*1 which it alleges collaterally are binding
upon UF. We find no abuse of discretion UNITED America, STATES of Appellee, judge trial who wrote separate mem- opinions (filed orandum April 26 and May Donald EUCKER et 1974) stating the basis for his determi- al. Defendants-Appellants. nation. The further claim that certain doc- uments were improperly excluded is equally Nos. 313 and 75-1246, Dockets meritless. There is no that any indication 75-1280 and 75-1303. of the documents would have changed the United States Court of Appeals, result below. Second Circuit. We conclude appellant’s antitrust Argued Oct. 1975. theories which impose would liability Decided sections 1 and 2 March Sherman Act and section of the Clayton Act are untenable
given the findings of fact below. Even
assuming standing, post-1961 monopoly,and
the application of the intracorporate con- doctrine,
spiracy all of dubious validity
here, it is clear no liability Ap- exists.
pellant’s only chance success on this ap-
peal depends upon a showing of clearly findings
erroneous of fact. Our review
shows that the findings are predominantly
supported by the record and they where are
not, cannot be clearly erroneous, termed
particularly in view the court’s convic-
tion that the UF officers’ testimony was
straightforward and credible. Plaintiff’s
ease rests in sum primarily upon dubious
and unsupported inferences. While the ap-
pellant has assiduously combed the exten-
sive record here and extracted occasional
comments which tend to serve purpose,
the errors uncovered are either harmless or are fact overborne the weight of the
evidence. judgment below therefore af-
firmed. *3 Londin, J.
Jerome New City (Carro, York Londin, Spanbock, Fass, & Rodman New York City, Kenneth Lapatine, A. New York City, of counsel), for Anderson. Rosen, Michael (Saxe, New City York Ba- Bolán, C., con & P. New City; Roy York M. Cohn, City, counsel), New York ap- pellant Sloan. Arkin,
Stanley City S. New (Stanley York Arkin, C., S. P. New City, York Mark S. Arisohn, New City, counsel), York appellant Eucker. Strauss,
Audrey (Paul Asst. Atty. U. J. S. Curran, Atty., Costello, U. S. Robert J. Committee, Eucker, Executive Sabetta, Asst. U. John C. Atty., U. S. Asst. Committee, counsel), of the Executive for member City, of York Atty., New S. early charge operations. In Or- appellee. experiencing difficulty vis was in maintain MOORE, and VAN FEINBERG required by ratio ing the 20:1 Before Judges. GRAAFEILAND, Exchange,2 Circuit rules of the New York Stock its Executive Committee cast about for GRAAFEILAND, Judge: Circuit VAN increasing apparent capital. its means of According proof, some Government’s Brothers, a Wall 1970, Orvis June widely.3 cast too members doors, firm, closed brokerage Street million dol of four in excess leaving debts susceptible account most appellants, September lars. On was that of the Clinton manipulation Oil *4 in were indicted company, of that officers Wichita, Kansas, presi- whose Company of York, charged District of New the Southern dent, Clinton, Realto was a close friend of conspiracy and substan with nine counts in was a broker for the appellant Sloan. Orvis law. federal securities of the violations tive Company gas Clinton in the sale of oil and trial,1 and he was to Anderson went Only units, exploration investment for which it count alone. conspiracy on convicted percent payable a six commission received trial by the counts were dismissed Seven the time the fourth and final installment Anderson on jury acquitted judge, and paid. of each unit purchase price was pleaded guilty eighth. 1969, Orvis, suggestion Sloan at the of Early in count, pleaded guilty Anderson, and Eucker conspiracy of and with Sloan illegal hy- charging count a substantive as began treating projected to commissions securities, reserv capital. of customers’ A fictitious customer pothecation current $797,100 the District right appeal to from was created and in ing his account dismiss this count projected refusal but unearned commissions was Court’s allege a crime. account. To balance this entered in this failure debit, stock of Realto Clin- unsecured some conviction, assert- appeals his Anderson wrong- possession ton in the Orvis procedural ing a number of substantive the same account. Ander- fully credited to Judge appeals from District errors. Sloan September this transfer in son learned of of his motion to withdraw Knapp’s denial 1969. predicat- motion was guilty plea, which alleged failure to prosecutor’s upon ed A second fictitious addition to sentencing with the “go to bat” for Sloan created out of the sale of units Clinton ap- Eucker promised. had been judge failing forty percent as to record the sales plea on his judgment employees. based peals payable from commission Orvis’ with his reservation guilty, in accordance The decision not to deduct these commis- right to do so. sions was known to Anderson and the other
