People v. Gonda

— 777 — Opinion RACANELLI, P. J. Gerald R. Sullivan and John Gonda were charged with nine counts of violating section 31110 of the Corporations Code (unlawful offering and selling of franchise without prior registration), nine counts of violating section 31201 of the same code (selling franchise by means of untrue statements) and nine counts of grand theft in violation of Penal Code section 487. After a jury trial, appellants were convicted on all but counts 24 (Corp. Code, § 31201) and 26 (Pen. Code, § 487). The court granted a motion as to each appellant dismissing counts 9 (Corp. Code, § 31110), 16 (Corp. Code, § 31201), and 23 (Pen. Code, § 487) notwithstanding the jury’s verdicts. The present appeal is therefore taken from judgments entered on guilty verdicts on the remaining 22 counts. A brief recital of the factual background underlying the convictions indicates that appellants, who had had wide experience in the consulting field, met and decided in the mid-1970’s to merge their respective businesses as the Logan Company (hereinafter Logan), a management consulting business with emphasis on small and medium-size firms. Advertisements were placed in the Wall Street Journal and other newspapers inviting inquiry by two classes of prospective personnel: salesmen, who were to be trained to develop new clients, and consultants, who, after being trained, were to furnish consulting services to such new clients. There can be little doubt that from the inception of the venture appellants consciously exaggerated the financial stability, expertise and prospects of the new firm. Their business proposal was essentially as follows: a format for a “registered management consultant” contract was devised, under the terms of which each prospective management consultant would pay $3,750 for the “privilege” of joining Logan as an independent contractor. The consultant would receive in exchange the right to service what was represented to be an extensive number of existing clients who desired Logan’s management consulting service. The record discloses a variety of misrepresentations to seven prospective “franchisees”; while it is unnecessary to detail the substance of such misrepresentations, it may be useful to summarize them as follows: All of the prospective “franchisees” were informed of Logan’s “extensive” clientele and “bright” prospects, and of “excellent” earning potential and “valuable” training opportunities. — 778 — After paying all or part of the $3,750 “fee,” some applicants received fairly extensive training and were actually assigned to and worked for Logan’s few clients, and obtained some remuneration. In no case, however, could it reasonably be said that the “franchisee” received anything approaching what he had been led to believe by Gonda’s and Sullivan’s blandishments. After a number of complaints to the district attorney from irate Logan franchisees, an investigation was commenced, charges were filed, and the guilty verdicts outlined above were returned. On appeal, Gonda and Sullivan raise a number of specific arguments, though some rather obliquely. For the reasons which follow, we conclude that the convictions for grand theft must be reversed, but the remaining convictions must be affirmed. I Appellants were convicted of both grand theft by false pretenses (Pen. Code, § 487) and unlawful sale of franchises by means of untrue statements (Corp. Code, § 31201). Yet, it is well settled that double conviction is not permitted where one offense is necessarily included in the other. (People v. Greer (1947) 30 Cal.2d 589, 597-598 [184 P.2d 512]; People v. Ratcliffe (1981) 124 Cal.App.3d 808, 820 [177 Cal.Rptr. 627]; People v. Johnson (1978) 81 Cal.App.3d 380, 387 [146 Cal.Rptr. 476]; People v. Pater (1968) 267 Cal.App.2d 921, 924 [73 Cal.Rptr. 823].) In the present case, the seven counts of violation of section 31201 are based upon the same acts as the seven counts of grand theft by false pretenses. Appellants necessarily committed the offense of selling franchises by misrepresentations each time they committed grand theft by false pretenses upon the sale of the very same franchises. (People v. Pater, supra, 267 Cal.App.2d 921, 926 [joyriding and grand theft—auto].) The remedy where a defendant has been erroneously convicted of both the greater and the lesser crime is reversal of the offense carrying the less serious punishment. (See People v. Wilson (1975) 50 Cal.App.3d 811, 815 [123 Cal.Rptr. 663]; People v. Pater, supra, 267 Cal.App.2d 921, 926.) Accordingly, the convictions for grand theft must be set aside.1 n With respect to the convictions for violating the franchise laws, we affirm. We discuss the requisite mental state required in relation to the charged offenses. — 779 — The Franchise Investment Law is designed to protect prospective franchisees by requiring the franchisor to register his franchise offering and to provide full and accurate information. (Corp. Code, § 31000 et seq.) Corporations Code section 31110 makes it unlawful to sell a franchise unless the offer has been registered. Section 31201 in turn makes it unlawful to use untrue statements in the offer or sale of a franchise. Any person who “wilfully violates any provision” of the franchise law is subject to criminal prosecution and imprisonment upon conviction. (Corp. Code, § 31410, italics added.) The word “wilfully” when used in the penal statutes means “simply a purpose or willingness to commit the act or to make the omission referred to. It does not require any intent to violate law, or to injure another, or to acquire any advantage.” (Pen. Code, § 7.) Thus, the courts have consistently held