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8 F.(2d) 24

said defendants would in effect extend to the persons so intended to be defrauded credit on the difference between the purchase price of said stocks and securities to be bought for and on account of such persons so intended to be defrauded and the small initial payment made by such persons so intended to be defrauded.

"Whereas in truth and in fact as they (the said defendants) at all of said times well knew, they, the said defendants, were not in a position to purchase said stocks and securities upon the payment of a small initial payment by the persons purchasing said stocks and securities, but, on the contrary, they (the said defendants) at all of said times had the view and intent to take into their possession and under their control the moneys and property of all and each of such persons as should invest money and property with them (the said defendants) as aforesaid, and convert such money and property to their (said defendants') own use and benefit and each of such persons to cheat and defraud."

There were nine counts in each indictment, in which it was alleged that a letter in furtherance of said scheme to defraud, address ed to a certain person named in each count, was sent through the mails of the United States. The defendant was convicted upon all the counts except the first and sixth in each indictment.

The errors assigned are: The denial of a motion to direct a verdict for the defendant; the failure to give instructions requested; instructions that were given; and the admission of evidence.

It was claimed by the defendant, in his motion for a directed verdict, that there was no evidence that the defendant personally or in concert with others had devised a scheme to defraud, and he requested, in substance, that the jury be so instructed.

[1] The jury were instructed, in substance, that, if they should find that Redmond & Co. did not purchase shares of stock upon payment of one-fifth of the purchase price, as promised in the booklet which was issued by the company, or if it was not in a position to purchase them, under the allegation in the indictment that the defendant, under the name and style of G. F. Redmond & Co., Inc., and Withington & Co. made these representations, the scheme to defraud was one devised by the defendant and his associates, and that the indictment alleged a scheme to be carried out by the defendants under the name and style of G. F. Redmond & Co.

Stripped of all legal verbiage, the question presented is whether one who has organized a corporation of which he is the active and controlling factor, and who is the sole owner of practically all its capital stock, may shield himself from the consequences of his acts as the chief actor in the affairs of the corporation, by claiming that he is not individually liable for any of its acts.

While the indictment; in setting out the scheme to defraud, alleges that the defendants, under the name and style of G. F. Redmond & Co., Inc., and Withington & Co., 'did "falsely pretend and represent that they (the said defendants) were in a position to purchase and would purchase, for and on the account of such persons so intended to be defrauded, stocks and securities on the partial payment plan," and does not allege that the acts to be done in furtherance of the scheme or artifice to defraud were to be done under the name and style of G. F. Redmond & Co., Inc., and Withington & Co., it is perfectly apparent that this is what was charged and that the allegation that the defendants "were not in a position to purchase said stocks and securities upon the payment of a small initial payment the contrary they (the said defendants) at all of said times, had the view and intent to take into their possession and under their control the moneys and property of all and each of such persons as should invest money and property with them, the said defendants, as aforesaid, and convert such money and property to their (said defendants') own use and benefit and each of such persons to cheat and defraud," by necessary implication charges that the said defendants, under the name and style previously stated, were unable to make these purchases and had the intent alleged.

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[2] Whether the defendants were in a position to purchase stocks and securities upon the payment of a small initial payment is immaterial, if they did not intend to purchase the same, but had the intent by their scheme or artifice to obtain the money and property of other persons and convert the same to their own use and benefit.

In United States v. Comyns, 248 U. S. 349, at page 353, 39 S. Ct. 98, 100 (63 L. Ed. 287), the Supreme Court said:

"To use the mails in order to carry out a scheme for getting money by the making of promises or agreements which, whether known to be impossible of performance or not, there is no intention to perform, is a forbidden use of the facilities of the post office department"-citing Durland v. United

States, 161 U. S. 306, 313, 16 S. Ct. 508, 40 L. Ed. 709.

