A mail order wholesale drug corporation made sales of morphine
sulphate to a physician in unusually large quantities, frequently,
and over an extended period.
that the evidence, from which it could be
inferred that the seller not only knew the physician was selling
the drug illegally but intended to cooperate with him therein, was
sufficient to sustain the seller's conviction of conspiracy to
violate the Harrison Narcotic Act. United States v.
Falcone, 311 U. S. 205
distinguished. P. 319 U. S.
131 F.2d 835 affirmed.
Certiorari, 318 U.S. 749, to review the affirmance of a
conviction for conspiracy to violate the Harrison Narcotic Act.
44 F. Supp. 623.
Page 319 U. S. 704
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
Petitioner, a corporation, was convicted of conspiracy to
violate the Harrison Narcotic Act. [Footnote 1
] It challenges the sufficiency of the evidence
to sustain the conviction. Because of asserted conflict with
United States v. Falcone, 311 U.
, certiorari was granted.
Petitioner is a registered drug manufacturer and wholesaler.
] It conducts a
nationwide mail order business from Buffalo, New York. The evidence
relates chiefly to its transactions with one Dr. John V. Tate and
his dealings with others. He was a registered physician, practicing
in Calhoun Falls, South Carolina, a community of about 2,000
persons. He dispensed illegally vast quantities of morphine
sulphate purchased by mail from petitioner. The indictment charged
petitioner, Dr. Tate, and three others, Black, Johnson, and Foster,
to and through whom Tate illegally distributed the drugs, with
conspiring to violate
Page 319 U. S. 705
Sections 1 and 2 of the Act [Footnote 3
] over a period extending from 1933 to 1940.
Foster was granted a severance, Black and Johnson pleaded guilty,
and petitioner and Dr. Tate were convicted. Direct Sales alone
appealed. The Circuit Court of Appeals affirmed. 131 F.2d 835.
The parties here are at odds concerning the effect of the
decision as applied to the facts proved in this
case. The salient facts are that Direct Sales sold morphine
sulphate to Dr. Tate in such quantities, so frequently, and over so
long a period it must have known he could not dispense the amounts
received in lawful practice, and was therefore distributing the
drug illegally. Not only so, but it actively stimulated Tate's
He was a small-town physician practicing in a rural section. All
of his business with Direct Sales was done by mail. Through its
catalogues, petitioner first made
Page 319 U. S. 706
contact with him prior to 1933. Originally, he purchased a
variety of pharmaceuticals. But, gradually, the character of his
purchases narrowed, so that, during the last two years of the
period alleged for the conspiracy, he ordered almost nothing but
morphine sulphate. At all times during the period, he purchased the
major portion of his morphine sulphate from petitioner. The orders
were made regularly on his official order forms. The testimony
shows the average physician in the United States does not require
more than 400 one-quarter grain tablets annually for legitimate
use. Although Tate's initial purchases in 1933 were smaller, they
gradually increased until, from November, 1937, to January, 1940,
they amounted to 79,000 one-half grain tablets. In the last six
months of 1939, petitioner's shipments to him averaged 5,000 to
6,000 half-grain tablets a month, enough, as the Government points
out, to enable him to give 400 average doses every day.
These quantity sales were in line with the general mail order
character of petitioner's business. By printed catalogues
circulated about three times a month, it solicits orders from
retail druggists and physicians located for the most part in small
towns throughout the country. Of annual sales of from $300,000 to
$350,000 in the period 1936 to 1940, about fifteen percent by
revenue and two-and-a-half percent by volume were in narcotics. The
mail order plan enabled petitioner to sell at prices considerably
lower than were charged by its larger competitors, who maintained
sales forces and traveling representatives. By offering fifty
percent discounts on narcotics, it "pushed" quantity sales. Instead
of listing narcotics like morphine sulphate in quantities not
exceeding 100 tablets, as did many competitors, Direct Sales for
some time listed them in 500, 1,000, and 5,000 tablet units. By
this policy, it attracted customers, including a
Page 319 U. S. 707
large group of physicians who had been convicted of violating
the Harrison Act.
All this was not without warning, purpose, or design. In 1936,
the Bureau of Narcotics informed petitioner it was being used as a
source of supply by convicted physicians. [Footnote 4
] The same agent also warned that the average
physician would order no more than 200 to 400 quarter-grain tablets
annually, [Footnote 5
requested it to eliminate the listing of 5,000 lots. It did so, but
continued the 1,000 and 500 lot listings at attractive discounts.
