Source: https://caselaw.findlaw.com/us-supreme-court/332/539.html
Timestamp: 2019-04-26 06:47:03+00:00

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[332 U.S. 539 , 541] Mr. Arthur B. Dunne, of San Francisco, Cal., for petitioners Blumenthal, Goldsmith, and Feigenbaum.
The four petitioners and Abel, another defendant, were convicted of conspiring to sell whiskey at prices above the ceiling set by regulations of the Office of Price Administration, in violation of the Emergency Price Control Act. 50 U.S.C.A.Appendix, 902(a), 904(a) and 925(b), 50 U.S.C.A. Appendix, 902(a), 904(a), 925(b). The charge was made pursuant to the general conspiracy statute, 37 of the Criminal Code, 18 U.S.C.A. 88. The convictions were affirmed by the Circuit Court of Appeals, one judge dissenting. 158 F.2d 883, dissenting opinion at 158 F.2d 762. Abel has not sought review in this Court. Certiorari was granted, 331 U.S. 799 , as to the other four defendants because we thought important questions were presented concerning the applicability of our recent decision in Kotteakos v. United States, 328 U.S. 750 .
We did not limit our grant of certiorari to that question, however, and on the record it is inseparably connected with the other issues, which relate to the admissibility and sufficiency of the evidence. Accordingly we have considered all of petitioners' contentions. The com- [332 U.S. 539 , 542] petent proof was clearly sufficient to show that each petitioner had aided in the whiskey's illegal sale and had conspired with others to do so. The only phase of the case meriting further attention is whether, because of a difference in the state of the proof affecting two groups of defendants, the proof, in variance from the indictment, shows that there was more than one conspiracy.
This whiskey was shipped by rail from the distiller or his agent to the Francisco Distributing Company, in San Francisco, in December, 1943. Goldsmith was the individual and sole owner of that business and held a wholesale liquor dealer's basic permit as required by federal law. Weiss, his former partner, was sales manager for the business. Feigenbaum operated the Sunset Drugstore in San Francisco. Blumenthal owned and operated the Sportorium, a sporting goods and pawn shop in the same city. Abel either owned or worked in a jewelry store in Vallejo, California. The evidence does not show that any of these last three was connected with Francisco in any way except that each had part in arranging sales and deliveries of portions of these two shipments to purchasers. These were tavern owners in San Francisco and near-by towns such as Vallejo, Santa Rosa, Livermore, Cottonwood and El Cerrito. Proof of the activities of Feigenbaum, Blumenthal and Abel was made largely by [332 U.S. 539 , 543] the testimony of the various tavernkeepers with whom they respectively dealt.
If further appeared that the cost of the whiskey to Francisco was $21. 97 a case,2 the wholesale ceiling price was $25.27, and Francisco received, by check of the purchasing tavernkeepers, $24.50 for each case sold. There was thus left to it a margin above cost of $2.53 on each case, out of which were to come storage charges, if any, and legitimate net profit.
Thus far no illegal act, transaction, intent or agreement appears. But by the testimony of purchasing tavernkeepers the Government proved that in connection with each sale the purchaser had paid to the selling intermediary, in addition to the $24.50 per case remitted [332 U.S. 539 , 544] by check to Francisco, an additional sum in cash amounting roughly to from $ 30 to $40 per case. Thus the actual cost to the retailer was from $55 to $ 65 per case.
In all instances, however, whether involving sales to San Francisco or to out-of-town dealers and whether through identified or unidentified selling intermediaries, the sales followed the general pattern described above. That is, once the understanding had been reached, the purchaser made out his check at the price of $24.50 per case, to the order of 'Francisco Distributing Co.,' at the direction of the selling intermediary, to whom the check was delivered; at the same time or later the purchaser [332 U.S. 539 , 545] also paid in cash to the intermediary the difference between the amount of the check and the agreed overceiling purchase price; then or later the purchaser received invoices in the name of Francisco for the number of cases of Old Mr. Boston Rocking Chair Whiskey bought showing only the legal price of $24.50 per case; and thereafter the purchaser received delivery of the whiskey from the warehouse company, by freight in the case of out-of-town buyers. Weiss gave the warehouse company instructions for shipments or local deliveries. Francisco collected the checks by endorsing and sending them through its bank for collection. Slight variations in detail of the pattern appear in some instances but they are insignificant for our purposes.
