Brief for Respondent — United States v. Sheridan

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OCTOBER TERM, 1946

~~ No. 53

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- UNITED STATES OF AMERICA,

ws. -«

PAUL DAVIS SHERIDAN

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SUPREME COURT OF THE UNITED STATES

Petitions y:

ON WREL OF CRE TIORARL TO PHE\UNITED SPAPES CIRCUIT COURT OF

2 a

he te ale

APPEALS FOR TINE SIXTH CIROUTY

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BRIEF FOR RESPONDENT |

“Soun TH. Prokerine,

Counsel tor Respondent,

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Opinion below

MUU ee wens ty era ee eek OD

Questions presented

Statute involved |.

Statement ....._.. ee

_ Summary of argument |

. Argument: :

Part I—The alleged petivition of Tespondent did

not contravene the statute.

Introduction .

A. Respondent did’ not ‘‘cause’’ the inter-

7 ' state transportation of the checks

~ -B. Respondent did not ‘‘with fraudulent

: intent”? ‘‘cause?’ the interstate trans-

portation of the checks. | 21

. Part Il—Respondent it is in any event entitled toa |

new trial . 3 . 26 -

Introduction e 26 ©

A. The admission of Menteur testimony con-

stituted reversible error a :

B. The evideneé presented by the Goveii- —

ment is insufficient to sustain the con- |

| “e viction © “28

| Conclusion —. ) 31

! es | CiraTions

_ Cages: ; tans

American Surety Co. v. _ Savings Bank, 242 Mich.

REG Pee UN Goneten crea ae pwc a 25

° Backun'v. United States, 112 F. 2d 635... 14, 15, 16

| Baender v. Barnett, 255 U. 8. 224 | fe 18

Bihn Wf United States, 66 Sup. Ct. 1172 28

_ Blue vy. United States, 138 F. 2d 351, certiorari de-

nied, 322 U. S.- 736, sb rehearing denied, 322 —

U. S. 771 15

Bolle nbach vy. United State s, 326 U.S. 607.

7143 ©

Kann v. United States, 323 U.S. 88

7, 9,13, 22, 24, 95

e

ae | 3 i a

ge ! es pe : Page

Bradford v. “Waited: States, 129.-F.. 2d 274, 130 F.

.. $d 630, certiorari denied, 317 U.S.683. , 2. _ 30

Brooks v. United Statés, 267 U. $. 482. .. 18,23

_ Bruno v. United States, 308-U.S. 287 > .- 7. ae

Buller v. United States, 53 F, 2d 800.5. - jo 15

Champion v. Ames, 188 U.S. 321... He eR ae?

Chatwin v. United &tates, 326 U.S: 455. 18, 20, 21

‘Clarke v. Sanford, 156 F.2d 115... |... - 17, 22, 23, 29

Clarke .v.: United States, 132 F. 2d 538, certiorari nee

‘denied, 318 U. 8.789... is Overy

- Cook v. State; 136 Tex. Cr, 454... Deo 30

Cook y.U wited States, 138 U.S. 157 . aN. fay Se

‘ Corbelt'v. United States, 89 F.2d124°..'....... 15,16 -

Crain v. United States, 148 F.2d 615... | Seeieee ai

Decker v. United States, 140 F. 2d. 378;vertiorari ;

- denied, 321 U. S.792:.... ia tigen |: Ss

Demolli v. United States, 144 Fed. 363 See 14

De Rose v. People, 64 Colo. 332. , edie:

~ Donnelly v. United States, 228 U. S. 243, ‘rehearing sas

“/; Ay EAs Be PE eke feel eo Ne,

“~Pyhre +. Hudspeth, 106 F.2d 286 eases A Te

Gates v: United States, 122 ¥. 2d a7, certiorari | .

denied, 314 U.S. 698 © . es 3 “29°

Glasser v. United States, 315 U.S; 60" EP Ph nt | as

Goodman v. United eee ‘OT F. 2d 197,. certiorari i

‘dismissed, 305 U. 8.578 8 ee -. 36

Goucher v. State, 113 Nebr. 352.) 28;

Grant v. United States, 268 Fed. 443, certiorari de- | Ee ee

nied, 256 U. S. 700 seahoiarr geese

Guardalibini v. United States, 128 F. 2d Q34 eae Y fe

Harris v. United States, 140 F. > | SRN Stare rears: Oe

Hart v. v 'nited States, 112 F. 2d 128, certiorari de-—

nied, 311 U. 8. 684 16

Hipolite Egg Co. v. United States, 290 U.S. 5 , aa

- Hoke v. United States, 227 U.S. 308. . Seg ey

Hopt v. Utah, 110U. 8: 574 | cay rea 27.

Husten v. United States, ce & ee 19

In re. Tully, 20 Fed. 812. } | ee

- Jerome v. United Statés, 318 U.S. 101 ¥:,’ 363k

a

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“ INDEX : ¢ iii

: | | | _ Page

~ Kebictlinn’. United States, 66 Sup, Ct. 1239. 28

La Page v. United States, 146 F. 2d 536. 16 «

- Marshall v. United States, 146 F.2d | Es ae 29

Miller v. United States, 317 U. 8. 192, rehearing de-

pO EE ee ee tee ,. 6,7.

Millette v. United States, 4 F. 2d 635:\.......... oS

People, v. Chronister,\379 Til. ‘617... ..\....2.......... 30:

‘People v. Cohen, 343 Ill. 437 ........\-...-.. week oe -“@

_ Pierce v. United. States, 314 U. S. 306 |. : PT eck aes ioe

_Pricێ y. U aleed States; 01 ]

Rice v. United States, 149 F.

Richardson v; United States, 1

Savage.v. United States, 270 Fed\14, certiorari de-

nied; 257 U. S. 642... Be Be ee 16

- Schrader v. United States, 94°F. 2d 926. -16

Shea v. United States, 251 Fed. 440, certiorari denied, A

248 U.S. 581. Seas perce rs ps oft ae

. Sheridan v. United: States, $4 F.2d 57 (opinion eat Me

3 eee 7 . 17, 22, 25°

Singer v. United States, 323 U. 8. 338 18

‘Smith v. United States, 61 F. 2d 681, certiorari de-

nied, 288 U.S.608 _. ‘fee 15, 16

Sorrélls v. United States, 287 U.. 8. 435°. ce. ae

Spear v. United States, 246 Fed: 250, certiorari de-

nied, 246 U. S. 667... ui ee |

' Spillers v. United States, 47 F. 2d A ee pa ae

_ Stapp v. United States, 120 F. 2d 898 17

State v. Lamb, 198 N. C. 423. iy Fae 28

State v. Kozukonis, 46 A. 2d 865... 30

Thompson v. United States, 145 F. 2d _ certi-

orari denied, 324 U.S. 861... 29

Tincher v. United States, 11 F. 2d 18, jalan de- ;

nied,.271 U. S. 664. « : ee — oe

Tolle v. Sanford, 58 F. Sapp. 695 | ... 17,22, 23, 29\,.

United States v. Campanaro,63 F.Supp.811... 27, 28

United States v. Carbone; 66 Sup. Ct. 734 18

“United States v. Citrin, 58 F. Supp. 766... 17

tte ‘ee P % : ‘

iv. . INDEX

. Page

U nited States v: Cohen, 145 F. ad 82, certiorari de-

SR Bas MS WO oss ha hana Sti eat es oe 15, 16

United States v. Feldman, 136 F. 2d 394, affirmed :

on other grounds, 323 U. S. 487 a 17

United States v. Flores, 66 F. Supp. 880. |. 17, 21, 22, 25, 28

United States v. Gaskin, 320 U. 8. 527 18

United States v. Hopper, 63 F. Supp. 612 . 17, 21, 22, 25, 28

United States v. Kenofskey, 243 U. 8.440... .... _ 14,15

United States v. Laffman, 152 F.2d 393... ....... 29

United States vy. Lowe, 115 F. 2d 596, certiorari de- =

nied, 311 U. 8717 ....... ..... es 17

- United States v. Moore, 60 Fed. 738 cs Bi re - 28

United States v. Ruffino, 67 F.2d 440°. | foes 30

- United States v. Staats, 8 How. 41... oa 28

United States v. Tommasello, 64 F. Supp. 467..... 28

United States v. Turley, 135 F. 2d 867, certiorari x

denied, 320 U. S. 745... 14, 15

United States v. Weisman, 83 F. 2d 470, certiorari ;

denied, 299 U.S. 560... .. Sata eae 15

United States v. Wentworth, 11. Fed. 52 ~ ints 28

United States v. Wood, 58 F. Supp. 451 17, 21, 22, 25, 28

Statutes: .

Act of March 16, 1878, 20 Stat.30 (28 U. S. C. 632) 30

Act of March 2, 1895, 28 Stat. 963... .23

Crimina! Code, § 215 (Mail fraud statute) (18 U <5. C.

