note, bill, promise to

pay or bank note issued by any foreign

government or by a bank or corporation of any

foreign country.”

3 United States v. Jones, 414 F.Supp. 964 (D. Md.

1976).

* The Government’s right to appeal is well established.

See 18 U.S.C. § 3731. See also Serfass v. United States,

420 U.S. 377, 387 (1975); United States v. Mann, 517 F.2d

259, 266 (5 Cir. 1975), cert. denied, 423 U.S. 1087 (1976).

A.3

The facts, as presented by the Government, were not

basically contested by the appellee and “[f]or the purposes

of [the motion to dismiss], it [was] not disputed that these

checks were ‘stolen, converted or taken by fraud’.’*

Accordingly, if the securities were not excluded by the

limiting paragraphs of sections 2314 and 2315, the acts

committed by Jones would constitute indictable offenses.

This is a case of computer abuse,® involving the input’

into a computer facility of allegedly altered accounts

payable data. The computer crime was perpetrated against a

Canadian company, Inglis, Limited, which is a subsidiary of

°414 F.Supp. at 965. Unfortunately, the appellee

failed to respond to the Government’s appeal of the

indictment’s dismissal. We therefore assume that the facts

are stipulated for the purposes of this appeal and note that

there does not exist a double jeopardy problem in the

appeal of a case wherein the defendant stipulates facts

solely for the purpose of attacking the validity of the

indictment. See United States v. Pecora, 484 F.2d 1289,

1293 (3 Cir. 1973).

® Criminal acts in the use of computers is rapidly

increasing. See D. Parker, Crime by Computer (1976); R.

Farr, The Electronic Criminals (1975); S. Liebholz and L.

Wilson, User’s Guide to Computer Crime 23 (1974); D.

Parker, S. Nycum & S. Oura, Computer Abuse (Stanford

Research Inst. 1973); Allen, Embezzler’s Guide to the

Computer, 53 Harv. Business Rev. 79 (July 1975); 88

Newsweek 58 (Aug. 9, 1976).

7 “Input refers to data capture, e.g., keypunching,

optical character recognition, and the entry of the data into

the system in machine-readable form. The possible abuses

included in this function are omission of documents,

creation of entirely false records, and the altering of

amounts, names, and the like, on otherwise authentic

documents.” Nycum, Computer Abuses Raise New Legal

Problems, 61 A.B.A.J. 444, 446 (Apr. 1976).

A.4

Whirlpool Corporation, a United States. corporation. It

specifically involved the issuance of five checks to one

“A .L.E. Jones’® which should have been issued to

Whirlpool. It is the Government’s theory that the appellee

transported or caused these checks to be transported from

Canada to Maryland;? and then disposed of the checks

when they arrived in Maryland.'®

8 “*a L.E. Jones’ appears to be the true name of the

defendant.” 414 F. Supp. at 965, n.2.

2 Count One of the indictment is an example of the

alleged section 2314 violations:

On or about September 12, 1975, in the State and

District of Maryland,

AMY EVERSTON JONES,

did willfully and knowingly transport and cause to

be transported in interstate and foreign commerce

from Canada to the State of Maryland, securities

and money which were stolen, converted and

taken by fraud, to-wit, a check #47456 in the

amount of $11,138.04 payable to A.L.E. Jones,

drawn on the account of Englis (sic) Limited, then

knowing the same to have been stolen, converted

and taken by fraud.

1° Count Six of the indictment is illustrative of the

section 2315 violations:

On or about the 12th day of September, 1975, in the

State and District of Maryland,

AMY EVERSTON JONES,

did receive, conceal and dispose of certain

securities and money that is, a check #47456 in

the amount of $11,138.04, payable to A.L.E.

Jones, drawn on the account of Englis (sic)

Limited, which were moving as, were part of, and

constituted interstate and foreign commerce from

Canada to the State of Maryland, knowing the

same to have been stolen, unlawfully converted

and taken.

-~

A.5

An understanding of Inglis’ accounting system is

necessary to explain the scheme devised by the appellee and

her cohort, one Michael Everston, who was the supervisor of

Inglis’ accounts payable department. When payments are

made to Inglis’ vendors the supporting documents (invoices

and evidence of receipt of goods) are matched in the

accounts payable department by the invoice audit clerks.

These clerks then attach an accounts payable distribution

slip to the supporting documents. At the accounts payable

distribution slip level, the clerks record (1) the invoice

number, (2) the vendor and/or supplier number, and (3) the

amount of the invoice. The clerks then initial as to the

recording of that data. The accounts payable distribution

slip is attached to the documents to facilitate the

preparation and the collection of the data on the supporting

documents. The invoice audit clerks then forward the

documents to another accounts payable clerk who logs and

records the voucher or the accounts payable number. The

documents are then transferred to the data processing area

where receipt of the documents is noted and they are sent

to a key punch operator who sets up cards for the

documents. The papers are then picked up by a data

control clerk who takes them to a production area for

computer processing. Once fed into the computer, it then

produces a report called a balancing report which is used to

identify all of the invoices in a particular batch. The totals

which appear on the balancing report are compared to a

taped total which is attached to the group of documents,

and this total is then compared against a log maintained by

the data processing area. The documents are then sent back

to the accounts payable department for a further

verification of their accuracy. After the data is entered into

the computer, an order is given to the computer to

print-out checks, complete with facsimile signatures, payable

to the order of the designated payee.