Later conferences held separately with Goldsmith and Weiss simply confirmed the substance of the first to the effect that Francisco was not the actual owner, but that Goldsmith and Weiss were acting for an unidentified person in handling the shipments in Francisco's name. 4 The identity of the owner was not established. But Goldsmith added the admission that he wrote most of the invoices.
Shortly after the trial began the court announced that it would save time and be fairer to all for the evidence to be received initially only as against the particular defendant or defendants to whom it appeared expressly related, reserving to the Government, however, the right to move for its admission as against any or all of the other defendants whenever in the Government's opinion [332 U.S. 539 , 547] sufficient facts had been introduced to show such defendants to have been connected with the conspiracy charged.
In the Kotteakos case, supra, the Government conceded that, under the charge of a single, all-inclusive conspiracy, the proof showed distinct and separate ones connected only by the fact that one man, Brown, was a participant and key figure in all. But it urged that [332 U.S. 539 , 548] under the ruling in Berger v. United States, 295 U.S. 78 , the variance was at the most harmless error, a contention we rejected. Here the situation is the reverse. The Government has conceded, in effect, that prejudice has resulted if more than one conspiracy has been proved. 5 But it insists that the evidence establishes a single conspiracy and no more, an issue not presented or determined in the Kotteakos case.
The Government does not maintain that Francisco, or Goldsmith (or therefore Weiss), was the owner of the whiskey. It accepts the view that another or others unidentified, were the real owner or owners and that Francisco (and thus Goldsmith and Weiss) was merely a channel for distributing the liquor and giving that unlawful process a legal facade. Indeed the 'innocent appearing actions' of Weiss and Goldsmith in their use of Francisco, the brief asserts, 'were the crux of the conspiracy * * * since the color of legitimacy was an essential part of the plan to dispose of the liquor to tavern owners at over-ceiling prices.'6 [332 U.S. 539 , 549] The evidence including the admissions was clearly sufficient to establish that the owner devised a plan which contemplated the entire chain of events from the original purchase in Francisco's name to the ultimate black market sales and deliveries. This includes the obvious inference that he made the arrangements for clearance through Francisco's books. Since Goldsmith and Weiss were the owner and sales manager respectively of Francisco and had active parts personally in carrying out those arrangements, there hardly can be any question that they knew the owner, had part in making the arrangements with him and, by virtue of those facts and their parts in facilitating the sales and deliveries to the tavernkeepers, knew also of his intention to resell the whiskey and of his plan for doing so in every material respect except that he intended to sell at over-ceiling prices.
The showing on that crucial question was entirely circumstantial. It was nonetheless substantial. Goldsmith and Weiss knew that there was a margin of only about 77õ between the legal price ceiling and the $24.50 per case they received by check in payment for the whiskey. 7 They knew that the invoices sent by Francisco to each purchaser gave no room for even that slender margin but [332 U.S. 539 , 550] represented only the owner's cost figure. They knew further that by using Francisco's name, services and facilities the owner was concealing his identity from the purchasers in the sales, making Francisco appear as the owner on the paper records; that sales were being made to numerous and widely scattered tavernkeepers; and that in every sale remittance was made to them uniformly not only by check, usually of the purchaser, but also in the exact amount of $24.50 per case.
The inference that the unknown owner giving away the liquor is scarcely conceivable. The most likely inferences to be drawn were two, namely, that the owner was selling for a legal margin of not more than 77õ or that he was selling at overceiling prices. The first inference is hardly tenable, especially in view of the prevailing and widespread shortage and demand, with accompanying black market activity, of which the most meticulous wholesale liquor dealer hardly could have been ignorant. The inference was not only justified, it was almost inescapable, that Goldsmith and Weiss knew of the owner's intent and purpose to sell above the lawful price, as well as most of the detail of his plan for doing so. With that knowledge their active aid toward executing his design made them co-conspirators with him, and he with them, toward accomplishing it.
The admissions alone disclosed the unknown owner's existence; that Goldsmith and Weiss were aci ng for him, not for themselves; received from the transactions, and divided equally, the $2 per case; and gave the use of [332 U.S. 539 , 551] Francisco's name to cover up the unknown owner's existence, identity and part in the scheme.
