People v. Baker — 96 N.Y. 340

Majority

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The People of the State of New York, Respondent, v. Lorenzo Baker, Appellant.

Headnote

In order to make out the crime of obtaining property by false pretenses, it is necessary to prove the false pretenses; that in reliance thereon and under the inducement thereof the property was parted with, and also that the false pretenses were made with intent to cheat and defraud.

Mere silence or suppression of the truth, a mere withholding of knowledge upon which another may act, is not sufficient to constitute false pretense.

Upon the trial of an indictment for obtaining $575 by false pretensfes the following facts appeared : Defendant, who speculated in stocks on his own account, agreed with M. that he would, through his brokers, purchase for M. one hundred shares of N. T. C. and H. R. R. R. Co. stock upon a margin, carry the same until the latter could pay for it, and, when paid for, deliver to him the certificate therefor. The money paid in by M. it was agreed that defendant might pay to the brokers or use it in his own business, allowing interest thereon, or in speculating, in his discretion, in other stocks, for M. ; the profits, if any, to be ultimately used in paying for the H. T. C. stock. The parties were intimate friends. Defendant was a merchant, in good standing and of considerable means ; he agreed to act as stated; for M., as a friend and without compensation. The purchase was made, as agreed, in April, 1873. In March, 1874, after having received from M., including dividends, about $5,000, defendant; pressed by financial necessities, sold the stock without M.’s consent or knowledge. At that time he had abundant property left to respond to any claim of M. The latter continued thereafter to send money from time to time, the receipts whereof defendant acknowledged, and he continued to send statements showing credits for money and dividends, as if the stock was still actually held by him. The parties met in the fall of '1875, when defendant proposed to make the payments thereafter to the brokers, but it was suggested by defendant that 'as there was some discrepancy between him and the brokers as to the accounts the payments to him should be continued. In January, 1876, defendant wrote a letter to M., giving a statement of credits as aforesaid. In March thereafter, without any farther meeting or communication, M. sent to defendant the $575 charged in the indictment. Payments and acknowledgments were continued in the same manner up to April, 1877, when defendant gave to M. a receipt for a small sum, stating it to be in full payment for said stock. Defendant was then financially embarrassed, and soon thereafter became insolvent. M. testified on the trial that in the transaction he relied entirely upon defendant’s promise to deliver the stock. Seld (Huger, Oh. J., Andrews and Miller, JJ. dissenting), that the evidence was insufficient to establish the crime charged.

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Evidence of the payments made by M. before and after the payment of the §575 was received under objection. Defendant, as a witness in his own behalf, was permitted to testify that he did not at the time he received the $575 intend to defraud M., but was not permitted to testify as to his intention in this respect when he received the other payments. Held error; that as proof of such other payments was competent only to show a guilty intention, he had the right to show that he did not receive them with such intent.

Defendant was asked by his counsel to state what was his intention in receiving the $575 ; this was objected to and excluded. Held, error.

The court charged the jury, “If you find that the defendant made the representations charged in the indictment, that they were, and that defendant knew they were, false when he made them, then the law presumes the fraudulent intent.” Held error; that while the jury might, from all the facts, infer such an intent, it was not an inference of law. The indictment alleged that defendant purchased the stock on a day specified. Evidence was received, under objection, tending to show that defendant never had the stock. His counsel requested the court to charge that, under the indictment, the jury must find that defendant had the stock at the date specified. This the court declined. Held, error.

(Argued May 1, 1884 ;

decided June 24, 1884.)

Appeal from judgment of the General Term of the Supreme Court, in the third judicial department, entered upon an order made December 3, 1883, affirming a judgment of the Court of General Sessions in and for the county of Rensselaer, entered upon a verdict convicting defendant of the crime of •obtaining money by false pretenses.