According to the government’s testimony the appellee’s

accomplice, Everston, directed an accounts payable clerk to

set up documents under the name of “A.L.E. Jones” which

A.6

included a vendor number “98844”. He then altered

Whirlpool accounts payable documents by changing

Whirlpool’s vendor number “99900” to “98844” to

correspond to the “A.L.E. Jones” account. Through a

process of personally reviewing the groups of accounts

payable documents, Everston, was able to store these altered

documents in the Inglis computer. Ultimately, the computer

issued checks payable to the account of “A.L.E. Jones”

which should have been paid to Whirlpool Corporation. The

five checks thus issued resulted in over $130,000.00 being

paid to the “A.L.E. Jones” account. Upon receipt of the

checks in Maryland the appellee deposited them in a

specified account to her credit.

The sole issue is whether the alteration of accounts

payable documents fed into a computer which resulted in

the issuance of checks payable to an improper payee

constituted a “falsely made, forged, altered, counterfeited or

spurious” security within the meaning of the exclusionary

clauses of sections 2314 and 2315 of Title 18.

In considering the phrase “falsely made, forged, altered,

or counterfeited” in the statutory sections the district court

correctly noted that the terms “are substantially

synonymous and refer to the crime of forgery. Greathouse

vy. United States, 170 F.2d 512, 514 (4 Cir. 1948).”""*' We

also agree with the district court’s conclusion that the term

“forgery” should be viewed in the light of its common law

meaning:

“A forged writing was defined in Greathouse

as one ‘which falsely purports to be the writing of

another person than the actual maker.’ Greathouse,

supra, at 514. It seems apparent from the sources

relied upon that this was intended to express the

meaning of forgery as it is known at common law.

'! 414 F. Supp. at 966-67.

A.7

Furthermore, the Supreme Court defined what it

termed ‘the concept of “federal” forgery’ as being

no broader than its common law counterpart, in

the absence of some contrary indication in the

statute or legislative history. Gilbert v. United

States, 370 U.S. 650, 655, * * * (1962). Although

the Court was there referring specifically to 18

U.S.C. § 495, the construction of § 2314 in

Greathouse was noted with approval; Gilbert,

supra, at 657 ***. The area of consideration in

this case is thus circumscribed by what would

have been a forgery at common law.'?

However, we disagree with the district court’s

conclusion that the acts committed by Everston constituted

common law forgery. The Supreme Court has noted that

“{florgery, or the crimen falsi, *** may with us be

defined (at common law) to be, ‘the fraudulent making or

alteration of a writing to the prejudice of another man’s

right?’ ***. 4 Blackstone, Commentaries (Christian ed.

1809), 247-248.” Gilbert v. United States, 370 U.S. 650,

657 n.10 (1962). Significantly then, “[{a]n essential element

of the crime of forgery is making the false writing * * *.”

United States v. Maybury, 274 F.2d 899, 903 (2 Cir. 1960)

(emphasis added). See Carr v. United States, 278 F.2d 702,

703 (6 Cir. 1960), (“The word ‘forgery’ is commonly

defined as the false making or materially altering, with

intent to defraud, or any writing, which, if genuine, might

apparently be of legal efficacy or the foundation of a legal

liability.”); Marteney v. United States, 216 F.2d 760, 763

(10 Cir. 1954), cert. denied, 348 U.S. 953 (1955), (“The

words [falsely made and forged] relate to genuineness of

execution and not falsity of content.” ?

'2 Id, at 967.

'3 See also R. Anderson, 2 Wharton’s Criminal Law

and Procedure, §634 at 412-13 (1957); Cunningham v.

United States, 272 F.2d 791 (4 Cir. 1959); United States v.

Smith, 262 F. 191 (D. Ind. 1920).

A.8

In the present case, the district court was of the

opinion that Everston, in fact, made a false writing because

“the individual who drafted the instrument in a practical

sense was Everston, although he employed the computer as

the instrumentality by which the checks were physically

drawn.”!* We think, however, that the acts of Everston did

not constitute the making of a false writing, but rather

amounted to the creation of a writing which was genuine in

execution but false as to the statements of fact contained in

such writing.'5 The distinction is critical to the sufficiency

of the indictment.

“In criminal cases the great weight of authority

holds false statements in or fraudulent execution

of otherwise valid instruments not to be forgery

within its common law or unexpanded meaning.

Greathouse v. United States, 4 Cir., 170 F.2d 512,

514; United States v. Brown, 2 Cir., 1957, 246

F.2d 541; Marteney v. United States, 10 Cir.

1954, 216 F.2d 760; 41 ALR. 229,

supplemented, 49 A.L.R. 1529, 51 A.L.R. 568.”

First National Bank of South Carolina v. Glenn Falls Ins.

Co., 304 F.2d 866, 870 n.1 (4 Cir. 1962).

14 414 F. Supp. at 968.

1S There is, of course, a valid and recognized

distinction between the false making of a writing and the

making of a false writing. See United States v. Davis, 231°

U.S. 183 (1913); United States v. Staats, 8 How. 41, 49

U.S. 40 (1850); Wright v. United States, 172 F.2d 310 (9

Cir. 1949); United States v. Mulligan, 59 F.2d 200 (2 Cir.

1932).

AY

The district court was of the opinion that the facts did

not warrant the conclusion that false statements appeared

on the face of the checks issued by Inglis to “A.L.E.