members of the Executive Committee. Background Charges Company In sent Clinton Oil Sloan 4,344 shares of Clinton stock directions partners were Orvis Broth Appellants Orvis, and partners it be sold to ers, in the securities busi which had been 5,000 man sent shares for sale to years. was the Realto Clinton many Sloan ness posted in party. third These shares were Anderson was chairman aging partner; appellants, dispute many two other defend- In addition to is substantial as to 1. 3.There pleaded guilty to con- herein; indicted. One purposes ants were facts recited but for of this appeal. spiracy The other was and did proof appeal, most favor- we must construe acquitted. tried with Anderson and was McCarthy ably to the v. United Government. States, 1972). twenty permitted to exceed 2. Liabilities are not capital. N.Y.S.E. Rule the amount of times 325. they gift were a Machinations at as if Orvis were Orvis’ books not confined consignment, and Anderson to the Clinton than account. In the fall rather August Anderson posting attempted negotiate of this learned the sale of nineteen thousand shares of unregistered month, it was discovered that In the same International Company Controls stock from trading account had sus- own the firm’s customers of Orvis to a mutual fund called $500,000, unexpected an loss tained the Fund of Letters. After pur- Orvis had to seek addi- called his friend Clinton Sloan chased the stock from its customers for to, did, agreed Clinton capital. tional $500,000, almost the Fund of Letters refus- However, $500,000. this was in forward ed accept it because International Con- for sale of Clinton commissions payment of trols Company would not register the stock. not as a loan to Sloan. gas units and oil and Despite refusal, the cost of the stock fact, money placed Despite this was not against capital but was account, trading part and no of it firm’s carried for fourteen months on the books of $797,100 carried on used to offset Orvis as a customer cash account with a Al- as earned commissions. books settlement date of five days. business part in this played though transaction, Also, of it. during he was aware 1968 and began fully paid to use for customers’ securities as eighty thousand Orvis owned collateral for partnership bank loans. Company stock which *5 of Clinton Oil shares Sells, When Haskins & the company audi- only seventy percent at be evaluated could tor, securing was required information capital purposes ratio market value Orvis’ October 1969 Form X-17A-5 report the rules of the New York Stock of financial condition to the New York Exchange. August, part- Sloan told his . Exchange Stock and the Securities and Ex- sold to that this stock had been ners change (SEC), Commission approximately Pension Fund and recorded the Oil Clinton six million dollars in customers’ securities partnership books at one hun- sale in were hypothecated. so Haskins & Sells was Although of value. Clinton’s percent dred advised, however, being that this was cor- by telegram informed Orvis counsel general rected, and so stated in its report. The occurred, “sale” had not and no advice report and the were both erroneous. made, was ever it remained on the payment By May hypothecation fully obstensibly valid trans- of Orvis as an books paid for customers’ securities exceeded six action. and one-half million dollars. The Govern- purported that this sale was At the time Anderson, ment introduced evidence that general counsel for Clinton taking place, time, by that was aware fully of what was York, attempting to ascertain in New being urged done but that this financial, situation Orvis. kept from the other members of the problem him that “there is advised Executive Committee. capital company” and that ratio concerning Information all of the manip- time, 12 and at that “between 15 ulations outlined herein kept from Has- was there at the moment and auditing firm Sells, although kins & report X-17A-5 right.” was all Clinton’s coun- everything was reviewed in detail at a meeting with not informed of the “sale” of Clin- sel was representatives of the auditor it until his and did not learn about ton stock result, by appellants. attended As a Kansas, he prompt- at which time return to report which was filed indicated a second visit made it. On ly disaffirmed was not in any difficulty, financial and its again counsel was Clinton’s December satisfactory. ratio was that there by Anderson and Sloan assured concern over the financial was no cause for Orvis.
condition of
Statutes Involved4
4. The
have since been
securities statutes referred to
renumbered.
