Stockton v. United States

GEIGER, District Judge (after stating the facts as above). [1] Section 215 of the Penal Code, so far as pertinent to the question presented, is as follows: ■ “Whoever, having devised or -intended to devise any scheme or artifice to defraud, or for obtaining * * * shall, for the purpose of executing such scheme or artifice or attempting so to do, place, or cause to be placed, any letter, postal card, package, writing, circular, pamphlet, or advertisement, whether addressed to any person residing within or outside the United States,” etc. It will be observed that the ingredients which go to make up the offense under this section are: (1) A scheme or artifice to defraud which the accused has devised, . or is intending to devise. (2) The use of the mails for the purpose of executing, such scheme or artifice, or attempting to do so. [2] Assuming that marked cards and loaded dice may be — or are, almost exclusively — used to cheat or defraud in gambling, has the plaintiff in error in selling or offering to sell to one knowingly desiring to purchase these articles at an agreed price, devised or intended to devise a scheme or artifice to defraud? Does he, by mailing a catalogue accurately descriptive of these articles and their prices, execute or attempt to execute such scheme or artifice? Without attempting comprehensively to define the language of the act, it is apparent that each of the words .“devise,” “scheme,” and “artifice” embodies elements found in the other two. As understood in the law of crimes or torts, to “devise” conveys the idea of being devious, contriving, disingenuous; a “scheme,” machination, intrigue, or plan whose appearance differs from the reality-an “artifice”; a trick, false pretense or token. But the degree to which this conception of the language of the statute is satisfied is never material, nor does the first essential ingredient of the offense exist, unless the scheme or artifice devised or intended to be devised is one to defraud. „ [3] . We start, as we must, with the concession that, although marked cards and loaded dice may be used, as stated, they are none the less lawful subjects of commerce-. They may be manufactured, sold, and [465] purchased. If, therefore, upon purchase and sale, the parties thereto understand precisely the subject-matter and the seller proposes to and does give to the purchaser just what the latter wants — even though it be gambling apparatus — the transaction is an ordinary contract. The seller has neither devised nor executed a scheme or artifice. But the government, to sustain the indictment and conviction in the present case, seeks to impute or ascribe to the plaintiff in error the fraudulent intent of the purchaser or possessor of the gambling devices, and thereby charge a fraudulent scheme. Its claim is thus stated in the brief: "That Stockton, the defendant, below, intended that the persons to be defrauded would engage in playing games of chance for money and other valuable consideration, with the persons to whom the catalogue described in the indictment was mailed, and that he planned, devised, and intended that these addressees should purchase from him (Stockton), and that he would sell them certain gambling devices, namely, loaded dice, marked playing cards, electro magnets, etc., by means of which the persons intended to be defrauded, while playing at games of chance with the possessors thereof, were to be defrauded of their money by being deprived of a fair and equal chance of winning in playing such games.” In other words, plaintiff in error by mailing the catalogue intended to induce Moore and Nichols to purchase gambling apparatus from him; if they purchased, he intended that they would engage persons at play and defraud them. Therefore he devised a scheme to defraud, bcause he intended to supply the instrumentality, i. e., marked cards, etc. Now, if plaintiff in error had, through personal solicitation, sold or offered to sell this apparatus to Moore and Nichols; or if they had called at his place of business and entered into and concluded negotiations with him, there would in each case be present every element disclosed in the indictment. The mailing of the catalogue is not an element of the scheme; the arbitrary allegation of the intention of plaintiff in error that Moore and Nichols would engage persons in play, etc., is in effect an allegation of knowledge on his part that such purchasers would put the apparatus to a use for which it was obviously intended — and it adds and can add nothing unless and until by appropriate averment of facts it appears that he was to be in some relation of confederacy or participation, beneficial or otherwise, in such use. The real scheme or artifice to defraud, if any, is that devised and perpetrated by the possessors of the apparatus when they use it. The actual intent of the plaintiff in error was coextensive only with his transaction in selling or offering to sell; and in case he sold — ■ the subject-matter being disclosed and known — his whole intention and expectation would have been fully realized. His relation to the matter would have been at an end; and, granting that Nichols and Moore would or might defraud persons as alleged in the indictment, they would not do so upon the prompting nor in obedience to any act or intention of the plaintiff in error. So, too, the defrauded victims could point to no act of, or circumstance affecting, plaintiff in error, in justifiable reliance whereon they could claim to have entered into a situation wherein he defrauded them. Therefore, to uphold the indictment by imputing to him the fraudulent design or acts of subse [466] quent possessors of the gambling apparatus, without averment or proof of participation therein, would by construction enlarge the statute. The statute (except in the particulars to be noted) neither defines nor denounces, but aims only to punish using the mails in effectuating, what, without it, would still be, schemes or artifices to defraud. This application of the statute is quite conclusively demonstrated by the course of its amendment and construction respecting counterfeit money and transactions specifically enumerated. Prior to the amendment by act of March 2, 1889, c. 393, 25 Stat. 873 (U. S. Comp. St. 1901, p. 3696), the section under consideration was limited to forbidding the use of the mails to effectuate schemes or artifices to defraud; but by such amendment there was added, in the disjunctive, the particular specification, now found, denouncing schemes or artifices to sell or deal in counterfeit money, “paper goods,” the “sawdust swindle,” and the like. The Supreme Court, in passing upon the amended section, said: “The statute, in very words as well as in manifest intent, applies to any person who devises either a scheme to defraud, or a scheme to sell counterfeit money or counterfeit obligations of the United States, provided the scheme is intended to be effected, and is effected, by communications through the post office. This indictment charged, not a scheme to defraud, but a scheme to sell counterfeit obligations of the United States; and therefore no proof of