Jones”.'®© We cannot agree. The checks state that the

designated amount is payable “to the order of A.L.E.

Jones,” and implicit in such an unconditional order was the

existence of an obligation running from Inglis, Limited, to

the payee. There was, of course, no such obligation, but as

the result of Everston’s misconduct the accounting

department of Inglis was defrauded into believing that the

company owed a bona fide obligation to “A.L.E. Jones”

and, accordingly, issued a genuine instrument containing a

false statement of fact as to the true creditor.'7

'© The district court stated that “[t]he only words on

the checks that can in any way be characterized as false are

‘A.L.E. Jones,’ and those words make no assertion, either

true or false; their only falsity lies in the fact that their

presence on the instruments was unauthorized.” 414

F. Supp. at 968. As noted above, we cannot agree with the

district court’s view on this point.

17 Although the district court correctly notes that

reference to the “imposter doctrine” as found in the civil

arena would be “irrelevant in the context of a criminal

prosecution * * * .” 414 F.Supp. at 971 n.9, we think the

imposter/forger distinction is helpful in deciding that the

facts of the present case do not amount tu forgery. See

Atlantic National Bank of Jacksonville v. United States, 250

F.2d 114 (S Cir. 1957). See also United States v. Bank of

America Nat. Trust & Sav. Ass’n, 274 F.2d 366 (9 Cir.

1959); United States v. Union Trust Co., 139 F. Supp. 819

(D.Md. 1956); Annot., 81 A.L.R.2d 1365 (1962) (The

annotation draws an interesting distinction between the

“imposter/forger” rule and the “defrauder/forger” rule. The

case at bar involves the latter doctrine. See 81 A.L.R.2d at

1368.

A.10

We recognize that, at common law, one need not have

physically counterfeited an instrument to be convicted of

forgery, see In re Count De Toulouse Lautrec, 102 F.878

(7 Cir. 1900).1% However, we note that in those

circumstances the issuance of the instrument purporting to

have legal efficacy “was neifher intended nor issued as such

by the purported maker.” Id. at 881. (emphasis added). In

'® The Seventh Circuit has capsulated the factual

contours of its Lautrec decision thusly:

In Lautrec a printer retained as samples of

his work several interest coupons, the originals of

which had been validly issued in connection with

certain corporate bonds. The petitioner obtained

some of these samples and, although knowing that

they were not genuine obligations of the issuing

corporations, negotiated them. The petitioner

argued that he was not guilty of common law

forgery because: 1) the coupons had been lawfully

printed and retained; 2) he had obtained the

coupons legitimately from a person with authority

to distribute them; and 3) he was able to

negotiate the coupons without altering them in

any way. The court rejected this argument,

concluding that forgery was committed when

the accused adopted the otherwise innocent

work of the printer for the purpose of

defrauding purchasers by selling as genuine an

instrument which purported to have legal

efficiency, but was neither intended nor

issued as such by the purported maker.

102 F. at 881. See also Gilbert, supra, 370 US.

at 658, ***(where “ ‘falsity lies in... the

genuineness of execution,’ it is . . . forgery’’).

United States v. Johnson, 504 F.2d 622, 625-26 (7 Cir.

1974) (footnotes omitted).

A.11

the present case, the purported maker, Inglis, issued the

check and “the instrument [was] of such nature that if not

voidable for the defendant’s fraud it could have some legal

or prejudicial effect upon the signer.” R. Anderson, 2

Wharton’s Criminal Law and Procedure § 611, at 378

(1957). We conclude that the crime herein was a fraud or

false pretense, and not forgery.

Decisional support for the proposition that the

alteration of supporting documents giving rise to the

issuance of a bona fide instrument amounts to the crime of

false pretenses is found in the Ninth Circuit’s decision in

Lemke v. United States, 211 F.2d 73 (9 Cir.), cert. denied,

347 U.S. 1013 (1954). In Lemke the court was faced with

a situation wherein the manager of a cafeteria, who had

previously purchased vegetables from a truck farmer,

attempted to have the farmer make out invoices showing

the sale to the cafeteria of vegetables which had never been

delivered. The manager planned to sign and approve the

slips and present them for payment. Under such

circumstances the invoices were treated as vouchers

authorizing payment to the sellers. Thus, “in ordinary

course, the bookkeeper would at the end of the month add

the amounts of these vouchers and write a check for the

total and deliver it ***.” 211 F.2d at 74. The Ninth

Circuit held that

“(t]he evidence here was sufficient to show that

Lemke had put in motion a procedure which, had

it not been interrupted in consequence of the

intervention by the officers, would have resulted

in $60 being paid by check to Elbert for

vegetables never delivered or intended to be

delivered. Had Lemke’s plan been consummated

the Civilian Mess would have been defrauded in

consequence of Lemke’s false pretenses.”

A.12

Id. at 75. Just as the facts before us indicate that the

alteration of supporting documents generated a_ valid

security, so also in Lemke the falsely made invoices would

have resulted in the issuance of a valid check. In each

instance the pattern of conduct was designed to defraud the

company through the use of false pretenses.

Since we conclude that the checks did not fall within

the exclusion of the statutes as forgeries, the order of the

district court dismissing the indictment must be reversed.

REVERSED.

ALES EN - GES

A. 13

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

UNITED STATES OF AMERICA

v.

AMY EVERSTON JONES

Criminal No. W-75-0854

MEMORANDUM OPINION AND ORDER

Dated: May 13, 1976

Jervis S. Finney, United States Attorney and Robert A.