338) 7, 9, 14, 2, 23, 24, 25

Criminal Code, § 147 (18 U. S. G. Sah)... 12

Criminal Code, § 332 (18 U. S. C. 550) - 16, 24

Federal Kidnapping Act, 47 Stat. 326 (18 U. S. C.

408a) 14, 20

Judicial Code, § 240(a) (28 U.S.C. 347) 2

Judiciut Code, § 269:(28 U. S. C. 391) ce 28

Michigan Compiled Laws of 1929, § 9301 . ~~

National Motor Vehicle Theft Act (18 U. S. C. 408)14, 18,23 .

National Cattle Theft Act (18 U. S. C. 419b) | 14

National Stolen Property Act, as amended, 48 Stat.

794, 53 Stat. 1178 (18 U.S. C. 413-419),

‘ 2, 4, 7, 9, 11, 14, 18, 20, 22, 23, 29

Pure Food and agi Act, 34 Stat. 1 : 23

. White Slave Traffic Act, 36 Stat. 825 5 ts U. s. Cc.

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adedaddadada:

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AARARAARNAAAS

SSRRSSses

18 U.

Miscellaneous :

Congressional Record, Vol. 78, p. 6981 \ Seen

Congressional Record, Vol. 84, pp. 9411-9412. __.

Criminal Appeals Rules, promulgated May 7, 1934...

Hearings on H. R. 10287, 70th Cong,, Ist Sess. peg

. > 491, H. Comm: Hearings) \

. H. Rep. 1462, 73d Cong., 2d seas. | Bee

i Rep. 422, 76th Cong., Ist sess. ‘

Robertson ari ‘Kirkham, ‘‘Juriadiction of (be Su-

preme Court of the United States’’ ae

S. Rep. 538, 73d Cong., 2d sess.

S. Rep. 674, 76th Cong., Ist sess. : Shae

Tt on — 3d Ed. Tete e

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SUPREME COURT OF THE UNITED STATES

Mig OCTOBER TERM, 1460 8 ~—

3 jase

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UNITED STATES OF “AMERICA, |

+: Petitioner,

* 8.

PAUL DAVIS SHERIDAN

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ON WRIT OF CERTIORARI-TO-THE UNITED STATES CIRCUIT COURT OF

“APPEALS FOR THE SIXTH CIRCUIT —

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- BRIEF FOR RESPONDENT

Opinion Below :

The opinion of fhe Circuit Court of Appeals (RB 21- 25)

is pinto at 152 F. 2d 57. |

@ —_—- Surisdiction |

' The judgment of the Circuit Court of Appeals wasentered .

November 19, 1945 (R. 21), and a petition for rehearing.

_ was denied January 28, 1946 (R. 26-29). The petition for a |

‘writ of certiorari was filed March 5, 1946, and granted May

13, 1946. The jurisdiction of this Court is invoked under

mts 7

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' Section 240 (a) of the Judicial Code, as amended by the

Act of February 13, 1925. See also Rules XI and XIII

of the Criminal Appeals Rules promulgated by this Court

‘ May 7, 1934. |

Questions Presented

-The. question presented by. the. Government's petition

for a writ of corti

lently cashes in/one state a falsely made or forged check

drawn on a bank in atother state, which check -is thereafter

: transmitted to the drawee “bank for payment, has, with

‘*fraudulent intent’’,-‘‘caused’’ a falsely made or forged.

_ security to be transported in'‘interstate commerce within

the meaning of Section 3 of the National Stolen Property

Act... #7 |

“If that question is wnswered affirmatively, two further

questions, not passed on by fhe court below and obviously

not raised by the Government’s petition for certiorari, are

involved :

(1) Whether reversible error was eotimitted by the ad

mission of certain hearsay testimony on behalf of the

Government.

(2) Whether the evidence adduced by the Government

is sufficient to sustain the conviction.

: Statute Involved |

‘The National Stolen Property Act of May 22, 1934, c.

- 333, 48 Stat. 794, 795, as amended by the Act, of August

3,.1939, e. 413, 53 Stat. 1178 (18 U.S. C. 413.419), provides

' in pertinent part as follows :

_- L- See. 2. That when used in this Act—

(a) The term ‘‘interstate or foreign commierce’’ shall

», mean transportation from one State, Territory, or the

District of Columbia to another State, Territory, or

;

rari is: Whether a’ person who fraudu- .

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Se we le a ee oe

the District of Columbia, or to a foreign country, or

from a foreign country to any State, Territory, or the

District of Columbia.

(b) The term ‘‘securities’’ shall include any note, |

stock certificate, bond, debenture, check, draft, war-

rant, traveler’s check, letter of credit, warehouse re-

ceipt, negotiable bill of‘ lading, evidence of indebted-

ness, certificate of interest or participation in any profit-

sharing agreement, collateral-trust certificate, preor-

' ganization certificate or subscription, transferable

share, investment contract, voting-trust certificate;

certificate of interest in property, tangible or intangi-

ble; instrument or document or writing evidencing

ownership of goods, wares, and merchandise; or trans-

ferring or assigning any right, title, or interest in or

to goods, wares, and merchandise, or, in general; any

instrument commonly known as a ‘‘security’’, or any

certificate of interest or participation in, temporary or

interim certificate for, receipt for, warrant, or right

to subscribe to or purchase any of the foregoing; or any

forged, counterfeited, or spurious. representation of

aie of the foregoing. _ =

ae . ° 7 a) . .

e Sed. 3. Whoever shall transport or cause to be trans-

ported in interstate or foreign commerce any goods,

‘wares, or merchandise, securities, or money, of the

‘value of $5,000 or more theretofore stolen, .feloniously

converted, or taken feloniously by fraud or with intent

_ to steal or purloin, knowing the same to have been so

stolen, feloniously converted, or taken, or whoever with

unlawful or fraudulent intent shall transport or cause to

be transported in interstate or foreign commerce any —

falsely made, forged, altered, or counterfeited securi-

| ties, knowing the same to have been falsely made, forged,

altered, or counterfeited, or whoever with unlawful or

fraudulent intent shall transport, or cause to be trans-

ported in interstate or foreign commerce, any bed piece,

bed plate, roll, plate, die, seal, stone, type, or other tool,

re batt kt or thing used or fitted to be used t in falsely

itt eens

4

| making, forging, altering, or ctsintert eile any secu-

rity, 6& any part thereof, shall be punished by a fine of

not more than $10,000 or by imprisonment for not more

than ten years, or both: Provided, That the provisions -

of this section shall not apply to any falsely made,

forged, altered, counterfeited, or spurious representa-

tion of (1) \an “obligation or other security of the

United States’’ as defined in section 147 of the Criminal

Code (U.S. C., title 18, sec. 261) or (2) an obligation,

bond, certificate, security, Treasury note, bill, promise

to pay, or bank note, issued by any “‘ foreign govern-

ment’’ as defined in the Act of June 15, 1917, title

VIII, section 4 (U.S. C., titlé 18, sec. 288), or by a bank seat

or corporanen of any foreign country.’

Statement

_ Respondent was charged with violating Section 3 of the

National.-Stolen Property Act (18 U. S. C. 415, supra)

by an indictment in three counts filed October .27, 1944,

in.the United States District Court for the Eastern District

of Michigan (R: 1, 2-4). Each count of the indictment

alleged that respondent did, ‘‘with fraudulent intent, trans-

port and/or cause to be transported in interstate commerce

* * * a Certain falsely made, forged, altered, or counter-

feited security *.* * knowing ‘the same to have been

falsely made, altered, torged, or counterfeited * * °%.

Count One covered a check for $62.50 drawn on the First

- National Bank of Cape Girardeau, Missouri, payable to

‘*P. H. D. Sheridan’’ and purporting to be|signed as maker

by ‘‘I7. S. E. F.C. 14A, A. J. Davis, Commissioner”; Count

Two. covered “an identically drawn check for the same

amount; and Count Three covered a check for $50.00 drawn -

on the First National Bank of Boston, Massachusetts, pay-

able to ‘‘Cash’’ and signed as maker by “PP. 3D. hori.

dan’”’ (R. 2-4).

"The portions in italics were added by the amendment of August 3, 1999,

supra.

Spomneeenene are -

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ieee waived the right to the assistance of counsel

(R. 1, 5, 6, 7), was tried before a jury which found’ him

guilty on each count of the indictment (R: 6), and was as

sentenced to imprisonment for five years_on each count,”

_ the sentences to run concurrently (R. 7-8).?

