Petition — KEHOE v. UNITED STATES (Nos. 78-803, 78-802)

NOV 15 1978

i Sores Gat 1!

| FILED

te lliccmngey, 12 CLERK

78-803 |

NO.

| Supreme Court of the United States

OCTOBER TERM, 1978

CORNELIUS J. KEHOE,

Petitioner

,

UNITED STATES OF AMERICA,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JAMES J. HIPPARD, SR.

3701 Kirby Drive, Suite 1230

Houston, Texas 77098

(713) 521-0221

Attorney for Petitioner

_——_—

ST

Alpha Law Brie} Co., One Main Plaza, No. 1 Main St., Houston, Texas . 7002

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SUBJECT INDEX

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SE See eRe REERG nde beeheccavccseceess

Ee eve ecccepecsces

Constitutional Provision, Statutes, and Federal Rule of

Criminal Procedure Involved ............0sesseeeees

I ee aac ccaccccccccceccces

Reason for Granting the Writ ............sssceeeeeees

a en oe

LIST OF AUTHORITIES

CASES

Blockburger v. United States, 284 U.S. 299 (1932) .....

Finch v. United States, 433 U.S. 676 (1977) .........

Fong Foo v. United States, 369 U.S, 141 (1962) .......

Sanabria v. United States, US. , 57 L.Ed.2d

WE I eee lcc ici cc ccecscces

United States v. Jenkins, 420 U.S. 358 (1975) ..........

United States v. Kehoe, 365 F.Supp. 920, ©22 (S.D. Tex.

| REE MES re) e sO Pt ae

United States v. Kehoe, 516 F.2d 78, 81, fn. 4 (Sth Cir.

Ss ee Cee vise caseeccceccccess

United States v. Kehoe, 5i6 F.2d 78, cert. denied, 424

ee idee ccc ccccecces

Page

Il

CASES Page

United States v, Kehoe, 573 F.2d 335, 345-346 (Sth Cir.

BIE Svcs ccaahos insane sky cat -asgbraseransses® 7

United States v. Kehoe, $79 F.2d 971 (Sth Cir, 1978 6

United States v. Scott, 57 L.Ed.2d 65

7 hein e erst aor ere 6,7

UNITED STATES CONSTITUTION

Fifth Amendment .......:seeeeeeeeeeeeeeeeeeeennnees 3

UNITED STATES STATUTES

ae WM MON, ovis s.cadcchaaves egtlaveonnaess«s 2,3,4,5,7

eee RS . cickzekessi ccdteenteip hears 2,3,5,7

a ee REE. |... su kaaecacaanaxtdadereamennions 2,4

FEDERAL RULES OF CRIMINAL PROCEDURE

Rule 29(8) .cccccccccccccvcceecnereceesessvsssesees 4

NO.

Supreme Court of the United States

OCTOBER TERM, 1978

CORNELIUS J. KEHOE,

Petitioner

V.

UNITED STATES OF AMERICA,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Cornelius J. Kehoe, petitions for a Writ of Certiorari

to review the judgment of the United Court of Appeals

for the Fifth Circuit in this case (No. 76-4346).

OPINIONS BELOW

The per curiam opinion of the Court of Appeals on

the Government’s petition for rehearing (App. A, infra,

p. Al) is reported at 579 F.2d 971. The opinion of

the Court of Appeals (App. B, infra, pp. A3-A25) is

reported at 573 F.2d 335. The earlier opinion of the

2

Court of Appeals (App. C, infra, pp. A26-A46) is reported

at 516 F.2d 78, cert. denied, 424 U.S. 909. The opinion

of the district court in Criminal Number 73-H-413 (App.

D, infra, pp. A47-A52) was not reported. The opinion of

the district court in Criminal Number 73-H-213 (App.

E, infra, pp. A53-A62) is reported at 365 F. Supp. 920.

JURISDICTION

The judgment of the Court of Appeals reversing the

district court’s conviction of petitioner was entered on

22 May 1978. The per curiam opinion of the Court of

Appeals on the Government’s motion for rehearing, in

which the Court reversed itself and affirmed the district

court’s conviction of petitioner, was entered on 5 Sep-

tember 1978. Timely petition for rehearing and suggestion

for rehearing en banc by petitioner was denied on 16

October 1978 (App. F, infra, p. A63). The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

QUESTION PRESENTED

Defendant was indicted for embezzling certain land

in violation of 18 U.S.C. § 657. After the government

had presented its case-in-chief, defendant moved for and

obtained a judgment of acquittal because real property

could not be the subject of an embezzlement under § 657.

Rather than exercise its right to appeal this midtrial

termination under 18 U.S.C. § 3731 and seek a new

trial, the government elected instead to let the acquittal

become final. Then the government again indicted and

tried defendant under 18 U.S.C. § 1006 for the identical

criminal misconduct alleged in the first indictment. The

question is:

3

Whether the Double Jeopardy Clause prohibits suc-

cessive prosecutions for a single transaction under two

separate statutes which prosciibe the same conduct.

where in the first prosecution the government al-

lowed a midtrial termination in the defendant’s

favor to become final by electing to forego its right

to seek reversal and a new trial through appeal?

CONSTITUTIONAL PROVISION, STATUTES, AND

FEDERAL RULE OF CRIMINAL PROCEDURE

INVOLVED

That part of the Fifth Amendment to the United States

Constitution which provides:

. nor shall any person be subject for the same

offense to be twice put in jeopardy of life or limb . . .

That part of 18 U.S.C. § 657 which provides:

Whoever, being an officer. . . of . . . any institu-

tion the accounts of which are insured by the Fed-

eral Savings and Loan Insurance Corporation . . .

embezzles, abstracts, . . . or willfully misapplies any

moneys, funds, credits, securities or other things

of value belonging to such institution . . . shall be

fined . . . or imprisoned . . . or both.

That part of 18 U.S.C. § 1006 which provides:

Whoever, being an officer. . . of . . . any institu-

tion the accounts of which are insured by the Fed-

eral Savings and Loan Insurance Corporation . . .

with intent to defraud the . . . institution . . . re-

ceives directly or indirectly any money, profit, prop-

erty, or benefits through any transaction, loan, com-

mission, contracts, or any other act of any such. . .

institution . . . shall be fined . . . or imprisoned . . .

or both.

4

That part of 19 U.S.C. § 3731, as amended, which

provides:

In a criminal case an appeal by the United States

shall lie to a court of appeals from a decision, judg-

ment, or order of a district court dismissing an

indictment or information as to any one or more

counts, except that no appeal shall lie where the

double jeopardy clause of the United States Con-

stitution prohibits further prosecution.

That part of Federal Rule of Criminal Procedure

29(a) which provides:

The court on motion of a defendant . . . shall

order the entry of judgment of acquittal of one or

more offenses charged in the indictment. . . after

the evidence on either side is closed if the evidence

is insufficient to sustain a conviction of such offense

or offenses.

STATEMENT OF THE CASE

Petitioner Kehoe was first indicted in 1973 under 18

U.S.C. § 657. In the jury trial that followed, petitioner

moved at the close of the government’s case for a judg-

ment of acquittal which was granted over the govern-

ment’s vigorous opposition (App. E, infra, pp. A53-A58).

United States v. Kehoe, 365 F.Supp. 920, 922 (S.D.

Tex. 1973).

Rather than attempt an appeal under 18 U.S.C. § 3731,

the government elected to let the judgment of acquittal

become final, and instead obtained a second indictment

under 18 U.S.C. § 1006 (App. C, infra, p. A30).

United States v. Kehoe, 516 F.2d 78, 81, fn. 4 (Sth Cir.

1975). The government has all along conceded that the

second indictment was for the same transaction (i.e., the

5

identical criminal misconduct) made the subject of the

first indictment, and that the evidence offered by the

government to prove the second indictment was the same

as that offered to prove the first indictment (Appendix

to first appeal No. 74-2353, p. 58).

Petitioner moved to dismiss the second indictment

arguing that he had been acquitted in the earlier trial

and that a second trial arising out of the same transaction,

and involving the same proof, would put him twice in

jeopardy. After a hearing the district court sustained the

double jeopardy contention and dismissed the second

indictment (App. D, infra, pp. A47-A52).

The government appealed the dismissal of the second

indictment pursuant to the provisions of 18 U.S.C. § 3731.

The Court of Appeals, in a split decision, reversed the

dismissal judgment of the district court and remanded

the case for trial (App. C, infra, pp. A26-A46). United

States v. Kehoe, 516 F.2d 78, cert. denied, 424 US.

909 (1976). Subsequently, petitioner was tried under

this second indictment and convicted of violating § 1006.

Petitioner appealed the conviction alleging, inter alia,

that the earlier Court of Appeals ruling on the double

jeopardy issues was erroneous. The Court of Appeals

agreed with petitioner in light of this Court’s holding

in Finch v. United States, 433 U.S. 676 (1977), and

in light of the court’s finding that application of the

“different evidence” test of Blockburger v. United States,

284 U.S. 299 (1932) revealed § 657 and § 1006 to be

so similar as to render successive prosecutions under them

a violation of the Double Jeopardy Clause (App. B, infra,

pp. A23-A25). United States v. Kehoe, 573 F.2d 335, 345-

346 (Sth Cir, 1978).

6

Thereafter this Court handed down its decision in

United States v. Scott, U.S , 57 L.Ed.2d 65

(1978) expressly overruling United States v. Jenkins,

420 U.S. 358 (1975), and the government in a petition

for rehearing convinced the Court of Appeals that the

holding in Scott compelled vacation of its opinion that

petitioner had been subjected to double jeopardy (App.

A, infra, p. Al). United States v. Kehoe, 579 F.2d

971 (Sth Cir. 1978).

REASON FOR GRANTING THE WRIT

The decision of the Court of Appeals below

permitting successive prosecutions for a

single transaction under two separate stat-

utes which proscribe the same conduct,

violates the Double Jeopardy Clause and is

in direct conflict with United States v.

Scott, ___U.S.___, 57 L.Ed.2d 65 (1978),

Sanabria v. United States, ___U.S.__, 57

L.Ed.2d 43 (1978), Fong Foo v. United

States, 369 U.S. 141 (1962), and Block-

burger v. United States, 284 U.S. 299

(1932).

In Petitioner Kehoe’s first trial under 18 U.S.C. § 657

he obtained a midtrial termination in his favor before

any determination of guilt or innocence. Under the teach-

ings of United States v. Scott, supra, at p. 80, the govern-

ment could have appealed and sought a reversal and a

new trial, Had such an appeal been successful, the en-

suing new trial would not have been in violation of the

Double Jeopardy Clause.

|

:

:

7

However, Scott does not hold or even Suggest that a

midtrial dismissal of a prosecution, in response to a

defense motion on grounds unrelated to guilt or innocence

is necessarily improper. To the contrary, Scott expressly

recognizes that such midtrial rulings may be necessary

to terminate proceedings marred by fundamental error

(the very contention made by petitioner in this case).

Ibid, at 80, n. 13.

All Scott gives to the government under these circum-

stances is the right to appeal and seek reversal and a new

trial; it offers no guarantee that the government will get

a new trial. And it would be ludicrous to argue that Scott

permits the government, should it lose its appeal, to

undertake a second prosecution for the identical criminal

conduct under a second statute which proscribes the

same conduct proscribed by the first statute. Such a

result would obviously vitiate the Double Jeopardy Clause

and thus is not permitted by Scott, by Sanabria y. United

States, supra, at 62-63, by Fong Foo v. United States,

supra, at 143, nor by Blockburger v. United States, supra.

Yet the holding of the Court of Appeals below upholds

just such a result. Here, the government elected not to

risk being rejected at the appellate level. Instead, it

attempted to circumvent double jeopardy finality by

letting the district court’s judgment of acquittal become

final, then undertook a second prosecution for the identi-

cal criminal conduct under a second statute (18 U.S.C.

§ 1006) which proscribes the same conduct proscribed

by the first statute (18 U.S.C. § 657) (App. B, infra,

pp. A23-A25). United States v. Kehoe, 573 F.2d 335, 345-

346 (Sth Cir. 1978).

8

The decision of the Court of Appeals upholding this

course of action by the government not only vitiates the

Double Jeopardy Clause, it mocks it.

As the Court of Appeals would have it, any time the

government is not sure it can obtain a new trial on

appeal and does not want to run the risk of double

jeopardy finality, all the government has to do is forego

an appeal, let the midtrial acquittal obtained by the

defendant become final, and then the government would

be free to start all over again with a second prosecution

for the identical criminal conduct under a second statute

proscribing the same conduct proscribed by the first

statute.

It is clear that the holding of the Court of Appeals is

in derogation of the Double Jeopardy Clause; it is clear

that said holding is in direct conflict with the decisions

of this Court cited above; it is clear that this case presents

a basic conflict on a fundamental constitutional question

which calls for the grant of certiorari and review by

this Court.

CONCLUSION

For this reason, a writ of certiorari should issue to

review the judgment and opinion of the Fifth Circuit.

Respectfully submitted,

i a

AMES )/ HIPPARD, sk

(/ 3701 Kirby Drive, Suite 1230

Houston, Texas 77098

(713) 521-0221

Attorney for Petitioner

9

CERTIFICATE OF SERVICE

I hereby certify that on the 47/4 day of November

1978, three copies of this Petition for Writ of Certiorari

was air mailed, postage prepaid, to the Solicitor General,

Department of Justice, Washington, D.C. 20530, Counsel

for the Respondent. I further certify that all parties re-

quired to be served have been served.

3701 Kirby Drive, Suite 1230

Houston, Texas 77098

Pon

Al

APPENDIX A

UNITED STATES of America,

Plaintiff-Appellee,

v.