The material facts are stated in the opinion. ■

G. B. Wellington for appellant.

To warrant a conviction under the statute regarding false pretenses it must be proved that the defendant made to the prosecutor a false representation as to some existing matter, (Ramey v. People, 22 17. T. 417.) That the prosecutor relied on the false representation, and because of it parted with his property. (Scott v. People, 62 Barb. 71 ; Regina v. Gardiner, 1 Dearsley & Bell’s C. C. 43; Therasson v. People, 82 17. T. 240; Dilleber v. Pome Ins. Co., 15 Alb. L. J. 311; Ramiey v. People, 22 17. T. 417; Peopile v. Tompkins, 1 Park. 239; People v. Conger, 1 Wheeler, 448;

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People v. Blanchard, 90 Y. Y. 314.) If there is fraud in the transaction Baker was only guilty of a fraudulent concealment of facts which is not indictable. Suppression of facts by' one of the parties to a contract does not impose criminal liability, unless there is an active (as distinguished from a passive) negation of fact. (2 Wharton’s Grim. Law, § 1170, note; Banney v. People, 22 Y. Y. 416.) The fact that the prosecutor sent the money voluntarily is important. (People v. Tompkins, 1 Park. 239 ; Fa/rmeri B'k v. Whinfield, 24 Wend. 427 ; Cook v. FF. Y. C. Li. P. Co., 5 Lans. 405 .) It was error to refuse to strike out the alleged statement made by Baker that he never had bought the stock, as the pretense must be proved as laid, and any matter admitted in the indictment need not be proved by the defendant, and cannot be disproved by the prosecution. (Qlaehan v. Commonwealth, 3 Mete. [Ky.] 234; Paige v. Willett, 38 Y. Y. 31; Van Dyke v. Maguire, 57 id. 429 .) The court erred in not allowing the defendant to answer the question as to his intent. (Seymour v. Wilson, 14 Y. Y. 568; People v. FLa/rt, 35 Barb. 630 ; Kerrains v. People, 60 Y. Y. 228; Gortlamd Co. v. Herkimer, 44 id. 26.)

Edgar L. Fursman for respondent.

To constitute the crime of false pretenses property must be obtained by means of some false representation, there must be an intent to defraud, and the false representations must be designedly made. (.Ran ney v. People, 22 Y. Y. 413-417 ; People v. Higbie, 66 Barb. 131 , 134, 137; Watson v. People, 87 Y. Y. 561, 567; Lesser v. People, 73 id. 78.) The evidence of subsequent similar false representations by defendant to Meeker, and the receipt by him of money by reason thereof, was properly admitted upon the question of guilty intent. (Bielsckofsky v. People, 3 Hun, 40 ; Weymcm v. People, 4 id. 511, 517; Copperman v. People, 56 Y. Y. 591.) A fraudulent intent may be presumed from the falsity of the statements made. (People v. Herrick, 13 Wend. 87 -91.) Where a judge has given the jury the true rule applicable to a case, when it comes to be considered on all the evidence, it is not error to refuse to charge a

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proposition which, though correct in itself, is only calculated, to confuse them by diverting their attention from the real question, which, upon the whole evidence, has been already correctly submitted to them. ( Walker v. People, 1 H. Y. Or. Bep. 7.)

The defendant was tried and convicted in the Bensselaer County Sessions for obtaining of William H. Meeker, on the 30th day of March, 1876, the sum of §575 by false pretenses. The conviction was affirmed at the General Term of the Supreme Court, and then he appealed to this court. The facts of the case may be summarized as follows: In and prior to March, 1873, Meeker was a Methodist minister, and the defendant was a reputable citizen of Schaghticoke, a merchant of considerable means, reputed to be wealthy, and in business affairs skillful and sagacious. They were intimate friends, and there existed intimate social relations between their families.

Meeker became aware that the defendant dealt somewhat in stocks, and that he had been successful in making in that way some money for himself and others; and having about §10,000 invested in small sums in various ways, he conceived the idea of operating in stocks through the defendant, mainly for a more profitable and less troublesome investment of his means. The defendant consented to act for him as his friend, and without compensation. It was finally agreed that the defendant was, through his brokers, to buy for Meeker one hundred shares of Hew York Central railroad stock, upon a margin of §2,000, and carry the stock through his brokers for him until he could pay for the same. After the payment of the first §2,000, as fast as Meeker could gather in his money, he was to pay it to the defendant and he was to pay it to the brokers, or use it in his business, allowing interest on the same, or in speculating in other stocks for Meeker the profits of which were ultimately to be used in paying for the Hew York Central stock which Meeker desired to hold as an investment. On the 28th day of March, 1873, the defendant wrote Meeker a letter which acknowledged the receipt of a sum of money to be used as the

