43 Mass. App. Ct. 522 | Mass. App. Ct. | 1997
Lead Opinion
Evidence adduced by the Commonwealth supported findings made by the Superior Court judge, to whom the case was tried without a jury, that over a period of five weeks the defendant Howard R. Reske, Jr., sold to a customer who was mentally impaired six new pickup trucks on terms that resulted in between four to six times the normal profit margins. Reske was convicted of six counts of larceny of property over $250, G. L. c. 266, § 30, more particularly, larceny by false pretenses. At trial, Reske made timely motions for a required finding of not guilty, and presses that point on appeal. His contention is that the evidence, taken in a light most favorable to the Commonwealth, describes acts that are morally reprehensible but that they are not a crime. We affirm the convictions.
Ronald Nellon,
In the first transaction, that which occurred on June 8, 1992, salesmen for the dealership had fixed a price of $17,566, yielding a profit of $1,145. That was very close to what David Quirk, the dealership’s principal, had testified was the average or normal profit on a truck sale. A salesman for Quirk and Nellon got so far as to sign an agreement at that price. Reske reviewed the contract (one might think that a general manager would review a sales contract before it was signed) and raised the price $2,000 by increasing the “price of unit” $1,000 and decreasing the trade-in allowance $1,000. Now the profit was $3,145.
The second transaction occurred on July 1, 1992, and produced a profit of $4,943, four times the norm, by adding $2,610 to the sticker price (the manufacturer’s suggested retail price) and “low balling” the allowance on the truck — purchased at another dealership on June 13, 1992, and with 175 miles on the odometer — that Nellon was trading in.
The third transaction, on July 8, 1992, was $2,700 over the sticker price and gave Nellon a trade-in allowance of $7,775 on the truck he bought from Quirk a week earlier and that had 109 miles on the odometer. The profit from this transaction was $7,288, six times the norm.
The fourth transaction occurred the very next day, i.e., July 9, 1992. Nellon received a trade-in allowance of $5,876 on the truck he had bought the day before for $14,625. The odometer on that vehicle read 26 miles. The profit margin on this transaction came to $4,313.
The sixth transaction occurred on July 17, 1992. Reske allowed a trade-in of $4,925 on a truck that Nellon had purchased from another dealer for $13,470. At the time of trade, that vehicle had 125 miles on its odometer. The value of the truck traded in was placed on Quirk’s books at $9,500. The profit on this transaction was $6,077.
A prosecution on the theory of larceny by false pretenses — that aspect of the larceny statute under which the prosecution proceeded — requires proof that: (1) a false statement of fact was made; (2) the defendant knew or believed the statement to be false when he made it; (3) the defendant intended that the person to whom he made the false statement would rely on it; and (4) the person to whom the false statement was made did rely on it and, consequently, parted with property. Commonwealth v. Leonard, 352 Mass. 636, 644-645 (1967). Commonwealth v. Kenneally, 10 Mass. App. Ct. 162, 164 (1980).
The core of Reske’s defense is that he made no false statements of fact, that prices are a matter of opinion, and — the defense comes to this — it is not a crime to gull a willing dupe. It is commonplace that prices, unless regulated, are subject to market fluctuation. That does not mean, however, that there is no such thing as a false statement about the value of an item that is for sale. Reinherz v. American Piano Co., 254 Mass. 411, 420-421 (1926). Commonwealth v. Coshnear, 289 Mass. 516, 522 (1935).
Here, the finder of fact may infer a false statement as to the value of the six trucks sold by Quirk to Nellon
There is a distinction between stating the price of a mine, a share of corporate stock, a piece of jewelry, or a work of art, as to which values are freighted with opinion, and goods sold as widely to the general public as new automobiles. It is simply not correct to suppose that automobile prices are so relative that it is not possible to state a false price. There are acceptable yardsticks. Dealer invoice prices are obtainable information and they set the base. Sticker prices, except for one brand of car which has a sales policy of selling at sticker price, are the ceiling. A price over sticker price would not be justifiable. See How to Buy or Lease a Car, Consumer Reports, Apr. 1997, at 13-15. Fair trade-in prices can be established through an industrial reference source known as the Blue Book. See Buying a Used Car, id. at 17.