But the trial court's rulings, both upon admissibility9 and in the instructions,10 leave no room for doubt that the [332 U.S. 539 , 552] admissions were adequately excluded, insofar as this could be done in a joint trial, from consideration on the question of their guilt. The rulings told the jury plainly to disregard the admissions entirely, in every phase of the case, in determining that question. 11 The [332 U.S. 539 , 553] direction was a total exclusion, not simply a partial one as the Government's argument seems to imply. 12 The court might have been more emphatic. But we cannot say its unambiguous direction was inadequate. Nor can we assume that the jury misunderstood or disobeyed it.
With the admissions thus entirely excluded, we think nevertheless that the remaining evidence was sufficient to show, in accordance with the charge, that the five defendants joined in a single conspiracy to sell the whiskey at over-ceiling prices in the guise of legal sales. We set forth in the margin the remaining evidence, in part, which justifies this conclusion both as to Goldsmith and Weiss13 and as to the other three defendants. 14 [332 U.S. 539 , 554] The main difference comes with the climination of the unknown owner from view, and Francisco's consequent appearance as both actual and legal owner. This changes the detail of the facade, but does not remove either the [332 U.S. 539 , 555] facade itself or the essence of the unlawful scheme. That still was to sell the whiskey illegally in the guise of legal sales,15 to the knowledge of each defendant. 16 The gist of the conspiracy lay not in who actually owned the [332 U.S. 539 , 556] whiskey, but in the agreement to sell it in this unlawful fashion, regardless of who might own it.
The law does not demand proof of so much. For it is most often true, especially in broad schemes calling for the aid of many persons, that after discovery of enough [332 U.S. 539 , 557] to show clearly the essence of the scheme and the identity of a number participating, the identity and the fact of participation of others remain undiscovered and undiscoverable. Secrecy and concealment are essential features of successful conspiracy. The more completely they are achieved, the more successful the crime. Hence the law rightly gives room for allowing the conviction of those discovered upon showing sufficiently the essential nature of the plan and their connections with it, without requiring evidence of knowledge of all its details or of the participation of others. 17 Otherwise the difficulties, not only of discovery, but of certainty in proof and of correlating proof with pleading would become insuperable, and conspirators would go free by their very ingenuity.
We think that in the special circumstances of this case the two agreements were merely step in the formation of the larger and ultimate more general conspiracy. In [332 U.S. 539 , 558] that view it would be a perversion of justice to regard the salesmen's ignorance of the unknown owner's participation as furnishing adequate ground for reversal of their convictions. Nor does anything in the Kotteakos decision require this. The scheme was in fact the same scheme; the salesmen knew or must have known that others unknown to them were sharing in so large a project; and it hardly can be sufficient to relieve them that they did not know, when they joined the scheme, who those people were or exactly the parts they were playing in carrying out the common design and object of all. By their separate agreements, if such they were, they became parties to the larger common plan, joined together by their knowledge of its essential features and broad scope, though not of its exact limits, and by their common single goal.
The case therefore is very different from the facts admitted to exist in the Kotteakos case. Apart from the much larger number of agreements there involved, no two of those agreements were tied together as stages in the formation of a large all-inclusive combination, all directed to achieving a single unlawful end or result. On the contrary each separate agreement had its own distinct, illegal end. Each loan was an end in itself, separate from all others, although all were alike in having similar illegal objects. Except for Brown, the common figure, no conspirator was interested in whether any loan except his own went through. And none aided in any way, by agreement or otherwise, in procuring another's loan. The conspiracies therefore were distinct and disconnected, not parts of a larger general scheme, both in the phase of agreement with Brown and also in the absence of any aid given to others as well as in specific object and result. There was no drawing of all together in a single, over-all, comprehensive plan. [332 U.S. 539 , 559] Here the contrary is true. All knew of and joined in the overriding scheme. All intended to aid the owner, whether Francisco or another, to sell the whiskey unlawfully, though the two groups of defendants differed on the proof in knowledge and belief concerning the owner's identity. All by reason of their knowledge of the plan's general scope, if not its exact limits, sought a common end, to aid in disposing of the whiskey. True, each salesman aided in selling only his part. But he knew the lot to be sold was larger and thus that he was aiding in a larger plan. He thus became a party to it and not merely to the integrating agreement with Weiss and Goldsmith.
[ Footnote 1 ] Of the more than 4,000 cases received by Francisco, proof concerning disposition at over-ceiling prices related to less than half, or some 1,500-plus cases.