It filled no more orders from Tate for more than 1,000 tablets, but
continued to supply him for that amount at half-grain strength. On
one occasion in 1939, he ordered on one form 1,000 half and 100
quarter grains. Petitioner sent him the 1,000, and advised him to
reorder the 100 on a separate order form. It attached to this
letter a sticker printed in red suggesting anticipation of future
needs and taking advantage of discounts offered. Three days later,
Tate ordered 1,000 more tablets, which petitioner sent out. In
1940, at the Bureau's suggestion, Direct Sales eliminated its fifty
and ten percent discounts. But, on doing so, it translated its
discount into its net price.
Tate distributed the drugs to and through addicts and purveyors,
including Johnson, Black, and Foster. Although he purchased from
petitioner at less than two dollars,
Page 319 U. S. 708
he sold at prices ranging from four to eight dollars per 100
half-grain tablets, and purveyors from him charged addicts as much
as $25 per hundred.
On this evidence, the Government insists the case is in
different posture from that presented in United States v.
It urges that the effort there was to connect the
respondents with a conspiracy between the distillers on the basis
of the aiding and abetting statute. [Footnote 6
] The attempt failed because the Court held the
evidence did not establish the respondents knew of the distillers'
conspiracy. There was no attempt to link the supplier and the
distiller in a conspiracy inter sese.
But, in this case,
that type of problem is presented. Direct Sales was tried, and its
conviction has been sustained, according to the claim, on the
theory it could be convicted only if it were found that it and Tate
conspired together to subvert the order form provisions of the
Harrison Act. As the brief puts the Government's view,
"Petitioner's guilt was not made to depend at all upon any guilt
of Dr. Tate growing out of his relationship to defendants other
than petitioner, or upon whether these other defendants were linked
with the Tate-Direct Sales conspiracy."
On the other hand, petitioner asserts this case falls squarely
within the facts and the ruling in the Falcone
insists there is no more to show conspiracy between itself and Tate
than there was to show conspiracy between the respondent sellers
and the purchasing distillers there. At most, it urges, there were
only legal sales by itself to Dr. Tate, accompanied by knowledge he
was distributing goods illegally. But this, it contends, cannot
amount to conspiracy on its part with him, since, in the
case, the respondents sold to the distillers
knowing they would use the goods in illegal distillation.
Page 319 U. S. 709
Petitioner obviously misconstrues the effect of the
decision in one respect. This is in regarding it
as deciding that one who sells to another with knowledge that the
buyer will use the article for an illegal purpose cannot, under any
circumstances, be found guilty of conspiracy with the buyer to
further his illegal end. The assumption seems to be that, under the
ruling, so long as the seller does not know there is a conspiracy
between the buyer and others, he cannot be guilty of conspiring
with the buyer to further the latter's illegal and known intended
use by selling goods to him.
case creates no such sweeping insulation
for sellers to known illicit users. That decision comes down merely
to this -- that one does not become a party to a conspiracy by
aiding and abetting it, through sales of supplies or otherwise,
unless he knows of the conspiracy, and the inference of such
knowledge cannot be drawn merely from knowledge the buyer will use
the goods illegally. The Government did not contend, in those
circumstances, as the opinion points out, that there was a
conspiracy between the buyer and the seller alone. It conceded
that, on the evidence, neither the act of supplying itself nor the
other proof was of such a character as imported an agreement or
concert of action between the buyer and the seller amounting to
conspiracy. This was true notwithstanding some of the respondents
could be taken to know their customers would use the purchased
goods in illegal distillation.
The scope of the concession must be measured in the light of the
evidence with reference to which it was made. This related to both
the volume of the sales and to casual and unexplained meetings of
some of the respondents with others who were convicted as
conspirators. The Court found this evidence too vague and uncertain
to support a finding the respondents knew of the distillers'
Page 319 U. S. 710
though not inadequate in some instances to sustain one that the
seller knew the buyer would use the goods for illegal distilling.
It must be taken also that the Government regarded the same
evidence as insufficient to show the seller conspired directly with
the buyer by selling to him with knowledge of his intended illegal
Whether or not it was consistent in making this concession and
in regarding the same evidence as sufficient to show that the
sellers knew of and joined the buyers' distilling ring is not
material. Nor need it be determined whether the Government conceded
too much. We do not now undertaken to say what the Court was not
asked, and therefore declined to say, in the Falcone
-- namely, that the evidence presented in that case was sufficient
to sustain a finding of conspiracy between the seller and the buyer
For, regardless of that, the facts proved in
this case show much more than the evidence did there.