See Pub.L. No. 94-29.
cannot
exceed
punishment
maximum
78q(a) provides
part
15 U.S.C.
§
provided for such misdemeanor.
every registered
keep
broker shall
“such
The SEC has elaborated on the
accounts,
provisions
correspondence, memoranda, pa-
of the Securities Exchange Act with
books,
records,
its
pers,
and other
and make
own rules and regulations. Rules 17a-3
reports,
such
as the
and Ex-
[Securities
and
240.17a-3, 4,
C.F.R. §§
detail the
change]
Commission
regula-
rules and
business
required
records
to be kept and
may prescribe
tions
as necessary
appro-
or
preserved by securities dealers. Rule 17a-
priate
public
in the
interest or
pro-
5, 17
240.17a-5,
C.F.R.
requires
that bro-
tection
investors.”
kers file Form X-17A-5
reports
financial
78ff(a)
provides
in substance
specifies
reports.
contents
these
anyone
willfully
“who
violates
8c-l,
Rule
240.8c-l,
C.F.R.
prohibits
78q(a)]
any
regulation
or
or
rule
thereun-
[§
hypothecation
securities,
in language
der the violation of which is made unlawful
similar to that of 15
78h(c).
U.S.C. §
or the observance of
required,”
which is
or
willfully
“who
knowingly makes,
Appeal
Anderson's
made,
to be
any
causes
any
statement
Anderson was
convicted
conspiracy to
application, report, or
document
to violate
78ff(a)
78q(a)
§§
and Rules 17-
be filed under
chapter
rule or
a-3, 4 and 5. As
reduced
the trial judge,
regulation thereunder
.
.
. which the charge of wrongdoing submitted to the
statement was
or misleading
false
with re-
jury was that Anderson conspired to file an
spect
fact,
to any
upon
material
shall
con-
report
X-17A-5
with the SEC which was
.,
viction be fined
.
.
or imprisoned false, in that
statements
the accounts of
. or both.” This section
pro-
further
Orvis and its
were
customers
inflated and
vides, however,
person
that no
shall be sub-
improper
of customers’
ject
imprisonment
“for the
thereunder
securities was wrongfully stated to have
violation of
regulation
rule or
if he been corrected.
*6
proves that he had no knowledge of such
Although appellant argues that he
regulation.”
rule or
was not a
any
member of
conspiracy, but at
15
78h(c)
U.S.C.
makes it
unlawful for a most a
onlooker,
argument
silent
is not
broker, in contravention of the rules and persuasive.
goal
Where the
of a conspiracy
regulations
SEC,
of the
hypothecate
to
any can be
only through
reached
deception and
customer’s securities “under circumstances
concealment, silence
is designed
which
(1)
permit
will
that
the commingling of his
may
conceal
indicate an intention to con
securities without his written consent with
spire.
Colasurdo,
United States v.
453 F.2d
the securities of any other customer, (2) 585,
(2d
1971),
denied,
592-93
Cir.
cert.
406
permit
will
such securities to be com-
917,
1766,
U.S.
92 S.Ct.
ment’s
son,
“go
heed to the fact
the Government
little
would
to bat” for
pays
witness,
Thereafter,
was the
who
testimony
pleaded guilty.
him.
Sloan
defendant,
However,
would have
cooperation
another
attorney for
consisted of
extent,
More
been,
large
privileged.
a
presenting
prosecution
to a
with version of
rule
established
over,
the well
he
ignores
attempted
he
the facts in which
to com-
all avail
need not call
pletely exculpate
the Government
himself from any wrong-
grand jury.
Unit
before
doing.
witnesses
able
Under
these circumstances
1167,
(2d
1169
Koska, 443 F.2d
v.
unwilling
ed States
Government was
to vouch for his
denied,
852,
404 U.S.
Cir.)
curiam), cert.