[ Footnote 2 ] Consisting of $19.24 per case to the distiller, 81õ for freight, and $1.92 for state taxes.
[ Footnote 3 ] The witnesses identifying Feigenbaum testified they sought him out at the Sunset Drugstore in San Francisco and made the arrangements with him for their purchasers there. Similar testimony was given by those identifying Blumenthal with the arrangements taking place in the Sportorium.
[ Footnote 4 ] At an interview with Goldsmith 'early in September,' Goldsmith was asked 'who actually bought him the whiskey, who owned it.' In reply 'he said that Blumenthal brought it in, and when asked if he knew of his own knowledge, he said, 'No." He again stated that Francisco received $2 per case, of which he gave Weiss half.
[ Footnote 7 ] The $24.50 price was at the most 53õ above the actual cost of the whiskey, see note 2, plus the $2.00 fee paid Francisco for the use of its books. There is no evidence that the unknown owner received any portion of this 53õ margin. Since the record shows that Francisco was billed by the warehouse company for the storage of the liquor, the inference was fully justified that the 53õ margin was largely dissipated by the storage charges and other overhead costs attributable to the sale of the whiskey and that the remaining sum, if any, was retained by Francisco.
[ Footnote 8 ] Even if the evidence were sufficient with the admissions excluded, they were of such importance that if admitted improperly the jury might have drawn entirely different inferences from the whole evidence including them than from it without them.
[ Footnote 11 ] It is not entirely clear whether the words 'In that connection,' italicized in the last paragraph of note 10, refer only to the last or to both of the preceding sentences, in the specific context of the two paragraphs last quoted. But when those statements are taken in conjunction with the earlier ones and with the court's rulings on admissibility made in the jury's presence, we think the total effect of the instructions was to tell the jury plainly to disregard the admissions entirely in considering the guilt of Blumenthal, Feigenbaum and Abel.
This view, though apparently differing from the Government's, see note 12, is reinforced by the further instruction, immediately following the one last quoted in note 10, to the effect that admissions of a conspirator not made in execution of the common design are not evidence against any of the parties other than the one making them. The admissions here fell clearly in that category, some of them because made after termination of the conspiracy, others because they had no effect to forward its object. None were made in furtherance of the conspiracy's object. Cf. Fiswick v. united States, 329 U.S. 211 .
[ Footnote 12 ] Although we are not sure the argument goes so far, it seems to urge, see note 6 and text, that the admissions, as well as the other evidence expressly affecting only one or some of the defendants, were admissible and were received, not merely as against Weiss and Goldsmith on the whole case but also in part as against the other three, that is, to show even as to them the existence and illegal character of the scheme, though not to establish their connections with it. We do not read the record as showing this was the effect of the trial court's ruling.
[ Footnote 13 ] The evidence as to the unknown owner no longer being in the picture, the inference is almost irresistible that Francisco was the owner. On arrival of the whiskey, title was taken in Francisco's name, in which the shipping documents were made out; sight drafts for the two carloads were paid, at Goldsmith's direction, from Francisco's bank account; and the whiskey was stored and delivered by the warehouse company in accordance with Weiss' directions.
At a time when wholesale liquor distributors were hard put to supply even long-established customers, Francisco sold its liquor, through the medium of salesmen who had no previous connection with the firm and were not regularly engaged in the business of selling liquor, to various tavern owners who had not previously had dealings with Francisco. Moreover, the sales were billed at a price 77õ per case below the OPA ceiling, despite the fact that tavern owners and other retail distributors considered themselves fortunate to secure whiskey at the full ceiling price. Also of interest are tavern owner Figone's over-ceiling purchases, which followed the pattern of the other sales, except in the important respect that they were made at the Francisco office, but with a person Figone could not identify. See text supra following note 3.
The case would stand little better for Goldsmith and Weiss upon an inference that they sold to some other person, who in turn resold to the tavernkeepers through the salesmen. For then the 77õ legal margin would remain, now for the intervening purchaser, together with the use of Francisco's books and records to conceal his existence and part in the transactions and the allowable inferences from those facts.
[ Footnote 14 ] Acting almost simultaneously in early December before the first carload arrived in San Francisco, Blumenthal and Feigenbaum, as well as Abel and other unidentified salesmen, made it known that they could obtain whiskey for tavernkeepers.
