Brief for Respondent — Leggett v. United States (No. 391)

Office-Supreme Court, U.S.

FILED

a

« pe ita aniblia add OCT 11 1961

JAMES R. BROWNING, CLERK

‘ No. 891

. Gu the Supreme Court of the Wnited States

OcroneR Term, 1961

CHakies E. Lecogrr ann JoHN Henry ELEVELD,

PETITIONERS

. Vv.

Untrep States oF AMERICA

O¥ PETITION FOR 4 WRIT OF OBRTIORARI TO THE UNITED

_8T4TRS COURT OF APPBALS FOR THE SIXTH CIROUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

ARCHIBALD COX,

Solicitor General,

HERBERT J. MILLER, JR.,

Assistant Attorney General,

BEATRICE ROSENBERG,

RICHARD W. SCHMUDE,

Attorneys,

Department of Justice,

Washington 28, D.C.

INDEX

Page

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CITATIONS

Cases:

Blumentha: v. United States, 332 UwS. 539.222.2222. 1!

Linden v. United States, 254 F. 2d 560_..2.22.2.2-.--- 12

United States v. Gordon, 253 F. 2d 177.2222 2-2. 10-11

Statute:

18 U.S.C. 2314 2

615314 — 61

Ou the Supreme Gourt of the Anited States

_.~ OcToBER TERM, 1961

No, 391

CHARLES E. LecGerr aND JOHN HENRY ELEVELD

PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PRTITION FOR A WRIT OF CERTIORARI TO THE UNITED

BTATES COURT OF APPEALS FOR THE SIATH CIROUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (R. 418-423;

Pet. App. 33-40) is reported at 292 F. 2d 423.

JURISDICTION

The judgment of the court of appeals was entered

on July 25, 1961 (R. 417, 418; Pet. App. 33). A

petition for rehearing was denied on August 15, 1961

(R. 431). The petition for a writ of certiorari was

filed on September 8, 1961. The jurisdiction of this

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

J

QUESTIONS PRESENTED

i. Whether the evidence was sufficient to support

petitioners’ conviction for the interstate transporta-

(1)

2

tion of goods of a value in excess of $5,000 acquired

through fraud.

2. Whether evidence was improperly admitted on

the issue of intent.

STATUTE INVOLVED

18 U.S.C. 2314 provides in pertinent part:

Whoever transports in interstate * * * com-

merce any goods, wares, merchandise, securities

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

knowing the same to have been stolen, conve ted”

or taken by fraud; * * *

* * * * *

Shall be fined not more than $10,000 or

imprisoned not more than ten years, or both.

* * * * *

STATEMENT

A two-count indictment returned in the District

Court for the Eastern District of Michigan charged

petitioners with having on two oceasions transported

or having caused the transportation in interstate com-

merce from Detroit, Michigan, to Fort Dodge, Iowa,

a number of drums of polyester resin of a value in .

excess of $5,000, with knowledge that the drums were

obtained through theft or fraud, in violation of 18

U.S.C, 2314, supra (R. 2). Following a trial by jury,

petitioners were convicted as charged. Petitioner

Leggett was sentenced to a general term of imprison-

ment for a year and a half, to be served consecutively

to a prison sentence which Leggett was then serving,

and ordered to pay court costs in the amount of $1,760

(R. 404). Petitioner Eleveld was sentenced to a gen-

eral term of imprisonment for a year and ordered to

3

pay court costs of $440 (R. 405). On appeal, the con-

viction was unanimously affirmed (R. 417, 418-423;

Pet. App. 33-40).

The evidence may be summarized as follows:

1. In 1957, one Edmund Juzwik was vice-president

and a director of Glass Craft Boats, Inc., of Fort

Dodge, Iowa. He had prior business dealings with

petitioner Leggett through a firm called National

Procurement (R. 250, 262-263). In September of

that year, Leggett asked Juzwik whether he could use

some surplus merchandise in his “manufaeturing op-

erations” (R. 252-253). Leggett said that he knew a

man by the name of **Dunwood,” who was a repre-

sentative of a company in Switzerland which, as a

result of its purchasing operations, occasionally had

surplus material to dispose of (R. 252-253, 263-265).

Juzwik said that he would purchase supplies if they

were the “right kind of material” at the “right price”

(R. 253). |

In October 1957, a “Mr. Wilson”’ of National Pro-

curement telephoned the Reichhold Chemicals Com-

pany of Ferndale, Michigan, and requested Reichhold

to submit price quotations on polyester resin to one

“Colonel Stewart” of National Procurement in New

York (R. 10-11). Reichhold did as requested. On

October 15, 1957, National Procurement ordered 106

drums of polyester resin at a total cost of $16,112 (R.