Nevertheless, the dissenting opinion insists that in the absence of some express statement by Reske that the prices charged or the values given in trade were fair market prices and values, there is no false statement of a fact. We think that far too literal — certainly in the peculiar circumstances of this case. The confidence man is generally subtle when winning the confidence of the mark and a false pretense may consist of an act, symbol, or token calculated to deceive, such as grossly off-market prices or credits stated on forms of an established automobile agency selling a respected line of automobiles. Commonwealth v. Morrison, 252 Mass. 116, 122 (1925). “It is not necessary to have direct evidence that a representation was false. It is enough if all the circumstances considered together would warrant the jury in concluding that it was untrue.” Id. at 122-123. A false pretense may be made by implication as well as by verbal
Reske wanted those false values to be accepted by Nellon. He expected them to be accepted because Nellon’s impaired cognitive capacities rendered him a gullible mark. The days may be over when caveat emptor was a byword of capitalism and a sucker had only himself to blame. Cf. McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704, 712-714 (1990). Even at the apogee of economic Darwinism, however, there was an underlying assumption that the mark had normal mental capacity. Given Nellon’s obviously addled state, taking his money was on the same larcenous plane as the extraction of money from a credulous and incompetent customer for an insurance policy never applied for in Commonwealth v. Kenneally, 10 Mass. App. Ct. at 165-166.
The dissent advances the somewhat curious proposition that, unless a statute defines as a crime the selling or buying of property to or from a manifestly incompetent person at greatly inflated profit margins, which any person of normal understanding would reject as unacceptable, then there is no crime. The law is not so inelastic. Larceny by false pretences is a crime of ancient lineage, originally enacted in 1757 by Parliament to supplement the common law.
Precisely so. Here the mark’s disability was the key necessary to Reske’s being able to relieve him of his money through a false pretense of ordinary dealing in the automobile market. Nellon was quintessentially weak and credulous. Reske crossed the prohibitory line, and did so following a repetitive pattern. Cf. Commonwealth v. England, 350 Mass. 83, 87 (1966); Commonwealth v. Pina, 1 Mass. App. Ct. 411, 415 (1973).
As to the fourth element of the crime, the unfortunate Nellon did rely on Reske’s inflated and deflated figures and paid whatever he was asked for, thus, parting with at least $23,651, which, in the aggregate, could not honestly have been charged. As to each of the six transactions, the amount of overcharge was substantially above $250.
Proof of the elements of larceny by false pretenses were, thus, put before the trial judge and he rightly denied the motion for a required finding of not guilty.
Judgments affirmed.
A pseudonym.
He had an IQ of 79 and could not comprehend numbers over 100.
The computation of profits on each of the six transactions was made by the comptroller of the Quirk companies.
The once separate crimes of larceny, embezzlement, and larceny by false pretenses have been merged into the one crime of larceny since 1899. Commonwealth v. King, 202 Mass. 379, 388 (1909).
When David Quirk, the principal of Quirk Chevrolet, noticed the pattern of sales to Nellon, he ordered that no more sales be made to Nellon and Quirk made full restitution to Nellon for the amounts he had been overcharged.
Compare Commonwealth v. Ianello, 344 Mass. 723, 734-736 (1962), in which a more systematic overcharge for sidewalk replacement was considered to be a basis for larceny by false pretenses.
One who obtained title to property, the English courts had held, was not guilty of larceny; hence the remedial statute.
Dissenting Opinion
(dissenting). I have no doubt that there was larceny in the defendant’s heart as he rewrote the first sales contract and wrote up the remaining five contracts for Nellon to sign. But it is fundamental to criminal law that “there can be no criminal liability for bad thoughts alone. ...” LaFave and Scott, Substantive Criminal Law § 1.2(b) at 10 (1986). I dissent because I conclude that the defendant’s conduct, however ex-ploitive and unfair it may have been, does not fall within the crime of larceny by false pretenses.
1. There was no evidence of a false statement of material fact. The gist of the crime of larceny by false pretenses, as the majority points out, is proof that a false statement of fact was made by the defendant upon which the victim relied. The Commonwealth failed to introduce any direct evidence that the defendant made any false statements to Nellon. Neither Nellon nor the defendant testified, nor was there a witness who testified to what he heard the two men say to each other, and there was
Nevertheless, the judge found that there were misrepresentations of fact made by the defendant to Nellon. He found that the statements on the purchase contracts (which he referred to as “invoices . . . prepared by the defendant”) “contain false statements of fact because they consistently undervalued the value of the trade-in and consistently overvalued the Maroney sticker prices [i.e., the manufacturer’s suggested retail price, commonly known as the ‘sticker price’]” (emphasis added).