The trial proceedings were not stenographically reported

(R. 20); and respondent and counsel for the Government:

entered into a stipulation with respect to a statement of

evidence in which it was agreed that such statement was

prepared from memory..and notes made during the trial

and substantially sets forth’ the testimony and ‘evidence -

- presented ; the statement was made part of the record upon.

the approval of the Trial Court and now appears at R. -

17-20 (see R. 20).*

The Government’s evidence, as disclosed by the statement

of evidence, may be summarized as follows: ;

1. Respondent, on July 19, 1943, when he checked out of |

the Otsego Hotel in Jackson, Michigan, where he had regis-

_ tered the preceding day, presented a check for $50.00 drawn

_on the ‘‘First National Bank of Boston, Massachusetts’’,

payable to ‘‘Cash’’ and bearing the endorsement ‘*P. H. D. |

Sheridan, 230 Park Avenue, New York’’. The hotel clerk,

who did not see respondent endorse the check, cashed it,

deducting the bill of $3.50 and giving respondent $46.50 in

cash. The check was returned unpaid, and, when the clerk

next saw it, it bore the same endorsements as appeared on

- it when offered in evidence. (R. 17-18; count 3.).

és. 2 The Government does not here seek to sustain the conviction on Count

“ 3 (Petition, p. 6; Brief, p: 18) forthe reason that “it is not clear [that] a

" eheck signed by the respondent in his name as maker * * ®* is

falsely made or forged within the law.” (Brief, p. 18.) This

is discussed at p. 28, infra. her

' : 3 That procedure was, of course, proper. Miller v. United States, 317.

_U. S. 192, 198-199; _ for _ denied, 317 v. 8. 713. ;

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2. About noon of the same day, July 19, 1943, respondent

bought some luggage in a store in Jackson, presenting in

payment a check for $62.50 drawn on the ‘‘ First National

-’ Bank of Cape Girardeau, Missouri”’, payable to, ‘‘P. H. D. -

Sheridan’’ and signed as maker by ‘‘U. S. E. F. C. 14A,

A. J. Davis, Commissioner’’, which it was stated had been

. received in the course of respondent’s business. The store .

“manager did not see respondent endorse the check, but he

accepted it in payment of the luggage valued at $36.00, giv-

ing respondent $26.50 in change, and deposited it in the

_. Jackson Bank and Trust Company. The check was later

returned unpaid. (R. 18, count 1.)

3. Also about noon of July 19, 1943, respondent cashed

a check for $62.50 (drawn identically with the check de-

scribed in the preceding paragraph) at the National Bank |

of Jackson. The assistant cashier who had approved pay-

ment testified that the records of the bank showed that the

check was forwarded to the drawee bank for payment. It

_-was later returned marked unpaid. (R. 18-19; count 2.)

4. .uai assistant cashier, after being qualified as an expert

in banking matters, testified, over respondent’s objection,

that from the endorsements on the three checks all were

presented for payment in Jackson, the Boston check had

been forwarded to Boston and the other two checks had been

_ forwarded to Missouri, and all had been returned unpaid -

' to the forwarding bank marked no account (R. 19).

5. A Jackson police officer testified, over respondent’s

objection, that he had learned through police channels that -

respondent had been arrested in Eau Claire, beac on

July 20, 1943 (R. 19). :

_. 6. An agent of the Federal Bureau of Investigation testi-

fied ‘‘that his office had conducted an investigation i in Wash-

ington, D. C., and that the United ll dacs of

DRI, We Bot AAS

eee REARS GS UE eas S65

Cimsiinde hes no agency ‘U. S. E. F. C. 14A,’ or one ‘A. J.

Davis, Corfithissioner’.’’ (R. 19.) Respondent objected

» that such testimony constituted hedtsay (R. 19), and on

* cross-examination the witness admitted that he had not.

personally conducted the investigation and.based his state-

ments on reports prepared by his Department (R. 20).

At the end of the presentation of the Government’s evi- |

dence, respondent’ s motion to dismiss was denied, and his

motion to keep from the jury various aliases set forth in

the indictment was granted (R. 20). The Government then

closed, and respondent closed without. offering any evi- |

dence (R. 20).

A motion for a new trial (R. 8.13) was denied (R. 14), 3

and respondent filed a notice of appeal, specifying, among _—

other things, that: (1) the Trial Coutt erred in matters

of law and in. admitting certain testimony and documents

into evidence over resporident’s objection; (2) the. verdict

was contrary to the evidence and.not supported by sufficient

evidence ; and (3) the trial court erred in giving and refus- ©

ing to give certain instructions * (R. 14-15).

_ The Circuit Court of Appeals reversed, holding, on author-

ity of the decision of this Court in Kann v. United States, 323

U. S. 88 (which\reversed a conviction under the mail fraud

statuté, section 215 of the Criminal Code, 18 U. S. C. 338),

that the activities of respondent as disclosed by the proof

adduced by the Government did not, contravene section 3.

of the National Stolen Property Act (R. 21- 35); no other

polit was discussed or passed upon (R. 23).. oA.

2 ip insteiellenil iheeek Gal Win Wellness a tenses catgeiiahd-0s

not appear in the record. If the cause should be remanded to the Circuit

Court of Appeals for further proceedings, it is suggested that it would

be appropriate to suggest to that Court in the remand that it exercise its

powers to secure a complete bill of exceptions, including the instructions.

given and all pertinent rulings in connection therewith. See Miller v.

ee States, 317 U. 8.192, 199-200; petition for rehearing denied, 317

‘U. 8. 713.

i oF

Summary of Argument

a5 : |

Past I

| : ues a

Assuring, without conceding, the sufficiency of the Gov-

ernment’s evidence, no violation of the statute is shown.

because respondent, within the meaning of the statute, did

not ‘‘cause”’ the interstate transportation: of the checks, .

or, in the alternative, did not ‘with fraudulent intent”

‘‘cause”’ them to be so transported.

A. Since there is no claim that respondent himself trans-

: ported the checks, the conviction cannot be sustained unless

he ‘caused’? the interstate transportation which it is

assumed occurred when ‘the checks, after ‘respondent had

cashed, tem, were forwarded to the out-of-state banks on

which they were drawn. Respondent did not direct, sug-

gest, A :

‘nothing’ to indicate that he had any conscious knowledge, i +

‘tent, plan, or desire that the checks would be so transported ; _

encourage that interstate transportation; there is

and unat \interstate transportation was not an essential or

integral part of the asserted fraud because respondent: chad

obtained his objective when he successfully cashed. the

checks. The only basis for holding that respondent

“caused” the interstate transportation 6f the checks is the

_ .cireumstance that such transportation would not have re-

~ sulted if he had \not cashed them. The word ‘‘cause’’ as °

_ used in the statute should not be so broadly construed. \

-Such a broad construction ‘finds little actual ‘support in \

judicial precedent, exténds the statute beyond its purpose ._

_ and produces. absurd. d unjust results. The ae of |

the statute as disclosed by its background and legislat

’ history is.the punishment of those who used or brou

use of interstate transportation as aq. -integral part of car- :

rying out their illegal activities, There is nothing to indi,

@ Whee that Congress intended to reach illegal activities, such *

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t . rae Naa iy , CEs Sed DER PSA Aid sac ath ba uni dihaleel PLP A See Repay oe PORN

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as. those in which respondent is claimed to have engaged, 2

which are essentially local in character and incidentally

result in interstate transportation which is neither essential _ 3

_nor substantially related to the carrying 0 out of these aetly

ities. -

B. If itis preeorr s es believed that eigen “caused”?

the interstate transportation of the checks, he did not

‘‘¢ause’’ that transportation ‘ ‘with fraudulent intent’’ as

required by thestatute. The provisions of the 1939 amend-

ment to the statute which cover spurious securities are pari a

materia with the mail-fraud statute (Criminal Code Section

215, 18 U.S. C. 338) and, on the basis of the construction . .

of the mail fraud statute in Kann v. United States, 323 -

U. S. 88, and Dyhre v. Hudspeth, 106 F. 2d 286 (C. ©. A.

~ 10), the asserted activities of respondent do not contravene

the instant statute. The difference in language used in the

‘two statutes is immaterial when. the s similarity of plan and

_ purpose of the two statutes | Weoneomned. Both depend upgn

the element ‘of fraud for: their operation and there is no

-persuasive or logical reason for supposing that Congress

meant to be more solicitous in protecting thie channels of

interstate transportation against — - becoming avenues. of

fraud than it has been of the mails. The. only sound con-

struction of the requirement of fraudulent intent in the |

1939 aniendment to section 3 of the National Stolen Prop-

. erty Act is that it means that the interstate transportation

of spurious securities must be for the. purpose of executing

a fraudulent scheme. The effect of any other construction

is te read the requirement of fraudulent intent out of the

statute. Consistently with the legislative purpose of the

statute, the spurious securities provisions of the 1939 amend-

ment cover the interstate transportation of spurious securi-

ties as an integral part of executing a fraudulent scheme,

leaving other situations to be dvalt' with by appropriate

2h

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&

then.

See

state law. Respondent’s asserted fraudulent scheme was .