Cornelius J. KEHOE and Ray K. Bullock,

Defendants-Appellants.

No. 76-4346.

UNITED STATES COURT OF APPEALS

Fifth Circuit.

Sept. 5, 1978.

Appeals from the United States District Court for the

Southern District of Texas, SEALS, J.

On Petition for Rehearing and Petition

for Rehearing En Banc

(Opinion May 22, 1978, 5 Cir., 1978, 7 F.2d 335)

Before GOLDBERG and MORGAN, Circuit Judges

and WYZANSKI, District Judge.*

PER CURIAM.

In United States v. Kehoe, 573 F.2d 335 (Sth Cir.

1978), we reviewed several alleged errors including de-

fendants’ claim that their conviction under 18 U.S.C.

§ 657 violated double jeopar’y. While rejecting the de-

* Senior Judge for the District of Massachusetts, sitting by

designation.

A2

fendants’ other contentions, we relied on United States

v. Jenkins, 420 U.S. 358, 95 S.Ct. 1006, 43 L.Ed.2d

250 (1975) to hold that the § 657 conviction abridged

the Double Jeopardy Clause. Subsequently, the Supreme

Court expressly overruled Jenkins in United States v.

Scott, U.S , 98 S.Ct. 2187, 57 L.Ed.2d 65, 46

U.S.L.W. 4653 (1978). The portion of our opinion rely-

ing on Jenkins, 573 F.2d at 340-346, must be vacated

in light of Scott. We now hold that the defendants’ con-

viction did not violate double jeopardy and we therefore

affirm the judgment of the district court.

————

eee ase 6

A3

APPENDIX B

UNITED STATES OF AMERICA,

Plaintiff-A ppellee,

Vv.

CORNELIUS J. KEHOE and RAY K. BULLOCK.

Defendants-A ppellants.

NO. 76-4346,

UNITED STATES COURT OF APPEALS,

Fifth Circuit.

May 22, 1978.

Defendants were indicted for violation of a federal

Statute making it illegal to make false entries in records

of, or mishandling of property of, certain enumerated

federal credit institutions, with intent to defraud the

United States. A double jeopardy contention was sus-

tained, but the Court of Appeals reversed and remanded

516 F.2d 78, rehearing denied 521 F.2d 815. Defendants

were thereafter convicted in the United States District

Court for the Southern District of Texas at Houston.

Woodrow B. Seals, J., and defendants appealed. The

Court of Appeals, Lewis R. Morgan, Circuit Judge, held

that: (1) dismissal of a previous prosecution for em-

bezzlement was not a declaration of mistrial, for double

jeopardy purposes, and it was irrelevant that the de-

fendant requested the dismissal; (2) the dismissal of

the previous charge was not appealable by the Govern-

ment, and validity of the Government's instant prosecu-

tion under another statute was to be determined by ap-

A4

plying traditional tests employed to decide whether same

conduct could justify prosecution under two separate

statutes and (3) the federal statute providing penalty

for embezzlement from a federally insured institution

and federal false statement statute protecting such insured

institutions are not identical but are sufficiently similar

that successive prosecutions offend the constitutional pro-

hibition against double jeopardy.

Reversed.

Appeals from the United States District Court for the

Southern District of Texas.

Before GOLDBERG and MORGAN, Circuit Judges.

and WYZANSKI, District Judge.*

LEWIS R. MORGAN, Circuit Judge:

Defendants Kehoe and Bullock allege several errors

that they argue require reversal of their conviction for

violation of 18 U.S.C. § 1006.' The facts allegedly

* Senior Judge for the District of Massachusetts, sitting by

designation.

1. 18 U.S.C. § 1006 states:

Whoever, being an officer, agent or employee of or connected

in any capacity with the Reconstruction Finance Corporation,

Federal Deposit Insurance Corporation, National Credit Union

Administration, Home Owners’ Loan Corporation, Farm Credit

Administration, Department of Housing and Urban Development,

Federal Crop Insurance Corporation, Farmers’ Home Corporation,

the Secetary of Agriculture acting through Farmers’ Home Admin-

istration, or any land bank, intermediate credit bank, bank for co-

operatives or any lending, mortgage, insurance, credit or savings

and loan corporation or association authoized or acting under the

laws of the United States or any institution the accounts of which

are insured by the Federal Savings and Loan Insurance Corpora-

tion or by the Administrator of the National Credit Union Admin-

istration, or any small business investment company, with intent

AS

constituting this criminal violation are extremely com-

plex. From 1969-1971, defendants Bullock and Kehoe

were directors of the Surety Savings Association, a fed-

erally insured corporation. Surety owned a 7.2 acre tract

of land in Houston on which it wanted to build an

office building, but state savings and loan regulations

limited the amount of money that such institutions could

invest in office real estate and, therefore, these regulations

prevented Surety from developing the property. Conse-

quently, the directors of Surety formed “Fondren Square,”

a limited partnership, to do that which Surety could not

do: develop the property. Kehoe and Bullock were

general partners in Fondren (both together held a 52%

interest in the partnership) with five limited partners,

Surety divided the 7.2 acre tract into two sections: a

2.5 acre tract [hereinafter referred to as Phase I] and a

4.7 acre tract [hereinafter called Phase II]. Surety then

conveyed Phase I to Fondren Square for a profit of

$28,000, after which the latter built an office building

and shopping center on the property. When the parking

lot for this Phase I property was paved, however, .3 acre

to defraud any such institution or any other company, body

politic or corporate, or any individual, or to deceive any officer,

auditor, examiner or agent of any such institution or of de-

partment or agency of the United States, makes any false entry

in any book, report or statement of or to any such institution,

or without being duly authorized, draws any order or bill of

exchange, makes any exceptance, or issues, puts forth or signs

any note, debenture, bond or other obligation, or draft, bill of

exchange, mortgage, judgment, or decree. or, with intent to

defraud the United States or any agency thereof, or any corpo-

ration, institution, or association referred to in this section,

participates or shares in or receives directly or indirectly any

money, profit, property, or benefits through any transaction,

loan, commission, contract, or any other act of any such corpo-

ration, institution, or association, shall be fined not more than

$10,000 or imprisoned not more than five years, or both.

A6

of Phase II, mistakenly thought to be part of Phase I,

was also paved. This .3 acre figures prominently in the

alleged criminal activity.

At this point Trans-Houston Corporation enters the

picture. Trans-Houston was a wholly-owned subsidiary

of Surety, chartered as a separate corporation and in-

tended to act as an investment vehicle for real property.

In September 1969 Surety transferred the Phase iI

property to Trans-Houston at cost in exchange for

$395,000 in Trans-Houston stock. Surety intended Trans-

Houston to enter a joint venture with Fondren Square

on the Phase II tract, with Trans-Houston supplying

the property and Fondren assuming all liabilities for

developing the property. In November, 1969, Surety made

an entry in its books transferring Phase IT from its asset

column to the account of Trans-Houston; the latter made

the same notation in its books. Title, however, was never

formally deeded to Trans-Houston. Of course, the .3

acre discussed above was included in this Phase II

property, although all parties presumably thought that

it was part of Phase I.

By 1970, Phase I was losing money and the Fondren

partners decided to sell it. A real estate broker advised

them that Phase I was not very attractive unless the un-

developed Phase II property could be sold with it. Fon-

dren consulted with its joint venturer Trans-Houston,

who decided that it would be more profitable to sell

Phase II than to expend more money developing it.

Thus, both phases were to be sold together.

A problem in selling the property existed, however,

with regard to Phase I. That is, Phase I and another

property [Hedwig property] owned by Fondren were the

A7

subjects of a cross-collateral agreement that ran in favor

of Gibralter Savings and Loan Association. This meant

that if a buyer bought one of the two properties [Hed-

wig or Phase I], his property would still be encumbered

by the debts of the other. Obviously, this cross-collateral

agreement impaired the marketability of Phase I. To

alleviate this problem, Fondren got Gibralter to release

the two properties—Phase I and Hedwig—from the

cross-collateral agreement in return for a $35,000 note

executed by the limited partnership. Defendants Kehoe

and Bullock signed the note individually and as general

partners.

With the Phase I and Phase II properties now market-

able, the real estate agent found a buyer, Triton Ventures.

Triton Ventures offered to buy Phase I and take a one

year option to buy Phase II. Yet, upon viewing a survey

plat of the entire tract, Triton discovered that the .3

acre thought to belong to Fondren Square in Phase I

was actually a part of Phase II. Triton insisted, however,

that the .3 acre be included in the Phase I conveyance

since it would need this area for parking at Phase I.

Fondren agreed to this and in March, 1971, Fondren

and Triton entered into an carnest money contract

whereby Triton was to acquire Phase I and the 3

acre by paying $35,000 in cash, assuming the $900,000

note owed by Fondren on the property, and by assuming

the $35,000 note owed by Fondren and defendants

to Gibralter. In addition, Triton had an option to buy

Phase II. The earnest money contract was signed by

Kehoe and Bullock on behalf of Fondren Square. Surety,

which still held the deed on Phase II, deeded the 3

acre to Triton, with Kehoe signing for Surety. Triton

gave back Kehoe a deed of trust on the .3 acre to secure

A8

payment of the note to Gibralter. Thus, if Triton did not

pay the $35,000 note, it would lose the .3 acre which

would revert to Gibralter Savings and Loan Association.

The contentions advanced by the Government at trial

were that Surety owned the .3 acre in question.’ Yet,

Surety received no compensation for the .3 acre in that

this .3 acre was conveyed to Triton in return for

Triton paying off a note owed to Gibralter by Fondren

and, in particular, by Kehoe and Bullock, Fondren’s

general partners. Accordingly, the Government con-

tended that Kehoe, by making the unauthorized convey-

ance, and Bullock, by aiding and abetting in this trans-

action, fraudulently reaped the benefit on a sale of prop-

erty that was owned by a federally insured institution.

Further, the Government contended that since the min-

utes of Surety and Trans-Houston were silent as to

the deed from Surety to Triton for the .3 acre, this meant

that the Surety Board of Directors did not know of the

conveyance. Accordingly, Kehoe’s signature was an un-

authorized conveyance made with the intent to defraud

the federally insured institution and, thus, a violation of

18 U.S.C. § 1006. The Government further contended

that Bullock aided and abetted this fraudulent convey-

ance,

[1] We have no difficulty rejecting defendants’ allega-

tions of error concerning the merits of the conviction,

itself. First, defendants argue that, even assuming they

committed the acts enumerated by the Government, the

jurisdictional limits of 18 U.S.C. § 1006 prevent convic-

2. While all of Phase II, including the .3 acre were on Trans-

Houston’s books, the Government contends that the deed was kept

by Surety and, thus, was its property.

A9

tion. That is, defendants contend that it they defrauded

anyone through their receipt of the $35,000 note from

Triton Ventures it was Trans-Houston Corporation, the

owner of the .3 acre in question and an entity not pro-

tected by § 1006. Thus, while defendants concede that

record title of the .3 acre remained with Surety, they

argue that Trans-Houston held equitable title, which under

Texas law gives one “the present right to legal title.”

Without exploring Texas real property law, we deem it

sufficient that record title, no matter how inferior it is to

equitable title, contains some value, of which value de-

fendants’ dealings with Trans-Houston deprived Surety,

an entity covered by § 1006. Even assuming that Trans-

Houston bore all title to the land, we cannot ignore the

fact that Surety owned one hundred percent of Trans-

Houston’s stock or that the 4.7 acres of land were the

latter's sole asset. Congress intended that § 1006, in

accordance with the maxim that a servant cannot serve

two masters, should prohibit a conflict of interests situa-

tion such as that which occurred here. See Beaudine v.

United States, 368 F.2d 417 (Sth Cir. 1966). Accord-

ingly, it is difficult to assail the Government's contention

that defendants contravened § 1006 because, by diminish-

ing the value of Trans-Houston’s sole asset, the defendants

were necessarily decreasing the value of its stock and,

accordingly, the value of a Surety asset.

[2,3] Defendants cite Cartwright v. United States, 146

F.2d 133 (Sth Cir. 1944) in rebuttal of the Government's

position on this issue. In Cartwright, the Government

sought to convict the defendant for a violation of what

3. Defendants cite Pegues v. Moss, 140 S.W.2d 461 (Tex. Civ.

App. 1940) for this proposition and opine that Texas statutory law,

Tex. Rev. Civ. Stat. Ann. art. 7425b-5 (1960), also “strongly sug-

gests’’ this result.

Al0O

was then 18 U.S.C. § 82, which made illegal the theft of

any property of the United States Government or of a

corporation in which the United States owned stock, The

Government had alleged in the indictment that the de-

fendant stole property owned by the Government, al-

though its evidence at trial indicated that the stolen prop-

erty was owned by a corporation in which the United

States owned stock. This court held that the Government

having chosen to allege in the indictment that the stolen

property was owned by the United States, itself, could

not discharge its burden of proof by showing that another

entity owned the property. Cartwright v. United States,

146 F.2d at 135. Clearly then Cartwright does not in any

way support defendants’ argument that Trans-Houston

Corporation's alleged “equitable” ownership of the .3

acre deprives § 1006 of jurisdiction over the conduct in

question. Cartwright is potentially significant for this case

only through its disapproval of the introduction of evi-

dence that varies from that evidence anticipated by the

indictment. Yet, even on this limited ground, Cartwright

is distinguishable from the present case, In this case the

indictment charged that defendants “conveyed three-tenths

(3/10) of an acre of land belonging to and in the care,

custody and control of Surety Savings Association,”*

Therefore, one could argue first that the allegations con-

tained in the indictment did not vary from those proved

at trial. That is, the indictment stated that the property

in question was “in the care, custody, and control of

Surety.” Indeed, the Government proved that allegation

at trial through its evidence showing that Surety owned

all of Trans-Houston’s stock and, thus, had effective

control over disposition of the latter’s assets. Of course,

4, R.p. 302.