a scheme to defraud was necessary to support it.” Per Gray, Justice, Streep v. United States, 160 U. S. 128, 16 Sup. Ct. 244, 40 L. Ed. 365. The distinction between cases now, but not formerly, comprehended by the statute, is thus stated by Judge Adams in Lemon v. United States, 164 Fed. 953, 90 C. C. A. 617: “There is an obvious difference between schemes to defraud and those to sell or deal in counterfeit money. The one necessarily involves a scheme to defraud some person or persons, while the other may dr may not involve such scheme. It may he only a scheme to do an unlawful act in which all concerned Icnowinyly participate. * s * “The amendment of 1889, instead of limiting, expanded the operation of the statute. It brought within its comprehension, in addition to what was there before, the subject of dealing in counterfeit and spurious money and ■other articles there specified.” Prior to the amendment it therefore was possible for one person to communicate to another an undisguised offer to sell counterfeit money. It was not a scheme to defraud within the meaning of the act, although ■counterfeit money could be dealt in only in violation of law, and was universally recognized as a means to defraud. Plow much more clearly is this true of gambling devices which may be lawfully bought and sold.. Were it not true, we would have the anomalous situation of permitting the sending of gambling devices themselves through the mail, but forbidding communications respecting, them. The plaintiff in error, without objection on the part of the government, could have sent the loaded dice or marked cards through the mail to Nichols and Moore, but could not have sent a letter soliciting the purchase. Counsel for the government urge the authority of Milby v. United States, 120 Fed. 1, 57 C. C. A. 21, in support of the indictment and conviction. The case will be examined in the light of an earlier determination (109 Fed. 643, 48 C. C. A. 574) by the same court involving [467] the same defendant. The facts were these: Milby was originally indicted for using the mails in attempting to sell counterfeit money. Demurrers were overruled, and motions in arrest of judgment denied. He was convicted. Upon appeal (109 Fed. 643, 48 C. C. A. 579), the indictment was held insufficient because the scheme was— “plainly a direct, undisguised proposition to sell counterfeit money. * * * It Is plainly evident,” said, the court, “from the course pursued in relation to the letter by the postmaster at Albany, Or., that he was left in no doubt or difficulty 'whatever as to the. meaning and object of the proposition contained in the defendant’s letter. If there was any misrexiresentation, direct or indirect, or other facts and circumstances, which would constitute a scheme devised by the defendant to defraud Ktites, the particulars in this respect are not given in this indictment. There is no averment to the effect that the defendant was not engaged in making counterfeit money, and in every way prepared to comply with his xwopositiou if accepted. In what method and by what scheme was Stites to be deceived or defrauded, looking alone to the facts disclosed in this indictment? * * * Or, again, putting the transaction in a past aspect, if Stites had concluded to accept the proposition, and use the spurious money offered, and had sent money to the defendant, and received counterfeit money in return therefor at the agreed rate of exchange, in what respect would Stites have been defrauded or misled? In this last aspect of the case both the defendant and Stites would have committed an offense, but Stites would not have been defrauded or deceived. The proposition contained in the letter was entirely devoid of artfulness, and could not have been misunderstood in the ordinary case; and, as we have said, no exceptional circumstance or fact is alleged in the indictment.” It is to be noted that, although the case was decided many years after passage of the amendment of March 2, 1889, no reference is made to such amendment, nor to the case of Streep v. United States, supra, which definitely construed it as expanding the statute to comprehend situations not theretofore within its terms — and comprehending precisely the accusation against Milby. A new indictment, charging in several counts the subject-matter of the first prosecution, was then returned. After trial and conviction, the case was appealed, being reported as Milby v. United States, 120 Fed. 1, 57 C. C. A. 21, and no\$ relied upon. It was urged that the first count, which charged an intention to defraud persons through subsequent circulation of the money, was insufficient. The court said: “It is further argued that the first count, which charges ail intention to defraud persons unknown by subsequent circulation of the counterfeit money after its receipt by the persons to whom it was originally sent, is insufficient. It is urged that, as the person ordering counterfeit money would know what he was to get, he could not be defrauded. We think, however, that the allegation of the indictment as to defrauding others by the subsequent circulation of the counterfeit money brings it within the statute. It must always be borne in mind that the ase of the mails in aid of schemes of spoliation is the thing sought to be prevented and. punished.” But the court further held that, even if defendant’s contentions were sound, the count was sufficient as charging an offense within the amendment, and the conviction was sustained because other sufficient counts of the indictment were covered by the proofs and a verdict of guilty. However, the infirmity of the position taken in the language quoted is this: It is always possible to impute to a seller knowledge, and (in an inaccurate sense) an intention, that an article sold may be [468] put to uses for which it is obviously intended. Hence, if the wrongful intent or scheme of the purchaser of counterfeit money could be ascribed 'to the seller as his scheme, there would have been no necessity for amending the statute. The sale, or offer to sell, would be a devising, and the scheme or artifice could always be charged and found, solely upon the inherent character of counterfeit money. The views which we have expressed respecting the scope of the statute and its application to the indictment- render unnecessary extended discussion of the facts established by the testimony. The plaintiff in error mailed the catalogues which were descriptive of the articles in his possession and described in the indictment. He sustained no relations toward Moore and Nichols, the addressees, other than such as arose through a desire to sell to them articles described in the catalogue. Until, by appropriate amendment, the scope of the statute is further expanded, it does not and cannot comprehend the situation thus disclosed in the proofs; and neither the indictment nor such proof shows either a scheme or artifice to defraud devised by the plaintiff in error, nor an execution or attempted execution thereof by him, through the use of the mails. The judgment is reversed, with directions to sustain the demurrer. to the indictment, and to discharge the defendant.