- completed when he cashed the checks and their subsequent

interstate transportatién was not in furtherance of that

schenie. Accordingly, respondent did nat “with fraudu-

dent intent’’ ‘‘cause’’ the interstate’ transportation of the

checks within the » meaning of the statute. 4

Par II

“If the question of the construction of the statute is re-.—

solved ‘unfavorably to respondent, this Court should grant

a new trial because reversible error was committed by the

¢.

admission of certain hearsay testimony ,and because, the

evidence of thé Government i is insufficient to sustain the

. conviction. Neither of those grounds was passed: upon

below or presented by the petition for.a writ of certiorari,

but we believe that under the circumstances of. this case

this Court. should « exercise its undoubted poner to sonainer |

i

A. The testimony of an agent of the Federal’ Bureau of

Investigation with respect to” an investigation conduct

by his. office which“was based on reports prepared by u

department was clearly hearsay and its. admission consti

‘tuted ieversible error. The same is-true of the testimony A

of a-Jackson police officer that he had learned through police,

_ channels of the arrest of respondent: The admission of they

hearsay testimony of those two officers cannot be character-\)

ized as ‘mere harmless error’’.

B. The evidence of the Government i is insufficient to sus-

. tain the conviction on Counts One and Two of the indict-.

, ment, and since the Government does not seek to sustain

the conviction on Count .Thtee, there should -be a new trial.

The Government presented no direct evidence of the. exist-

--enee of the essential elements of fraudulent intent and_

know! cdge of the ‘spurious character of the securities. The:

a ; \

\

ciréumstantial eviderice on. those elements discloses otily

that. ‘respondent negotiated, two identically. drawn checks,

~ both of which were dishonored by the drawee bank because

‘the purported maker had no account, and that an investi-

gationdisclosed that the United States Department of Com- _

merce had no agency or agent bearing the name of the pur-

ported maker. That is not sufficient to support an inference -

that respondent passed those two’ checks with knowledge

- that they were spurious and with fraudulent intent. The

fact that a person+passed a forged check or counterfeit

money does not prove or justify an inference that he knew

its spurious character or that he intended to defraud.

Something more than. the naked. act:of passing must be

shown, and: that ‘is lacking here.

ARGUMENT

Panr I

aN?

- The Alleged Activities of Respondent Did Not Contravene

the Statute —

| Introduction © AN

Respondent’s conviction was for. violating the portion

_ of the 1939 amendment to section 3 of the-National Stolen

Property Act which deals with spurious securities and in

pertinent part provides punishment for ‘‘whoever with un-

lawful or fraudulent intent shall transport or cause to be

an transported in interstate or foreign commerce any falsely

made, forged; altered, or counterfeited securities, knowing

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

terfeited”’ (ante, pp. 3-4).° Whatever may be the proper

interpretation of that language, it is obvious that the offense

The 1939 amendment further provides that it shall, not apply .to any

falsely made, forged, altered, counterfeited, or spurious, representation of -

9

_ 5 The term “securities” as defined in section 2 of the statute includes

checks (see ante, pp. 2-3). 5

12

thereby created consists of four elements—there must be

(1) unlawful or fraudulent intent, (2) transportation in

interstate or foreign commerce, (3) a falsely made, forged,

altered, or counterfeited security, and (4) knowledge of the

spurious character of the security. Assuming for the pur- —

poses of this Part I, what is not conceded as is evident from —

Part II of this argument, that the evidence of the Govern-

ment was sufficient to show the presence af those four ele-

ments, namely, that respondent had a fraudulent intent at

some time in connection with the matter,® that the checks ~

were forwarded in interstate commerce by banks in Jackson

after respondent had cashed them; that at least one of them

was falsely made or forged and that respondent knew that,’

_ an “obligation or other security of the United States” us defined in 18

U. S. C. 261, or of certain, foreign securities (apte, pp. 3-4). The words

“obligation or other security of the United States”, as defined in 18 U. S. C.

261, inelyde checks “drawn by or upon authorized officers of the United

Staies”. If the two checks which were signed as maker by “U.S. E. F.C.

- 14A,, A. J. Davis, Commissioner” (counts 1 and 2) fall with .n that defini-

_ tion, the eonvietion should not stand because the Government does not

here urge error with respect to the réversal of the conviction on the third

count, covering the check signed by “P. H. D. Sheridan” as maker ( Brief,

p. 18). Since those two checks were drawn on a private bank, they would

not fall within that definition unless A. J. Davis was‘an authorized officer

of the United States. The Government has attempted to show that no such

officer zits (R. 19-20).

* It is true that the statutory language is “unlawful or fraudulent intent”,

‘but the question presented by the Government (Brief, p. 2) and argued

throughout refers only to fraudylent intent. From that we assume that

‘the Government does not contend that respondent had any unlawful intent

as distinguished from his asserted fraudulent intént. Indeed, there does -

* not seem to be any basis for such a contention. This argument therefore

considers only the question of fraudulent intent.

™ Since the sentences were coneurrent, the convietion may be sustained

on any count of the indietment. The Government does not contend that

any of the checks were “altered” or “counterfeited”; does not urge error

with respeet to the reversal on the third count of the indictment beeause

of uneertainty-as to whether the check there.i olved was “falsely made”

or “forged”; and limits its argument to a contention that the checks covered

‘’ by counts one and two were “falsely made” or “forged” (Brief, p. 18).

.For a discussion of whether the check sovered by the thisd count was

“falsely made” or “forged” see infra P. 28.

Pe

= pb asrinck ia

13

it is nevertheless submitted that no violation of the statute

is shown because respondent, within the meaning of the

statute, did not ‘cause’ the interstate transportation of

the checks, or, in the alternative, did not ‘‘with fraudulent _

intent’’ ‘‘cause’’ them to be so transported. |

_ A.-Respondent did not ‘‘cause’’ the interstate transporta- 3

tion of the checks. : are

Since there is no claim that respondent himself trans-

ported the checks, his conviction cannot be sustained unless.

he can be said to have ‘‘caused”’ the interstate transpor- —

tation which it is assumed occurred when the checks, after

respondent had cashed them, were forwarded by the Jack-

son banks to the out-of-state banks on which they were —

drawn. This Court bas not passed on whether interstate —

transportation is ‘‘caused’’ under such circumstances, and,

in considering whether the use of the mails was ‘‘caused’?

under similar circumstances, without deciding the matter,

indicated that there was some doubt whether ‘‘the defend-

ants may be said to have ‘caused’ the mailing of the checks’’. - |

Kann v. United States, 323 U. S. 88, 93.

Respondent did not direct, suggest, or encourage the

interstate transportation of the checks. There is nothing —

to indicate that he had any conscious knowledge, intent,

plan or desire that they be so transported; indeed, their

.transportation was the ‘sure means of revealing his asserted

fraud. Moreover, the interstate transportation was not

an essential or integral part of the fraud because respondent

had obtained his objective when he successfully cashed the

checks. The only basis for holding that respondent ~

‘‘caused’’ the interstate transportation of the checks is

the. circumstance that such transportation would not have

resulted if he had not cashed them. The word ‘‘cause”’ as

used in the statute should not be so broadly construed.

i

ee

True, that word, which i is used i in numerous sections of Title

18 of the United States Code defining offenses against the

postal service and against foreign and interstate commerce?

has been characterizéd as a word of ‘‘very broad import’

with the well known sense of ‘‘bringing about’’: United

States. v. Kenofskey, 243 U. 8.440, 443. : And, it has been

held that a person may ‘‘cause’’ interstate transportation

even though no specific direction is given to that effect.

See Backun v. United States, 112 F. 2d 635 (C. C. A. 4);

United States v. Turley, 135 F. 2d 867 (C. C.'A. 2), cer-

tiorari denied, 320 U: S. 745; Millette v. United States, 4

F. 2d 635 (C. C. A. 7).° It does not follow, however, that:

a person hag ‘‘caused’”’ interstate transportation merely .

because it may be the natural and probable consequence

_ 8 For example:

18 U. 8. C. 334—Mailing obscene matter

18 U. S. C. a libelous and -indecent matter on wrappers or

envelopes,

18 U. 8S. C. 336—Lottery circulars not mailable

18_U. S. C. 338—Using mails to promote frauds

18 U. S. C. 338a—Mailing threatening communications

18 U. S. C. 340——Poisons or explosives not mailable

18 U. 8. C. 341—Use of mails for advertisements of intoxicating liquors

in prohibition states

18 U. S. C. 351—Inelosing higher i in lower ¢lass matter

18 U. S. C. 358—Fraudulently increasing weight of mail

18 U. S. C, 387—Importing lottery tickets.

18 U. S. C..388—Intoxicating liquors; by interstate shipment

- 18 U. S. C. 390—Intoxieating liquors ; shipping packages in interstate

.commercé not plainly marked .