Rohrbaugh, Assistant United States Attorney, for the Govern-

ment.

Gerald A. Kroop, Esquire, for Defendant.

WATKINS, District Judge.

Defendant Amy Everston Jones is charged in a ten-count

indictment with transportation in interstate commerce of

stolen, converted, or fraudulently obtained securities valued at

more than $5,000 in violation of 18 U.S.C. §2314; and with

receiving, selling, or disposing of those same securities knowing

them to have been stolen, converted, or taken by fraud, in

violation of 18 U.S.C. §2315.

The securities at issue are five checks,’ payable to the

order of “A.L.E. Jones,”* drawn on the Royal Bank of Canada

'1 Checks are included in the definition of “securities” for

purposes of § §2314 and 2315; see, 18 U.S.C. §2311.

2“A L.E. Jones” appears -to be the true name of the

Defendant.

A. 14

against the account of Inglis, Limited, a Canadian appliance

firm. The government alleges that Defendant transported these

checks from Canada to Maryland (or that they were sent to her)

and that the checks were then deposited in a Maryland bank

account.

For purposes of this motion, it is not disputed that these

checks were “stolen, converted or taken by fraud.” Defendant

contends, however, that the Inglis securities are not genuine and

are instead forgeries of checks of a foreign corporation, to

which §§2314 and 2315 expressly do not apply. Defendant

has, therefore, moved that the instant indictment be dismissed?

Except for minor differences in punctuation, the exclu-

sionary language referring to foreign securities is the same in the

two sections. Section 2314 provides, in pertinent part, as

follows:

This section shall not apply to any falsely made,

forged, altered, counterfeited or spurious representa-

tion of an obligation or other security of the United

States, or of an obligation, bond, certificate, security,

treasury note, bill, promise to pay or bank note

issued by any foreign government or by a bank or

corporation of any foreign country.

* At the time the instant motion was filed it appeared to be

Defendant’s contention that the exclusionary language would

have applied even to bar a prosecution arising from a transac-

tion involving genuine foreign securities. Such an assertion is

flatly refuted by the plain language of the statute and also by

the evident purpose of the legislation, which was to avoid dupli-

cation with other statutory provisions dealing specifically with

foreign forgeries. See, generally, United States v. Galardi, 476

F.2d 1072, 1077-1078 (9 Cir. 1973), reh. denied, cert. denied

414 US. 839, 856. At the hearing, however, Defendant argued

that the securities at issue were forged.

TE ee RS

Dehn

A. 15

Under most circumstances, the issue of geniineness of

instruments poses little difficulty ; certainly there is no dearth of

authority as to what constitutes a forgery at common law and

for purposes of the various federal forgery statutes. The circum-

stances of the instant case, however, are not the usual ones. The

Inglis checks were printed by a computer, complete with

authorized facsimile signatures, and, it is alleged, were the direct

result of tampering by an Inglis employee with data records

stored in the computer and with payment data inserted into the

computer. Whether or not they can be characterized as “falsely

made, forged, altered, counterfeited or spurious” poses an

interesting question and one which the Court considers novel in

the case law.

The unusual nature of this case requires that the facts be

recited in some detail.

Inglis, Limited, is a Canadian company which routinely

purchases substantial quantities of household appliances from

Whirlpool Corporation, a United States manufacturer. The

accounts payable generated by these purchases are processed

through a rather complex system at Inglis which in part involves

manual accounting techniques but which culminates in the

issuance of checks by means of automated electronic data

processing equipment.

According to Edward McCormack, comptroller and

assistant treasurer of Inglis, the system is initiated by the arrival

of invoices and other documents (including warehouse receipts,

customs clearing documents, and shipping manifests) associated

with a particular purchase or shipment. These materials are

collected and matched with records of orders. The information

needed to process payment of the account is then extracted

from the various documents and written down on an “accounts

payable distribution slip.” This information includes the invoice

number, the date, the amount due, and a vendor code number.

The vendor code number is used to identify the payee to the

computer, which issues the actual check.

A. 16

The data thus collected are verified within the accounts

payable department, and batches of documents, with verified

accounts payable distribution slips attached, are then sent to

the keypunch op.rators. The keypunch operators do not check

any of the information given them; they merely take the infor-

mation necessary to process the payment from the accounts

payable distribution slip and prepare it for entry into the com-

puter by transferring it to a computer keypunch card. The data

thus processed are entered into the computer and are retained

in the computer memory as “open item entries.” Periodically,

the computer is commanded to execute a “check run” by

printing checks for all entries on the “open item” list. The

checks are automatically printed by the computer in fully

negotiable form, complete with facsimile signatures.

According to the theory advanced by the government, and

not disputed by the Defendant for purposes of this motion

alone, the checks in question resulted when an alleged

confederate of the Defendant, one Michael Everston, tampered

with certain of the data being processed through the system

described above. At the time of the alleged tampering, Everston

was supervisor of the accounts payable department. As such, he

was familiar with all aspects of the system, including the

verification techniques employed to assure the proper payment

of accounts payable.

The first step in the scheme alleged by the government was

the creation of an improper vendor code listing in the computer

which would have rendered the computer receptive to the

insertion of false data at a later time. An exhibit filed at the

hearing suggests that this was done by means of an order to

change vendor codes and addresses issued on September 3,

1975, allegedly at the direction of Michael Everston. That order

contained an instruction to create a new vendor code, 99894, to

correspond to “A.L.E. Jones, P. O. Box 123.” Creation of this

code within the computer’s memory ensured that any order to

pay code 99894, if properly entered into the computer, would

automatically result in the issuance of a check payable to the

order of “A.L.E. Jones.”