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margin for the purchase of the stock, and after giving some facts and opinions about stocks closed as follows: “ I have given you the facts for you to decide, and let me know your decision. You cannot make much mistake in the stocks I have mentioned. You can have all the benefit (if any) of my experience; but do not forget that all human judgments are fallible, and I may be mistaken in my opinions. You should inform yourself as soon as possible. My opinion is, there will be a large advance in all railroad stocks, except such as have been inflated.” To this letter Meeker replied the next day, speaking of his resources and his efforts to get in his money, desiring to know how long he could carry the one hundred shares of stock upon payment by him of $2,000, expressing a wish that some of his money might be used to speculate in Lake Shore and in W abash stocks, and saying, among other things, “ as you are disposed to help me a little, I wish you to' practice that great rule, do by me as you do for yourself, and I will take the results.” “You understand now my resources and wishes, I think, and if you think it best for me or for yourself to venture my $4,000 in this way, then let drive, and I will send moneys to you as fast as they come, and pay you interest on any moneys you use of your own for my benefit“not that I care about speculating, but I would like to have as much lawful interest in the way of dividends as my neighbors have; ” “ all of which I leave now to your judgment.” On the 9th of April, before the defendant had received the full sum of $2,000, he purchased through his brokers the one hundred shares of 14ew York Central stock at a total cost of a little over $10,000, and reported the purchase by letter to Meeker. . They met soon after and had a conversation in which the defendant told him that he need not hurry up his collections,' or incommode himself, as the stock had been purchased. After that they did not meet for about a year and a half, and their business was transacted, by correspondence. Meeker, from time to time, sent him more money, suggesting in some of his letters that he should use his money in speculating in western stocks so as to make money to aid in paying for the LTew-Yorlc Central stock. The defendant, in the letters he wrote, acknowl

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edged the receipt of money, gave his opinion about stocks and sent statements of the account between them. The defendant was to carry along the stock in this way until, by the money sent him by Meeker and the dividends on the stock, it was paid for, and then, and not until then, Meeker was to have the stock certificate.

Unfortunately for both parties, in the fall of 1873 the great financial panic occurred, which caused great stringency in money and great depreciation in the price of stocks; and on the 11th day of March, 1874, after he had received of Meeker, including the dividends credited, about $5,000, pressed by his financial necessities, without the knowledge or consent of Meeker, he sold the stock. After that Meeker continued to send him money from time to time to apply upon the stock, and he continued to acknowledge the receipt of the money so sent, and to send statements to Meeker showing credits for the money, and for dividends as if made upon stock actually held by him. In a letter to Meeker, dated March 12, 1875, he advised him not to sell the stock until times were better, and said that he would carry it just as long as he wished ; and in a letter dated March 15, he said: “Ton will certainly do well not to sell until times are better, for then you will get a higher price.” They met in the fall of 1875 and had some conversation about the stock and the account, in which Meeker proposed thereafter to pay his money directly to the brokers instead of the defendant, but it was suggested by the defendant that as he had charge of the matter and there was some discrepancy between him and the brokers about the account, he should continue to make his payments to him. On the 12th day of January, 1876, the defendan’t wrote him a letter giving him a statement of his credits for dividends upon the stock, besides credits for several payments of money. He closed the letter in language not uncommon with deluded and sanguine dealers in stocks, by saying : “ I think stocks have about reached their lowest prices. The market is very buoyant. There will be a prodigious advance in them before long. Bottom has. been touched.” Thereafter, without any further meeting or com

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niunication between them, on the 30th day of March, Meeker sent him $575, for which he gave a receipt, and that is the sum which he is charged with obtaining by the false pretenses. Afterward Meeker kept on sending the defendant money which the defendant continued to acknowledge, and this course of business lasted until April 13, 1877, when the defendant gave Meeker a receipt for a small sum which was stated to be in full payment for the one hundred shares of stock. The correspondence between the parties, which continued down into the year 1879, shows that the defendant was financially embarrassed, but that he was hopefully struggling against the adverse tide, and waiting for a favorable turn in the stock market. In the end he became insolvent, and all his property and all Meeker had paid him seem to have passed into the Wall street maelstrom, where so many fortunes of sanguine and confiding speculators have been engulfed.