The purchase contracts prepared by the defendant and signed by Nellon are barren of any words of representation. The contracts merely recorded the price of the vehicle sold, the trade-in allowance, the miscellaneous costs of the transaction, and the mathematical calculation of the cash due on delivery of the vehicle purchased.
The judge’s argument proves too much. He ruled, in substance, that the terms of the transactions were so unfair that the terms themselves were “false statements.” But it makes much more sense to say that if the terms were that unfair, no competent adult would accept those terms regardless of what was said. I return to this point below; it is enough to say where, as here, a contract merely recites the financial terms of a transaction, it is unreasonable to conclude that those financial terms may be taken as a representation as to the fair value of the vehicles sold and bought. A car salesperson who offers and sells a vehicle to a competent adult in excess of the sticker price, or who offers and buys a used vehicle for less than blue book has not, without more, committed larceny; this is so because the offeror has made no false statement of fact.
The judge, not unmindful of the problem presented by this unusual case, acknowledged that (on his view of the purchase
Coshnear provides no support for the judge’s conclusions. That case involved a circular for the sale of stock which stated that “the stock [being offered for sale] was selling at a fair market price in the open market in the vicinity of” $125 per share (emphasis added). In fact, the evidence was that the defendants were purchasing the shares of the same stock at $100 per share, and “in many instances [for] much less. . . .” Id. at 523. In Coshnear, the defendant’s statement had to do with actual sales in the open market; the statement was both explicit and demonstrably false. In the case before us, there was no evidence that the defendant made any statement.
The majority, rightly perceiving that the purchase contracts cannot themselves “contain” false statements of fact, as the judge found, argues that the “finder of fact may infer a false statement as to the value of the six trucks. . . .”
The majority’s argument does no better, it seems to me, than that of the judge. The manifestly unreasonable terms of the six transactions were not accepted by Nellon because of some unknown, untestified-to false statement of fact by the defendant upon which Nellon relied; no reasonable, competent adult would accept such extravagant terms no matter what he was told. Rather, Nellon accepted the six transactions because his impaired cognitive ability disabled him from realizing that the terms of the transactions were grossly unfair to him. The majority’s “inference” of false statements is pure conjecture. See Brown v. Commonwealth, 407 Mass. 84, 89 (1990), S.C., 414 Mass. 123 (1993).
Moreover, I believe Massachusetts decisional law does not support the proposition that in a business transaction involving the purchase and sale of property, a statement — much less an inferred statement — regarding value is a statement of fact rather than one of opinion. “It has long been settled that false
Commonwealth v. Leonard, 352 Mass. 636, 644-645 (1967), and Commonwealth v. Kenneally, 10 Mass. App. Ct. 162, 165-166 (1980), which the majority cite, are inapposite. Leonard involved false invoices regarding the number of men on the job, the amount of overtime, and the amount of supervision of the job. There was no issue of value as a statement of fact. In Kenneally, the issue was proof of the defendant’s intent to steal, not whether the expression of an opinion as to value was a statement of fact.
2. The exploitation of an elderly or disabled person is not, without more, a crime in Massachusetts. The cases dealing with larceny by false pretenses have focused on the false representations of the defendant, not the victim’s perception of those events. See, e.g., Commonwealth v. Beckett, 373 Mass. 329
The Florida statute is the most precise and illuminates the problem at hand. It is a crime in Florida for a person to obtain or use the funds of an elderly or disabled person if the accused “knows or reasonably should know that the elderly person or disabled adult lacks the capacity to consent.” Fla Stat. c. 825.102 (1996 Supp.).
The Massachusetts Legislature did address the problem of the exploitation of elderly and disabled persons in 1995 when a statute was enacted, entitled “An Act relative to the assault, abuse, neglect and financial exploitation of an elderly or disabled person.” St. 1995, c. 297. Section 9 of c. 297, amends G. L. c. 266, § 30, the larceny statute, by adding subsection (5) which deals with larceny from a person sixty years or older, or a disabled person. However, new subsection (5) merely provides for increased penalties where the victim is a person sixty years or older, or a person with a disability. Subsection five does not change the elements of the substantive crime; it remains the same in subsection (5) as it currently appears in subsection (4): “Whoever steals, or with intent to defraud obtains by a false pretense. . . .” Moreover, St. 1995, c. 297, was passed approximately two years after a grand jury indicted the defendant charging him with the crimes for which he was convicted in this case.