that even where the statute requires a “wilful” violation, public welfare offenses in general are punishable without proof of criminal intent. (People v. O’Brien (1892) 96 Cal. 171, 175-179 [31 P. 45] [wilful alteration of public record]; People v. Park (1978) 87 Cal.App.3d 550, 562 [151 Cal.Rptr. 146] [wilful violation of corporate securities law]; People v. Clem (1974) 39 Cal.App.3d 539 [114 Cal.Rptr. 359] [same]; cf. People v. Thygesen (1979) 93 Cal.App.3d 895, 904-905 [156 Cal.Rptr. 212] [violation of subdivided lands act]; People v. Byers (1979) 90 Cal.App.3d 140 [153 Cal.Rptr. 249] [same]; People v. McCalla (1923) 63 Cal.App. 783, 793-794 [220 P. 436] app. dism., 267 U.S. 585 [69 L.Ed. 799, 45 S.Ct. 461], disapproved on other grounds in People v. Elliot (1960) 54 Cal.2d 498, 503 [6 Cal.Rptr. 753, 354 P.2d 225] [“knowing” violation of corporate securities law]; see generally 1 Witkin, Cal. Crimes, §§ 57, 62, pp. 62, 66-67.) Because no criminal intent was required for the franchise law violations, we reject appellants’ claim of error in the giving of CALJIC instruction No. 4.36 that “it is no defense that [the defendant] did not know that his act was unlawful or that he believed it to be lawful.”2 In any case, knowledge of the fact of nonregistration is not the equivalent óf knowledge of unlawful conduct. (People v. McCalla, supra, 63 Cal.App. 783, 793; but cf. People v. Calban (1976) 65 Cal.App.3d 578, 585-586 [135 Cal.Rptr. 441].) Nor do we find merit in appellants’ further argument that the trial court improperly excluded evidence which would have negated any criminal intent. Appellants’ offer of proof included the testimony of a business lawyer consulted by appellants who allegedly informed them that their contract was not a registrable franchise and “they therefore were not breaking any laws.” — 780 — Reliance on advice of counsel provides no defense to the charges here.3 {Milner v. Fox (1980) 102 Cal.App.3d 567, 574, fn. 9 [162 Cal.Rptr. 584]; People v. Clem, supra, 39 Cal.App.3d 539; People v. Marvin (1941) 48 Cal.App.2d 180, 194-195 [119 P.2d 413]; People v. McCalla, supra, 63 Cal.App. 783, 795; see People v. Snyder (1982) 32 Cal.3d 590 [186 Cal.Rptr. 485, 652 P.2d 42] [evidence of defendant’s asserted mistake of law regarding her status as convicted felon properly excluded].) We also reject appellants’ claim that the franchise laws are unconstitutionally vague. It is well settled that a criminal statute which is so indefinite, vague and uncertain that the definition of the crime or standard of conduct cannot be ascertained therefrom is unconstitutional and void. However, the fact that the statute’s meaning is difficult to ascertain does not render the statute void. “ . . All the Due Process Clause requires is that the law give sufficient warning that men may conduct themselves so as to avoid that which is forbidden.’” {People v. Superior Court {Hartway) (1977) 19 Cal.3d 338, 345 [138 Cal.Rptr. 66, 562 P.2d 1315], quoting from Rose v. Locke (1975) 423 U.S. 48, 50 [46 L.Ed.2d 185,188,96 S.Ct. 243]; see generally People v. Mc-Caughan (1957) 49 Cal.2d 409, 414 [317 P.2d 974]; People v. Heffner (1977) 70 Cal.App.3d 643, 653-655 [139 Cal.Rptr. 45].) All presumptions and intendments favor the validity of a statute, and it will be upheld unless its unconstitutionality clearly, positively and unmistakably appears. {In re Dennis M. (1969) 70 Cal.2d 444, 453 [75 Cal.Rptr. 1, 450 P.2d 296]; People v. Medina (1972) 27 Cal.App.3d 473, 479 [103 Cal.Rptr. 721]; People v. Tufts (1979) 97 Cal.App.3d Supp. 37, 48 [159 Cal.Rptr. 163].) With respect to the Corporate Securities Act, the courts have consistently rejected arguments that the act is void for vagueness. {In re Leach (1932) 215 Cal. 536, 543-546 [12 P.2d 3] app. dism., 287 U.S. 579 [77 L.Ed. 507, 53 S.Ct. 290]; People v. Taylor (1973) 30 Cal.App.3d 117, 123 [106 Cal.Rptr. 216]; Conrad v. Superior Court (1962) 209 Cal.App.2d 143, 150-151 [25 Cal.Rptr. 670]; People v. Sears (1956) 138 Cal.App.2d 773, 793 [292 P.2d 663].) We reach the same conclusion with respect to the parallel Franchise Investment Law. We think the language of the statute is sufficiently definite to provide an adequate warning as to what conduct comes within its prohibition. As to appellants’ remaining arguments, we find them to be wholly without merit and to require no discussion. — 781 — The convictions on counts 17, 18, 19, 20, 21, 22, 27 for grand theft are reversed. The remaining convictions appealed from are affirmed. Footnotes [1] The punishment for grand theft is imprisonment in the county jail for one year or state prison. (Pen. Code, § 489.) The punishment for violating the Franchise Investment Law is identical, with the additional penalty of a fine. (Corp. Code, § 31410.) This additional punishment renders the latter crime a more serious offense. [2] Since the convictions for grand theft must be set aside on other grounds, we dismiss as moot appellants’ claim that the instruction was improperly declared applicable to that specific intent crime. [3] The statute specifically exempts from criminal liability any person who “had no knowledge of [an administrative] rule or order.” It does not exempt a person who lacked knowledge of the law itself. (Corp. Code, § 31410.) Section 31511 permits the defense of good faith reliance on any written interpretive opinion of the commissioner or the Attorney General. (See People v. Ferguson (1933) 134 Cal.App. 41, 51-53 [24 P.2d 965]; People v. Sapse (1980) 104 Cal.App.3d Supp. 1,13 [163 Cal.Rptr. 920].) But it does not create a defense for good faith reliance on private counsel. (People v. Clem, supra, 39 Cal.App.3d 539.)