A. 17

The second step in the scheme involved the entry into the

computer of data relating to specific checks to be issued to

A.L.E. Jones. According to the government, Everston’s supervis-

ory position enabled him to obtain batches of Whirlpool

invoices with attached accounts payable distribution slips after

the documents had been verified as described above. Then, the

government alleges, Everston prepared accounts payable distri-

bution slips like those which had been prepared in his depart-

ment but bearing the vendor code “99894” instead of the

proper vendor code corresponding to Whirlpool.

As the final element in the scheme, the documents and

accounts payable distribution slips were allegedly forwarded to

keypunch. The data on the accounts payable distribution slips

were routinely transferred to keypunch cards. When directed,

the computer read the data from the keypunch cards and stored

the information in its memory. In due course, when

commanded to process a check run, the computer automatically

printed checks payable to the order of “A.L.E. Jones” which

had been intended to be made payable to the order of

Whirlpool Corporation. The government then alleges that the

“A L.E. Jones” checks were sent or given to the Defendant,

who, it is charged, deposited them in a bank account in

Maryland.

Assuming all of this to be true for purposes of the instant

motion only, the question is whether or not checks thus pro-

duced can properly be the subject matter of a prosecution

under § §2314 and 2315.

It has long been settled in this circuit that the terms

“falsely made, forged, altered, or counterfeited” as used in

§ 2314 are substantially synonymous and refer to the crime of

forgery. Greathouse v. United States, 170 F.2d 512, 514 (4 Cir.

1948). Since §2315 was enacted at the same time and as part of

the same law, the National Stolen Property Act, it seems clear

that a single construction would apply to essentially identical

language in the two sections. Furthermore, it would seem that

A. 18

the term “spurious” must likewise be considered ejusdem

generis, since a contrary construction would require the Court

either to hold that the exclusionary provisions excises from the

statutes that which was not included, or to regard the term

“‘spurious”’ as surplussage.

A forged writing was defined in Greathouse as one “‘which

falsely purports to be the writing of another person than the

actual maker.” Greathouse, supra, at 514. It seems apparent

from the sources relied upon that this was intended to express

the meaning of forgery as it is known at common law. Further-

more, the Supreme Court defined what it termed “the concept

of ‘federal’ forgery” as being no broader than its common law

counterpart, in the absence of some contrary indication in the

statute or legislative history. Gilbert v. United States, 370 U.S.

650, 655 (1962). Although the Court was there referring

specifically to 18 U.S.C. §495, the construction of §2314 in

Greathouse was noted with approval; Gilbert supra, at 657. The

area of consideration in this case is thus circumscribed by what

would have been a forgery at common law.

In contending that the Inglis checks were forgeries, the

Defendant has relied principally on those cases which have held

that one who obtains a stolen instrument in blank and later

completes it, has committed a forgery. See, e.g., United States

v. Galardi, 476 F.2d 1072 (9 Cir. 1973), cert. denied 414 U.S.

839, 856; United States v. Brown, 417 F.2d 1068 (5 Cir. 1969);

United States v. Franco, 413 F.2d 282 (5 Cir. 1969); and

United States v. Ketchum, 327 F. Supp. 768 (D. Md. 1971).

Such a scheme would ordinarily constitute forgery, even though

the blank is filled with the name of a real person and even if the

thief-forger uses his or her own name. Ketchum, supra, at 770;

but see, United States v. Brown, 344 F. Supp. 291, 294 (E.D.

Va. 1972).

The government urges two alternative theories. First, it is

contended, even conceding that the substitution of “‘A.L.E.

Jones” for Whirlpool constituted a false writing, the falsity was

A. 19

in the meaning rather than in the making of the instrument.

Thus, the government seeks to bring the instant case within the

rule stated by Wharton and quoted by the government in its

brief that:

. . . when a person writes a letter or fills out a loan

application which he signs with his own name intend-

ing that it be accepted as his writing, he is not guilty

of forgery because statements contained therein are

“ false and their falsity was known to him. The better

view, and that supported by the majority opinion, +s-

jori inion, is that under

the common law under statutes defining forgery in

substantially the language of the common law

definitions, the genuine making of an instrument for

the purpose of defrauding does not constitute the

crime of forgery. In other words, the term ‘falsely’ as

applied to making or altering a writing in order to

make it a forgery, does not refer to the contents or

the tenor of the writing or to the facts stated therein,

but implies that the paper or writing is not genuine,

that in itself it is false or counterfe't.

2 Wharton’s Criminal Law, Section 634, pp. 412-413 (1957).

In essence the government argues that the documents in

question are genuine, but contain false statements. Further-

more, the government argues, such “genuine” documents would

not have been regarded as forgeries at common law even though

their execution might have been procured by fraud, citing the

following language:

According to settled authority, it is not forgery to ob-

tain a person’s signature to an instrument by means of

false and fraudulent representations as to its contents,

or as to the purpose for which the instrument is to be

A. 20

used.* Nor is it forgery to fraudulently:procure a per-

son’s signature to an instrument which has previously

been altered without his knowledge.

Clark and Marshall, A Treatise on the Law of Crimes, Section

12.34, p. 961 (1967) (footnotes and citations omitted in the

government’s brief).