It must be noticed that not a word passed between Meeker and the defendant, personally, from the fall of 1875 until long after the payment of the $575. The defendant at no time asked Meeker to pay that or any other sum, and the only false representations upon which the people rely are those captained in the statements made in the accounts sent to Meeker by the defendant on and prior to January 12, 1876.

We have thus given an outline of all the evidence tending to establish the crime of which the defendant was convicted. A careful examination and consideration of all the facts has left upon our minds a strong conviction that the defendant was not guilty. He ought not to have sold the stock without Meeker’s consent; birt in doing so he was at most guilty of its conversion. After he had sold it, he ought to have informed Meeker of the sale so that he could have withheld further payments, or at his option, continued the payments, relying upon the ability of the defendant to furnish the stock when it should be paid for. But for withholding this information he was not guilty of any crime. He ought not to have used language in his letters and statements sent to Meeker, substantially conveying information that he was still carrying the stock. So far as

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his letters and statements convey that information, they were undoubtedly false; but a mere false statement is not punishable as a crime. It is not claimed that the defendant, at the time of the original arrangement with Meeker to receive his money for the purchase of the stock, had then formed any plan or intention to defraud or swindle. It is entirely clear upon the evidence that he intended then, in good faith, to aid Meeker to make money by operating in stocks, and to procure for him a profitable and safe investment. Having been somewhat successful in stock operations, he was sanguine that his good fortune would continue and that his sagacity would enable him to aid Meeker. There is not a particle of evidence which justifies the inference that when he sold the stock he meant to defraud Meeker. At that time, so far as the evidence tends to show, he had abundant property left after the sale to respond to any claim of Meeker. There is no reason to doubt that he made the sale of the stock to relieve himself from what he then believed to be a temporary embarrassment, expecting to be able to replace the stock, and in any event to deliver it whenever Meeker should pay for it. It is not a just inference from the evidence that when, on the 12th day of January, 1876, more than two months before the $575 was paid, the defendant entered in an account then rendered to Meeker credits for dividends paid upon the stock, as if he were still holding the stock for him, he made such entries for the purpose of inducing Meeker to make further payments. As between himself and Meeker, the latter was entitled to such credits, and it was simply a mode of stating the account between him and Meeker, as an account would have to be stated whenever the stock should be fully paid for and the time should come for its delivery. Those statements in the account were not made to induce any payment or any action on the part of Meeker. He at no time pressed Meeker for payments or asked him to make payments, and whatever payments were made by Meeker at any time were voluntarily made- It is not a just inference from the evidence that on the 12th of January, or at any time before the $575 was paid, the defendant had conceived any design to swindle

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or defraud Meeker. He was evidently confident and sanguine that a turn in the stock market would bring him out all right and enable him to perform his entire obligation to Meeker in reference to the stock.

In order to constitute the crime of obtaining property by" false pretenses, it is not sufficient to prove the false pretenses, and that property was obtained thereby; but it must be proved that the false pretenses were made with intent to cheat and defraud another. Here there was an entire failure to prove that necessary element of the crime. . It is impossible to say that the statements as to the dividends in the letter of January, 1876, were made to induce the payment of the $575, or to . induce any further payments,. The defendant undoubtedly wished Meeker to understand that he was still carrying the stock — not for the purpose of inducing him to make further payments, but undoubtedly so that Meeker should not complain of, charge him with, or hold him for conversion of his stock. ■

Another essential element of the crime, which the people in all cases of this kind are bound to establish, is that the money was paid, or the property parted with in reliance upon and under the inducement of the false pretenses alleged. Here it is not a just inference from the evidence that this $575 was paid in reliance upon the representation that the defendant was still holding and carrying the stock. ■ At that time Meeker had implicit confidence in the 'financial ability, the business sagacity, and' the personal integrity of 'the defendant. For aught that appears in the evidence he would have continued his payments relying upon the defendant to deliver the stock when it had been fully paid for, if he had known that, to tide over a present necessity, he had sold the stock. And so when Meeker was asked the direct question, he testified that he relied entirely upon the promise of the defendant that he would purchase the stock and deliver it to him after he had fully paid for it, and that his promise to deliver the stock was the only thing he relied upon. He did not testify as he could if it had been true, that he relied upon the representations of the defendant that he still continued to carry the stock. It must be

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borne in mind that mere silence and mere suppression of the truth, the mere withholding of knowledge upon which another may act, is not sufficient to constitute the crime of false pretenses.