18 U. S. C. 396—Importing and transporting obseene books

_ 18 U. S.C. 398—White-slave traffic

18 U. 8S. C. 400—White-slave traffic

18 U. S. C. 407a—Transporting strikebreakers -

18 U. 8. C..408—Motor vehicles

' 18 U. 8. C. 408a—Kidnapped persons -

18 U. 8. C. 415—National Stolen Property Act

18 U. 8. C. 419b—National Cattle Theft Act so

'®There are similar holdings with respect to “causing” the use of the

mails. See United States v. Kenofskey, 243 U. 8. 440; Demolli v. Unifed

States, 144 Fed. 363 (C. C. A. 8); Preeman v. United States, .244 Fed.

°°

AA Sei Ply SU PY CA Ss NAO

15

or the reasonably foreseeable. result of action intentionally

taken. The above cited cases involved more than the mere

passive occurrence of a natural and probable consequence,

and in all of them the interstate transportation was essential

to, or substantially helped in, carrying out the crimi- |

nal activity involved and was an integral part of that

activity. Thus, there was evidence of a conscious knowledge

- and desire that interstate transportation would be used in

the Backun case, 112 F. 2d at 636 and 638; the maintenance

of a market for disposing of stolen securities by the defend-

ants-in the Turley case induced and encouraged interstate

transportation which materially aided them in their illegal

activities; and, in the Millette case there was evidence that

it was ‘‘Millette’s purpose and plan and contrivance to

have these cars transported to a place beyond the Minnesota

boundaries’’, 4 F. 2d at 636..° Moreover, the activities of

’ the defendants in the Backun and Turley cases were such

that they might be considered as having aided and abetted

1 (C. C. A. 7), certiorari denied, 245 U. s 654; Grant v. United States,

268 Fed. 443 (C.,C. A. 6), certiorari denied, 256 U. 8. 700; Butler v.

United States, 53 F. 2d 800 (C. C. A. 10); Smith v. United States, 61

__ FP. 24 681.(C. C. A. 5), certiorari denied, 288. U. 8. 608; United States

v. Weisman, 83 F. 24 470 (C. C. A. 2), certiorari denied, 299 U. 8. 560,

rey t denied, 299 U. 8. 621; Corbett v. United States, 89 F. 2d 124.

(C. C. A. 8); Clarke v. United States, 132 F. 2d 538 (C. C. A. 9), cer-

tiecust aaaden’ .318 U. S. 789; Blue v. United States, 138 F. 2d 351 (C. C. A.

6), certiorari denied, U. 8S. 736, 737, rehearing denied, 322 U: S. 771; -

United States v. ct F. 2d 82 (C: C. A. 2), certiorari denied, 323

U. 8.799; Richar United States, 150 F. 24.58 (C. C. A. 6).

"16 Similar threads of conscious knowledge, desire, plan, intent or direc-

tion and of the substantial relation of the use of the mails to the consum-

mation of the improper activities being conducted run through most of sad

the cases involving the use of the mails which are set forth in note 9, ante.

Thus, the action in United States v. Kenofskey was “deliberately caleulated”’

‘ to effeet the use of the mails which was essential to the consummation

of the fraud, 243 U. 8. 440, 443. The use of the mails was obviously neces-

sary in order to conduet the fraudulent business activities involved in

Preeman Vv. United States, 244 Fed. 1 (C. C. A. 7), certiorari denied, 245

U. 8. 654;. Butler v. United States, 53 F. 2d 800 (C. C. A. 10); Blue v.

United States, 138 F. 2d 351 (C. C. A. 6), certiorari denied, 322 U. S

16

the commission of the offense and hence were guilty as

principals by force of section 332 of the Criminal Code

(18 U. S, C. 550). This point was one basis for the decision

in ‘the’ Backun case. ‘See also Schrader v. United States,

94 F. 2d 926 (C. C. A. 8), as explained by La Page v. United

States, 146 F. 2d 536 (C. C. A. 8). That is not the case here,

for there was no unlawful act independent of that which

is sought to be charged to respondent.

_ There are several decisions by the lower federal courts,

but none by this Court, that the use of the mails or the chan-

nels of interstate commerce by banks in clearing checks is

‘‘caused’’ by persons who-previously negotiated them for

“ improper purposes or who were engaged in improper activ-

ities in connection with whidh the checks were previously

‘negotiated, .While causation is discussed in terms of nat-

ural and probable consequence and reasonably foreseeable -

. result in many of these decisions, most of them, like those

, just discussed, actually involve situations in which there

was a conscious knowledge, plan, intent, desire or direction

that the mails or the means of interstate commerce would

be employed and in which that employment was either essen-

tial or closely related to the execution of the improper

activities in which the defendants were engaged."* As

736, 737, rehearing denied 322 U. 8-771; and United States v. Cohen,

145 F. 2d 82 (C. C. A. 2), certiorari denied, 323 U. S. 799. The defendants

in Grant v. United States, 268 Fed. 443 (C. C. A. 6), certiorari denied,

. 256 U. 8. 700; Corbett v. United States, 89 F. 2d 124 (C. C. A. 8); and

Richardson v. United States, 150 F. 2d 58 (C. C. A. 6), gave direetions

‘which naturally lead to the use of the mails. And, the defendants in

Smith v. United States, 61 F. 2d 681 (C. C. A. 5), certiorari denied, 288

U. 8. 608, and Clarke v. United States, 132 F. 2d 538: (C. C. A. 9), cer-

tiorari denied, 318 U. S. 789, actually knew of, and Pay ‘aequieseed

~ in, the ase of the mails. :

11 Thus, Spear v. United States, 246 Fed: 250 (C. C. A. 8), certiorari

denied, 246 U. 8. 667; Savage v. United States, 270 Fed. 14 (C. C. A. 8),

certiorari denied, 257 U. S. 642; Tincher v. United States, 11 F. 2d 18

(C. C. A, 4), certiorari denied, 271 U. 8S. 664; Goodman v. United States,

97 F. 2d 197 (C. C. A. 3), certiorari dismissed, 305 U. 8S. .578; Hart ‘v.

United States, 112 F. 2d 128 (C. C. A. 5), certiorari denied, 311 U. S. 684;

wake, nk se ee

AZ

previously stated, that is not the situation here, and accord-

‘ingly it should maith? rp that respondent ‘‘caused’’ the

interstate transportation of the checks, which was an inci-

dental result and not an integral part of his alleged activi-

ties. ‘See opinion below (R. 21-25) ; United States v. Wood,

58 F. Supp. 451 (N. D. W. Va.); United States v. Hopper,

63 F. Supp. 612 (D. Ore.) ; United States v. Flores, 66 F.

‘Supp. 880 (Dist. Ct. Virgin Islands, Div. St. Thomas and

St. John) ; Spillers v. United States, 47 F. 2d 893 (C. C. A.

5); Stapp v. United States, 120 P. 2d 898, 899 (C.C.A.5).

The broad construction of ‘‘cause’’ which the Govern-

ment is forced by the instant cireumstances to urge not only

finds little actual support in judicial precedent, but in addi-_

tion would extend the statute beyond its purpose and would

produce absurd and unjust results. For those reasons it

should not be adopted. The axiom that criminal statutes

should be narrowly or strictly construed, of course, does

‘not mean that the words employed are to be given their”

narrowest possible meaning or that the evident meaning

and purpose of legislation is to be distorted or nullified.

and Harv's v. United States, 140 F. 2d 567 (C. C. A. 4), all involved

checks deposited or presented by defendants for collection, and the use of

some means of transmission was obviously essential to the consummation

of the plans of the defendants. United States v. Lowe, 115 F. 2d 596

(C. C. A. 7), certiorari denied, 311 U. S. 717; Guardalibini v. United States,

128 F. 2d 984 (C. C. A. 5); United States v. Feldman, 136 F. 2d 394

(C. C. A. 2), affirmed on a different point, 323 U. S. 487, rehearing denied,

323 U. 8. 811; and United States v. Citrin, 58 F. Supp. 766 (S. D. N. Y.),

all involved eheck kiting schemes which are entirely dependent upon the

blank clearance system and its attendant delays for success. In Shea v.

United States, 251 Fed, 440 (C. C. A. 6), certiorari denied, 248 U. 5. 581,

one of the defendants suggested that the dupe “send” a check so that the

illieit gain could be secured.

Decker v. United States, 140 F. 2d 378 (C. C. A. 4), certiorari denied,

321 U.S. 792, involved a continuing scheme to defrand.

Clarke v. Sanford, 156 F. 2d 115.(C. C. A. 5), pending on a petition

for a writ of certiorari, No. 397 at the present Term, and Tolle v. Sanford,

58 F. Supp. 695 (N. D. Ga.), both of which involve the application of

the instant statute to cireumstances substantially similar to those involved

in this ease, are to the contrary.

18

See United States v. Gaskin, 320 U. 8. 527, 529-530; Singer

v. United States, 323 U. S. 338, 341-342... It does mean, how-.

ever, that the language used must be taken in a reasonable

sense which does not work manifest Anjustice (Baender

v. Barnett, 255 U. S. 224), and that the offense must be

stated with appropriate definiteness which should not be

judicially enlarged, Pierce v. United States, 314 U. S. 306.