Neither the doctrine advanced by the Defendant nor those

put forward by the government are apposite to the case at bar.

The cases cited by the Defendant all involve the fraudulent

making or alteration of an instrument by one who is a stranger

to the instrument. In the instant case, however, the individual

who drafted the instrument in a practical sense was Everston,

although he employed the computer as the instrumentality by

which the checks were physically drawn. Everston, unlike the

defendants held to have committed forgery in Ketchum and like

cases, was authorized for certain purposes to direct the entry of

data into the computer and thus initiate the drafting of checks

bearing authorized Inglis signatures; although, if the govern-

ment’s theory is correct, Everston was in no way authorized to

effect the creation of the particular checks at issue.

Nor do the theories urged by the government provide an

answer. The government’s contention that the instruments, if

genuine, cannot be considered forged merely because they con-

tain false information is correct: see, Marteney v. United States,

216 F.2d 760, 763 (10 Cir. 1954). Where the falsity in an

instrument is in its content, rather than in the manner of -

making, the instrument is not a forgery. Gilbert, supra, at 658.

* In fact, the matter is not settled among the American

decisions, although the better and perhaps the majority view

seems to be in accord with Clark and Marshall. See, Wharton,

supra, §635 at 415.

A. 21

This expression, however, merely restates the venerable rule

that a lie will not be considered forgery at common law merely

because it is written down; it retains its character as fraud or

misrepresentation. For example, it is settled that there is no

common law forgery where an agent, in executing a document

purportedly authorized by his principal, misrepresents the

extent of his authority on the face of the instrument. Gilbert,

supra. See, also, Cunningham v. United States, 272 F.2d 791,

793-794 (4 Cir. 1959); and Selvidge v. United States, 290 F.2d

894, 895 (10 Cir. 1961). The application of this doctrine,

however, presupposes a statement on the face of the instrument

which is false as to its meaning, and there is no such statement

with respect to the Inglis checks.* The only words on the

checks that can in any way be characterized as false are ““A.L.E.

Jones,” and those words make no assertion, either true or false;

their only falsity lies in the fact that their presence on the

instruments was unauthorized.

But even assuming that the mere presence of the payee’s

name on the instrument can in these circumstances be

considered an “assertion” capable of characterization as true or

false, a premise this Court does not accept, the rule as to falsity

of content has no application where the documents were in fact

falsely made.

With respect to false making, the government’s principal

authority is the quotation from Clark and Marshall noted above.

That language cannot be applied to the facts of the instant case.

5 Quite conceivably the accounts payable distribution slips

were false as to meaning, rather than making, and could not

themselves be considered forgeries. However, the Court is con-

cerned in the instant case only with the checks. In any event,

forgeries or not, the slips could not properly be the basis of a

charge under § §2314 and 2315 since there is no nexus with

interstate commerce as to them.

a

A. 22

As is apparent from the case authori i i i

treatise, Clark and Marshall were aan re Aone

involving two parties and the reliance by one on fraudulent mis-

representations of another.® As with the lie set to writing which

does not thereby become forgery, that which is essentially false

pretenses or misrepresentation retains its character as such.

In the case at bar, however, there were no fraudulent mis-

representations to any second party and in fact th

second party to be deceived. cries

As the government urged at the hearin g, the

a computer was used to print these checks Parga na

mitted to confuse the matter. The computer was cate an

inanimate and obedient instrumentality employed by Everston

who himself accomplished everything necessary to assure the

issuance of checks to an unauthorized Payee and was, as a

practical matter, the drawer of the checks. Like a checkwriting

machine or a ball point pen, the computer did exactly what it

was told to do by its program and by the data inserted at

*It is clear that the two-p situati j

matter of the quote from Clark wr Ray let ath oa

therein to Regina v. Chadwick (1844), 2 Moody & Robinson

545; there, the question was whether or not the Defendant had

induced creditors of his principal to sign a receipt which he had

fraudulently altered as to amount. In ruling that this would not

have been a forgery, provided the alteration preceded the

signature, Baron Rolfe referred to an earlier case in which h

had considered the doctrine generally, that being Regina .

Collins (1843), 2 Moody & Robinson 461. In that case. Baror,

Rolfe stated that it would not be forgery fraudulently to induce

a person to execute an instrument based on a misrepresentation

as to its contents because, if such a charge were permissible

any party might be indicted for forgery who prevails on a man

to execute a deed by misrepresenting i ” Regi

Collins, supra, at 466. g its legal effect.” Regina v.

dbretiats a

A. 23

Everston’s command. Likewise, the keypunch operator’s

_ function was to follow instructions exactly and to punch into

computer cards exactly the information given. It was only by

means of this mechanical process that the computer could

digest the information; and it is fair to say that the operator,

acting routinely, functioned in a sense as an adjunct of the

machine. At most, the computer operator was the innocent

agent of Everston.

These facts, therefore, describe a one-party transaction

without any of the deception described by Clark and Marshal!

That deception was rendered unnecessary by the seemingly

efficient system devised at Inglis which made it possible for one

man to accomplish the entire transaction in essence single-

handedly.

That being the case, it seems plain that the checks fit

within the definition of forgery. It has long been the rule that

an agent may commit forgery by executing an instrument in

disobedience of his instructions, provided that the requisite

mens rea exists and that the documents so executed have the

capacity to defraud. Selvidge, supra, at 895.’

