Blumenthal v. United States
332 U.S. 539 (1947)

Annotate this Case

U.S. Supreme Court

Blumenthal v. United States, 332 U.S. 539 (1947)

Blumenthal v. United States

No. 54

Argued October 23, 1947

Decided December 22, 1947*

332 U.S. 539

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

The four petitioners and another defendant were tried jointly and convicted for violating § 37 of the Criminal Code by conspiring to sell whiskey at prices above the ceiling set by the Office of Price Administration. Two of the defendants were the owner and sales manager, respectively, of a business holding a wholesale liquor license which was the ostensible owner of the whiskey; but they were proven, solely by their own admissions, which were received in evidence as to them alone, to have known that the concern was acting as intermediary for an undisclosed owner. The other

Page 332 U. S. 540

three defendants were salesmen who made the sales and collected the proceeds, and they were not proven to have known that the business was not the actual owner.

Held:

1. Under the trial court's rulings on admissibility and instructions that the jury must determine the guilt or innocence of each defendant separately and must not take into consideration the admissions of the owner and sales manager in determining the guilt of the salesmen, the admissions were adequately excluded from consideration on the question of the salesmen's guilt. Pp. 332 U. S. 550-553, 332 U. S. 559-560.

2. With the admissions of the owner and sales manager thus excluded, the evidence summarized in the opinion was sufficient to show that the five defendants joined in a single conspiracy to sell the whiskey at over-ceiling prices in the guise of legal sales. Pp. 332 U. S. 542-545, 332 U. S. 553-556.

3. Although, in a hypertechnical aspect, the case might be regarded as showing two agreements, one among the owner of the business, the sales manager, and the undisclosed owner of the whiskey, and the other among the five defendants, the unique facts of this case revealed a single over-all conspiracy of which both agreements were essential and integral steps. Pp. 332 U. S. 553-559.

4. Kotteakos v. United States,328 U. S. 750, distinguished. Pp. 332 U. S. 558-559.

5. The reception in evidence of the admissions made by the owner and the sales manager, under the trial court's careful instructions that the jury must determine the guilt or innocence of each defendant separately and must not take those admissions into consideration in determining the guilt of the salesmen, was not prejudicial error as to the latter. Pp. 332 U. S. 550-553, 332 U. S. 559-560.

6. A conspiracy to violate the Emergency Price Control Act, coupled with an overt act in furtherance thereof, is punishable under § 37 of the Criminal Code. P. 560, n 18.

158 F.2d 883 affirmed.

Petitioners were convicted under § 37 of the Criminal Code for conspiring to violate the Emergency Price Control Act. The Circuit Court of Appeals affirmed, 158 F.2d 883, and denied rehearing, one judge dissenting. 158 F.2d 762. This Court granted certiorari. 331 U.S. 799. Affirmed, p. 332 U. S. 560.

Page 332 U. S. 541

MR. JUSTICE RUTLEDGE delivered the opinion of the Court.

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. §§ 902(a), 904(a) and 925(b). The charge was made pursuant to the general conspiracy statute, § 37 of the Criminal Code. 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 competent

Page 332 U. S. 542

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.

I

The indictment charges a single conspiracy in a single count. Ten overt acts are specified. The Government alleged and sought to establish that all of the defendants and other unidentified persons conspired together to dispose of two carloads, each consisting of about 2,000 cases, of Old Mr. Boston Rocking Chair Whiskey at over the ceiling wholesale prices.

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

Page 332 U. S. 543

the testimony of the various tavernkeepers with whom they respectively dealt.

The evidence showed that, on arrival of the whiskey in San Francisco, legal title was taken in Francisco's name, in which the shipping documents were made out; that it honored sight drafts for both shipments, upon Goldsmith's directions to Francisco's bank to pay them out of Francisco's account; that some of the whiskey was delivered ex car directly to tavernkeepers who previously had arranged for purchases in lots varying from 25 to 200 cases; that the remainder was placed in storage with the San Francisco Warehouse Company, pursuant to arrangements made by Weiss, and thereafter was delivered by the warehouse to various purchasers holding invoices issued by Francisco [Footnote 1] on orders given by Weiss. The ex car deliveries also were made pursuant to similar invoices and orders.

If further appeared that the cost of the whiskey to Francisco was $21.97 a case, [Footnote 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

Page 332 U. S. 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 some instances, the identity of the person arranging the transaction for the seller and receiving the cash payment was not established or known to the witness testifying to the sale and its details. In others, however, Blumenthal, Feigenbaum, or Abel was identified as the salesman or intermediary. It was not brought out with what person or persons Abel, Feigenbaum, Blumenthal, or the other salesmen dealt in securing the whiskey from Francisco. [Footnote 3] In two sales, Figone, a tavernkeeper of El Cerrito, testified he arranged for the purchases in Francisco's offices, but could not identify the person with whom he dealt.

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

Page 332 U. S. 545

also paid in cash to the intermediary the difference between the amount of the check and the agreed over-ceiling 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.

The foregoing is substantially the evidence used not only in part to show the conspiracy, but also to connect Blumenthal, Feigenbaum, and Abel with it. In addition to the evidence already related as it affects Goldsmith and Weiss, the court received as to them alone the testimony of Harkins, a special investigator for the Alcohol Tax Unit of the Treasury Department. He related conversations had with Goldsmith and Weiss during which important admissions were made by one or the other or both. Those admissions give rise to the crucial problems in the case.

At the initial conference "early in January," 1944, attended by both Goldsmith and Weiss, the latter "did most of the talking." Questioned concerning who purchased the two carloads and how they were handled, Weiss said "that his firm received $2.00 a case for clearing it through their books." Goldsmith concurred in this, and both stated that they divided the $2.00, each taking a dollar.

"They both stated, agreed, that they did not sell any of the whiskey. It was sold by others, and they received

Page 332 U. S. 546

the check generally for the payment for the whiskey in advance of the date that they had to take up the sight draft bills of lading. At that time, they did not tell us who actually sold the whiskey."

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. [Footnote 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,

Page 332 U. S. 547

sufficient facts had been introduced to show such defendants to have been connected with the conspiracy charged.

This course was followed. At the close of the Government's case, the court granted its motion to admit all of the evidence as against all of the defendants, except that it declined to allow Harkins' testimony concerning his conversations with Goldsmith and Weiss to be admitted as against the defendants Blumenthal, Feigenbaum, and Abel. That testimony, however, was allowed to stand against both Goldsmith and Weiss insofar as it related the conversation had in the presence of both, and as to each of them respectively to the extent that the other interviews took place in his presence.

The court overruled numerous objections to these rulings by each defendant. None offered evidence in his own behalf.

Following its rulings on admissibility, the trial court concluded as against various objections that the evidence was sufficient to go to the jury on the issues whether the conspiracy charged had been made out and concerning each defendant's connection with it. Accordingly, it overruled the defendants' motions for directed verdicts and submitted the case to the jury. In the instructions, the court expressly stated, in accordance with the previous rulings on admissibility, that Harkins' testimony was to be considered only as against Goldsmith and Weiss, not as against the other three defendants.

II

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,

Page 332 U. S. 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. [Footnote 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 proof, in relation to whether one or more conspiracies were shown as well as relative to whether any was made out, requires somewhat different treatment concerning the two groups of defendants, Weiss and Goldsmith, on the one hand, and Blumenthal, Feigenbaum and Abel, on the other. This is by reason of the court's exclusion of the admissions of Goldsmith and Weiss from consideration as to the other three defendants.

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. [Footnote 6]

Page 332 U. S. 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 77

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