All

defendants would argue that the indictment also stated

that the .3 acre “belonged” to Surety and that accordingly,

the evidence at trial varied from their allegation because

it showed that the property “belonged” to Trans-Houston.

One answer to that contention is that no matter what

equitable interest Trans-Houston possessed, Surety still

held record title to the property and, thus, its authoriza-

tion was necessary, and indeed was sought in this case,

to pass the title to Triton. Accordingly, the Government

was not totally inaccurate in ascribing ownership of the

property to Surety in its indictment. At any rate, even

assuming a variance between the charge and proof, this

court does not deem such a variance fatal unless it ap-

pears that this variance deprived the defendant of fair

notice sufficient to enable him to prepare his defense.

United States v. Eaton, 501 F.2d 77 (Sth Cir, 1974);

United States v, Lambert, 501 F.2d 943 (Sth Cir. 1974),

vacating 470 F.2d (Sth Cir, 1972). Clearly, any variance

in this case does not meet that test.

[4,5] Defendants Bullock and Kehoe also argue that

the evidence was insufficient to justify their conviction.

We have examined the record and find that the Govern-

ment introduced adequate evidence of defendants’ guilt

to uphold their convictions. In addition, we consider with-

out merit defendant Bullock's contention that § 1006 is

unconstitutionally vague, Likewise, we reject Bullock's

claim that the indictment was insufficiently specific with

respect to the description of the land conveyed and the

benefits received. Fed. R. Crim. P. 7(c)(1) states that

an indictment “shall be a plain, concise and definite

written statement of the essential facts constituting the

offense charged.” The Government met that standard

here,

Al2

Defendants’ most troublesome argument in this case

concerns the double jeopardy implication present in their

prosecution. That is, the Government first tried defendants

under an indictment charging violation of 18 U.S.C.

§ 657,° which makes illegal the embezzlement of money

and “other things of value” from institutions insured by

the Federal Savings and Loan Insurance Corporation.

After a jury had been empanelled and the Government

had prosecuted its case in chief, the defendants moved for

a judgment of acquittal on the ground that the indictment

failed to charge an offense against the laws of the United

States; specifically, they argued that real property cannot

be embezzled under the provisions of 18 U.S.C. § 657.

The district court judge, Judge Bu», granted defendants’

motion, holding that the term “embezzlement” can apply

5. 18 U.S.C. § 657 states:

Whoever, being an officer, agent or employee of or connected

in any capacity with the Reconstruction Finance Corporation,

Federal Deposit Insurance Corporation, National Cyedit Union

Administration, Home Owners’ Loan Corporation, Farm Credit

Administration, Department of Housing and Urban Development,

Federal Crop Insurance Corporation, Farmers’ Home Corpora-

tion, the Secretary of Agriculture acting through the Farmers’

Home Administration, or any land bank, intermediate credit

bank, bank for cooperatives or any lending, mortgage, insurance,

credit or savings and loan corporation or association authorized

or acting under the laws of the United States or any institution

the accounts of which are insured by the Federal Savings and

Loan Insurance Corporation or by the Administrator of the

National Credit Union Administration or any small business

investment company, and whoever, being a receiver of any such

institution, or agent or Ts of the receiver, ermbezzles,

abstracts, purloins or willfully misapplies any moneys, funds,

credits, securities or other things of value belonging to such

institution, or pledged or otherwise intrusted to its care, shall

be fined not more than $5,000 or imprisoned not more than

five years, or both; but if the amount or value embezzled,

abstracted, purloined or misapplied does not exceed $100, he

shall be fined not more than $1,000 or imprisoned not more

than one year, or both,

Al3

only to personal property. Shortly thereafter the Govern-

ment obtained a new indictment against the defendants

for the same transaction presented in the first trial; this

indictment charged violation of 18 U.S.C, § 1006. Prior

to trial, defendants moved to dismiss the indictment,

arguing that a second trial arising out of the same trans-

action would place them in double jeopardy. Judge Seals,

the district judge for this second indictment, granted the

motion. Pursuant to 18 U.S.C. § 3731,° the Government

6,

18 U.S.C, § 3731 states:

An appeal may be taken by and on behalf of the United

States from the district courts direct to the Supreme Court of

the United States in all criminal cases in the following instances:

From a decision or judgment setting aside, or dismissing any

indictment or information, or any count thereof, where such

decision or judgment is based upon the invalidity or construc-

tion of the statute upon which the indictment or information

is founded.

From a decision arresting a judgment of conviction for in-

sufficiency of the indictment or information, where such decision

is based upon the invalidity or construction of the statute upon

which the indictment or information is founded.

From the decision or judgment sustaining a motion in bar,

when the defendant has not been put in jeopardy.

An appeal may be taken by and on behalf of the United States

from the district courts to a court of appeals in all criminal

cases, in the following instances;

From a decision or judgment setting aside, or dismissing any

indictment or information, or any count thereof except where

a direct appeal to the Supreme Court of the United States is

provided by this section,

From a decision arresting a judgment of conviction except

where a direct appeal to the Supreme Court of the United States

is provided by this section,

From an order, granting a motion for return of seized property

or a motion to suppress evidence, made before the trial of a

person charged with a violation of any law of the United States,

if the United States attorney certifies to the judge who granted

such motion that the appeal is not taken for purpose of delay

and that the evidence is a substantial proof of the charge pend-

ing against the defendant.

The appeal in all such cases shall be taken within thirty days

Al4

appealed the dismissal and a panel of this court, holding

that a trial for the § 1006 violation would not contravene

the Double Jeopardy Clause, reversed the district court

order dismissing the second indictment. See United States

v. Kehoe, 516 F.2d 78 (5th Cir. 1975), cert. denied, 424

U.S. 909, 96 S.Ct. 1103, 47 L.Ed.2d 313 (1976). Sub-

sequently, defendants were tried under this second indict-

ment and convicted of violating § 1006; it is this convic-

tion that is the subject of the present appeal.

[6] One of defendants’ major contentions upon this

appeal is that, in a light of a recent Supreme Court

opinion, Finch v. United States, 433 U.S. 676, 97 S.Ct.

2909, 53 L.Ed.2d 1048 (1977), the prior panel’s ruling

on the double jeopardy issue is now erroneous and that,

accordingly, this panel should affirm Judge Seals’ dis-

missal of the second indiciment. In this court an opinion

in a case becomes the “law of the case” and will not be

overturned by a panel in a later appeal on the same issue

in the same case unless it is shown to clearly erroneous

after the decision or judgment has been rendered and shall be

diligently prosecuted.

Pending the prosecution and determination of the appeal in

the foregoing instances, the defendant shall be released in ac-

cordance with chapter 207 of this title.

If an appeal shall be taken, pursuant to this section, to the

Supreme Court of the United States which, in the opinion of

that Court, should have been taken to a court of appeals, the

Supreme Court shall remand the case to the court of appeals,

which shall then have jurisdiction to hear and determine the

same as if the appeal had been taken to that court in the first

instance.

If an appeal shall be taken pursuant to this section to any

court of appeals which, in the opinion of such court, should

have been taken directly to the Supreme Court of the United

States, such court shall certify the case to the Supreme Court

of the United States, which shall thereupon have jurisdiction

to hear and determine the case to the same extent as if an

appeal had been taken directly to that Court.

Al5

and to work a manifest injustice. United States v. Bedami,

539 F.2d 440 (Sth Cir. 1976); United States v. Seiffert,

501 F.2d 974 (Sth Cir. 1974). We agree with defendants

that Finch and another recent Supreme Court case, Lee

v. United States, 432 U.S. 23, 97 S.Ct. 2141, 53 L.Ed.2d

80 (1977), do alter the analysis used by the first Kehoe

panel; we do not agree, however, that these Supreme

Court cases necessarily change the result in this case.

To explicate why we have reached this conclusion, a

review of the first Kehoe opinion and relevant Supreme

Court case law is appropriate. That panel’s holding was

based primarily on its “believe that a defendant who for

reasons of trial tactics delays until mid-trial a challenge

to the indictment that could have been made before the

trial—and before jeopardy has attached—is not entitled

to claim the protection of the double jeopardy clause

when his objections to the indictment are sustained.”

516 F.2d at 86. In reaching this determination, the panel

examined recent Supreme Court pronouncemen‘:. It ob-

served that at first glance United States v. Jenkins, 420

U.S. 358, 95 S.Ct. 1006, 43 L.Ed.2d 250 (1975) seemed

to pose an obstacle to retrial of defendants through its

holding that the Double Jeopardy Clause precludes an

appeal of a trial court’s order, entered before a finding

of guilt or innocence, that discharges a defendant based

on the judge’s determination that he or she cannot be

convicted of the offense charged.’ The panel noted, how-

7. In Jenkins, the district court, after hearing the evidence in

a bench trial, dismissed an indictment charging refusal to submit to

induction into the armed services. Under the law of- the Second

Circuit at the time of the offense, the induction order was improper

and, accordingly, a person could not be convicted for refusing to

submit to it. A subsequent decision, announced by the Second Circuit

after the offense but before Jenkins had been charged with the crime,

would allow conviction for refusal to submit to such an order. The

Al6

ever, that Serfass v. United States, 420 U.S. 377, 95 S.Ct.

1055, 43 L.Ed.2d 265 (1975), decided on the same day

as Jenkins, limited the seemingly broad rule announced

in Jenkins. For the panel, the significance of Serfass lay

in the Supreme Court’s reservation of two questions that

otherwise would have fallen directly within the Jenkins

rule. The reserved question pertinent to this case con-

cerned whether appeal would be barred from a mid-trial

ruling discharging the defendant on a legal ground that

could have been raised by the defendant before trial. See

United States v. Kehoe, supra, 516 F.2d at 84. Thus, inter-

preting Jenkins as a narrow holding limited to its facts,

the panel held that it was not applicable to the case before

it. Further, discovering no Supreme Court case on point,

the panel determined that J/linois v. Somerville, 410 U.S.

458, 93 S.Ct. 1066, 35 L.Ed.2d 425 (1973) was most

analogous to the present case. In Somerville, the trial

judge declared a mistrial when the prosecution discovered,

after jeopardy had attached, that the indictment contained

an incurable jurisdictional defect; the Supreme Court held

that “where the declaration of a mistrial implements a

reasonable state policy and aborts a proceeding that at

best would have produced a verdict that could have been

district court reasoned, however, that retroactive application of the

intervening decision would be unfair. For this reason, and without

entering any finding of guilt or innocence, the court dismissed the

indictment. United States v. Jenkins, 349 F.Supp. 1068 (E.D. N.Y.

1972). Ruling upon the issue of whether the Government could

appeal this order of dismissal, the Supreme Court held that such

an appeal would violate the Double Jeopardy Clause. The Court

reasoned that the proceedings in the trial court had terminated in

the defendant’s favor and, consequently, a Government appeal that,

if successful, would require another trial to determine factual issues

relating to the elements of the charge would violate the Double

Jeopardy Clause. United States v. Jenkins, 420 U.S. 358, 95 S.Ct.

1006, 43 L.Ed.2d 250 (1975).

Al7

upset at will by one of the parties, the defendant's interest

in proceeding to verdict is outweighed by the competing

and equally legitimate demand for public justice.” 410

U.S. at 471, 93 S.Ct. at 1074, 35 L.Ed.2d at 435.

Accordingly, holding that despite the different termi-

nology used to abort the first trial in Somerville and in

the instant case, the effect was the same in both, the panel

employed the interest-balancing approach used in Somer-

ville and permitted a second prosecution. 516 F.2d at 85.

In short, the panel having reasoned that Jenkins, limited

by Serfass, did not control, it analyzed the dismissal as

a mistrial and because this mistrial implemented a “rea-

sonable state policy,” it permitted a second prosecution."

Defendants now contend that Finch v, United States,

433 U.S. 676, 97 S.Ct. 2909, 53 L.Ed.2d 1048 (1977),

decided after Kehoe, changes the result in the latter case.

As noted above, we believe that Lee v. United States, 432

U.S. 23, 97 S.Ct. 2141, 53 L.Ed.2d 80 (1977) and Finch

v. United States, 433 U.S. 676, 97 S.Ct. 2909, 53 L.Ed.

2d 1048 (1977), alter the reasoning employed by this

court in its original opinion on this question. That is, in

this case the Government did not appeal the district

court’s dismissal of the indictment charging a § 657 vio-

lation. Rather, it brought a new indictment, charging a

8. Assuming that the dismissal could have been analyzed as a

mistrial, see dgsicussion, infra, slip opinion at pp. - at

pp. 4324-4327, the panel’s conclusion that a second trial would not

be prohibited by the Double Jeopardy Clause, was ratified by the

Supreme Court in United States v. Dinits, 424 U.S, 600, 96 S.Ct.