Selvidge itself involved a false agency endorsement, as

noted above. Such endorsements are now held not to be

forgery. The Court noted, however, that the critical factor was

the assertion on the face of the instrument that the Defendant

was acting as an agent and stated that “if Selvidge had merely

endorsed the name of her principal and cashed the checks

7The rule can be traced at least as far as the Statute 5

Elizabeth Ch. 14 (1562-1563), which provided that the inser-

tion of a clause into a will purporting a devise of lands without

warrant or direction of the devisor is forgery even though the

insertion is made in the lifetime of the testator and by the clerk

authorized to draft the will. 1 Hale, Pleas of the Crown, Ch. 64

p. 684 (1847).

A. 24

contrary to her instructions, the crime of forgery would have

been complete.” Selvidge, supra, at 895.

This “rule of general application” is in harmony with the

established concept that it is “the giving [to an instrument of]

a false appearance of having been executed by [the principal]

which makes a man guilty of forgery.” 1 Hawkins, Pleas of the

Crown, Ch. 21 §5 at 256 (1824). In making his own

unauthorized act appear to be the act of his principal, the agent

commits forgery in the classical sense; he makes a “writing

which falsely purports to be the writing of another.”

Greathouse, supra, at 514.

The rule has been most often expressed in the English

cases. Typical is the case of Regina v. Wilson (1848), 2 Car. &

K. 527, 175 Eng. Rep. 219 (Nisi Prius Book 6) in which a clerk

was given a check that had been signed but was otherwise blank,

with instructions to fill in the check to a certain amount and

then to give the proceeds to one Williamson. The clerk instead

filled the check out to a larger amount, cashed the check, and

converted the proceeds. This was held to be forgery, fourteen

judges concurring.

The rule has been stated less often, but with no less

authority, in the American cases. It was recognized early in Ex

Parte Hibbs, 26 F.421 (D. Ore. 1886). A postal employee,

authorized to issue money orders when paid for, made out

money orders for which no payment had been received and

converted the proceeds. This was held to be forgery:

The instruments set out in these indictments, and of

which the prisoner is thereby charged with forgery,

purport to be postal money orders of the United

States. They were issued without authority, and

contrary to the prohibition of law. They were falsely

made, filled up, signed, stamped, and issued by the

prisoner, as upon a state of facts which did not exist,

with intent to defraud his employer, the United

States. this, in my judgment, was a false making

A. 25

within the statute, and such a false making as con-

stitutes the crime of forgery at common law. The

writing is false, because it purports to be what it is

not. It purports to be a money order of the United

States, issued by its authority, after the receipt by its

agent of the sum named therein, on the application of

a real person, while in truth and in fact, it was issued

without such authority and contrary to law. . .

Hibbs, supra, at 432.

See, also, Quick Service Box Co. v. St. Paul Mercury Ind. Co.,

95 F.2d 15, 17 (7 Cir. 1938) (bookkeeper obtained signatures

of his employer to blank checks and, in excess of authority,

filled in the blanks and appropriated the proceeds; held,

forgery.®

This situation must be distinguished, of course, from the

cases that deal with agency endorsements such as Gilbert and

Selvidge. The reason for the rule that false agency endorsements

are not forgery is that the party who would be defrauded by

such a false endorsement would not regard the endorsement as

the act of the principal; instead, his reliance would be upon the

®The District of Columbia Circuit had likewise declared

the rule in Yeager v. United States, 32 F.2d 402 (D.C. Cir.

1929). There an employee authorized to endorse checks and

deposit them to this employer’s account instead endorsed the

checks and pocketed the proceeds. This was held to be forgery

under the rule cited in Hibbs. 32 F.2d at 402. It may be as later

developed, and as noted in Selvidge, that Yeager was wrongly

decided because the endorsement was an agency endorsement, a

fact that did not come to light in the case law until some three

years after Yeager had been decided. See, 290 F.2d at 896.

However, Yeager is still authority, although perhaps no more

than dictum, in support of the rule of forgery by an authorized

agent.

A. 26

existence of authority as evidenced by the representation of

agency on the instrument. The distinction between the case

where the agency is stated on the document and those, such as

the case at bar, where there is no such representation and where

the party to whom the instrument is given regards it as the act

of the principal, is very clear. It is a “decisive circumstance

which compels a different conclusion,” Selvidge, supra, at 896.

That distinction was drawn in Selvidge with respect to Hibbs

and Quick Service Box, and was explicitly approved by the

Supreme Court in Gilbert, supra, at 658 n. 12.

Additionally, the case at bar should be distinguished from

those that involved an agent with general authority. A case

nearly identical with the instant case, except for that critical

factual difference, is Regina v. Richardson, (1860), 2 F. & F.

343, 175 Eng. Rep. 1088 (Nisi Prius Book 6). In that case, the

Defendant had been employed as a clerk with authority to pay

the routine expenses of the business. To that end, he was given

control of the cash on hand, into which he was to pay receipts.

When necessary, he was authorized generally to cash checks on

that account, drawing the money himself and then using it to

pay the creditors. On one occasion he cashed such a check and

entered into the books a notation that he had used the proceeds

to pay a creditor when, in fact, he had converted the funds.

This was held not to be forgery, because the Defendant’s

authority was limited only by the amount in the account; rather

than draw checks to the creditors, his function was to cash

checks and pay over the cash. In cashing the check at issue, he

quite possibly had not exceeded his authority; his crime was

misappropriation of the proceeds after the check had been

cashed, rather than forgery. 175 Eng. Rep. at 1089.