See, also, Byron v. United States (C. C. A.) 273 F. 769; Badders v. United States, 240 U. S. 391, 394, 36 S. Ct. 367, 60 L. Ed. 706; Pandolfo v. United States (C. C. A.) 286 F. 8.

[3] While the scheme or artifice to defraud must be set out in all of its substantial elements, it is not necessary that it be described with any further particularity than is necessary to apprise the defendant of the scheme to defraud with which he is charged. The gist of the offense is the use of the mails of the United States with intent to defraud. Brooks v. United States, 146 F. 223, 76 C. C. A. 581; Lemon v. United States, 164 F. 953, 90 C. C. A. 617; Horn v. United States, 182 F. 721, 727, 105 C. C. A. 163.

In the last case, the court said: "While the formation of some scheme or artifice to defraud is an essential element of the offense, the gist of the offense is the use or attempted use of the United States mails for the forbidden purpose. It is only necessary, therefore, to charge the scheme with such particularity as will enable the accused to know what is intended, and to apprise him of what he will be required to meet upon the trial; and if it is distinctly alleged that the United States mails are to be used, or are intended to be used, in consummating such scheme, that is sufficient."

In Moffatt v. United States, 232 F. 522, 146 C. C. A. 480, the law in relation to the allegation of the scheme to defraud is stated as follows:

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"In an indictment for mailing a letter in execution or attempted execution of scheme to defraud, in violation of this statute, if the scheme is sufficiently outlined to show its design and adaptability to deceive and to fairly acquaint the accused with what he is required to meet, it answers the require ments of the statute. Brooks v. United States, 146 F. 223, 76 C. C. A. 581. The test to be applied is, not whether the material averments of this indictment might have been made more accurate and certain, but whether they plainly embrace in their terms both requirements, of notice of the ultimate facts to be proved against the accused, and specification thereof which will leave no second prosecution open for the alleged offense. If these requisites are sufficiently stated it is the duty of the court to uphold the indictment"-citing Cochran v. United States, 157 U. S. 286, 15 S. Ct. 628, 39 L. Ed. 704; Rosen v. United States, 161 U. S. 29, 16 S. Ct. 434, 480, 40 L. Ed. 606;

Markham v. United States, 160 U. S. 319, 16 S. Ct. 288, 40 L. Ed. 441.

"Section 215 of the Penal Code only requires two things to complete the offense charged in this indictment, (1) that a scheme to defraud be devised; and (2) that, for the purpose of executing it, the defendant caused to be delivered by mail, by the post office establishment of the United States, the letter set forth in count 3 of the indictment, to the person therein named."

See, also, McDonald v. United States, 241 F. 793, 797, 154 C. C. A. 495; Kaufmann v. United States (C. C. A.) 282 F. 776, 783; Olsen v. United States (C. C. A.) 287 F. 85, 89; Brewer v. United States (C. C. A.) 290 F. 807; Stewart v. United States (C. C. A.) 300 F. 769, 775.

There was no error in the refusal to give the instructions requested, or in those that were given, or in the denial of a motion for a directed verdict.

[4] A witness, MacLean, who testified that he was employed by the defendant and directed by him to report to a Mr. Bowman, who had charge of blotter sheets, and was promised by the defendant a large sum if he would keep secret all the transactions which passed under his observation, was permitted to testify, over the objections of the defendant, in regard to talks that he had, not only with Bowman, but with the managers of G. F. Redmond & Co., in regard to entries upon blotter sheets not made by him. The record discloses that MacLean's testimony related to the general method of making up blotter sheets used by G. F. Redmond & Co. While from the blotter sheets shown him he could select only three upon which entries were made made by him, his testimony was admissible to show the system that was in use in regard, to the same, and that blank spaces were left upon them to be filled in later by the entry of purchases of stock from fictitious persons, so that it would appear that the stock ordered by a customer had been actually purchased as soon as the order was received. MacLean and those who worked with him made these fictitious entries. He testified that he had received instructions from the head blotter clerk, to whom the defendant had told him to report, and also from the managers of the company, particularly from one by the name of Baker, and that he had been enjoined by the defendant to keep secret what was done with these blotters, and promised the large bonus of $50,000 at the end of two years for doing so.