11-13, 83). On October 23, pursuant to arrange-

ments made by petitioner Eleveld, the resin was

picked uj at Reichhold and stored in a warehouse in

Dearborn, Michigan (R. 16-18, 127-129, 131-133, 152,

166, 177-179). Eleveld paid the truck driver in cash

4

for his services, and the unloading and storage

eharges were paid for in cash by someone for Na-

tional Procurement (R. 141, 153-154). After the

resin was stored, Leggett and two other men tested

some of it (R. 167-173).

In a letter of October 24 signed by ‘‘J. Eleveld,”

National Procurement advised the warehouse that

title to the resin had been transferred to ‘‘ Joseph

Dunwood and/or Acme Limited, Zurich, Switzerland’

(R. 146-147, 150). Shortly thereafter, the warehouse

was instructed by letter from ‘‘Joseph Dunwood,

Acme Limited Representative” to release the resin to

the Sansone Brothers Cartage Company of Detroit

(R. 148, 155). In late October, the Sansone Brothers

trucking firm, pursuant to arrangements made by

Leggett, picked up the resin at the warehouse and

delivered it to a warehouse in Detroit where it was

unloaded and stored (R. 154-155, 160, 183-185, 192-194,

196, 210, 228-229). Leggett and two other men paid

the truck drivers in cash for their services (R..

184-185, 197).

Leggett subsequently sold the warehouse receipts ,

for the resin to Juzwik for about $13,000 (R. 251-254,

258-261, 265-267). Juzwik then sent the warehouse

receipts to a trucking firm, and informed the Detroit

warehouse that he had purchased the warehouse re-

ceipts for the resin (R. 210-211, 213, 248, 269).

Shortly thereafter, petitioners entered the ware-

house in Detroit, where Eleveld introduced himself

as “Joseph Dunwood"’ (R. 231-233, 239-240; see

R. 215, 217, 220). Eleveld paid the handling and stor-

age charges in cash, and signed papers in the name

5

‘Joseph Dunwood”’ (R. 221, 231-233, 246-247). Peti-

tioners arranged to have the drums tallied in lots of

ten. The ‘‘way bills’’ indicated the consignor as

“Acme Limited—A. E. Juswik,’’ and the consignee

as Glass Craft Boats of Fort Dodge, Iowa (R. 199-

200, 204-205, 208, 227-228). <A short time later, the

106 drums of resin were picked up at the warehouse by

a trucking firm, and were subsequently shipped to

Juzwik at Fort Dodge, Iowa, by another trucking firm

(R. 204-205, 208, 210, 226-227, 242-243, 254, 273).

2. In April 1958, a “Colonel Stewart’’ of National

Procurement telephoned the credit manager of Reich-

hold Chemicals and said that the original invoice for

the 106 drums of resin which had been bought in

October 1957 had been ‘‘lost,’’ and that Reichhold

should send duplicate invoices which he would insure

would be processed for ‘‘immediate payment’’ (R.

73-74). In late April, without having made payment

on the resin obtained in October 1957, National Pro-

curement ordered 114 additional drums of polyester

resin from Reichhold at a total price of $18,240 (TR.

19-24, 83). Reichhold’s credit manager left instruc-

tions with the plant that the second order was not

to be shipped until payment was reeeived on the first

order. Shortly thereafter, a man who identified him-

self as ‘‘Col. Eleveld’’ telephoned the credit manager

and said that National Procurement had paid #52,000

‘*by mistake,’ and that Reichhold should apply the

‘‘overpayment’’ to the second order (R. 84-85, 116—

117). As a result of this telephone call, the credit

department permitted the April order to be shipped

(R. 117). On May 2, 1958, a trucking firm picked up

6

114 drums of resin at the Reichhold plant in Ferndale,

Michigan, and brought it to a warehouse in Detroit

where it was unloaded and stored for National Procure-

ment (R. 25-27, 90, 104, 278-283, 284-286, 293-294).

Leggett paid the storage charges (R. 289-290,

292-293). |

In a letter signed by “C. O. Stewart,’’ National

Procurement subsequently advised the warehouse that

the resin should be released to “Joseph Dunwood

and/or Acme Limited, Zurich, Switzerland” (R. 288-

289; see R. 294). A few days later, the 114 drums

of resin were picked up by another trucking firm

and transported to another Detroit warehouse where

it was unloaded and stored. Eleveld paid the truck-

ing firm in cash for its services and, in making

storage arrangements, introduced himself to a ware-

house-representative as “Joseph Dunwood’’ (R. 296-

298, 301-302, 320-321). In the meantime, Leggett

sold the warehouse receipts to Juzwik for $14,453.70,

and a check in that amcunt was made payable to

“Joseph Dunwood’’ and given to Leggett (R. 258

259). The warehouse was subsequently informed by

letter from “Joseph Dunwood’’ that the warehouse

receipts were being turned over to Mr. Juzwik, and

that the warehouse was authorized to release the

resin to Juzwik (R. 305-308, 315). Eleveld and Juz-

wik paid the storage charges (R. 310). A short time

later, a trucking firm picked up the resin, which

was subsequently delivered to Glass Craft Boats in

Fort Dodge, Iowa, by another tnicking company

(R. 206-268, 273, 304, 309, 312-313).