The commodities sold there were articles of free commerce,
sugar, cans, etc. They were not restricted as to sale by order
form, registration, or other requirements. When they left the
seller's stock and passed to the purchaser's hands, they were not,
in themselves, restricted commodities, incapable of further legal
use except by compliance with rigid regulations, such as apply to
morphine sulphate. The difference is like that between toy pistols
or hunting rifles and machine guns. All articles of commerce may be
put to illegal ends. But all do not have inherently the same
susceptibility to harmful and illegal use. Nor, by the same token,
do all embody the same capacity, from their very nature, for giving
the seller notice the buyer will use them unlawfully. Gangsters,
not hunters or small boys, comprise the normal private market for
machine guns. So, drug addicts furnish the normal outlet for
morphine which gets outside the restricted channels of legitimate
Page 319 U. S. 711
This difference is important for two purposes. One is for making
certain that the seller knows the buyer's intended illegal use. The
other is to show that, by the sale, he intends to further, promote,
and cooperate in it. This intent, when given effect by overt act,
is the gist of conspiracy. While it is not identical with mere
knowledge that another purposes unlawful action, it is not
unrelated to such knowledge. Without the knowledge, the intent
cannot exist. United States v. Falcone, supra.
] Furthermore, to establish
the intent, the evidence of knowledge must be clear, not equivocal.
This because charges of conspiracy are not to be
made out by piling inference upon inference, thus fashioning what,
in that case, was called a dragnet to draw in all substantive
The difference between sugar, cans, and other articles of normal
trade, on the one hand, and narcotic drugs, machine guns, and such
restricted commodities, on the other, arising from the latters'
inherent capacity for harm and from the very fact they are
restricted, makes a difference in the quantity of proof required to
show knowledge that the buyer will utilize the article unlawfully.
Additional facts, such as quantity sales, high pressure sales
methods, abnormal increases in the size of the buyer's purchases,
etc., which would be wholly innocuous or not more than ground for
suspicion in relation to unrestricted goods, may furnish conclusive
evidence, in respect to restricted articles, that the seller knows
the buyer has an illegal object and enterprise. Knowledge equivocal
and uncertain as to one becomes sure as to the other. So far as
Page 319 U. S. 712
is the foundation of intent, the latter thereby also becomes the
The difference in the commodities has a further bearing upon the
existence and the proof of intent. There may be circumstances in
which the evidence of knowledge is clear, yet the further step of
finding the required intent cannot be taken. Concededly, not every
instance of sale of restricted goods, harmful as are opiates, in
which the seller knows the buyer intends to use them unlawfully,
will support a charge of conspiracy. [Footnote 8
] But this is not to say that a seller of
harmful restricted goods has license to sell in unlimited
quantities, to stimulate such sales by all the high-pressure
methods, legal if not always appropriate, in the sale of free
commodities, and thereby bring about subversion of the other forms,
which otherwise would protect him, and violation of the Act's other
restrictions. Such a view would assume that the market for opiates
may be developed as any other market. But that is not true. Mass
advertising and bargain counter discounts are not appropriate to
commodities so surrounded with restrictions. They do not create new
legal demand and new classes of legitimate patrons, as they do for
sugar, tobacco, and other free commodities. Beyond narrow limits,
the normal legal market for opiates is not capable of being
extended by such methods. The primary effect is, rather, to create
black markets for dope and to increase illegal demand and
Page 319 U. S. 713
When the evidence discloses such a system, working in prolonged
cooperation with a physician's unlawful purpose to supply him with
his stock in trade for his illicit enterprise, there is no legal
obstacle to finding that the supplier not only knows and
acquiesces, but joins both mind and hand with him to make its
accomplishment possible. The step from knowledge to intent and
agreement may be taken. There is more than suspicion, more than
knowledge, acquiescence, carelessness, indifference, lack of
concern. There is informed and interested cooperation, stimulation,
instigation. And there is also a "stake in the venture" which, even
if it may not be essential, is not irrelevant to the question of
conspiracy. [Footnote 9
Petitioner's stake here was in making the profits which it knew
could come only from its encouragement of Tate's illicit
operations. In such a posture, the case does not fall doubtfully
outside either the shadowy border between lawful cooperation and
criminal association or the no less elusive line which separates
conspiracy from overlapping forms of criminal cooperation.
Unless, therefore, petitioner has been exempted arbitrarily by
the statute's terms, the evidence clearly was sufficient to sustain
its conviction for conspiring with Tate. Its position here comes
down ultimately to the view, alluded to above, that the statute
has, in fact, thus immunized its action. In effect, this means the
only restriction imposed upon it, apart from other provisions not
now material, such as those affecting registration, was the
requirement it should receive from purchasing physicians a signed
order form for each sale. That done, in its view, its full duty to
the law was fulfilled, it acquired a complete immunity, and what
the physician had done
Page 319 U. S. 714
or might do with the drugs became of no further concern to
itself. Such a view would legalize an express written agreement
between a registered wholesaler and a physician for the former to
supply him with all his requirements for drugs for both legal and
illegal distribution, conditioned only upon his using the required
order forms. The statute contains no such exemption in explicit
terms. Nor was one implied. [Footnote 10
This being true, it can make no difference the agreement was a
tacit understanding, created by a long course of conduct and
executed in the same way. [Footnote 11
] Not the form or manner in which the
understanding is made, but the fact of its existence and the
further one of making it effective by overt conduct, are the
crucial matters. The proof, by the very nature of the crime, must
be circumstantial, [Footnote
] and therefore inferential, to an extent varying with the
conditions under which the crime may be committed. But this does
not mean either that the evidence may be equivocal or that
petitioner is exempt from its effects when it is not so merely
because, in the absence of excesses such as were committed and in
other circumstances, the order form would have given it protection.
