Opinion ID: 1476888
Heading Depth: 1
Heading Rank: 2

Heading: Stokley Transactions.

Text: The evidence also indicates that Judge Davis' actions in the Root cases were actually influenced by the expectation of gain or favors, pursuant to an agreement or understanding to that effect with Kaufman. After Kaufman received the first payment of $25,000, certain transactions took place between him, Davis and Davis' cousin, C. L. Stokley, which indicate that Davis was paid for his action in the Root cases. These transactions originated in February, 1935, shortly after the argument, but before the decision of the Root cases while Davis and Kaufman were in Florida. Stokley was a grower of citrus fruit and was threatened with the loss of certain property through foreclosure proceedings instituted by the Town of Mount Dora on account of an unpaid paving assessment of $29,000. Davis learned of this situation when he visited Stokley on his way to Miami, and again on his return trip to Philadephia. He promised Stokley to try to secure a loan for Stokley from a friend. After his return, Davis entered into active correspondence with Stokley and with the town authorities in respect to the title of the property, and an acceptance of a smaller sum in compromise of the assessment. The correspondence went on through the ensuing months, but although the town was pressing for payment, Davis did not make a firm offer of a loan until October 4, 1935, when he wired the town that $10,000, the sum which the town had agreed to accept, had been definitely promised. On October 24, 1935, two days after Kaufman had been paid by Universal, Davis arranged a meeting in his office at Trenton between Kaufman and Stokley, who then met for the first time. An agreement between them was drawn, under which Kaufman agreed to loan $10,000 to Stokley at 8 per cent. per annum, and Stokley agreed to make certain conveyances of property to Kaufman by which the loan would be amply secured. In November, 1935, Davis sent his law clerk to Mount Dora with Kaufman's certified check for $10,000, payable to the town. The check was delivered and deeds for the property were received and sent to Kaufman. During this period and thereafter until the Government investigation of Davis had begun, Davis showed great interest in the transaction and Kaufman no interest at all other than to enter into the agreement and advance the money. The financial condition of Judge Davis in 1935 and 1936 is pertinent to the issues in this case. Davis was insolvent at this time as the result of stock speculations which came to a disastrous end in the financial crash of 1929. He was a client of Samuel Ungerleider and Company, New York brokers, and in 1929 owed them $9,000 which has never been repaid. Morgan Kaufman also dealt in stocks with the Ungerleider firm. He and Davis and Samuel Ungerleider were friends. In 1941, in the course of the Grand Jury investigation of Davis, Kaufman testified that in 1929 he received a bill from the Ungerleider firm for either $9,000 or $14,000 on an account entitled J. Warren Davis, c/o Morgan S. Kaufman. In the instant proceeding Kaufman said that no such account ever existed and that his Grand Jury testimony was a mistake caused by nervousness. In the spring of 1937, Davis owed the banks $85,000. He believed that he had a malignant disease and was preparing to go to the hospital for an operation. In this emergency Samuel Ungerleider arranged a composition with the banks for the sum of $37,674.50, and advanced the money to put it into effect. Davis gave notes for the loan and assigned certain insurance policies on his life to Ungerleider. Ultimately Ungerleider recovered certain sums from the proceeds of the policies and from payments by Davis on the loan, leaving a balance of $17,000 which has never been repaid. Samuel Ungerleider was also helpful in the Stokley transactions. After the $10,000 loan from Kaufman to Stokley was effected, it was learned that Stokley was threatened with foreclosure of certain of his orange groves by reason of an obligation to the Eustis Company, and that he did not have sufficient funds to pay that obligation and also the taxes on the property conveyed to Kaufman. He needed $4,000 to settle the debt. Davis himself, insolvent at the time, borrowed the money from Ungerleider without security on March 12, 1936, and loaned it to Stokley at 8 per cent. per annum, and took certain deeds from Stokley as security. Davis never repaid the $4,000 to Ungerleider. Subsequently, Stokley made certain payments to Davis now to be described whereby we find that money due Kaufman on account of the $10,000 loan was paid to Davis. Davis did not keep accurate books of account, but his records show that Stokley paid him $200 on June 22, 1936, $200 on July 7, 1936, and $400 in February, 1937, which Davis testified were paid on account of the principal of the $4,000 loan. The evidence clearly shows, on the contrary, that these sums were payments on account of interest on the $10,000 loan from Kaufman to Stokley. These payments correspond in amount to overdue semi-annual payments of interest at 8 per cent. on $10,000, and could not have been made for interest on the $4,000 loan. Interest on that loan in the sum of $320 for the first year was paid by Stokley to Davis on February 9, 1937. Nor were the three sums mentioned payments of principal on the $4,000 loan as Davis testified, because in March and April, 1937, Stokley sent to Davis two checks of $500 each, marked as the first and second payments on the property which secured the $4,000 loan. That the payments in question were actually interest on the Kaufman loan, but paid to Davis, is corroborated by other circumstances. A statement prepared by Stokley's son showed a payment by Stokley to Davis on February 28, 1938 of interest in the sum of $400, the amount of one-half year's interest on the $10,000 loan; but a subsequent statement covering the same period prepared by Stokley for submission to the Grand Jury in the investigation of Davis in 1941 omitted this item altogether. Moreover, the stub of this check in the Stokley checkbook had been completely torn out and destroyed. The change in the statement and the destruction of the stub were obviously designed to conceal this payment to Davis. Significant also was the testimony of Kaufman given during the Davis investigation that in July, 1936, he received a $200 payment from Stokley on the $10,000 loan. This testimony was obviously designed to offset the evidence outlined above which tended to show that Kaufman was indifferent to the loan and that interest due him had been paid to Davis; but the Kaufman testimony was proved to be false for he went on to say that he deposited the check in a certain bank whose officers testified that no such deposit had in fact been made. In the instant proceeding, Kaufman testified that he had no recollection of the deposit of the check. Kaufman's indifference to the loan of $10,000 during the period 1935 to the beginning of 1939 is highly significant. He met Stokley at Davis' office and made the loan on October 24, 1935, on the heels of the payment of $25,000 by Universal. However, he manifested no interest in the loan until after the Davis investigation was begun in the spring of 1939. Ordinarily he was persistent in pressing defaulting creditors for payment, but in this instance he took no action although his agreement with Stokley called for annual payments of $2,500, and Stokley made no payment to him at all, principal or interest, until the summer of 1939. Kaufman testified that he wrote Stokley many times before 1939 but this testimony is incredible since none of the letters were produced and Kaufman's secretary, who kept his books, testified that she never heard of Stokley before he made a payment of $600 on the loan on June 18, 1939. Kaufman produced two letters from Stokley dated April 7, 1937 and May 11, 1938, respectively, which referred to the $10,000 loan and his difficulties in making payment. Unlike all the other letters produced by Kaufman, these were written in lead pencil and were not accompanied by envelopes in which they were mailed. Kaufman's real interest in the $10,000 loan did not begin until after the Government had started the Davis investigation and until after Kaufman and Stokley dined together at Davis' house in Trenton in the spring or early summer of 1939. Stokley paid the loan to Kaufman on December 29, 1943, in the sum of $12,000, at which time the interest was reduced to 4 per cent. The $4,000 loan, with interest at 8 per cent., was paid to Davis in full on March 25, 1943. There can be no reasonable doubt, especially when the timing of the loan is considered, coming as it did immediately after the receipt by Kaufman from Universal of the sum of $25,000, that the $10,000 loan was designed to provide an indirect means for the payment from Kaufman to Davis, and a false front behind which the true nature of the payment was concealed.