There are compelling indications that these salesmen were kept informed of the status of the whiskey. Thus, on the 8th or 9th of December, Feigenbaum told one purchaser that the whiskey would arrive in San Francisco in 'about a week or ten days,' that it would come in by railroad, and that there would be 'a carload of it.' The first of the two carloads of liquor actually arrived on December 17. Similarly, on the 3d or 4th of December, Blumenthal told tavernkeeper Fingerhut that the whiskey would arrive in the latter part of the month. The whiskey did so arrive and the purchaser received delivery. Then, late in December, Fingerhut received a telephone call, which he said was from Blumenthal, asking whether he needed more whiskey. As a result, Fingerhut made an additional purchase on January 3 or 4, 1944. The second carload was received by the warehouse company on or about January 3d. In addition to being well informed as to the progress of the whiskey in its journey westward, the salesmen followed a singularly set pattern in making their respective sales. All knew and so told the prospective customer that he would receive Francisco's invoice for the whiskey at the same below-ceiling price, which invoice was of great importance because it enabled the tavernkeepers to comply with the record-keeping requirements imposed by the California law. See note 15. All made arrangements for the payment of the identical price of $24.50 per case to Francisco by check. All received the checks, which were delivered to Francisco and collected by it. Of some significance, in connection with the other evidence, is the testimony of tavernkeeper Reinburg that on two occasions, at Abel's direction, he drove Abel to San Francisco, dropped him at the Sportorium, Blumenthal's place of business, and picked him up there about a half hour later. The inference was justified that Blumenthal, Feigenbaum and the other salesmen were aware that their individual sales were part of a larger common enterprise, dependent on the carefully evolved arrangements to give the sales the guise of legitimacy, to dispose of a larger store of liquor. Where a salesman knew, as did Feigenbaum, that at least a carload of whiskey was involved, it was an entirely reasonable inference that he knew that other salesmen, paralleling his efforts, were making sales similar to his. On the basis of the evidence, the jury was well warranted in deciding that the facts dovetailed too neatly to be the result of mere chance.
[ Footnote 15 ] The evidence showed that some of the purchasers were unwilling to buy liquor without receiving a document to show purchase from a lawfully authorized source as reqi red by state law. With Francisco appearing as actual owner the scheme took on the aspect of one to sell its own whiskey illegally in the guise of lawful sales.
[ Footnote 16 ] Each salesman knew that he was receiving $30 to $40 above the ceiling; that Francisco was supplying the whiskey; that the elaborate arrangements were made not merely for his sales, but also for others, see note 14; and that he had to have the cash, as well as the check, before delivery from Francisco was completed.
The basis for imputing such knowledge to Goldsmith and Weiss becomes not so compelling as with the admissions included, but nevertheless remains adequate. However the case is viewed, apart from the admissions, they knew the margin of legal profit left, whether for themselves or for others, after deducting the $24.50 per case, was only 77õ. If they actually owned and sold the whiskey, why sell below the ceiling in the face of the shortage and demand, when selling costs including the salesmen's compensation still were to be paid? If they did not own or sell at the $24.50 figure, then why the checks and false invoices in that amount? The inference is justified that either they or someone else to their knowledge was receiving more than the lawful price.
[ Footnote 17 ] Marino v. United States, 9 Cir., 91 F.2d 691; Lefco v. United States, 3 Cir., 74 F.2d 66; Jezewski v. United States, 6 Cir., 13 F.2d 599; Allen v. United States, 6 Cir., 4 F.2d 688.
[ Footnote 18 ] These include the argument that petitioners were prosecuted under the wrong statute. Section 4(a) of the Emergency Price Control Act makes it unlawful, as a misdemeanor, 205(b), for any person to sell or deliver any commodity in violation of price regulations, 'or to offer, solicit, attempt, or agree to do any of the foregoing.' (Emphasis added.) Petitioners regard the prohibitory words 'or agree,' etc., as repeal by implication of the general conspiracy statute, 37 of the Criminal Code, insofar as otherwise it might apply to the acts forbidden by 4(a). There was no 'implied repeal.' Conviction under the general conspiracy statute requires more than mere agreement, namely, the commission of an overt act. See also Taub v. Bowles, Em.App., 149 F.2d 817; H.Rep. No. 827, 79th Cong., 1st Sess., 7, 8.

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