Reichhold Chemicals never received any payments

on the two shipments of resin, despite efforts by

v

a _—_>

7

it and a collection agency to collect payment, and

National Procurement’s account, totaling $34,352 due

and owing, was written off as ‘thad debts’’ (R. 71-73,

82-85, 91-95, 98, 112-113; see R. 29).

3. National Procurement used the telephone num-

ber and mailing address of a New York City tele-

phone answering service in 1957 and 1958, and mail

sent to National Procurement at that address was

forwarded to “Charles E. Leggett’? at a Chicago

address (R. 39-44, 408-409). During the same _pe-

riod, National Procurement had a telephone answer-

ing and mail service aecount with a Washington,

}D).C., answering firm (R. 45-46, 48-49, 410-412).

Reichhold’s credit manager telephoned the Wash-

ington number and left messages for “Colonel Stew-

art” to call him. The credit manager subsequently

received telephone calls from “Colonel Stewart’? and

“Colonel Eleveld’? (R. 73-74).

National Procurement’s purehase orders sent. to

Reichhold included authorization numbers, requisi-

tion numbers, warrant numbers, account numbers,

terms, shipping points and routing (R. 12, 23, 37).

The first purchase order stated that inspection was

waived, that the entire shipment was to be made

available “for truck pick-up starting at 0900 hours

23 October 1957,’’ that the loading would be = su-

pervised by its personnel, and was signed by a

Colonel over the designation “Procurement Director”’

(R. 10-14). Reighhold’s credit manager testified that

Reichhold had supplied products including polyester

resin to the government in the past and that he

treated the purchase orders of National Procure-

8

ment as government orders when he was informed

by the shipping manager, who possessed the orders,

_ that they were ‘‘identical’’ to government orders

(R. 74-75, 81-82, 106-108, 118; 408, 413). He said

that an added reason for his believing that the

purchase orders were government orders was because

the people from National Procurement with whom

he dealt identified themselves as colonels (R. 118-

119). He testified that Reichhold did not investi-

gate the credit standing of National Procurement

because he believed that Reichhold was dealing with

the United States Army (R. 118-119). The ship-

ping manager of Reichhold testified that National

Procurement’s purchase orders were similar to gov-

ernment orders and that the shipping department

treated them as government orders (R. 408).

Beginning in late 1957, Glass Craft Boats, Inc.

purchased fiber glass cloth from Leggett (R. 201,

254, 274-275). Juzwik testified that he believed that

a shipment of fiber glass came from a warehouse in

Tennessee (R. 254). The sales supervisor of the fiber

glass division of a firm in Nashville, Tennessee, testi-

fied that he had been asked for price quotations by a

person who identified himself as Lieutenant Colonel

Eleveld; representing National Procurement. The

person calling said he was with an emergency pur-

chasing group and that the materials were needed in

the missile program. The sales supervisor was sub-

sequently contacted by another person who identified

himself as “Colonel Stewart.” The supervisor be-

lieved that the company was doing business with the

government (R. 347-352). The credit standing of

9

National Procurement was not investigated for this

reason. Two shipments of fiber glass were picked up

(R. 349-350).

The sales manager for the fiber glass division of a

New Hampshire Company testified that in 1958 he re-

ceived telephone calls from a person who identified him-

self as Lieutenant Colonel Eleveld of National Pro-

curement and that materials were later ordered by

National Procurement. The company believed that it

was doing business with the government (R. 323-324,

326, 328-330, 332, 334-336, 340, 342). The mate-

rials furnished to National Procurement were re-

plevied from a New Hampshire warehouse after the

company discovered that it was not dealing with the

government (R. 335-336, 343-344).