Everston, however, had no such general authority to draw

checks. His authority was strictly limited by the parameters of

the accounts receivable, which were to be satisfied by check

rather than out of any cash fund over which Everston had

control. Unlike the clerk in Richardson, he clearly acted outside

the scope of his authority. By executing documents without

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ed

A. 2/

authority in such a way that they appeared to be the solemn act

of his principal. Everston committed forgery, given, of course,

that the government’s allegations are true.°

Since, under the theory of this transaction advanced by

the government, the checks were “forged. . . securit[ies]. . .

issued by . . . a bank or corporation of any foreign country,”

prosecution under § §2314 and 2315 is improper, and the

indictment must be dismissed.

Accordingly, it is this 13th day of May, 1975, by the

United States District Court for the District of Maryland,

ORDERED:

(1) That the motion of the Defendant to dismiss the

indictment BE, and the same hereby IS, GRANTED;

(2) That the indictment in the instant case BE, -and the

same hereby IS, DISMISSED; and

(3) The Clerk of the Court is directed to send copies of

the foregoing Memorandum Opinion and Order to Gerald A.

Kroop, Esquire, and to Jervis S. Finney, United States Attorney

for the District of Maryland.

/s/ R. Dorsey Watkins,

United States District Judge

%In holding these checks to be forgeries, the Court

expresses no opinion as to any possible questions of civil

liability. Those questions involve considerations which are

irrelevant in the context of a criminal prosecution, such as any

possible fault, estoppel, or application of the impostor rule.

United States v. Union Trust Co., 139 F.Supp. 819, 820 (D.

Md. 1956).

a

A. 28

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

UNITED STATES OF AMERICA

v.

AMY EVERSTON JONES

Criminal No. W-75-0854

ORDER

Pursuant to the Memorandum Opinion and Order filed

May 13, 1976, in the above entitled case, it is ORDERED this

17th day of May 1976 that the indictment be and the same is

hereby DISMISSED.

/s/ R. Dorsey Watkins,

U.S. District Judge

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A. 29

APPENDIX C

_1. Title 18, United States Code

Section 2314:

Transportation of stolen goods, securities, moneys,

fraudulent State tax stamps, or articles used in

counterfeiting — Whoever transports in interstate or foreign

commerce any goods, wares, merchandise, securities or

money, of the value of $5,000 or more, knowing the same

to have been stolen, converted or taken by fraud; or

Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises, transports or causes to be

transported, or induces any person to travel in, or to be

transported in interstate commerce in the execution or

concealment of a scheme or artifice to defraud that person

of money or property having a value of $5,000 or more; or

Whoever, with unlawful or fraudulent intent, transports

in interstate or foreign commerce any falsely made, forged,

altered, or counterfeited securities or tax stamps, knowing

the same to have been falsely made, forged, altered, or

counterfeited; or

Whoever, with unlawful or fraudulent intent, transports

in interstate or foreign commerce any traveler’s check

bearing a forged countersignature; or

Whoever, with unlawful or fraudulent intent, transports

in interstate or foreign commerce, any tool, implement, or

thing used or fitted to be used in falsely making, forging,

altering, or counterfeiting any security or tax stamps, or any

part thereof—

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Shall be fined not more than $10,000 or imprisoned

not more than ten years, or both.

This section shall not apply to any falsely made,

forged, altered, counterfeited or spurious representation of

an obligation or other security of the United States, or of

an obligation, bond, certificate, security, treasury note, bill,

promise to pay or bank note issued by any foreign

government or by a bank or corporation of any foreign

country.

2. Title 18, United States Code,

Section 2315:

Sale or receipt of stolen goods, securities, moneys, or

fraudulent State tax stamps. — Whoever receives, conceals,

stores, barters, sells, or disposes of any goods, wares, or

merchandise, securities, or money of the value of $5,000 or

more, or pledges or accepts as security for a loan any

goods, wares, or merchandise, or securities, of the value of

$500 or more, moving as, or which are a part of, or which

constitute interstate or foreign commerce, knowing the same

to have been stolen, unlawfully converted, or taken; or

Whoever receives, conceals, stores, barters, sells, or

disposes of any falsely made, forged, altered, or

counterfeited securities or tax stamps, or pledges or accepts

as security for a loan any falsely made, forged, altered, or

counterfeited securities or tax stamps, moving as, or which

are a part of, or which constitute interstate or foreign

commerce, knowing the same to have been so falsely made,

forged, altered, or counterfeited; or

Whoever receives in interstate or foreign commerce, or

conceals, stores, barters, sells, or disposes of, any tool,

implement, or thing used or intended to be used in falsely

“——

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making, forging, altering, or counterfeiting any security or

tax stamp, or any part thereof, moving as, or which is a

part of, or which constitutes interstate or foreign commerce,

knowing that the same is fitted to be used, or has been

used, in falsely making, forging, altering, or counterfeiting

any security or tax stamp, or any part thereof—

Shall be fined not more than $10,000 or imprisoned

not more than ten years, or both.

This section shall not apply to any falsely made,

forged, altered, counterfeited, or spurious representation of

an obligation or other security of the United States or of

an obligation, bond, certificate, security, treasury note, bill,

promise to pay, or bank note, issued by any foreign

government or by a bank or corporation of any foreign

country.