1075, 47 L.Ed.2d 267 (1976). In Dinitz, the Court held that when

a defendant successfully moves for a mistrial and the error that

necessitates the mistrial is not attributable to prosecutorial or judicial

bad faith or overreaching, a second trial for the same offense does

cee ae the Double Jeopardy Clause, Dinitz, 424 U.S. at 607,

96 S.Ct. 1075.

Als

violation of § 1006. The first Kehoe panel decided the

case under the assumption that the result on the double

jeopardy issue would be the same whether the Govern-

ment has appealed the § 657 dismissal or, as actually

happened, had brought an indictment under another

statute. Accordingly, it analyzed the case as if the Govern-

ment were appealing the dismissal of the § 657 indict-

ment and seeking a retrial on that charge should its appeal

be successful. See Kehoe, 516 F.2d at 81 n.4 and at 84

n.8. Yet, Lee and Finch clearly indicate that the Double

Jeopardy Clause would prevent an appeal of the original

indictment charging a violation of § 657. In Finch, the

Government charged the defendant with knowingly fish-

ing on a portion of a river reserved for use by the Crow

Indians in violation of 18 U.S.C, § 1165. The district

court reviewed the applicable treaties and dismissed the

information for failure to state an offense under the

statute in that the relevant treaties indicated that the land

on which the defendant was fishing was not held by an

Indian group. The Supreme Court held that the Double

Jeopardy Clause prevented the Government from appeal-

ing the dismissal “[bJecause the dismissal was granted

prior to any declaration of guilt or innocence, ‘on the

ground, correct or not, that the defendant simply cannot

be convicted of the offense charged.’ ” Finch, 433 U.S. at

677, 97 S.Ct. at 2910, 53 L.Ed.2d at 1051, citing Lee v.

United States, 432 U.S. at 23, 97 S.Ct. at 2141, 53

L.Ed.2d at 80,

Lee is signifiicant for this case because of its explica-

tion of the Jenkins holding. In Lee, the defendant had

been charged with theft of some wallets in a United States

Post Office in violation of the Assimilative Crimes Act,

18 U.S.C. § 13. Immediately before trial, the defense

Al9

counsel moved to dismiss the indictment as defective in

that an essential element of the offense—the intent to

steal—was omitied from the indictment. Because the

court had had no prior opportunity to consider the mo-

tion, it began the bench trial, reserving its decision on the

motion. After both the prosecution and the defense had

rested, the court ruled that although the defendant's guilt

had been proven beyond a reasonable doubt, it found the

indictment defective and granted the motion to dismiss.

In analyzing the Double Jeopardy Claim, the Supreme

Court reexamined Jenkins, supra, and reemphasized the

importance of the distinction drawn between a mistrial

and a dismissal. In Jenkins, the Court had stated that it

was of critical importance to its determination that Jen-

kins could not be retried that the proceeding in the trial

court had terminated in the defendant's favor rather than

in a mistrial. Lee v. United States, 432 U.S. at 30, 97

S.Ct. at 2146, 53 L.Ed.2d 80, The Court noted that

[t]he distinction drawn by Jenkins does not turn on

whether the District Court labels its action a ‘dis-

missal’ or a ‘declaration of mistrial.’ The critical

question is whether the order contemplates an end

to all prosecution of the defendant for the offense

charged. A mistrial ruling invariably rests on grounds

consistent with reprosecution, . . . while a dismissal

may or may not do so. Where a midtrial dismissal

is granted on the ground, correct or not, that the

defendant simply cannot be convicted of the offense

charged, Jenkins establishes that further prosecution

is barred by the Double Jeopardy Clause.

432 U.S. at 30, 97 S.Ct. at 2146, 53 L.Ed.2d at 87

(emphasis added), Applying this standard to the case

before it, the Court held that

A20

the proceedings against Lee cannot be said to have

terminated in his favor. The dismissal clearly was

not predicated on any judgment that Lee could never

be prosecuted or convicted for the theft of the two

wallets. To the contrary, the District Cou.t stressed

that the only obstacle to a conviction was that the

fact that the information had been drawn improperly.

The error, like any prosecutorial or judicial error

that necessitates a mistrial, was one that could be

avoided—absent any double jeopardy bar—by be-

ginning anew the prosecution of the defendant. And

there can be a little doubt that the court granted

the motion to dismiss in this case in contemplation

of just such a second prosecution. In short, the

order entered by the District Court was functionally

indistinguishable from a declaration of mistrial.

Lee, 432 U.S. at 30, 97 S.Ct. at 2146, 53 L.Ed.2d at

87 (footnote omitted), Having determined that this pro-

ceeding had ended in a mistrial, the Court applied the

rule articulated in United States v. Dinitz, 424 U.S. 600,

96 S.Ct. 1075, 47 L.Ed.2d 267,” and held that the de-

fendant having made the motion for a mistrial, he is

estopped from claiming the protections of the Double

Jeopardy Clause in a subsequent trial for the same offense.

[7] In the present case, the district court clearly did

not intend its dismissal of the § 657 indictment as a

declaration of mistrial. The error that necessitated the

court’s dismissal was not a simple defect in the indict-

ment that, as in Lee, could be cured by redrawing the

instrument to include an essential element that was

omitted in the first indictment. Rather the order of dis-

missal was grounded on the court’s determination that

the Government's theory of the case—the real property

9. Seen. 8, supra,

A21

can be embezzled or misapplied under § 657—could

never be proved by any set of facts nor by any amend-

ment of the indictment; its indictment quite simply stated

no offense prohibited by § 657. Unlike the order in Lee,

the district court’s order here contemplated no second

prosecution for this § 657 offense.’® Accordingly, the

order of dismissal did constitute a termination of the

proceedings in the defendant’s favor and a determination

by the district court, whether correct or not, that the

“defendant simply [could] not be convicted of the of-

fense charged.”

Therefore, because we conclude that the district court’s

order of dismissal should be considered as a dismissal,

not as a mistrial, under the Jenkins test, we do not con-

sider the second part of the Lee opinion, relating to the

defendant’s “waiver” of his right to object to a second

trial if he requested the mistrial and if neither the Gov-

ernment nor the court has acted in bad faith. That is,

10. The Government argues that, as in Lee, the order of dismissal

here did not contemplate that defendants Kehoe and Bullock could

not be convicted of some offense, although not 18 U.S.C. § 657.

Yet, in Lee, the court’s mid-trial dismissal was labeled a mistrial

because the court anticipated reprosecution for the same offense

charged in the indictment that was being dismissed there. In this

case, the district court clearly did not envision reprosecution for

the § 657 charge as a result of its dismissal. Even if the court

expected retrial of defendants for some other offense—and that is

nowhere indicated in its order—that expectation in no way negates

the court’s determination that defendant could not be convicted for

a § 657 violation. Indeed, in Finch v. United States, 433 U.S. 676,

97 S.Ct. 2909, 53 L.Ed.2d 1048, discussed supra slip opinion at

, at 4324, the district court dismissed an information that

charged a violation of 18 U.S.C. § 1165 as failing to state an offense.

The Supreme Court held that the Double Jeopardy Clause prevented

an appeal of this dismissal. Thus, simply because the district court’s

dismissal did not preclude another prosecution under another statute

for the same conduct did not alter the Government’s inability to

appeal the dismissal itself.

A22

the Government argues that Lee is helpful to their argu-

ment in that it holds that whenever a defendant exercises

a choice in favor of termination, rather than continuation,

of the trial, Dinitz principles’ control and the defendant

is estopped from objecting to a second trial. The Gov-

ernment ignores, however, the Supreme Court’s insistence

that one must first find that the district court’s termina-

tion of the case constitutes a declaration of mistrial, be-

fore one can apply this Dinitz waiver-like concept. Here,

as discussed above, it is clear that the district court did

not intend its order of dismissal as a mistrial. Accordingly,

it is irrelevant that the defendant requested the dismissal.

[8, 9] Similarly, the Government might argue that

conceding the above discussion to be correct, Lee does

not alter this court’s first opinion in this case under the

“clearly erroneous” standard in that ihe basis for the

panel’s decision—that one who for reasons of trial tactics

delays until mid-trial a challenge to the indictment that

could have been made before jeopardy attached—was not

touched upon by the Supreme Court in Lee, It is true

that the Court did not address this precise question in

Lee. Nevertheless, its discussion of the Jenkins decision

indicates that the timing of the defendant’s motion to

dismiss is not the threshold question. That is, in Lee,

the defendant delayed making a challenge of the indict-

ment that could have been made before trial until after

jeopardy had attached.’ The Court’s first question, how-

11. Seen. 8.

12. In Lee, defendant made his motion to dismiss immediately

before the trial began. Nevertheless, after determining that the court’s

d'smissal was indeed a mistrial, the Supreme Court deemed the

de‘endant’s motion to dismiss as having been made after jeopardy

had attached, in that the defense counsel gave the court little op-

portunity to consider the motion before jeopardy had attached, he

A23

ever, was whether the termination of the trial envisioned

a second prosecution for the offense after the defective

indictment had been corrected or whether the dismissal

was grounded instead on the conclusion, correct or not,

that the defendant simply could not be convicted of the

offense charged. Clearly, had the Court found that the

case had finally ended in Lee’s favor, it would not have

considered probative the failure of Lee to make the mo-

tion to dismiss until after jeopardy had attached.

Having determined that Lee and Finch would prevent

the Government’s appeal of the dismissal of the § 657

indictment, the validity of the Government’s subsequent

prosecution of the § 1006 charge must be determined

by applying the traditional tests employed to decide

whether the same conduct can justify prosecution under

two separate statutes. In order to determine whether a

given act can be tried as a violation of two separate

statutes we employ the “different evidence” test formu-

lated by the Supreme Court in Blockburger v. United

States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306

(1932). That is, if each statute requires proof of a fact

and element that the other statute does not require, then

successive trials of a person for conduct allegedly violat-

ing both statutes does not violate the Double Jeopardy

Clause. Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221,

53 L.Ed.2d 187 (1977); United States v. Ewell, 383 U.S.

116, 86 S.Ct. 773, 15 L.Ed.2d 627; United States v. Hill,

500 F.2d 733 (Sth Cir. 1974). United States v. Costello,

made no effort to withdraw the motion after jeopardy had attached,

and he offered no objection to the termination of the proceedings

before a finding of guilt or innocence had been entered. Lee v. United

States, 432 U.S. 23, 33, 97 S.Ct. 2141, 2147, 53 L.Ed.2d 80, 89

(1977).

A24

483 F.2d 1366 (Sth Cir. 1973); United States v. Young,

482 F.2d 993 (Sth Cir. 1973); Hattaway v. United

States, 399 F.2d 431 (Sth Cir. 1968). In applying this

standard, however, we are mindful that this is not a

standard of mathematic precision. In Brown, supra, the

Supreme Court recognized this limitation: “It has long

been understood that separate statutory crimes need not

be identical—either in constituent elements or in actual

proof—in order to be the same within the meaning of

the constitutional prohibition.” 432 U.S. at 164, 97 S.Ct.

at 2224, 53 L.Ed. at 187. The statutes themselves are

the prime sources for this analysis. By first resolving the

statutes into their constituent elements, and then com-

paring the elements, along with their probable judicial

glosses, the double jeopardy issue may be analyzed.

[10] Resolved into its elements § 657 provides:

(1) Whoever, being an officer... of . . . any

institution the accounts of which are insured by the

Federal Savings and Loan Insurance Corporation

(2) embezzles, abstracts, or willfully misapplies

(3) any moneys, funds, credits, securities, or

other things of value belonging to such institution,

shall be fined or imprisoned or both.

In the same fashion, § 1006 contains the following four

elements:

(1) Whoever, being an officer... of . . . any

institution the accounts of which are insured by the

Federal Savings and Loan Insurance Corporation

(2) with intent to defraud the . . . institution

receives directly or indirectly

A25

(3) any money, profit, property, or benefits

(4) through any transaction, loan, commission,

contract, or any other act vf any such . . . institution,

shall be fined or imprisoned or both,

Even though the sections employ different language, we

are persuaded that both statutes proscribe the same con-

duct with the exception of the § 1006 requirement that

an act of the institution be involved. The first and third

elements of both are nearly identical. The second ele-

ments, the scienter requirements, although employing

different language, are broad enough to be construed to

proscribe the same peculations, Although § 1006’s fourth

element has no analog in § 657, the Blockburger test is

not thereby satisfied because each statute must contain

an element that the other does not and Section 657

contains no element not present in § 1006, We therefore,

hold that § 657 and § 1006, although not identical be-

cause of the § 1006 “act of the institution” requirement,

are sufficiently similar that successive prosecutions under

the statute offend the constitutional prohibition against

double jeopardy.

REVERSED.

A26

APPENDIX C

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

V.

Cornelius J. KEHOE and Ray K. Bullock,

Defendants-A ppellees.

NO, 74-2353.

UNITED STATES COURT OF APPEALS,

FIFTH CIRCUIT

July 16, 1975.

Defendants were charged with embezzling certain land

from a savings association in violation of federal statutes.

After the government had presented its case-in-chief, a

motion for “judgment for acquittal” on the ground that

the indictment failed to charge an offense against the

United States in that real property could not be the subject

of an embezzlement was granted by judgment expressly

denominated an acquittal rather than a dismissal of in-

dictment. Defendants were thereafter indicted for the

same transaction, but for violation of a federal statute

making it illegal to make false entries in the records of, or

mishandling of property of, certain enumerated federal

credit institutions, with intent to defraud the United

States. A double jeopardy contention was sustained by

the United States District Court for the Southern District

of Texas at Houston, Woodrow B. Seals, J., and the

United States appealed. The Court of Appeals, Thorn-

berry, Circuit Judge, held that a defendant who for

reasons of trial tactics delays until mid-trial a challenge

A27

to indictment that could have been made before trial, and

before jeopardy has attached, is not entitled to claim pro-

tection of the double jeopardy clause when his objections

to indictment are sustained,

Appeal from the United States District Court for the

Southern District of Texas.

Before, BELL, THORNBERRY and GEE, Circuit

Judges.