" We do not sit here to square the conduct of the defendant by any .code of morality, or any standard of integrity; the sole question is whether the proof was sufficient to show that he had committed the crime with which he stood charged, and we are of the opinion that it utterly failed.

It does not relieve us from our responsibility that the jury have found the defendant guilty. The point was taken at the trial on his behalf, that there was not evidence sufficient to establish the crime, and that he should be discharged on that account; and that makes it our duty to determine whether the evidence was sufficient, and finding that it was insufficient it is our duty to reverse the judgment entered upon the verdict of the jury.

But if so far wrong, and the case was one for the jury, errors were committed at the trial of which the defendant can justly complain. Against his objection, the people were permitted to show payments of money by Meeker to him from time to time before and after the payment of the $575. Proof of such payments was made for the purpose of showing the guilty intention of the-defendant, and was competent only for that purpose. The defendant as a witness in his own behalf was permitted to testify that he did not, at the time he received the $575, intend to defraud Meeker. He was also asked this question: “Was your intention, when you received moneys from time to time from Meeker, to defraud him % ” That was objected to as incompetent and inadmissible, and the objection was sustained. As the intent with which those moneys were ■ received was one of the material inquiries he should have been permitted to show that he did not receive them with any fraudulent intent. The case went to the jury in such a way as to enable the people to claim, that not only the $575 was received by the defendant with the intent to defraud Meeker, but that all the other moneys were received in the same way, and that the receipt of all the moneys had a tendency to show with

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what intent the $575 was received; and hence the defendant clearly had the right to show that he had no fraudulent intent in receiving any of it.

The defendant, after answering that at the time he received the $575 he did not intend to defraud Meeker, was also asked to state his intention at the time he received it, and th.e question was objected to on the part of the people, and the objection was sustained. We think that ruling was also erroneous. Upon the facts of the case as they were developed at the trial, it was claimed by the defendant that when he received the $575' it was his intention to replace the stock, to respond to Meeker whenever called upon for the stock, and that he was at the time able to do so. That was a theory he had a right to prove if he could, and the proof would bear upon the final issue whether he intended to cheat and defraud him, and hence he should have been permitted to answer the question.

The judge charged the jury as follows: “ If you find that the defendant made the representations charged in the indictment, and that they were false, and that the defendant knew they were false when he made them, then the law presumes the fraudulent intent.” That portion of the charge was excepted to by the defendant, and we think the exception well founded. The crime of false pretenses is not made out by simply showing that the representations charged in the indictment were made, and that they were false, and that the defendant knew them to be false. The jury, from those facts and from all the other facts, may infer a fraudulent intent; but the law does not presume a fraudulent intent; that is to be found as a fact by the jury, and is not an inference of law.

The indictment alleged that Baker did purchase this stock on the 9th day of April, 1873. The people, against the objection of the defendant, gave some evidence on the trial tending to show that the defendant .never had the stock; and his counsel requested the judge to charge that, under the indictment, the jury must find that Baker had the stock April 9, 1873, and the judge declined. That should have been charged. It was so alleged in the indictment, and the people

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could not take any benefit from any proof tending to show the contrary.

We are, therefore, of opinion that the defendant was improperly convicted, and that the judgment should be reversed and a new trial ordered.

All concur, except Huger, Ch. J., Andrews and Miller, JJ., dissenting.

Judgment reversed.

Cases cited

Pope v. Hart 35 Barb. 630 N.Y. Sup. Ct. 1862-01-28 p. 342
People v. Higbie 66 Barb. 131 N.Y. Sup. Ct. 1861-01-01 at 134, 137 p. 342
People v. Herrick 13 Wend. 87 N.Y. Sup. Ct. p. 342