Court Opinion

ID: 8814442
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:14:01.187458+00
Date Added: 2024-06-11T17:04:24.937071
License: Public Domain

ROGERS, Circuit Judge.
The plaintiffs in error (hereinafter called defendants) have been convicted upon an indictment which in the first count charged them with having unlawfully conspired to apply to their own use certain property of the United States, and in the second count charged that they unlawfully conspired to sell, convey, and dispose of the same property. The indictment is based on the following provisions of the Criminal Code (Act March 4, 1909, c. 321, 35 S'tat. 1096 [Comp. St. §§ 10200, 10201]):
“Sec. 36. Whoever shall steal, embezzle, or knowingly apply to his own use, or unlawfully sell, convey, or dispose of, any ordnance, arms, ammunition, clothing, subsistence, stores, money, or other property of the United States, furnished or to be used for the military or naval service, shall be punished as prescribed in the preceding section.
“Sec. 37. If two or more persons conspire either to commit any offense against the United States, or to defraud the United States in any manner or for any purpose, and one or more of such parties do any act to effect the object of the conspiracy, each of the parties to such conspiracy shall be fined not more than ten thousand dollars, or imprisoned not more than two years, or both.”
The testimony shows, and defendants admit, that defendant Bor-man caused to be shipped to defendant Phillips about February 25, 1918, some 2,664 yards of linings which Phillips received and which had been furnished by the government to the defendant Borman to be used in making up leather jerkins under contracts which will be more fully referred to — which jerkins were intended to be used by the military forces of the United States. The 2,664 yards of linings were delivered at various times on the demand of Borman made upon the Quartermaster’s Department to be used under the contracts, and which were in excess of the amount of linings it was necessary for the government to furnish. It appears that defendant Phillips, acting under Borman’s direction, sold this extra lining material for the sum of about $6,000, checks for which were delivered to Borman, who in turn indorsed them over to an employé, who, at the direction of Borman, deposited the check to his (the employe’s) credit in his bank. The money was afterwards applied to the use of the defendants. And the defense relied upon is that at the time the defendants appropriated these linings to their own use the title was not in the United States.
*28It appears that two contracts were made between the United States and the Borman,Sheep Lined Coat Company,-one on September 27, 1917, and the other on October 20, 1917. Contract No. 1112 calls for the manufacture of 63,000 leather jerkins, and is on a blank printed in part and typewritten in part. It-has printed on it that it is “to be used for all purchases of supplies, clothing, wagons, harness, bacon, etc., which are purchased in bulk or large quantities to be delivered at depots or to purchasing quartermasters.” It contains a typewritten statement that the supplies are “to be manufactured from materials furnished in part by the Quartermaster Corps, and to be delivered at the depot of the Quartermaster Corps, U. S. Army, Philadelphia, Pa.” It states that “the government is to furnish lining, buttons, and rings only; contractor is-to furnish all other materials”; also that “the materials furnished by the government are to be received by contractor f. o. b. New York, N. Y.; * * * contractor to be liable for any loss of or damage to any of the materials furnished by the Quartermaster Corps from any cause whatsoever while in his possession. All rags and clippings from the linings shall remain the property of the United States and be delivered with the finished jerkins.”
Contract No. 1464 calls for the manufacture of 50,000 leather jerkins, and is on a blank also printed in part and typewritten in part. Like the first contract it states that it is to be used for all purchases of supplies, etc. It contains the following provision:
“The government is to furnish the lining and buttons only. Contractor to furnish all other materials. The lining and buttons to be received by contractor f. o. b. New York. All rags and clippings from linings furnished by the government delivered at the Philadelphia depot of the Quartermaster Corps, U. S. Army, without expense to the United States for packing or transportation ; contractor to be liable for any loss of or damage to any materials furnished by the Q. M. Corps, U. S. Army, from any cause whatsoever while in contractor’s possession.”