- The latter is particularly true with respect to federal crim-

inal statutes, such as the instant. one, which supplement

state law, because the administration of criminal justice

rests primarily with the states and because a prosecution |

for violation of the law of a state does not bar on the

ground of double jeopardy a prosecution for violation of |

a federal statute arising out of the same circumstances.

ms Jerome v. United States, 318 U. S. 101, 104-105. And,

this Court has emphasized that broad statutory language

must be construed consonantly with, rather than independ-

entiy of, the legislative purpose, especially when absurd or

unjust results would otherwise occur. See Chatwin v. United

States, 326 U. S. 455, 464-465; United States v. Carbone,

66 S. Ct. 734, 736, 738 (No. 474, O. T. mesa Sorrells v.

United States, 287 U.S. 435. _

Since the statutory language here involved: are ‘*be

read and applied -in light of the evils which gave rise to the

statute and the aims which the proponents. sought to

-achieve”’ (United States v. Carbone, supra, at p. 736), it is .

necessary to consider those evils and aims as revealed by

the background and legislative ‘history of the National.

Stolen Property Act. As the title of the Act-indicates (48.

Stat. 794), it was adopted to extend generally the provi-

sions of the National Motor Vehicle .Theft Act to other

‘stolen property, and the evils which prompted its enactment

were the same as those which led to its predecessor,'? namely,

"12 See Brooks v. United States, 267 U. 8. 432, 438-439.

19

the alarming and widespread use which criminals were

| making of the: modern facilities of interstate and foreign

commerce to carry out their illegal activities and to cir- |

cumvent effective prosecution by state authorities.” There

is nothing in the legislative history of the 1939 amendment,

which inter alia brought spurious securities and counterfeit- —

ing tools within section 3 of the Act (see pp. 3-4, ante), to

indicate that Congress had any different evil in mind.”

In the light of that background and that history it is believed

that the purpose of Congress in enacting the Act and the

‘amendment of 1939 was to punish those who used or brought

about the use of interstate transportation as an integral

part of carrying out’their illegal activities, and, conversely,

that Cengress did not intend to reach illegal activities, such

as those in which respondent is claimed to have engaged,

which are essentially local in character and incidentally

result in interstate transportation which is neither essential

nor substantially related to the carrying’ out of those activi-

ties. There is nothing in the legislative history of the stat-

ute indicating that state authorities were unable to deal

; effectively with persons who uttered forged checks within

13 That was stated by Senator Ashurst, the spons:t of the Aet in the 3

Senate, as follows (78 Cong. Ree. 6981) : ae

“Gangsters who now convey stolen property, except vehicles, across

the State line, with that immemoria! gesture of derision, thumb their

nose at the officers. This bill extends the provisions of the National

Motor. Vehicle Theft Ad, to other stolen ind deseribed in the

dill.”

See also H.° Rep. 1462 ‘ak 8S. Rep. 538, 73d Cong., 2d sess. Those

- reports sketch the history of previous legislative attempts to deal with the

problem. Hearings which were held on one of those attempts (H. R. 10287,

70th Cong., 1st sess.) stressed the difficulties confronting state officials

in effectively proseeuting criminals operating across state lines, and par-

ticularly the diffieulty of securing witnesses (see Hearings on H. R. 10287,

vol. 491 H. Comm. Hearings). That particular difficulty is not present .

in this case.

See also Husten v. United States, 95 F. 2d 168 (C. C. A. 8).

14 See H. Rep. 422 and S. Rep. 674, 76th ‘Cong., lst sess.

a

ord

° 20

their jurisdiction even though such checks were drawn on

out-of-state banks, and, likewise, there is no indication that

Congress intended to assist the states in dealing with such

persons. Indeed, the undesirability of covering essentially

local offenses was pointed out when the 1939 amendment

_ was discussed in the Senate.” There would thus appear to

be no more warrant for comprehending the alleged activities

of respondent within the statute because of the incidental

interstate transportation of the checks than there was for

_holding that the broad-sweep of the language of the Federal

Kidnapping Act (18 U. S. C. 408a), which like the National

Stolen Property Act was part of the Congressional program

to assist the states in dealing with the interstate ramifica-

tions of crime, applied to ‘‘general transgressions of moral-

ity involving the crossing of state lines’. See Chatwin.

v. United States, 326 U. 8. 455, 464-465. Moreover, to do.

that would, | have the absurd result of putting the federal

courts in tlie police ovart pasiness when there is no indica-

15 The selbst significant. cilions occurred between Senator O’Ma-

honey, the sponsor of the bill in the Senate, and Senator King, when the

latter requested an explanation of the.bill (84 Cong. Rec. 9411-9412) :

_Mr. U’Mahoney: Mr. President, this bill eame from the Judiciary Com-

mittee with a unanimous report. The National Stolen Property Act is

sought to be amended by this measure, which originated in the House

_ and has the support of the Department of Justice, so ag to extend its

provisions to embezzled property as well as to counterfeit securities. The

_ Senate committee amended the bill to include the materials with which

. counterfeiting is carried on. I am sure the bill is thoroughly meritorious,

ar? shouldbe passed.

' Mr. King: Mr. President, will the Senator yield?

Mr. O’Mahoney : Certainly.

Mr. King: The Senator will recall that a short time ago we passed an

act under the terms of which larceny, when the transportation was from

one jurisdiction to another, was made a Federal offense. I was opposed

to the bili, and am glad to know that the President vetoed it. This bill |

does not go so far as to make larceny, or other offenses which are purely

‘intrastate, interstate in character, subjecting the offenders to Federal

. jurisdiction.

Mr. O’Mahoney: “The pending bill is not of thie character of the measure

to which the Senator is referring. The bill deals with the transportation

@-«

21

tion that the states are unable to deal effectively’ with such .

activities, and’ would have the unjust: result of subjecting

offenders to heavy double punishment for what is in essence

a single, local offense.. See United States v. Wood, 58 F.

Supp. 451 (N. D. W. Va.) ; United States 'v. Hopper, 63 F.

Supp. 612-(D. Ore.) ; United States v. Flores, 66 F. Supp.

880 (Dist. Ct. Virgin Islands, Div. St. Thomas and St.

John).* That should not be done without a clear Congres-_

sional mandate. See Chatwin v. United States, supra;

Jerome v. United States, 318 U.S. 101, 104-105. Since such

a mandate is lacking here, it should not be said that respond-

ent ‘‘caused’’, within the meaning of the statute, the inter-

- state transportation which it is assumed occurred when the

_ banks in Jackson forwarded the checks to the out-of-state

banks on which, they were drawn.

B. Resnondend did not ‘‘with fraudulent intent’’ *‘cause’”’

"the interstate transportation of the checks :

If, despite the foregoing, this Court believes that scale

ent ‘‘caused’’ the interstate transportation of the checks,

we submit that he did not ‘‘cause’’ that transportation with

. ‘fraudulent intent’’ as required by the statute. The basis

“of sue property in interstate ecommeree, a character of offense whieh can-

not be handled except in this manner.

Mr. King: With that understanding, I shall not object. However, I

look with much apprehension upon the constant encroachment by- the

Federal Government and its assertion of jurisdiction over matters which, -

under our form of — belong especially, atts and solely

to the States. ;

Mr. O’Mahoney: Let me give the Senator an instance of whet i is needed

under the present situation. The stock certificates of the New York Central

. Railroad were counterfeited in the City of Chicago, and were sold through-

out the West, indeed, as a matter of fact, throughout the country. This

bill would make the transportation of counterfeit securities of an interstate

corporation a Federal offense. It is a whdlly harmonious provision.

- ‘16 That is the situation bere. Respondent is now serving in a Michigan

prison a state convietion which was based op the tranenetions involved, in

this case. % : i

a

e- for our contention i is that the provisions of the 1939 amend-

~ ment to the statute which cover spurious securities are part

materia with the mail f raud statute (Criminal Code: § 215,. 18 °

“US. C. 338). nd that on the basis of the construction of tlie

mail fraud statute in Kann v. United States, 323 U. S. 88, and

Dyhre v. rat hopee 106 F. 2d 286 (€. C. A; 10), the asserted.

activities of*

ute. This contention is /supported by the opinion below.

(R. 21- 25) afd by United States v. Wood, 58 F. Supp. 451 .

(N. D.'W. Va,) ; United States v. Hopper, 63.F. Supp. 612.

(D. Ore.) ; and United States v. Flores, 66 F. Supp. 8st)

(Dist. Ct. Vi rein Islands, Div. St. Thomas and St. John).