THORNBERRY, Circuit Judge:

Presented for decision in this § 3731 appeal is a

question expressly left open by the Supreme Court in

its recent double jeopardy trilogy. In Serfass v. United

States, 1975, _. U.S. ___, 95 §.Ct. 1055, 43 L.Ed.2d

265, the Court declined to “intimate any view concerning

the case put by the Solicitor General, of ‘a defendant who

is afforded an opportunity to obtain a determination of a

legal defense prior to the trial and nevertheless knowingly

allows himself to be placed in jeopardy before raising the

defense.’" __. U.S. at ___., 95 S.Ct. at 1065, 43 L.

Ed.2d at 277. In this case we conclude, first, that Kehoe

and Bullock allowed themselves to be placed in jeopardy

for tactical reasons, and second, that because of their

decision they are not entitled to claim the protection of

the double jeopardy clause. Accordingly, we assume

jurisdiction of the appeal and reverse the judgment of

the district court.

I,

On January 18, 1973 the grand jury named appellees

in an eleven-count indictment charging a number of per-

A28

sons with participation in an alleged loan kickback

scheme. On May 14, 1973 a superseding eleven-count

indictment was handed down by the grand jury. This

indictment, as well as the one that it superseded, alleged

violations of 18 U.S.C. § 1006." Also on May 14, how-

ever, Kehoe and Bullock alone were charged in a single

count indictment with embezzling certain land from a

savings association in violation of 18 U.S.C. § 657.’

Appellees pleaded not guilty to the embezzlement charge,

and on October 29, 1973 a jury was empanelled and trial

began. After the government had presented its case-in-

chief, appellees moved for a “judgment of acquittal” on

1. Section 1006 renders illegal the making of false entries in the

records of, or the mishandling of the property of, certain enumerat-

ed federal credit institutions, with the intent to defraud the United

States.

2. Section 657 provides:

Whoever, being an officer, agent or employee of or con-

nected in any capacity with the Reconstruction Finance Cor-

poration, Federal Deposit Insurance Corporation, National Credit

Union Administration, Home Owners’ Loan Corporation, Farm

Credit Administration, Department of Housing and Urban De-

velopment, Federal Crop Insurance Corporation, Farmers’ Home

Corporation, the Secretary of Agriculture acting through the

Farmers’ Home Administration, or any land bank, intermediate

credit bank, bank for cooperatives or any lending, mortgage,

insurance, credit or savings and loan corporation or association

authorized or acting under the laws of the United States or any

institution the accounts of which are insured by the Federal

Savings and Loan Insurance Corporation or by the Adminis-

trator of the National Credit Union Administration, or any

small business investment company, and whoever, being a re-

ceiver of any such institution, or agent or employee of the re-

ceiver, embezzles, abstracts, purloins or wilfully misapplies any

monevs, funds, credits, securities or other things of value be-

longing to such institution, or pledged or otherwise intrusted

to its care, shall be fined not more than $5,000 or imprisoned

not more than five years, or both; but if the amount or value

embezzled, abstracted, purloined or misapplied does not ex-

ceed $100, he shall be fined not more than $1,000 or imprisoned

not more than one year, or both.

A29

the ground, inter alia, that the indictment failed “to charge

an offense against the laws of the United States of

America since real property cannot be the subject of an

embezzlement under the provisions of Title 18, United

States Code, Section 657.” In a memorandum opinion

reviewing the permissible reach of § 657, Judge Bue

announced his decision to grant appellees’ motion “on the

grounds that the indictment failed to state an offense

against the United States of America.”* Shortly there-

after the government procured a new indictment against

appellees for the same transaction made the subject of

the previous indictment; this time, however, the grand

jury charged Kehoe and Bullock with a violation of 18

U.S.C. § 1006. Appellees promptly moved to dismiss this

indictment, arguing, inter alia, that Judge Bue had

acquitted them in the earlier trial and that a second trial

arising out of the same transaction would put them twice

in jeopardy. After a hearing, Judge Seals sustained the

double jeopardy contention and dismissed the second

indictment. The United States now seeks to appeal that

ruling.

[1] The government may appeal an adverse judgment

in a criminal case only when authorized by statute. United

States v. Sanges, 1892, 144 U.S. 310, 12 S.Ct. 609, 36

L.Ed. 445. 18 U.S.C. § 3731 provides that:

In a criminal case an appeal by the United States

shall lie to a court of appeals from a decision, judg-

ment, or order of a district court dismissing an in-

dictment or information . . . except that no appeal

shall lie where the double jeopardy ciause of the

United States Constitution prohibits further prose-

cution.

3. The correctness of this ruling is not before us.

A30

Here Judge Seals dismissed the second indictment because

he felt that after Judge Bue’s ruling on the first indict-

ment, the double jeopardy clause barred further prosecu-

tion. Hence, our resolution of the double jeopardy issue

will control not only the jurisdictional question but the

merits as well.* With that in mind, we proceed to the

main issue on appeal: Does the double jeopardy clause

bar the government from further prosecuting Kehoe and

Bullock?

Il.

[2] Judge Bue expressly denominated his judgment an

acquittal, rather than a dismissal of the indictment. Never-

theless, although “[i]t is, of course, settled that ‘a verdict

of acquittal . . . is a bar to a subsequent prosecution

for the same offense.’ . . . [t]he word [acquittal] . . . has

no talismanic qualities for purposes of the Double Jeop-

ardy Clause.” Serfass v. United States, supra, ___. US.

___., 95 S.Ct. at 1064, 43 L.Ed.2d at 276. In short, as

the Supreme Court noted in a related context, “the trial

judge’s characterization of his own action cannot control

the classification of the action for purposes of our appel-

late jurisdiction.” United States v. Jorn, 1971, 400 U.S.

470, 478 n.7, 91 S.Ct. 547, 553 n.7, 27 L.Ed.2d 543,

552 n.7. It follows that we must examine Judge Bue’s

4. The case is in its present posture because the government,

rather than appealing Judge Bue’s ruling, chose to reindict ap-

pellees under a different statute. Hence, the constitutional double

jeopardy question that we would have addressed as a jurisdictional

matter had Judge Bue’s order been appealed was instead presented

to Judge Seals as an argument on the merits for dismissing the se-

cond indictment. Nevertheless, even Judge Seals’ judgment would

not be appealable if “the double jeopardy clause of the United

States Constitution prohibits further prosecution” of Kehoe and

Bullock. Hence, in this situation the merits and the jurisdictional

question merge.

A31

ruling and properly characterize it for purposes of the

double jeopardy clause.

[3] Kehoe and Bullock were of course not acquitted

on the general issue by the jury. The primary factfinder

made no determination of their guilt or innocence. In

certain circumstances, however, the trial judge even in a

jury trial may find facts in a manner that will, by a doc-

trine similar to collateral estoppel, act as an acquittal.”

Thus, if Judge Bue based his ruling upon facts that

went to the general issue of the case, Kehoe and Bullock

were in substance, as well as in name, acquitted. The

constitutional rule against further prosecution after an

acquittal would then come into play to prevent us from

assuming jurisdiction.*

A reading of Judge Bue’s opinion reveals that except

perhaps for one brief passage he was clearly discussing

orily the legal sufficiency of the indictment and not the

facts of the case before him. Hence, appellees’ argument

5. United States v. Sisson, 399 U.S. 267, 90 S.Ct. 2117, 26 L.

Ed.2d 608; United States v. Jorn, supra, 400 U.S. at 478 n. 7, 91

S.Ct. at 553, n. 7, 27 L.Ed.2d at 552 n. 7. See also Note, Govern-

ment Appeals of “Dismissals” in Criminal Cases, 87 Harv. L. Rev.

1822 (1974).

Although the Supreme Court in United States v. Wilson,

US. , 95 S.Ct. 1013, 43 L.Ed.2d 232 read Sisson as a statutory

rather than a constitutional decision for purposes of reviewability

on appeal, Wilson noted and apparently approved Sisson’s suggestion

(399 U.S. at 290 & n. 18, 90 S.Ct. at 2129 & n. 18, 26 L.Ed.2d at

624 & n. 18) that the trial judge’s ruling in that case posed a con-

stitutional bar to further ¢rial proceedings against Sisson.

US. at , 95 S.Ct. at 1025-26, 43 L.Ed.2d at 246.

5. This case is not like Sisson or Wilson; reversal on appeal

would mean that appellees’ second trial could go forward. Thus, if

Judge Bue’s judgment was an acquittal, the double jeopardy clause

would prohibit further proceedings against Kehoe and Bullock, see

note 5 supra, and we would be required to dismiss the appeal.

A32

on this point turns entirely on one ambigious statement,

quoted below:

This Court was aware of and concerned with the

fine distinctions being made when the motion for

judgment ot acquitta: was urged by defendants at

the ciose of the Government’s case. Had the evidence

shown that the property was sold by and for the

benefit of Surety Savings with the defendants in

their fiduciary capacities diverting the consideration,

ot such sale for their own benetit, an indictment

alleging embezzlement might have been proper.

However, the circumstances of this case, accepted

as true for the purposes of this motion, showed that

the alleged consideration never was intended to flow

to Surety but only to the defendants. Although the

defendants ostensibly deprived Surety Savings of

real estate holdings, no tunds, credits or securities

belonging to Surety were taken. While this distinc-

tion is a fine one, it is one that is critical to the

offense of embezzlement.

App. at 265. Appellees apparently contend that Judge

Bue found that, if other evidence had been introduced,

the prosecution could have obtained a conviction under

the indictment as it then stood, despite the fact that it

alleged embezzlement of real property. The government

argues, on the other hand, that this passage was simply

a hypothetical situation posited by the trial judge in which

the defendants could properly have been indicted under

18 U.S.C. § 657. We think that the government is es-

sentially correct.

[4] First, it is doubtful whether the judge intended to

make findings of fact; he clearly states that certain facts

will simply be “accepted as true for purposes of this mo-

tion.” Second, Judge Bue concluded only that “an indict-

A33

ment alleging embezzlement might have been proper,”

and not that an indictment alleging embezzlement of

land might be permissible. Therefore, even if he did

intend in this passage to make formal findings, the re-

sulting comments were not necessary to the stated ground

for granting appellees’ motion—i.e., that the indictment in

question failed to state an offense—and thus do not con-

stitute findings of fact binding on this court. Compare

United States v. Esposito, 7 Cir. 1974, 492 F.2d 6, 9,

cert. denied 414 U.S. 1135, 94 S.Ct. 879, 38 L.Ed.2d

760 (1974),’ with United States v. Sorenson, 7 Cir. 1974,

504 F.2d 406; United States v. Jaramillo, 8 Cir. 1975,

510 F.2d 808. In these circumstances Judge Bue’s ruling

can only be characterized as purely legal—and hence

not an acquittal. There was no conclusion on innocence

or guilt. Consequently, since the rule forbidding further

proceedings after an acquittal is inapplicable here, we

must now consider whether the double jeopardy clause

prohibits further prosecution of defendants who procure

the mid-trial dismissal of the indictment on the ground

that it fails to state an offense.

III.

The recent Supreme Court double jeopardy triology

does not supply a direct answer. In United States v. Wil-

7. “{I]t is clear from the order that the court concluded that

the fatal defect in the prosecution lay in the indictment’s

failure to state and the statute’s failure to require a nexus with

interstate commerce which would justify federal regulation. The

fact that the prosecution failed to prove such a connection,

though alluded to in the order, was of no significance to the

actual basis for the decision. The order was neither based upon

nor limited in application to the facts of the case. Appeal,

therefore, is not barred by the double jeopardy clause of the

fifth amendment” (emphasis added).

A34

son, 1975, U.S , 95 S.Ct. 1013, 43 L.Ed.2d

232, the trial judge dismissed the indictment on speedy

trial grounds after a jury had found Wilson guilty of

converting union funds to his own use. Relying on

United States v. Sisson, supra, the Court of Appeals

rebuffed the government’s attempt to appeal that ruling.

The Supreme Court reversed. Justice Marshall carefully

reviewed the legislative history of the new § 3731 and

concluded that “Congress was determined to avoid cre-

ating nonconstitutional bars to the Government’s right

to appeal.” ___. U.S. at ____, 95 S.Ct. at 1019, 43 L.Ed.

2d at 239. Proceeding then to an examination of the scope

of the double jeopardy clause, the Court isolated “the

prohibition against multiple trials as the controlling con-

stitutional principle.” ___ U.S. at ___, 95 S.Ct. at 1023,

43 L.Ed.2d at 243. Since in the case before it reversal

on appeal would result only in reinstatement of the jury

verdict and not in a new trial, the court concluded that

the double jeopardy clause would not be offended by per-

mitting the appeal.

[5] In United States v. Jenkins, 1975, _.. U.S. ___.,

95 S.Ct. 1006, 43 L.Ed.2d 250, the defendant was in-

dicted for knowingly refusing to submit to induction into

the armed forces. After a bench trial the court “dismissed

the indictment” because the Board had—erroneously

under then-existing law—refused to entertain Jenkins’

“late-ripening” claim to conscientious objector status. The

government sought to appeal this ruling, claiming that

the district judge erred in refusing to give retroactive

effect to a Supreme Court decision that legitimated the

Board’s refusal but which was handed down after Jenkins

declined induction. The Court of Appeals dismissed for

lack of jurisdiction, and the Supreme Court affirmed.

TE EP. lat oe

me eo et oe

Saw Be SE ee

A35

The Second Circuit had characterized the district court's

judgment as an acquittal. The Supreme Court was less

sure, and noted the difficulty in bench trials of determining

whether a judgment discharging the defendant rested

upon factual or legal grounds, Nevertheless, the Court

was reasonably certain that the trial judge had not found

all factual issues against the defendant. Thus, the case

before them was not, like Wilson, where reversal and

remand would lead only to reinstatement of a guilty

verdict. In deciding that the double jeopardy clause would

forbid further proceedings against Jenkins the Court

articulated this standard:

Here there was a judgment discharging the defend-

ant, although we cannot say with assurance whether

it was, or was not, a resolution of the factual issues

against the Government. But it is enough for pur-

poses of the Double Jeopardy Clause, and therefore

for the determination of appealability under 18

U.S.C. § 3731, that further proceedings of some

sort, devoted to the resolution of factual issues going

to the elements of the offense charged, would have

been required upon reversal and remand.