(per
credibility and
as
did not call him a witness.
(1971).
92,
92
30 L.Ed.2d
92 S.Ct.
prosecutor
“go
The
also did not
to bat” for
him, because he did not consider Sloan’s
error
claim of
final
Anderson’s
willingness
testify falsely
to
coopera-
be
imprisonment. As
sentence of
to his
relates
tion.
371,
above, 18
U.S.C. §
out
pointed
statute,
that where the
provides
conspiracy
The District Court found
this deci
misdemeanor,
conspiracy is
a
object of a
and
good
sion was made
faith
refused to
ex
conspiracy cannot
punishment
plea.
permit Sloan to withdraw his
The
the mis
punishment for
the maximum
ceed
District Court’s determination was discre
78ff(a) provides
15 U.S.C. §
demeanor.
Giuliano,
v.
tionary, United States
348 F.2d
subject
imprison
shall be
person
no
(2d Cir.),
denied,
939,
221
cert.
382 U.S.
the violation
thereunder
ment
(1965),
The Assistant United States this count fails to argues Eucker ney represented the Government on who allege an essential element the crime pleaded he promised trial Sloan that if wit, charged, the total amount of preparation guilty cooperated and in 1, b; exceeding year punishable imprisonment 5. Under 18 y death or are U.S.C. one § offenses felonies; misdemeanors. all are others hypothecated securities was in excess of the leave to withdraw plea his of guilty on the aggregate customer indebtedness to Orvis ground that it was not knowingly made as respect with to such In making securities. required by Fed.R.Crim.P. 11. If such an argument, Eucker assumes that he is application made, the district court shall violating subsection 3 of 15 grant the motion upon appropriate condi- 78h(c). U.S.C. § tions finds, if it bearing in mind the Government’s contentions, that says, hand, appellant’s The Government on the other plea was made without it never proceed intended to under possible subsection 3 and that it really proceed applicability 15 U.S.C. ing 1, prohibits 78h(c)(l) subsection which (2), §§ 78j(b), 78o(c) and commingling of a 77q(a). customer’s securities If this application is not made without his written with the consent securi within thirty days from the date remand, ties of other customer.6 The Govern however, we will conclude that appellant’s ment also contends plea was, fact, made with an under- fully paid for customers’ securities con standing of possible applicability of the stitutes fraud in violation of 15 U.S.C. above sections. In the event that applica- 783(b),78o(c) 77q(a). §§ tion is not timely made, or if the District Court denies appellant’s appellant
Because motion Eucker for leave admitted at the replead, time the matter plea of his shall permitted he caused or be returned to this fully Court paid customers’ for a securities on hy- to be decision the merits. If the pothecated as charged indictment, in the granted, we motion is this appeal will be dis- appeal could on this go directly to the mer missed as moot.
its of the Government’s contention. The statutory reference indictment obvi Disposition Appeal ously includes all three subsections of The judgments appel- of conviction of 78h(c). regard With to the other statutes lants Anderson and Sloan are affirmed. upon which the now Government seeks to appellant case of Eucker is remanded rely, if an properly charges indictment an to the District Court for further offense, proceed- sufficient, it is though even an ings in accordance with inapposite opinion. statute is referred therein. 1 Wright, Federal Procedure, Practice seq. (1969); 124 et United States Calab MOORE, Circuit Judge (concurring and
ro, (2d 1972), 467 F.2d Cir. cert. dissenting): denied, 410 U.S. 93 S.Ct. I concur in the affirmance of Anderson’s (1973). Clearly L.Ed.2d 587 the Govern convictions, and Sloan’s but dissent from ment is not rely upon that stat the majority’s decision to remand as to utory provision the defendant choos Eucker. es to select. A defendant not plead guilty should However, a plea defendant’s should be charges of which ignorant ishe made with an about understanding of the nature which he is However, him, confused. charge against Irizarry v. facts Unit- in this case States, argument belie ed 963-66 Eucker 1974), ignorant either and there is a possibility that this confused did time plea. not occur in this case. Pursuant Eucker was a member of the authority given us Executive Brothers, we Committee of Orvis partner are therefore remanding charge the case of operations, and a man appellant Eucker to the