To the contrary are Clarke v. Sanford, 156 F. 2d 115 (C. C. 3

_ Awd), pendipg on petition for a writ of*certiorari, No, 397°

. at the present Term, and Tolle v: steady Oh 58 ¥. Suen 695

(N. D. Ga. ) aig ; 14

It is true that the pertinent language of! the two statutes

differs,!’ but! the difference seems immaterial, as the court.

below said (R. 25), when the similarity of plan and purpose |

of the statutea is considered. They appear to be the only’

- offenses et the postal’ service and against foreign and

‘ interstate cofamerce which are contained in Chapters 8 and

9 of Title 18 of the United States Code which depend upon

the element of fraud for their operation. There is rio per-

suasive or pace reason for supposing that veneeese meant

eee ee

17 The a language of the mail fraud ‘ack is:

“Whoever, having devised Bd intending to| devise any scheme or

artifice to defrand, * °- shall, for the| purpose of executing:

such scheme or illen or attempting 80 to do, place or cause to be

placed, any letter * * °* in any post offieed *-* *.”

The perti.ent mngenge of the National Stolen — ire Act (see pp.

2-4, ante) is:

e Pe caeneid with sue gs . fraudulent lehad shall trans-

port or cause to be transported in interstate or foreign commerce

any falsely made, forged, altered, or counterfeited securities, knowing |

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

e ° it, ” :

| ‘ .

espondent donot contravene the instant. wat

.

EMSS CALERA EONS ORT Col DRS ES NI POSE SSS 8 Ore Pin nek eee L 2

y :

Oe

ar: |

to be move’ solicitous in pibtection the Sfininnels of inter-

state trayisportation against becoming avenues of, frand

: than it has been of the mails.’ 7 a

The wit of the offense under the mail fraud statute is

thd use or-the causing of the use of tlie mails for the pur-

“pose of executing a f raudulent scheme. Similarly, the gist

of:the offense under the spurious securities ‘provisions of

. the “1939 amendment: of the instant statute is not, contrary

to the —— of the Government and the holdings in

.Clarke-v. Sanford and Tolle v. Sanford, supra, the interstate

transportation or causing of the interstate: transportation

_ of khown spurious sécurities ; there must be in addition a

. fraudulent intent. The only sound construction of that

requirement, is that it méans that the interstate transporta-

tion must be for the purpose of. executing a fraudulent

scheme, which is the requirement of the mail fraud statute

with respect to using en mails. That, is so because the

effect of any other construction is to read the requirement

of .fraudulént intent out of the statute.

It is true that spurious securities are not legitimate arti-

cles of comimerce, and Congress might have excluded them

' from the channels of interstate commerce because of théir _

spurious character by forbidding the transportation of them

‘with knowledge of their character, as Congresshas done -

with respect to articles which are deemed injurious to the

public health," or the public morals,’ or which are othe ise

tainted with an aura af Hegnaaty.” The fact that Cong ress

s 4

1S E.g., the ‘Pure Food eis Drug Act of June 20, 1906, ¢.°3915, 34 Stat.

768. See ‘Hipolite Egg Co. v. United States, 220 U.S. 45.

1 Kig., the Act of March 2, 1895, e. 191, 28 Stat. 963, for the su prés-

_ sion of the lottery traffie—see Champion v. Ames, 188 U: S. 321° —, and

the White Slave Traffic Aet of June 25, 1910,‘ ¢.- 395, 36 Stat. 825 (18

U. 8. C. 397-404)—see. Hoke v. United States, 227 U. S. 308.

20 E.g., the National Motor Vehicle Theft Act (18- U. 8. C. 408), see

Brooks v. United. States, 267 U. 8.1432; and, the stolen property provisions 7

of seetion 3 of the National Stolen Property Act.

\ .

‘indicates that Congress was not ¢

Oy tes

erned with preventing

the interstate. transportation of spurious: securities with

did not do that i in the instant “af provisions sufficiently

_ knowledge of their charaeter. Congress was concerned.

rather with preventing the effectuation of fraud through -

—* the interstate transportation of spurious securitiés; other- .

wise the requirement of fraudulent intent is. superfluous and

meaningless. In other words, the instant statutory provi-

sions do not purport to reach spurious’ securities, the inter-

state transportation of them, or fraud-in connection with ‘

them generally; consistently with the legislative purpose

(see ante, pp 18- 21), those provisions cover the interstate

; transportation ot spurious securities as an integral part of _

executing a fraudulent scheme,. leaving other situations

to be dealt with by ‘appropriate state law. Cf. Kann v.

_ United States, 323 U.S. 88, 95. Like the mail fraud statute, . —

the instant provisions of the 1939 amendment are aimed not.

at ie things employed (mailable matter i in the one case and

spurious securities: in the other) or the transmission’ of

them (through the mails, and by interstate transportation)

but at the transmission of them in the proinotion of fraud.

Construing the statute as becoming operative only when:

| ‘interstate transportation of spurious securities is in further: —

ance ‘of a fraudulent scheme does not unduly restrict the

statute #! but instead makes it consonant with the legislative

purpose, which, as previously discussed (ante, pp. 18-21)

‘was to punish interstate wremapenqtos which was an inte-

2" As so construed, the Statute inline the illustration posed by the Gov-

ernment (Brief, pp. 31-32) to support its argument to the contrary. B, in

‘that example, may be said, consistently with the interpretation of cause

for which we contend (ante, pp. 13-21), to have “caused” the interstate

trans}. sivation of the spurious security, and since he intended to utter it,

the’ interstate transportation was for the purpose of executing a scheme

to defraud. Hence he is guilty of a violation of’the statute. A, who know-

ingly makes that violation. possible, is at the least.an sider and abetter

and hence liable as a — under section 332 of the Criminal Code

(18 U. 8. C650).

{

|

ss ce *

-. gral part of eviminal activity. in this instance; ‘trond: And,

it would eliminate the absurd and ‘unjust results which

are pointed out at pp. 20-21, ante,'of providing federal pun-

' ishnient for essentially local offenses with which the states

are competent to deal,

The alleged activities of respondent would not support a

conviction under: the mail fraud statute, if the means

— by the Jackson banks to forward the checks had

‘ been the mails. Kann v: United States, 323 U.S. 88; Dyhre

v. Hudlspeth, 106 F. 2d 286 (C. C. Ay’ 10). Since, for the

reasons stated, the instant statutory provisions are pari

_ materia with the mail fraud statute, it follows that respo

ent has not violated them. See opinion below (R. 21- 25) ;

United States v. Wood, 58 F. Supp. 451 (N. D. W. Va.);

United States. v. Hopper, 63 F. Supp. 612 (D. Ore.);

United States v. Flores, 66 F. Supp. 880 (Dist. Ct. Virgin

Islands, Div. St. Thomas and St. John). Here, as in the

Kann and Dyhre cases, the asserted fraudulent scheme was

complete when respondent cashed the checks and received -

the money which was his objective ; the persons who cashed —

the checks became holders in due course and the owners.of

them;*? and the subsequent interstate transportation of

the checks by them or by takers from them was not in fur-

therance of the asserted fraudulent scheme. The invalidity

of the checks is immaterial. Dyhre v. Hudspeth, United :.

. States v. Wood, United States v. Hopper, United States v.

Flores, supra; opinion below (R. 21-25). Accordingly,

‘respondent did not ‘‘with fraudulent intent’’ *‘cause’’ the

- interstate transportation of the checks within the meaning

of the statute. 2) p

yy : :

- 22 See Michigan Compiled Laws of 1929, § 930T; American Surety Co..

v. Savings Bank, 242 Mich. 581.

ee

Part I] ¢

Respondent Is In Any Event Eatied to A Mow Tri

Introduction

The preceding part of this argument has been concerned

with the question decided below and raised by the petition

for a writ of certiorari. If that question is resolved by this

_. Court favorably to respondent, the mafter is, of course, at

anend. If that question is not so resolved, then other ques-

tions, relating chiefly to the admission of certain testimony

and to the sufficiency of the Government’s evidence, must be

decided before respondent’s conviction can be finally upheld.

The purpose of this Part II is to urge this Court, if it should

resolve that question adversely to respondent, to consider

those other questions and on the basis thereof grant a new |

* trial to respondent, instead of remanding the cause to the

Circuit Court of Appeals for further proceedings. ;

_ The grounds justifying a new trial, @ither of which is .

sufficient, are that reversible error was committed by the

- admission of certain hearsay testimony and ‘that the evi-

‘ dence of the ’Government is insufficient to sustain the con-

viction. Those grounds were raised in the court below (R.