—___. US. at ___., 95 S.Ct. at 1013, 43 L.Ed.2d at 259.

At first glance the broad rule stated here would appear to

require dismissal of the present appeal. We have before

us a judgment discharging the defendants, and if it is

reversed, further proceedings devoted to resolution of

factual issues going to the elements of the offense charged

will be necessary." Nonetheless, the final case of the double

8. For purposes of the double jeopardy clause it is of no signi-

ficance that appellees were originally indicted under 18 U.S.C. § 657

and are now under indictment for violation of 18 U.S.C. § 1006.

Both indictments arise out of the same factual setting; all that has

changed is the prosecution’s legal theory.

A36

jeopardy trilogy strongly implies that the Jenkins standard

is not as sweeping as it first appears.

In Serfass v. United States, supra, the district court,

granted the defendant’s pre-trial motion to dismiss the in-

dictment on the legal ground that the Selective Service

Board had erred in its handling of Serfass’s claim to

conscientious objector status. The Court of Appeals de-

cided that the government could appeal this order and

reversed on the merits. The Supreme Court affirmed,

holding that since Serfass had never waived his right to

a jury trial, the district judge had made his ruling before

Serfass had been placed in jeopardy and hence the double

jeopardy clause had no application. Most significant for

present purposes, however, the Court reserved two ques-

tions not necessary to decision of the case before it: (1)

“whether a similar ruling [to the one actually made in

Serfass] by the district court after jeopardy had attached

would have been appealable,” (emphasis added), and

(2) whether appeal would be barred from a mid-trial

ruling discharging the defendant on a legal ground that

could have been raised by the defendant before trial.

— US. at __, 95 S.Ct. at 1065, 43 L.Ed.2d at 277-

78. The implication that these might be open issues is

important, because both hypothetical cases seem to fall

directly within the Jenkins rule. If a legal bar to further

proceedings is raised by the defendant after jeopardy

has attached, a judgment sustaining the objection would

result in the defendant’s discharge, and upon reversal

and remand new factual inquiries would perforce be

made. Yet the Supreme Court treated the Serfass hypo-

theticals as controversies for another day and not as

cases clearly controlled by Jenkins. Consequently, it seems

likely that the Court intended Jenkins to be limited to its

nw eS ee ee ee

ee

sates

A37

facts: a bench trial terminated by a ruling that—since

it may have been one in fact—must be treated as an

acquittal for purposes of the double jeopardy clause.’

Thus, none of the recent Supreme Court cases controls

here.

[6-8] Accordingly, we must make an independent

analysis of whether the double jeopardy clause prohibits

further proceedings against appellees. Double jeopardy

considerations first come into play when jeopardy at-

taches; in a jury trial attachment occurs when the jury

is empanelled and sworn. Serfass v. United States, supra,

—_—. US. at ___, 95 S.Ct. at 1062, 43 L.Ed.2d at 274.

In this jury case jeopardy had clearly attached: the trial

judge ruled on the indictment at the close of the govern-"

ment’s case-in-chief. Nevertheless, “the conclusion that

jeopardy has attached begins, rather than ends, the in-

quiry as to whether the Double Jeopardy Clause bars

retrial.” Illinois v. Somerville, 1973, 410 U.S. 458, 467,

93 S.Ct. 1066, 1072, 35 L.Ed.2d 425, 433, quoted in

Serfass v. United States, supra. See also United States v.

Sisson, supra, 399 U.S. at 303, 90 S.Ct. at 2137, 26

L.Ed.2d at 631; United States v. Pecora, 3 Cir. 1973,

484 F.2d 1289, 1294 n. 7; Note, supra note 5, at 1836.

Of course, once jeopardy has attached, a judgment that

either is or may be, an “acquittal on the merits” bars

further proceedings. The Supreme Court has already

weighed the various considerations raised in this context

and come down on the side of the defendant. United States

v. Wilson, supra, ___. U.S. at ___., 95 S.Ct. at 1026,

43 L.Ed.2d at 246. We have determined, however, that

Judge Bue’s ruling in this case was not an acquittal. What

we must decide, then, is whether a judgment discharging

9. But see United States v. Means, 8 Cir. 1975, 513 F.2d 1329.

A38

the defendant after jeopardy has attached on the ground

that the indictment is incurably defective poses the same

constitutional obstacle to a second trial that is supplied

by an actual or an apparent acquittal.

[9] The Supreme Court case most nearly resembling

this one is Illinois v. Somerville, supra. In Somerville

the trial judge had declared a mistrial when the prosecu-

tion discovered, after the jury had been empanelled and

sworn but before any testimony had been taken, that the

indictment contained an incurable jurisdictional defect.

Distinguishing, inter alia, an earlier defective indictment

case’® on the basis that there the first trial had resulted

in a verdict of acquittal by the jury, the Court held that

“where the declaration of a mistrial implements a reason-

able state policy and aborts a proceeding that at best

would have produced a verdict that could have been upset

at will by one of the parties, the defendant’s interest in

proceeding to verdict is outweighed by the competing

and equally legitimate demand for public justice.” 410

U.S. at 471, 93 S.Ct. at 1074, 35 L.Ed.2d at 435. Despite

the different terminology used to abort the first tria: in

Somerville and the first trial here, the effect was the

same—the dismissal of the indictment and the bringing

of a new prosecution—and we believe that the interest-

balancing approach employed in that case is also ap-

propriate in this one.’’ See United States v. Mayes, 6 Cir.

10. United States v. Ball, 1896, 163 U.S. 662, 16 S.Ct. 1192,

41 L.Ed 300.

11. In United States v. Jenkins, supra, the Supreme Court ex-

pressly disapproved the reasoning of the dissenting judge in the

Court of Appeals, who argued that Sommerville-type balancing is

appropriate even in cases where the defendant has been acquitted:

“We disagree with this analysis because we think it is of critical

importance whether the proceedings in the trial court terminate in a

— — |

A39

1975, 512 F.2d 637, 651-52; Comments, Double Jeop-

ardy and Government Appeals of Criminal Dismissals,

52 Texas L.Rev. 303, 342 & n. 180; cf. Note, supra note

5, at 1838-40.

[10-13] Two factors make this ca: + stronger for the

defendants than Somerville. First, Kehoe and Bullock sat

through a full day of trial, at which the prosecution pre-

sented its evidence against them. Second, the trial judge

termed his decision an acquittal, rather than a mistrial,

and the defendants could reasonably have believed that

the government was barred from proceeding further a-

gainst them; the possible psychological shock of being re-

indicted is not immaterial to traditional double jeopardy

considerations. What we think controlling for double

jeopardy purposes, however, is the manner in which

this case is Jess strong for the defendants than Somerville.

In the latter case the defendant objected strenuously to

the termination of the first trial. Here, on the other hand,

the defendants themselves challenged the indictment, but

only after the jury had been sworn and the government

had presented its case-in-chief. At oral argument counsel

for appellees stated that he waited to make his “motion

for acquittal” because he wanted an opportunity to view

the government’s evidence. We believe that a defendant

who for reasons of trial tactics delays until mid-trial a

challenge to the indictment that could have been made be-

fore the trial—and before jeopardy has attached—is not

entitled to claim the protection of the double jeopardy

mistrial as they did in the Sommerville line of cases, or in the de-

fendant’s favor, as they did here.” USS. at n. 7, 95 S.Ct.

at 1010 n. 7, 43 L.Ed.2d at 256 a. 7, Read in context, it seems plain

that this language refers only to cases where the defendant was, or

may have been, acquitted on the merits. We have already decided

that ours is not such a case,

A40

clause when his objections to the indictment are sus-

tained.* Cf. United States v. Serfass, supra, ——US.

at ___, 95 S.Ct. at 1065, 43 L.Ed.2d at 277-78; United

States v. Jenkins, 2 Cir. 1973, 490 F.2d 868, 880. The

Senate Report on the bill to amend old § 3731 reveals

that Congress believed that the double jeopardy clause

would not bar further proceedings in this type of case.

S.Rep. No. 91-1296, 91st Cong., 2d Sess., 7, 8-12 (1970).

See also United States v. Wilson, supra. In fact, the old

statute’s failure to permit a government appeal in cases

like this one appears prominently in the Report as a

reason for amendment. Under the flexible, interest-bal-

ancing approach of Illinois v. Somerville we think that

the double jeopardy clause does not forbid further pro-

ceedings against appellees; the new § 3731 thus achieves

one of the intended purposes. Accordingly, the judgment

of the district court is reversed and the case is remanded

for proceedings consistent with this opinion.**

Reversed and remanded.

12. Fed. R. Crim. P. 12(b)(2) is not violated by this holding.

That rule states, in pertinent part: “Lack of jurisdiction or the

failure of the indictment or information to charge an offense shall

be noticed by the court at any time during the pendency of the

proceeding.” Although the rule removes the threat of procedural

waiver with regard to jurisdictional defenses, it does not purport

to prohibit courts from attaching other unfavorable consequences to

the decision to withhold a motion until the middle of the trial.

13. There is no merit in appellees’ additional contention that

the pattern of government behavior toward them constitutes bad

faith harassment in violation of the due process clause. See United

States v. McGough, 5 Cir. 1975, 510 F.2d 598, 603-05.

A4l

BELL, Circuit Judge (dissenting):

Being of the view that jeopardy attached by virtue of

the judgment of acquittal entered in the prior trial of de-

fendants, and that Rule 12(b)(2), F.R.Crim.P., pre-

vents defendants from being barred from claiming double

jeopardy because of their delay in challenging the in-

dictment, | would dismiss the government’s appeal. I

therefore respectfully dissent.

Defendants-appellees Kehoe and Bullock were indicted

in 1973 under 18 U.S.C.A. § 657 for the offense of em-

bezzling real property. The case proceeded to trial and at

the close of the government’s case-in-chief both defend-

ants moved for a judgment of acquittal under Rule 29

F.R.Crim.P. on several grounds, one being that the in-

dictment failed to charge an offense. They argued that

real property could not be embezzled and that no case of

embezzlement of any property had been established by

the government’s evidence. The district court granted this

motion, agreeing with defendants on both points.

A second indictment was then obtained charging these

same defendants with fraudulently receiving the benefits

of a federally insured savings association transaction in

violation of 18 U.S.C.A. § 1006. This indictment related

to the same criminal misconduct alleged in the indictment

previously dismissed, and the evidence to have been of-

fered was also the same. Defendants moved to dismiss

this second indictment on the grounds that jeopardy had

attached in the prior proceeding. This motion was granted

and the government now appeals.

The government contends that the judgment of ac-

quittal in the first proceeding was in fact a dismissal of

the indictment for failure to charge an offense. It is ar-

A42

gued that the district court did not reach the merits of

the case, that there was no verdict in defendants’ favor,

and that therefore no jeopardy attached. I find no sub-

stance in these contentions. It appears that the district

court did consider the evidence presented and therefore

went beyond the face of the indictment in its ruling:

Recent United States Supreme Court decisions make it

clear that principles of double jeopardy bar subsequent

reprosecution once a case has terminated in defendant’s

favor based upon factual conclusions not found in the

indictment but instead upon evidence adduced at trial.

United States v. Jenkins, 1974, U.S , 95 S.Ct.

1006, 43 L.Ed.2d 250. See also Serfass v. United States,

1975, US , 95 S.Ct. 1055, 43 L.Ed.2d 265;

United States v. Wilson, 1975, U.S , 95 S.Ct.

1013, 43 L.Ed.2d 232. The first question then is whether

the trial court relied on such evidence in its determination.

The district court in the second proceeding answered this

question in the affirmative and I agree.

The critical language of the court in the first proceeding

is as follows:

This Court was aware of and concerned with the

fine distinctions being made when the motions for

judgment of acquittal was urged by defendants at

the close of the Government’s case. Had the evidence

shown that the property was sold by and for the

benefit of Surety Savings with the defendants in their

fiduciary capacities diverting the consideration of

such sale for their own benefit, an indictment alleging

embezzlement might have been proper. However,

the circumstances of this case, accepted as true for

purposes of this motion, showed that the alleged con-

consideration never was intended to flow to Surety

but only to the defendants. Although the defendants

A43

ostensibly deprived Surety Savings of real estate

holdings, no funds, credits or securities belonging to

Surety were taken. While this distinction is a fine

one, it is one that is critical to the offense of “em-

bezzlement.” (Emphasis added)

Thus it appears that the court found that the govern-

ment had not put on sufficient evidence to sustain a con-

viction of embezzlement since embezzlement could not

be of real property and the government failed to show

that any personal property had been taken in the trans-

action.

Jenkins, supra, is controlling where, as here, facts ad-

duced after defendants were put on trial before a trier

of facts were considered in dismissing the indictment.

____US. at__., 95 S.Ct. 1006, 43 L.Ed.2d at 259.

Jeopardy attaches, according to Serfass, when a defendant

is put to trial before the trier of the facts. ___. US. at

___, 95 S.Ct. 1055, 43 L.Ed.2d at 274. This rule, ac-

cording to Jenkins, includes a case where an indictment

is dismissed by utilizing facts developed in that trial in

connection with the dismissal although the trial did not

reach the point of a verdict or judgment. ___U.S. at

___., 95 S.Ct. 1006, 43 L.Ed.2d at 259. Such facts were

utilized here.’