ARGUMENT

1. Petitioners contend (Pet. 19-80) that the evi-

dence was insufficient to prove three basic elements

of the offense with which they were charged. This

contention, however, was properly rejected by the court

below and presents no issue warranting further re-

view by this Court.

a. Petitioners seek to insulate themselves from the

interstate shipments by pointing out that ‘“Dunwood"’

purchased the resin from National Procurement, had

it stored, and subsequently sold it to Juzwik who ar-

ranged for its interstate shipment. Their argument

overlooks the clear evidence that Leggett himself sold

the warehouse receipts to Juzwik; that Leggett re-

ceived over $23,000 in checks on behalf of ‘*Dunwood”

10

and over $3,000 in cash from Juzwik in payment for

the resin; that Leggett inquired in Iowa of Juzwik’s

supply needs in his ‘‘manufacturing operations’’ prior

to the placing by National Procurement of its first

order for resin with Reichhold; that petitioners ar-

ranged for the storage of the resin after its “sale”

to ‘‘Dunwood”’; that petitioners paid the truck driv-

ers for hauling the resin and paid some of the storage

charges after the resin was “sold” to Dunwood; that

Eleveld, in the company of Leggett, represented him-

self as “Joseph Dunwood”’ to warehouse personnel

immediately prior to the first interstate shipment;

and that, prior to that interstate shipment, peti-

tioners requested that the warehouse have the drums

tallied in groups of ten for shipment. Whether or

not a “Joseph Dunwood”’ existed and whether or not

National Procurement sold the resin to him, the fact

remains that petitioners knew that the resin was

destined for an interstate shipment and actively

caused and facilitated this shipment. In short, peti-

tioners were actively interested in the resin from the

time it was obtained from Reichhold to the time of

its shipment from Detroit to Fort Dodge, Iowa.* In

answer to special questions, the jury found that peti-

tioners knew that the resin was destined for an

interstate shipment (R. 414).’

1 Petitioners’ claim (Pet. 17, 20, 25) that the decision below

conflicts with United States v. Gordon, 253 F. 2d 177 (C.A.

7), is misplaced. In that case, where the defendant helped load

the stolen property into an automobile, there was no direct evi-

dence that the defendant knew that the property had been stolen

or that it was being transported in interstate commerce. /d. at 181.

Moreover, there was nothing in the record to indicate that the

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11

b. The argument that the proof did not show the

value of the resin is rebutted by the record. Reich-

hold sold each shipment to National Procurement

for over $16,000, and Leggett sold the warehouse

receipts for the first shipment for about $13,000 and

the warehouse receipts for the second shipment for

about $14,000 (R. 83, 251-254, 258-261, 265-267).

e. The record shows beyond any doubt that peti-

tioners, through National Procurement, obtained the

resin from Reichhold through fraud. Business men

do not ordinarily sell materials for which there is a

market at substantially less than the purchase price ©

if they intend to'pay the purchase price. See Blumen-

thal| v. United States, 332 U.S. 539, 550, where this

Court noted that it was reasonable inference that in

a time of shortages an owner of liquor was not sell-

ing at cost or slightly above. Not only were no

payments ever received by Reichhold on National

Procurement’s outstanding indebtedness, but National.

Procurement induced Reichhold, through a telephone

eall from a “Col. Eleveld,” to ship the second order

of resin by representing that a $32,000 cheek was

mailed to Reichhold, and that the ‘‘overpayment”’

should be applied to the second order. There was also

evidence that National Procurement sought to rep-

defendant had any further interest in the property or the pro-

ceeds from it after it was loaded. /d. at 181-182. Here, in

contrast, the evidence showed that petitioners themselves per-

petrated the fraud and therefore hud knowledge of it; they

were actively engaged in transporting the resin in interstate

commerce; and they had a financial interest in its shipment.

In any event, both the Gordon and instant cases concern the

evaluation of different evidence in two different records. Thus,

there is no possible conflict on any general question of law.

12

resent itself to Reichhold and others as a purchasing

group for the federal government, t.e., the character

of its purchase orders and the many uses of the mili-

tary rank of “Colonel’’ in dealing with Reichhold.

2. The evidence that National Procurement sought

to represent itself as a government purchasing agency

was clearly admissible. As we have seen, it tended

to show that National Procurement and thus petition-

ers obtained the resin from Reichhold with the intent

to defraud. It was not necessary for the government

to introduce legitimste government purchase orders

into evidence for comparison purposes. There was

testimony from a person who had dealt with the gov-

ernment that National Procurement’s purchase orders

were identical with government purchase orders,

The fact that Reichhold, and other parties who had

dealt with National Procurement, believed National

Procurement’s purchase orders to be government

orders was in itgelf some evidence of their fraudulent

character. As was pointed out in a recent mail fraud

case, “[t]he tendency of the form to mislead is

shown by testimony that it did mislead.” Linden v,

United States, 254 F. 2d 560, 566 (C.A. 4).

13

CONCLUSION

For the foregoing reasons, we respectfully submit

that the petition for a writ of certiorari should be

denied.

ARCHIBALD Cox,

Solicitor General.

L HERBERT J. MILLER, Jr.,

Assistant Attorney General.

BEATRICE ROSENBERG,

RicHarD W. ScHMUDE,

Attorneys.

OcToBER 1961.