It follows the mere fact that none of petitioner's representatives
ever met Dr. Tate face to face or held personal communion with him
is immaterial. Conspiracies, in short, can be committed by mail,
and by mail order houses. This is true notwithstanding the overt
acts consist solely of sales which, but for their volume,
frequency, and prolonged
Page 319 U. S. 715
repetition, coupled with the seller's unlawful intent to further
the buyer's project, would be wholly lawful transactions.
Accordingly, the judgment is
The conspiracy statute, R.S. § 5440, as amended, 18 U.S.C. § 88,
"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 $10,000, or imprisoned
not more than two years, or both."
The pertinent provisions of the Harrison Act are set out in
note 3 infra.
38 Stat. 785, as amended, 26 U.S.C. §§ 3220, 3221.
38 Stat. 785, as amended, 26 U.S.C. §§ 2553, 2554. The
indictment charged the conspiracy's object was to violate those
portions of the Act (as amended) which provide:
"It shall be unlawful for any person required to register under
the provisions of this part or section 2551(a) to import,
manufacture, produce, compound, sell, deal in, dispense,
distribute, administer, or give away any of the aforesaid drugs
without having registered and paid the special tax as imposed by
this part, or section 2551(a)."
26 U.S.C. § 3224.
"It shall be unlawful for any person to purchase, sell,
dispense, or distribute any of the drugs mentioned in section
2550(a) except in the original stamped package or from the original
stamped package. . . ."
26 U.S.C. § 2553.
"It shall be unlawful for any person to sell, barter, exchange,
or give away any of the drugs mentioned in section 2550(a) except
in pursuance of a written order of the person to whom such article
is sold, bartered, exchanged, or given, on a form to be issued in
blank for that purpose by the Secretary."
26 U.S.C. § 2554(a).
"It shall be unlawful for any person to obtain by means of said
order forms any of the aforesaid drugs for any purpose other than
the use, sale, or distribution thereof by him in the conduct of a
lawful business in said drugs or in the legitimate practice of his
26 U.S.C. § 2554(g).
Thus, although there were more than 1,350 wholesale drug dealers
in the United States from whom physicians might order narcotics
(Traffic in Opium and Other Dangerous Drugs for the Year Ended
December 31, 1941, United States Treasury, Bureau of Narcotics),
about 27% of the 204 doctors convicted were petitioner's
Testimony in the record establishes that the practice in the
profession is to give one-eighth or one-fourth grain doses, and
only rarely one-half grain doses. Cf. United States v.
Behrman, 258 U. S. 280
258 U. S. 289
Furthermore, there was expert testimony to the effect that codein
may be, and preferably is, used for the same medical purposes as
morphine sulphate. During the period from 1934 to 1940, however,
the record does not show that Tate ever ordered codein from
R.S. § 5323, 18 U.S.C. § 550.
Although this principle was there applied to aiding and abetting
a conspiracy among others, it has at least equal force in a
situation where the charge is conspiring with another to further
his unlawful conduct, without reference to any conspiracy between
him and third persons.
This may be true, for instance, of single or casual
transactions, not amounting to a course of business, regular,
sustained and prolonged and involving nothing more on the seller's
part than indifference to the buyer's illegal purpose and passive
acquiescence in his desire to purchase, for whatever end. A
considerable degree of carelessness, coupled with casual
transactions, is tolerable outside the boundary of conspiracy.
There may be also a fairly broad latitude of immunity for a more
continuous course of sales, made either with strong suspicion of
the buyer's wrongful use or with knowledge, but without stimulation
or active incitement to purchase.
Cf. United States v. Falcone,
109 F.2d 579, 581,
and compare Backun v. United States,
112 F.2d 635, 637;
United States v. Harrison,
121 F.2d 930, 933; United
States v. Pecoraro,
115 F.2d 245, 246.
Cf. Gebardi v. United States, 287 U.
; see also
81 U. of Pa.L.Rev. 474.
Glasser v. United States, 315 U. S.
, 315 U. S. 80
United States v. Manton,
107 F.2d 834, 839; United
States v. Harrison,
121 F.2d 930, 934; Eastern States
Retail Lumber Dealers' Assn. v. United States, 234 U.
; Interstate Circuit, Inc. v. United
States, 306 U. S. 208