The point need not be labored. Until the Legislature decides to enact appropriate remedial legislation, such as that enacted in Florida, protecting a person in Nellon’s circumstances from exploitation by unethical persons, Nellon’s lack of capacity to understand and consent to the unfair transactions imposed upon
The judgments should be reversed and the findings set aside.
The commentary to the Model Penal Code offers the following discussion to illustrate the irrelevancy in the criminal law of the unfairness of a bargain brought about by an undisclosed material fact. “Taking advantage of a known mistake that is influencing the other party to a bargain is not criminal under existing law in the absence of special circumstances imposing a duty to correct the mistake. The miner who discovers that his mine is nearly exhausted of ore may sell it to a stranger although he is fully aware that the stranger is buying under the mistaken belief that the property is still valuable as a mine.” See comment 3(f) to § 223.3 (1980).
I note that the Commonwealth did not try this case on the theory now put forward by the majority, and the judge did not decide the case on that theory. See note 4, infra. See, however, Commonwealth v. One 1986 Volkswagen GTI Auto., 417 Mass. 369, 370 n.l (1994) (“The theory of law on which by assent a case is tried cannot be disregarded when the case comes before an appellate court for review . . .”).
It is also worth noting that, to establish “value,” the majority relies on “market norms” — referring, presumably to the “sticker price” (i.e., the manufacturer’s suggested retail price) and the “blue book” of the National Automobile Dealers Association. The sticker price is self-defined as a mere
During the trial the defendant moved to strike the Commonwealth’s evidence of the incompetency of Nellon. The judge denied the motion. He said it is not the Commonwealth’s theory to prove “that this defendant defrauded the victim. That is not the theory at all. . . . We agree everybody can buy cheap and sell dear. But you can’t take advantage of someone who can’t add it all up, and falls prey to this sort of cunning, as they put it. ... I mean that is all I know, So I am going to try it on their theory." (Emphasis added.)
In his judgment which he announced from the bench immediately following the conclusion of the trial, the judge emphasized that the defendant knew or should have known what the fair market value of the vehicles were, and that such values may be, and were stated falsely. Then the judge — who earlier in his opinion had found that Nellon was “borderline retarded” — pointed out that “the defendant. . . knew that [Nellon] was not really competent to enter into any contractual relationships. Competence to engage in business transactions is more than a transient surge of lucidity. It involves not merely comprehension of what is going on, but an ability to comprehend the nature and quality of the transaction, together with understanding of its significance and consequences.” (Emphasis added.)
The judge concluded that the conduct of the defendant was “inexcusable and criminal,” and found him guilty on all six indictments.
Viz.: “The days may be over when caveat emptor was a byword of capitalism and a sucker had only himself to blame.”
But for Nellon’s diminished cognitive ability, he would have been bound by the transactions, whether or not he had read or understood the agreement, see Spritz v. Lishner, 355 Mass. 162, 164 (1969), whether or not he could read, ibid., and regardless of the adequacy of the consideration, see Graphic Arts Finishers, Inc. v. Boston Redev. Authy., 357 Mass. 40, 43 (1970) (“The law does not concern itself with the adequacy of consideration; it is enough if it is valuable”), and criminal charges would not have been brought.
In Delaware, see Del Code Ann. tit. 31, § 3913 (1996); in Florida, see Fla. Stat. c. 825.102 (1996 Supp.); in Illinois, see 720 Ill. Comp. Stats. 5/16-1.3 (West 1996); in North Carolina, see N.C. Gen. Stat. § 14-32.3 (1996 Supp); in South Dakota, see S.D. Codified Laws § 22-46-3 (Michie 1997 Supp.); in Utah, see Utah Code Ann. § 76-5-111 (1996 Supp.); and in Wyoming, see Wyo. Stat. Ann. § 35-20-109 (Michie 1997).
It is not entirely irrelevant to point out that automobile salespersons are not subject to licensure by the Commonwealth, and particularized criminal penalties in connection with the sale of motor vehicles are limited to a few events. See G. L. c. 266, § 139 (altering identifying numbers); c. 266, § 92A (requiring disclosure of certain conditions affecting motor vehicles); c. 266, §§ 141 and 141A (regarding odometers and speedometers); c. Ill, § 142K (emission standards).