Both contracts specify the amount to be paid for each jerkin and then provide as follows:
“That for and in consideration of the faithful performance of the stipulations of this contract, the contractor shall be paid, at the office of the contracting officer, or by a disbursing officer designated by him to make payments, the prices stipulated in this contract for those supplies delivered and accepted; and, except as otherwise provided, payments will be made as soon after the acceptance of each delivery as is practicable and funds on hand for the purpose will admit.”
Both contracts provide:
“That the articles herein contracted for shall be examined and inspected, without unnecessary delay after being delivered, by a person or persons appointed by the United States; and upon such inspection, the articles found to be in all respects as required by this contract shall be received and become the property of the United States. Any arid all articles that may, upon such inspection, be condemned or rejected, shall be removed from the premises by the contractor within 10 days after the said contractor or his agent shall have been notified of such rejection; otherwise, at the risk and expense of the contractor.”
Counsel for the defendants argue that the contracts show that the transactions involved a sale of the materials which the government *29furnished, as the word “purchases” and “purchased” necessarily imply a sale; so that at the time of the delivery of the linings to the contractor the title passed out of the United States and to the contractor, the amount finally to be paid by the government for the finished jerkins being reduced by the amount due to the government for the linings furnished.
[1, 2] It is elementary that where articles are delivered by one •person to another, who is to perform labor upon them or to manufacture them into other articles for the former, the transaction is a bailment; but if the person who receives the articles may deliver in return articles which are not the product of those received, the transaction is in effect a sale. Now it is not necessary to inquire, for reasons which will presently appear, whether under the provisions of the contracts herein involved the delivery of these linings involved a bailment or a sale, whether the contractor was bound to use the linings which the government delivered, or whether other linings might have been used in their stead. Neither is it conclusive that the blanks used in filling in the terms of the contracts contained the words “to be used for all purchases of supplies.” The government was undoubtedly purchasing supplies, and they were to be manufactured in part from materials furnished by it and in pari from materials furnished by the contractor. But for the purpose of the argument we shall assume that under the contracts there was a sale of the linings, and not a bailment. Then the question arises whether or not under the sale the title had passed to the linings herein involved.
This court had under its consideration in Re Liebig, 255 Fed. 458, 166 C. C. A. 534, the question as to the time when title passes under a sale. We said in the case cited that in sales the transfer of title depends upon the intention of the parties however indicated. And in Hatch v. Oil Co., 100 U. S. 124, 25 L. Ed. 554, the general rule, was said to be that the agreement as to the passing of title is just what the parties intended to make it, if the intent can be collected from the language employed, the subject-matter, and the attendant circumstances. We think the intent of the .parties to these two contracts is clearly indicated in the language they employed.
The provision already referred to which provided that the contractor was to be liable to the United States for any loss of or damage to any of the materials furnished by it would seem to indicate that the title to the property continued in the government atid had not passed to the contractor. If the title had passed out of the United States, the property was the property of the contractor, and there was no necessity for such a provision.
Moreover, it was provided, as we have seen, that “all rags and clippings from the linings ‘shall remain’ the property of the United States”; that is to say, the title in tire rags and clippings must under this language have been all the time in the United States. If the title to the linings had passed out of the United States at the time of them delivery to the contractor, the title to so much of the linings as subsequently became rags and clippings originally passed along with the rest, and it could not properly have been said that as to *30them the title should continue or “remain” in the United States. Some other language would have been necessary to indicate that the United States was to be reinvested with the title which it lost when the linings were delivered. Assuming, then, a sale, it is clear that the title could not have been intended to pass until the linings were cut out, and then only as to so much as were used in the jerkins.
In view of what has been said, it is not necessary to consider certain cases which have held that contracts in some .particulars not unlike those in this case have held that the transaction amounted to a sale and not a bailment. Power Co. v. Burkhardt, 97 U. S. 110, 24 L. Ed. 973; Hargraves Mills v. Gordon, 137 App. Div. 695, 122 N. Y. Supp. 245. Neither is it important to consider a class of cases of which Dixon v. London Small Arms Co., Ltd., 1 App. Cases, 632, is the most notable, in which the courts have considered whether such contracts .result in a sale or in an agreement for service.