District Court obviously sophisticated so in his knowledge may apply to that court for both of the industry securities and its ex- *9 reason, 6. For some unknown the Government less of consent anyone the with securities of makes no mention customer, of 2 of 15 e., subsection other presuma- than a bona fide i. 78h(c) prohibits commingling regard- bly § which with those of the broker himself. statute which could not apply particu- to his govern the federal by regulation tensive ex lar acts. Nine of the indictment Count ment. 78b,1 all to 15 U.S.C. § referred pressly majority properly concludes that the subparts and its various subsections three compelled by Government is to abide a not thereby. obviously included were 78h of § interpretation defendant’s selective of his However, by remanding indictment. the by counsel represented Eucker majority the point, case at this undermines He plead at bar. litigation the throughout holding. prolongs own The remand understanding that express on the guilty ed unnecessarily, and its effect litigation is He made very plea.2 appeal would he with an clothe Eucker innocence before or confusion ignorance claim of plainly facts refute. Eucker should not be appeal to this court3 or on the district given this late opportunity stage alleged only has —at He Court.4 proceedings plead a state igno- of —to an indictment failed to draft Government helpless rance or confusion which is disin- detail, technical form and correct in all its genuous completely contrary to the “fatally rendering that indictment thereby record. Eucker does not claim that he defective”.5 against charges to understand appeal failed I would reach the merits of his at him;6 should merely posits he law this time and would affirm his conviction on text grounds to him because the apply adequately the indictment citation to 78h preceding charges pleaded set forth the to which he § indictment in the largely guilty. taken from subsection majority opinion, pp. at aggregate Reference in 1. indebtedness to Orvis of all 256-257, 78j(b), 78o(c), 77q(a) is to §§ customers on all of their securities carried for inapposite the facts that Eucker in view of their account Orvis. The motion to dis- pleaded guilty under indicted This, miss 9 was Count in addition denied.”] 78h; 78h; and has § was convicted to Eucker’s own statements before the dis- appeal sufficiency predicated on the court, 5, infra, give trict see n. to his coun- recitation of 78h. the indictment’s vagueness sel’s statements about the distinct appearance op- of a tactical maneuver as Appellant appendix at 50. All Eucker’s 2. posed legitimate expression to the true “appellant” herein are to Euck- references to respecting “confusion” felt Eucker er. meaning charges of either 78h or the urging appellant permitted 3. an brought thereunder. plea guilty, appeal immediate from his argued Eucker’s counsel that the statute was Presented”, “Questions Appellant’s 4. See brief vague, by ings, argument given weight an which was at 1-2. [Transcript proceed- the district court. 14, 1975,Appellant’s appendix March Appellant’s at 1. brief agree your . .1 with Honor that 29: the statute clarity is not a model of . following excerpt proceedings 6. The from the your my Honor understands inten- I believe before the district court instructive: respect plea that is to be tion client, my today offered Eucker, which is to have Mr. “By the Clerk: drafted, plead to the indictment as you Q. Are the Donald Eucker in the case aggregate denying net and of course indebtedness the amount of the taking presently before Court? of all the customers exceeded Yes, A. I am. hypothecation, and then you Q. reading Do waive formal up upstairs hopeful for a clarifi- indictment in this matter? of what the statute How- means.”] cation ever, Yes, A. I do. it should be noted that has you fully Q. charges Do understand the appeal; not raised that issue on trary, on the con- Count 9 of this indictment? he fails even to cite it as basis Yes, A. Q. I do. judge’s respecting appeala- decision district you plead How do wish to to that bility plea [Ap- curious omission. —a count? pellant’s brief at “Eucker moved to dis- 6: plead guilty.” A. I wish to upon ground miss Count 9 failed to that the count Transcript proceedings, 14, 1975,Ap- March allege an essential element of the wit, pellant’s appendix (emphasis sup- charged, at 37-38 crime that the total amount plied). hypothecated of securities excess