14) but were not passed on there because that was unneces-

_sary (R. 23). Obviously, they are not presented by the

- Government's petition for a writ of certiorari.: We realize

that this Court does not consider matters, such as thgse

, grounds, which are not passed on below or presented by the

petition for a writ of certiorari, except in exceptional cases

-® where the ends of justice are served by so doing, and then

only in cases coming from the federal courts. See gen-

erally Robertson and Kirkham, ‘Jurisdiction of the Su-

preme Court of the United States,’’ § 389. We, the -efore,

make our request that this Court grant a new trial if the

3

_one ‘‘A. J. Davis, Commissioner,

_ respondent’s objection, was based on reports prepared by

27

judgment below is reversed, because we believe that this

case is an exceptional case of that nature which fulfills those

requirements. Respondent is now confined in a Michigan

state prison, is without funds and is unable to employ coun-

sel of his own choice. The entire case is here and this Court

has full power to decide all questions involved in it. The

validity of the’ grounds which we assert are easily demon-—

trable and clearly warrant a new trial. Accordingly, we turn

to a consideration of those grounds. 3 |

A. The Admission of Hearsay Testimony Constituted

Reversible Error @

The attend of an agent of the Federal Bureau of —

Investigation to the effect that the United States Depart-

ment of Commerce had no agency ‘‘U. S. E. F. C. 14A”’ or

’’ which was taken over

his department of an investigation which he did not per-:

sonally conduct (R. 19-20). That testimony was clearly

hearsay, and its admission constituted reversible error.

See United States v. Campanaro, 63 F. Supp. 811 -(E. D.

Pa.), in which it was held that a new trial was necessary

because of the admission of hearsay testimony of a Secret

Service agent as to what ‘‘our records show.’’ Seé also

Hopt v. Utah, 110 U. 8. 574; Cook v. United States, 138 U. 8.

157; Donnelly v. United States, 228 U. S. 243, ere ;

denied, 228 U.S. 708.

Likewise the testimony of a Jackson police officer that he

had learned through police channels of the arrest of re-

spondent, which was also taken over respondent’s objec-

tion (R..19), was inadmissible hearsay. In addition it was —

improper because it impugned respondent’s character

although respondent did not put his character in issue. - See

Wigmore on Evidence, 3d Ed., vol. 1, § 57.

28

--The admission ofthe hearsay testimony of those two

officers cannot be characterized as ‘‘mere harmless error,”’

not warranting a new trial, within the meaning of Section .

269 of the Judicial Code (28 U. 8. C. 391). At best the

Government’s case was not a strong one—indeed it is

- earnestly believed it is not sufficient to sustain the convic-

tion—and it cannot be said that the admission of that testi-

mony was not prejudicial. See Kotteakos v. United States,

66 Sup. Ct. 1239 (Nos. 457, 458, O. T. 1945) ; Bihn v. United

States, 66 Sup. Ct. 1172 (No. 675, O. T. 1945); Bollenbach v.

United States, 326 U. S. 607; United States v. Campanaro,

supra... . | \ ce s.

®

B. The Evidence Presented by the Seine Nanna Is *

Insufficient to Sustain the Conviction

A new trial is also warranted because of the es Mildienes

of the Government’ 8 evidence. The Government (Brief, p.

_. 18) doés not seek to sustain the conviction on Count Three

of the indictment, which covered the check apparently

signed by ree pondent in his own name as -naker, and cor--

rectly so since such a check is not a ‘*faisely. made’’ or

“*forged’’ document, within the general law, even though it

_ may be an \ invalid one.” Accordingly, this discussion of

23 See annotation, 41 A.'L. R. 229, where many of the relevant cases are

‘diseussed. See also United States v. Wentworth, 11° Fed. 52 (D. N. H.);

In re Tully, 20 Fed. 812, 815 (8. D. N. Y.); United States v. Moore, 60

Fed. 738 (N. D. N. Y.); De Rose v. People, 64 Colo. 332 (1918); Goucher

Vv. State, 113 Nebr. 352, 354-355 (1925); State 'v. Lamb, 198 ‘N. C. 423

(1930). Congress has apparently realized the legal distinction between a

“false” and a “falsely made” document i in previous legislation. See United

States v. Staats, 8 How. 41.

There are cases to the contrary—for example United States v. Tom- —

maselle, 64 F. Supp- 467 ~- . N. Y.)—but they represent the minority

view. 4

This question bil not appear to have been decided under the instant

statute. The checks involved in United States v.. Wood, 58 F. Supp. 451

(N. D. W. Va.), United States v. Hopper, 63 F. Supp. 612 (D. Ore.),

and United. States v. Flores, 66 F. Supp. 880 (Dist. Ct. — Islands,

4 :

®

99

the sufficiency of the evidence is addressed only to the

offenses charged in.Céunts One and Two of the.indictment

which relate to the checks signed as maker by ‘‘U.S. E. F. C.

14A, A. J. Davis, Commissioner.”’

.As previously stated (ante, pp. 11-12), two essential ele-

ments of the offense defined by the spurious securities pro-

visions of section 3 of the National Stolen Property Act are

(1) fraudulent intent and (2) knowledge of the spurious

character of the securities. The°Government presented no

direct evidence of the existence of either of those elements.

None was necessary, since intent and knowledge, on which

direct evidence is seldom available, may be proved by cir-

cumstantial evidence. See Gates v. United States, 122 F:~

2d 571, 575 (C. C. A. 10), certiorari denied, 314 U. S. 698;

Marshall v, United States, 146 F. 2d 618, 620 (C. C. A. 9);

Rice v. United States, 149 F. 2d 601, 603 (C. C, A. 10).

However, a criminal conviction cannot stand on the basis of

circumstantial evidence unless that evidence is not only

consistent with guilt but also inconsistent with every rea-

sonable hypothesis of innocence. See Thompson v. United

_ States, 145 F. 2d 826 (C. C. A. 5), certiorari denied, 324

U. S. 861; Crain v. United States, 148 2d 615, 617

—(C. @. A. 5); United States v. Laffman, 152 F. (2d) 393

(C. C. A. 3). The circumstantial evidence presented by the

Government on the issues of fraudulent intent and knowl-

‘edge of the spurious nature of the two checks does not meet

that standard. | ;

Taking the Government’s evidence with respect to those

issues most favorably to the Government, as must be done

Div. St. mms and St. John), were drawn in the name of the defendants, |

but the question of whether they were “falsely made” was not discussed,

the statute being held uO pplieable on other grounds (see ante,-pp. 17 and

22. It is not stated in Clarke v. Sanford, 156 F. 24.115 (C. C. A. 5),

pending on petition for-a writ of certiorari, No. 397 at the present Term,

and Yolle v- Sanford, 58 F. Supp. 695 (N. D. Ga.), whether the age

inbred wore madi te\the name of tie defeatante or & the nane of

another.

30

when its sufficiency is challenged (see Glasser v. United

States, 315 U. S.-60, 80), it discloses only that (1) respond-

ent negotiated two identically drawn checks, made in the

name of another, one of which was represented to have been

received in the course of\his business, and both of which

were dishonored by the drawee bank because the purported

. maker had no account, and (2) an investigation disclosed

_ that the United States Department of Commerce had no

agency or agent bearing the name of the purported maker—

_ (the testimony based on that investigation was inadmissible

hearsay as previously shown, ante, pp. 27-28). That is not

_ enough to support an inference that respondent passed

those two checks with knowledge that they were spurious

' and with fraudulent intent. The fact that a person passed a

forged check or.counterfeit money does not prove or justify

an inférence that he knew its spurious character or that he

intended to defraud; something more than the naked act

of passing must he shown. See United States v. Ruffino, 67

F. 2d 440 (C. C. A. 2); Price v. United States, 70 F. 28

467 (C. C. A. 4); People +. Cohen, 343 Tll. 437 (1931); Peo-

ple v. Chronister, 279 Ill. 617 (1942) ; Cook v. State, 126 Tex.

Cr. 454 (1934); State v. Kozukonis, 46 A. 2d 865, 869

(R. L., 1946). That something more is lacking here. Thus,

there was no attempt to identify respondent’s handwriting

with that of the checks im question, or to show that respond-

ent had engaged in any similar activities, or to prove the

numerous aliases set forth in the indictment (R. 2-4). This

deficiency in the Government’s proof cannot be remedied by

drawing an inference of guilty knowledge or intent from

respondent’s failure to take the stand and explain how he

acquired the two checks. The Act of March 16,1878, ¢. 37,

20 Stat. 30 (28 U. 8. C. 632) forbids that. See Bruno v.

United States, 308 U. 8. 287; Bradford v. United States, 129

F. 2d 274, 278, 120 F. 2d 630 (C. C..A. 5), certiorari

denied, 317.U. 8S. 683.

31

Respondent is therefore entitled to a new trial because the

evidence of the Government is not sufficient to prove that he

had the requisite knowledge and fraudulent intent.

Conclusion *

For the reasons stated in Part I of the argument, the

judgment below should be affirmed. In the event, however,

that this Court should decide to reverse the judgment below,

this Court should at the same time grant a new trial, with-

out remanding the cause.to the Circuit Court of Appeals,

for further proceedings, for the reasons stated in Part II.

of the argument. ]

Respectfully submitted,

-Joun H. Pickertxo,

Counsel for Respondent

\ (7143)

'