An important fact is that these linings were not obtained in accordance with any contract. The government was under no contractual obligation to furnish them. It was only contractually obliged to furnish the amount of linings necessary to enable the contractor to manufacture the number of jerkins contracted for. Another important fact is that the amount of the linings the government was to furnish was not furnished altogether, hut as required and called for by the contractor. The Quartermaster’s Department made an allotment to each contractor of the amount of the material he was entitled to receive under each contract, and material was issued from time to time as called for. When Borman in New York applied to the Quartermaster’s Department for material the officials there called up the department in Philadelphia and said: “Mr. Borman is here for material; is it all right to give it to him?” So that Borman, using the contract as a reason for his demand, asked for his material in excess of what he was entitled to under his contract, and obtained the 2,664 yards of the linings which he sold. This yardage cannot be said to have been obtained in accordance with any contractual obligation.
Moreover, as it was. never cut, but remained in the form in which it was received, no title passed, and it continued to be the .property' of the government. And the clandestine manner in which it was sold and the proceeds put in the name of Borman’s employé indicates that Borman very well knew that it was not his property, and that he knew.he was acting dishonestly in what he did. The court in his charge said:
“In other words, as reasonable men, pass upon this situation and all the evidence in the case, and determine whether or not these defendants acted as honest men or as dishonest men; and if you conclude that they acted dishonestly, whether their intent and purpose was knowingly to apply to their own use property of the United States, and whether their purpose was to unlawfully sell, convey, and dispose of property of 'the United States.”
And it was also charged:
“That these defendants cannot be convicted in this case, unless the jury believe from the evidence to a moral certainty and beyond a reasonable doubt *31that they conspired to apply the linings to their own use, or conspired to unlawfully dispose of them knowing that the linings belonged to the United Stales.”
Under the charge, as given, Borman could not have been convicted if the jury believed that Borman honestly thought that he had obtained title to the 2,664 yards of linings which he sold. We must conclude, therefore, not only that the linings which he sold were as a matter of law the property of thfe United States, but that defendants did not believe that the title to the linings had .passed from the government to Borman.
[3] Under the circumstances it is not important to inquire whether Borman, at the time he demanded the additional yards of linings, knew that they were in excess.of the amount which he was entitled to receive under the contracts. There is no evidence upon that subject in the record, and nothing was said concerning it upon the argument in this court; and we must assume that Borman did not obtain possession by a trick or by fraud. If possession had been obtained by a trick and animo furandi, title, according to many cases, would not have passed. See Kerr on Fraud and Mistake, pp. 10, 11; Cole v. Northwestern Bank, L. R. 10 C. P. 354, 373; Whitehorn Brothers v. Davison, [1911] 1 K. B. 463, 470; Oppcnheimer v. Frazer, [1907] 2 K. B. 50, 70; Kingsford v. Merry, 1 FI. & N. 503; Regina v. Middleton, L. R. 2 C. C. 38; Bailey v. State, 58 Ala. 414; State v. Williamson, Houst. Cr. Cas. (Del.) 155; Cooper v. Commonwealth, 110 Ky. 123, 60 S. W. 938, 52 L. R. A. 136, 96 Am. St. Rep. 426; Wolfstein v. People, 6 Flun (N. Y.) 121; Goff v. Golt, 5 Sneed (Tenn.) 562.
The defendants are in this court, as they were in the court below, admitting that they obtained the linings wrongfully, that they sold them wrongfully, and that they appropriated to their own use wrongfully the moneys realized from their sale. They seek to escape upon a technicality the punishment which the Criminal Code of the United States imposes. In this they cannot succeed. The defense interposed is not tenable. The title to the 2,664 yards continued in the United States.
Judgment affirmed.