The opinion prepared by Judge Thornberry, as I per-

ceive it, recognizes that Jenkins, without more, would

control the disposition of this appeal and require affirm-

1. In both Jenkins and the present appeal, it is unclear whether

the district judge terminated the trial based upon factual or legal

conclusions. In both cases, however, the judge apparently relied at

least in part upon the facts as developed, and thereupon concluded

the trial. The court in Jenkins held that retrial of the defendant in

such a posture would place him twice in jeopardy. I see the posture

of the present case as requiring an identical] result.

A44

ance. Jenkins is avoided, however, by deciding and apply-

ing the reserved hypothetical of Serfass, thus necessitating

a balancing test with the result of estopping defendants

from asserting a double jeopardy defense. This approach,

in my judgment, misconstrues the reserved question in

Serfass, decides it incorrectly as construed, and denies a

constitutional right because of delay in the fact of Rule

12(b) (2).

The issue then is whether defendants are barred from

claiming double jeopardy under the circumstances because

they could have but did not challenge the indictment until

the close of the government’s case-in-chief. They could

have questioned the indictment before trial by a motion

to dismiss for failure to charge an offense under Rule

12(b)(2).? The same rule, however, provides that such

a failure may be noticed by the court at any time. De-

fendants chose to wait until the close of the government's

case-in-chief to make their motion and the court took

notice of it. At that point, the sufficiency of the evidence

was drawn into issue with respect to the validity of the

indictment.

In Serfass, supra, the Supreme Court saved the question

of the government being denied a right to appeal by the

strategy of a defendant, although afforded an opportunity

2. Rule 12(b)(2)—Defenses and Objections Which Must be

Raised.

Defenses and objections based on defects in the institution of the

prosecution or in the indictment or information other than that it

fails to show jurisdiction in the court or to charge an offense may

be raised only by motion before trial. The motion shall include all

such defenses and objections then available to the defendant. Failure

to present any such defense or objection as herein provided consti-

tutes a waiver thereof, but the court for cause shown may grant

relief from the waiver. Lack of jurisdiction or the failure of the in-

dictment or information to charge an offense shall be noticed by the

court at any time during the pendency of the proceeding.

.-

i one en athe

A45

to do so prior to trial, knowingly allowing himself to be

placed in jeopardy before raising a legal defense. ___U.S.

at___, 95 S.Ct. 1055, 43 L.Ed.2d at 277.* It must be

remembered that the question being considered was only

that of the right of the government to take an appeal

under 18 U.S.C.A. § 3731. This statute permits an appeal

by the government unless further prosecution is prohibited

by the double jeopardy clause. The question saved went

only to this and not, as the majority opinion does, to the

delay being a bar of a jeopardy defense itself.

Whatever the Supreme Court meant by its reservation

of the question, I do not understand it as creating a

problem in this case. We have, in effect, entertained the

appeal to determine whether we have jurisdiction under

18 U.S.C.A. § 3731. Section 3731 provides that no appeal

shall lie where the double jeopardy clause of the Constitu-

tion prohibits further prosecution.‘ What the government

has in fact appealed is the question whether jeopardy had

attached. Thus we are in the position of having to take

jurisdiction to determine if the appeal wiil lie. By way

of analogy, cf. Bell v. Hood, 1946, 327 U.S. 678, 66

S.Ct. 773, 90 L.Ed. 939, which teaches that there are

cases where jurisdiction must be exercised for the purpose

of determining jurisdiction. This is such a case. If we

found no error in the district court’s conclusion that

jeopardy had attached, it would follow that the appeal

3. 18 U.S.C.A. § 3731 provides:

In a criminal case an appeal by the United States shall lie

to a court of appeals from a decision, judgment, or order of a

district court dismissing an indictment or information as to any

one or more counts, except that no appeal shall lie where the

double jeopardy clause of the United States Constitution pro-

hibits further prosecution.

4. Cf. United States v. McGough, 5 Cir., 1975, 510 F.2d 598,

602 n. 2.

A46

would be dismissed rather than affirmed. This was the

precise procedure followed in Jenkins, supra, in the

Second Circuit. United States v. Jenkins, 2 Cir., 1973,

490 F.2d 868, 880.

It must be conceded that the reservation in Serfass of

the deliberate delay question is perplexing. It purportedly

goes only to the right of appeal but, as expressed, it

could relate also to barring double jeopardy as a defense.

In any event, it is doubtful that the court would treat a

constitutional right in such an off-hand fashion.

The Supreme Court has not considered the question

whether the delay in attacking an indictment may bar a

double jeopardy defense. The law of this circuit is that

an indictment may be challenged for the first time on

appeal, and after trial and conviction. Walker v. United

States, 5 Cir., 1965, 342 F.2d 22, 26. It is also the law

in other circuits. United States v. Beard, 3 Cir., 1969,

414 F.2d 1014, 1017; United States v. Bailey, 7 Cir.,

1960, 277 F.2d 560, 562.

It is true that the delay was an admitted trial tactic but

experienced counsel were taking advantage of what is

expressly permitted by Rule 12(b)(2). They wished to

see the government’s case before they moved to strike the

indictment. The trial court could have ruled, but did not

that the motion came too late. It happened that the court

(the trier of the facts) considered the facts in its ruling

and this gave rise to the double jeopardy claim.

The obtuse problem presented in this appeal is but

another example of the labyrinthian state of criminal law,

praticularly in the trial stages. Although not without some

apprehension, I believe that defendants have the better

side of the case and I would, therefore, sustain the district

court judgment and dismiss the appeal.

A47

APPENDIX D

IN THE

DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CRIMINAL NO. 73-H-413

UNITED STATES OF AMERICA

Vs.

CORNELIUS J. KEHOE

AND RAY K. BULLOCK

FINDINGS OF FACT AND CONCLUSIONS

OF LAW

The Court: United States of America vs. Cornelius J.

Kehoe and Ray K. Bullock, criminal number 73-H-213,

the following constitutes the findings of fact and conclu-

sions of law, and may be amended or supplemented at

a later time.

The court accepts as true the testimony of all the de-

fendants’ witnesses.

The court accepts their version of the facts of this case

since they are not contested.

The court finds that in 73-H-213 jeopardy has attached.

Criminal number 73-H-413 is dismissed as to both de-

fendants because jeopardy has attached.

The government is baried from trying them again.

A48

The court finds that Judge Bue’s opinion was not based

on a motion to dismiss under Rule 12, but that the judg-

ment of acquittal was granted under the federal rule of

criminal procedure 29(A).

Rule 29(A) cites that judgment of acquittal shall be

granted if the evidence is insufficient to sustain a con-

viction of such offense or offenses.

The motion which was filed at the conclusion of the

evidence in chief of the government’s case was a

[78]

motion and so called a motion for judgment of acquittal,

which is the way to raise the question of sufficiency of

the evidence.

I might point out in Judge Bue’s opinion the last para-

graph on page 6, and I will read it:

“This court was aware of and concerned with the fine

distinctions being made when the motion for judgment

of acquittal was urged by defendants at the close of the

government’s case. Had “—-I emphasize had—” had the

evidence shown that the property was sold by and for

the benefit of Surety Savings with the defendants in their

fiduciary capacities diverting the consideration of such

sale for their own benefit, an indictment alleging em-

bezzlement might have been proper. However, the cir-

cumstances of this case, accepted as true for purposes of

this motion, showed that the alleged consideration never

was intended to flow to Surety but only to the defendants.”

That shows to me that Judge Bue not only was decid-

ing this case on whether or not the indictment stated an

offense which should have been raised by Rule 12 and,

of course, Rule 12 motions can be raised at any time,

A49

but that this opinion that he wrote and signed on the

8th day of November, 1973 did go to the sufficiency of

the evidence because it was before him and it was before

the jury and the judge had to dispose of it.

[79]

He could not dispose of part of it without disposing of

all of it.

That the government did not appeal from that decision.

If the government now contends that that judgment of

acquittal was really a motion to dismiss under Rule 12,

the court ruled against the government and the govern-

ment had a duty to appeal a motion to dismiss if they

considered that now a motion to dismiss because the

indictment does not state an offense.

The way you raise the question of whether or not an

indictment states an offense is by Rule 12 and that gives

the government the right to appeal if the judge rules

against the government.

Because of the doctrine of collateral estoppel and the

doctrine of due process of law, it would be unfair for

the government now to come in and say that this was a

motion to dismiss because the indictment did not state

an Offense.

The language at the bottom of page 6 and continued

on page 7 I have read convinces me that since you had

a jury, that one of the reasons Judge Bue granted the

motion for judgment of acquittal, and I emphasize that

that was before the court then, a motion for judgment of

acquittal, which under Rule 29 can only be granted if

the evidence is

AS50

[80]

insufficient to sustain a conviction of such offense or

offenses.

That double jeopardy does attach in this case, even if

Judge Bue had made a mistake or if he himself was con-

fused in his opinion because the fact of the matter is

the defendants did plead not guilty and the government

offered all the evidence that they could offer on the guilt

of the defendants and they did have a trial and the judg-

ment of acquittal under Rule 29 was granted.

That it would be manifestly unfair and unjust to sub-

ject these defendants to a trial on this case again in view

of the other facts which I have heard from the defendants

in this hearing, which I accept to be true,

I might further state that you don’t test the sufficiency

of an indictment by the proof that’s offered later on.

The sufficiency of the indictment is determined by

the face of the indictment.

It seems to me that this indictment, from what he

says at the bottom of page 6 and beginning of page 7,

could have well stated an offense and the government

has carved out of an offense and they have carved once

and they can’t carve it again.

Therefore, by the doctrine of carving as well as

equitable collateral estoppel, they cannot try these

[81]

defendants on the same sets of facts again.

I am not passing on whether or not there was bad

faith in the prosecution of this case because I have

heard no evidence to the contrary, but am not passing

on it.

AS1

I am not passing on whether or not there was a

mistake or an accident in the government taking the

position that you can embezzle land, but from the

record, it shows the government pursued that theory

that you can embezzle land from the beginning, either

through mistake or not, and it was calculated to break

or injure the defendants, not only in their mental con-

dition and anxiety that they suffered, but also unnecessary

expenses and also time of the court.

That meant that the government has taken up a long

time in trying this case and now they want to take up

some more time to try it again under what I would say

is a mistake or accident.

The government did have the right to appeal this

case. If they now take the position that what Judge Bue

did was a granting of a motion to dismiss, when the

court sustains a motion to dismiss and the government

has a right to appeal that, which they didn’t do, so they

now, because of due process of law and collateral estop-

pel, they cannot now come into court and say that we

think it was a motion to dismiss that was granted be-

cause it didn’t state an offense, but we didn’t appeal it,

so we are going to put the

[82]

defendants to the expense of another trial.

Tne defendants were tried before a jury, a Rule 29

judgment of acquittal was entered, and, although Judge

Bue must interpret his opinion differently from the way

I do, I am convinced that jeopardy is attached.

I finally would say that this does not extend to the

other two cases pending in Judge Hannay’s court.

A52

This decision is not based on the fact that those

cases have been pending a year, but I am persuaded

somewhat by the facts that I have heard in this case and

they reinforce the reason that equity and inherent fairness

and due process of law compel this court to grant the

defendants’ motion to dismiss because of double jeopardy.

Now, that disposes of this case as far as this court

is concerned. I am sure that Mr. Novak will appeal

this decision, which he has a right to do, because it

is a most unusual case, and it’s a case that has caused

this court a great deal of trouble because of the fact

that 1 am passing somewhat on what another judge

says, but, as I have told the lawyers and as Mr. Novak

told the court, that when the reindictment came down

in 413, that Judge Bue told Mr. Novak that he wanted

the case not in his court and it wound up in my court

and I didn’t know that, of course, but I went to Judge

Bue in our regular conference and brought it up to

Judge Bue and the other judges.

[83]

Judge Bue asked me to keep the case.

Of course, I told Judge Bue that in effect I would be

passing upon his opinion, and I don’t mind doing that

because we have to pass on opinions and facts all the

time that are in dispute—some people can interpret it

differently and, of course, Judge Bue knows that, and he

knows that we all have to do our duty, as everyone has

done in this case, as far as I can see, their duty.

We will leave it up to the court of appeals to decide

if this court was right or not.

Thank you very much.

WOODROW SEALS

A53

APPENDIX E

IN THE

DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CRIMINAL NO. 73-H-213

UNITED STATES OF AMERICA

Vv.

CORNELIUS J. KEHOE and

and RAY K. BULLOCK

OPINION

(Informal written opinion of Judge Carl O. Bue, Jr.,

in chambers on November 1, 1973)

This Court has given close consideration to the De-

fendants’ argument and authorities in support of their

motion for judgment of acquittal as well as the Govern-

ment’s response, both as set forth in written legal

memoranda as well as in conference in chambers yester-

day. The legal area in question is not without consider-

able difficulty. In a relatively brief but intensive search

of authorities which included a check of annotations,

legislative history, and even a call to the Library of

Congress, this Court has found no federal authority dis-

cussing whether or not embezzlement applies, or should

apply, to real property as alleged in the indictment against

these two defendants. This Court has located only a few

AS54

cases in state jurisdictions wherein the issue was consid-

ered. It is the opinion of this Court inat historically

the term embezzlement has been limited only to personal

property. In the absence of specific legislation reflecting

a clear intent to expand the term to cover real property,

the more persuasive view of the existing jurisprudence is

that embezzlement statutes were never intended by legisla-

tures to cover offenses relating directly to real property

such as is alleged in the indictment before this Court.

This is a criminal case in which the contents of an

indictment must necessarily be scrutinized with great

care. The Court is fully aware of the thrust of Rule 29

as well as the

[2]

significance of Rule 12(b)(2) of the Federal Rules of

Criminal Procedure. These have been carefully consid-

ered. Because the Government has not met its burden

of proof in demonstrating that the indictment recites an

offense for which prosecution may be brought, a Judg-

ment of Acquittal as to both defendants will be entered.

This Court will issue a memorandum opinion within the

next few days setting forth in greater detail the legal

basis on which this conclusion was reached.

AS5

(1)

EXHIBIT B

MEMORANDUM AND ORDER

CRIMINAL NO. 73-H-213

(Caption Omitted )

(Filed November 8, 1973)

Following completion of the Government's case, the

defendants moved for judgment of acquittal under Fed.

R. Crim. P. 29(a) alleging several grounds in support

thereof. Of central importance to this Court’s decision

was the claim that the indictment failed to charge an

offense against the laws of the United States of America,

- this being a non-waivable defense under Fed. R. Crim.

P. 12(b)(2). In what is apparently a case of first im-

pression in the federal courts, this Court felt constrained

to grant defendants’ motion for the reasons set forth be-

low.

The indictment charged that defendants Kehoe and

Bullock, President and Advisory Director, respectively.

of Surety Savings Association, an institution the accounts

of which are insured by the Federal Savings and Loan

Insurance Corporation, embezzled .3082 acres of land,

valued at $35,000, belonging to said institution, in vio-

lation of Title 18, United States Code, Section 657. Con-

struing the evidence most favorabbly to the

[2]

Government, the defendants were essentially charged with

having used their fiduciary positions of authority to con-

vey title to the land from Surety Savings to a third party.

The sole consideration was alleged to have been the as-

sumption by that third party of a promissory note for

A56

$35,000 on which the defendants were contingently liable.

It was alleged that no consideration flowed to Surety

Savings as a consequence of the conveyance of its prop-

erty. The defendants strongly contest these assertions and

contend that had they gone forward with the defense,

they would have shown full consideration flowing to

Surety Savings in an environment of bona fide, legal and

legitimate business negotiations.

The critical issue before this Court was whether or not

real property may be “embezzled” under this statute as

alleged in the indictment.

Section 657, Title 18, United States Code provides, in

pertinent part:

Whoever, being an officer... of . . . any institu-

tion the accounts of which are insured by the Fed-

eral Savings and Loan Insurance Corporation .. .

embezzles, abstracts, purloins or wilfuliy misapplies

any monies, funds, credits, securities or other things

of value belonging to such institution, or pledged or

otherwise entrusted to its care, shall be fined . . . or

imprisoned. . . .

Embezzlement has bees defined for federal courts as

“the fraudulent appropria:ion of property by a person to

whom such property has been entrusted, or into whose

hands it has lawfully come”. Moore v. United States, 160

U.S. 268, 269-70, 40 L.Ed. 422, 424, 16 S.Ct. 294, 295

(1895); Woxberg v. United States, 329 F.2d 284, 290

(9th Cir. 1964); 29A C.J.S. Embezzlement § 1 (1965);

26 Am. Jur. 2d Embezzlement § 1 (1966). It has

[3]

been stated that embezzlement is a purely statutory of-

fense, not having been a crime at common law. Hughes v.

AS7

United States, 4 F.2d 686, 687 (8th Cir. 1925); 29A

C.J.S. Embezzlement § 2 at 4-5 (1965); 26 Am. Jur. 2d

Embezzlement § 1 at 549-50 (1966). Contra United

States v. Davenport, 266 Fed. 425, 431 (W.D. Tex.

1920), aff'd 267 Fed. 803 (Sth Cir. 1921); United States

v. Cadwallader, 59 Fed. 677, 680 (W.D. Wis. 1893)

[both district courts citing 4 BI. Comm. 231, an authority

not readily available to ti‘: court]. This Court’s neces-

sarily limited review of embezzlement and its history com-

ports fully with the following summary:

Embezzlement is purely statutory in its origin; it

was unknown at common law, which, insofar as per-

sonal property was concerned, penalized only inter-

ferences with possession. Accordingly, at common

law, if the possession of personal property was law-

fully obtained in the first instance, its subsequent

appropriation by the possessor constituted no of-

fense. It was this failure of the common law to pro-

vide any criminal remedy for these breaches of trust,

incident to the multiplying affairs of business on the

part of servants, clerks, agents, bailees, trustees, and

other persons occupying fiduciary positions that led

to the enactment of the present Penal Code provi-

sion dealing with embezzlement. These provisions

were not, however, intended to provide against every

breach of duty or pecuniary obligation on the part

of agents and employees toward principals and em-

ployers. Accordingly, in applying those articles of

the Code to the various cases that may arise, careful

discrimination is required, for it is sometimes diffi-

cult to draw with entire precision the line of demar-

cation between acts punishable as crimes under the

code and those that are not within its purview,

although presenting instances of breach of trust.

21 Tex. Jur. 2d Embezzlement and Conversion § 2 at

579-80 (1961).

—_

A58

The Government has contended that the statutory lan-

guage “other things of value” was sufficiently broad to

include real

[4]

property. The defendants have contended that the Court

should apply the statutory rule of construction denomi-

nated “ejusdem generis” wherein the phrase should be

construed to include only those things of the same class or.

nature as those specifically enumerated in the statute, this

class being limited to items of personal property.’

While there are critical distinctions between embezzle-

ment and the other offenses included within this statute,

all are basically similar in nature to larceny. See Moris-

sette v. United States, 342 U.S. 246, 260-61, 96 L.Ed.

288, 299, 72 S.Ct. 240 (1951); Moore v. United States,

160 U.S. 268, 40 L.Ed. 422, 16 S.Ct. 294 (1895);

United States v. Northway, 120 U.S. 327, 30 L.Ed. 664, 7

S.Ct. 580 (1887). Larceny is commonly defined as “the

felonious taking and carrying away of the personal goods

of another”. United States v. Turley, 352 U.S. 407, 412,

1 L.Ed.2d 430, 434, 77 S.Ct. 397 (1957). The elements

of embezzlement are admittedly somewhat different.

[Embezzlement] differs from larceny in that the fact

that the original taking of the property was lawful, or

1. The rule of ejusdem generis, closely related to that of noscitur

a sociis, remains a valid rule of construction, See United States v.

Standard Oil Co., 384 U.S, 224, 228, 16 L.Ed.2d 492, 495, 86 S.Ct.

1427 (1966); Haberman v. Equitable Life Assurance Society of

United States, 224 F.2d 401, 405 (Sth Cir, 1955), rek. den., 225

F.2d 837, cert. denied, 350 U.S. 948 (1956). The proper application

of these rules is thoroughly discussed elsewhere. See 50 Am. Jur.

Statutes §§ 249, 250 (1944). Most of the United States Supreme

Court cases discussing the application and limits of these rules have

been annotated, See Annot., 94 L.Ed. 464 (1949).

4

A59

with the consent of the owner, while in larceny the

felonious intent must have existed at the time of the

taking.

Moore v. United States, 160 U.S. 268, 269, 40 L.Ed.

422, 424, 16 S.Ct. 294, 295 (1895). See also United

States v. Powell, 294 F.Supp. 1353, 1355 (B.D. Va.

1968), affd, 413 F.2d 1037 (4th Cir. 1969); 29A

C.J.S. Embezzlement §5 (1965). Notw “ystanding this

fact, and notwithstanding the apparent majority view that

“embezzlement” is a purely statutory rather than common

law offense, the term, nevertheless, has acquired a well

established connotation which approaches the sanctity of

a common law meaning. United States v. Northway, supra,

120 US.

[5]

at 334, 30 L.Ed. at 666. It is limited to items of per-

sonal property, similar to the offense of larceny after

which embezzlement was patterned. Where a federal crim-

inal statute uses a common-law term of established mean-

ing without otherwise defining it, the United States Su-

preme Court has held that the general practice is to give

that term its common-law meaning. United States v. Tur-

ley, 352 U.S. 407, 411, 1 L.Ed.2d 430, 433, 77 S.Ct.

397 (1957). This same practice appears to be proper for

established terms such as “embezzlement”.

In 1896 the Supreme Court of California was con-

fronted with virtually the identical issue now before this

Court, the specific statute there under consideration being

one pertaining to “false pretenses”.

And the offense of false pretenses, under the English

statutes, has always been construed as largely analog-

A60

ous to, and closely bordering upon, that of larceny,

and as applying only to personal property, which

was capavie of manual deuvery, and the subject of

the latter offense, and has always been punishable in

much the same manner as larceny. Keal property

under the English law was never the subject of the

offense either of cheating or of false pretenses. Being

incapable of larcenous asportation, it was not re-

garded as requiring at the hands of the criminal law

the same protection as personalty. Since it could not

be carried away and dissipated like chattels, although

a man might be deprived of his landed estate by

means of fraudulent practices and devices, yet the

property was bound™to remain stationary, and ac-

cessible to the reach of the law, and he was relegated

to the civil courts for his redress of the wrong.

Our American statutes upon the subject have all

followed more or less closely those of England. As

indicated, there are slight differences in language,

but in substantive purpose and effect they are the

same.

[6]

People v. Cummings, 114 Cal. 437, 46 P. 284 (Sup. Ct.

1896). Other state cases which have been located reach

the identical conclusion for substantially the same rea-

sons. See State v. Clark, 60 Ohio App. 367, 21 N.E.

484 (1938); Mannng v. State, 175 Ga. 875, 166 S.E.

658 (Sup. Ct. 1932); State v. Eno, 109 N.W. 119 (Sup.

Ct. Iowa, 1906). This Court has thoroughly reviewed

federal criminal statutes, and annotations relating thereto,

similar in nature to embezzlement, theft and larceny’ and

has been unable to find any legislative indication that

Congress has sought to modify the traditional definition

2. 18 U.S.C. §§ 641-60.

A6é1

and limitations of larcenous-like offenses. The logic of

People v. Cummings, as applied in a federal context, ap-

pears to be as valid now as it was in 1896. It was in-

structive to this Court to note that the California legis-

lature subsequently amended the California statute at

issue in Cummings. The California Supreme Court there-

after held that it was proper for the legislature to depart

from the common law by specifically including real prop-

erty within the statute. People v. Rabe, 202 Cal. 409,

416, 261 P. 303, 306 (Sup. Ct. 1927). Since

then real property in California has been held to be prop-

erly the subject of embezzlement, People v. Roland,

134 Cal. App. 675, 26 P.2d 517 (1933), as well as lar-

ceny. People v. Pugh, 137 Cal. App. 2d 226, 289 P.2d

826 (1955), app. denied, 352 U.S. 885 (1956); People

v. Brunwin, 2 Cal. App. 2d 287, 37 P.2d 1072 (1934).

This Court was aware of and concerned with the fine

distinctions being made when the motion for judgment

of acquittal was urged by defendants at the close of the

Government’s case. Had the evidence shown that the

property was sold by and for the benefit of Surety

Savings with the defendants in their fiduciary capacities

diverting the consideration of such sale

[7]

for their own benefit, an indictment alleging embezzle-

ment might have been proper. However, the circum-

stances of this case, accepted as true for purposes of this

motion, showed that the alleged consideration never was

intended to flow to Surety but only to the defendants.

Although the defendants ostensibly deprived Surety Sav-

ings of real estate holdings, no funds, credits or securities

belonging to Surety were taken. While this distinction is

A62

a fine one, it is one that is critical to the offense of

“embezzlement”.

Criminal statutes are to be construed strictly with an

eye to precedent, legislative history and common sense.

See United States v. Standard Oil Co., 384 U.S. 224, 255,

16 L.Ed.2d 492, 494, 86 S.Ct. 1427 (1966). This Court

has made every effort to do so and has found no legislative

indication that the traditional personal property limitation

of embezzlement has been abrogated by Congress. For

this Court to hold that real estate may be the subject of

embezzlement under this federal statute as presently

framed would not involve court interpretation, but would

constitute judicial legislation.

The restricted usage of the term embezzlement neces-

sitated the application of the doctrine of ejusdem generis

to the phrase “other things of value” contained in Title 18,

United States Code, Section 657. Properly interpreted, it

may include only items of personal property. For the

foregoing reasons, this Court granted defendants’ motion

for judgment of acquittal on the grounds that the in-

dictment failed to state an offense against the United

States of America.

DONE at Houston, Texas, this 8th day of November,

1973.

CARL O. BUE, JR.

Carl O. Bue, Jr.

United States District Judge

A63

APPENDIX F

UNITED STATES COURT OF APPEALS

Fifth Circuit

OFFICE OF THE CLERK

Tel. 504-589-6514

Edward W. Wadsworth 600 Camp Street

Clerk New Orleans, La. 70130

October 16, 1978

TO ALL PARTIES LISTED BELOW:

NO. 76-4346—U.S.A. vs. CORNELIUS J. KEHOE,

and RAY K. BULLOCK

Dear Counsel:

This is to advise that an order has this day been entered

denying the petition(s) for rehearing,* and no member of

the panel nor Judge in regular active service on the Court

having requested that the Court be polled on rehearing

en banc (Rule 35, Federal Rules of Appellate Procedure;

Local Fifth Circuit Rule 12) the petition( ) for rehear-

ing en banc has also been denied.

See Rule 41, Federal Rules of Appellate Procedure for

issuance and stay of the mandate.

Very truly yours,

EDWARD W. WADSWORTH,

Clerk

By /s/ SALLY HAYWOOD

Deputy Clerk

* On behalf of Cornelius and Ray Bullock

ce: Mr. James J. Hippard

Mr. Randy Schaffer

Ms. Mary L. Sinderson