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His testimony was admissible to show the system pursued with reference to the blotters, which showed purchases of stock, and that the representation made in the booklet issued by the company, that stock would be purchased for a customer upon receipt of his order, on the partial payment plan, and held for him until he had completed his payment for the same and interest at 6 per cent., was false, and was a part of the alleged scheme to defraud.

For the same reason the testimony of the same witness in regard to his conversation with the manager, Baker, was admissible. This disclosed that the list of fictitious names to be used in making false entries upon the blotters was changed "every three or four months," and was "to be kept private, and nobody was to know anything about them but myself and the Bowmans."

Lamont testified that Redmond, the defendant, "was active in the business and gave the orders," as would be expected in the case of one who owned practically all its stock; and it is idle to contend that he did not know what methods were being pursued or that he had not directed them.

There was no error in admitting the testimony of MacLean in regard to the method pursued by him, evidently under the direction of his superiors.

Lamont, the president of G. F. Redmond & Co., was shown what purported to be confirmations of sales made to it by brokers, and, while he said that he had never seen the confirmations before, he recognized them as confirmations of sales to G. F. Redmond & Co. by certain brokers. The admission of these confirmations is assigned as error.

[5] Lamont, who had previously testified that Redmond & Co. "operated with the broker who gave these confirmations, both at. New York and Boston," when these confirmations were shown to him, testified that they were confirmations from this broker and one other. No evidence was offered to show the source from which these confirmations were obtained, and without this or some evidence to show their genuineness, or from which it could have been presumed, they should not have been admitted.

[6] Error is assigned because a book made under the supervision of the witness, Lamont, was admitted in evidence. This book contained a résumé of the business of Redmond & Co. for the year 1922, one copy of which, signed by the witness, was given to the defendant. It showed the number of accounts in all the offices of Redmond & Co. in 1922; the extent of the business for that

year, which reached nearly $74,000,000, salaries paid, and other expenditures. It showed no brokerage commissions, except those paid to Boston Curb brokers, and did not show stocks on hand or receipts. It was a convenient summary of the business of the company for that year, and was made up from records which the witness had requested his bookkeeping force to keep and under his supervision. This was clearly admissible.

[7] The Cassidy account book, which was admitted in evidence over the defendant's objection, which is assigned as error, was a book showing transactions with a broker by that name. Lamont testified that this was

one of the books kept by Redmond & Co., and he recognized it as such, although he had never seen it before. He evidently knew that such a book was kept, and there was no error in its admission.

[8] Certain confirmations of sales and securities by H. M. Williams of New York City, addressed to G. F. Redmond & Co., Boston, Mass., were received through the mail at the office of Redmond & Co. in Boston after the United States Marshal had taken possession of the office under a warrant issued to him by the bankruptcy court. These were turned over to the receivers, and were received in evidence over the objection of the defendant, which is assigned as error.

These confirmation sheets were identified by order slips found in the office of Redmond & Co. by an accountant. They were properly admitted in evidence to show the methods pursued by the defendant in the execution of his scheme to defraud; and, for the purpose of showing what the defendant admits, they had a tendency to show, in connection with other evidence, that they were fictitious transactions with persons whom the jury might find upon the testimony did not exist.

The other assignments of error which have been argued relate to testimony in regard to attempts to locate certain brokers with whom transactions appeared to have been had from the confirmations and other testimony. We have carefully examined the record, and find no reversible error in the admission of this testimony.

Our conclusion is that the only error that was committed was in the admission of the confirmation sheets from the broker Jarvis. This was but slightly cumulative on a point fully proved by clearly competent evidence, and, after a careful examination of the entire record, we think this was a technical error which did not affect the substantial rights of the defendant. Section 269, Judicial

Code, as amended by Act Feb. 26, 1919 7. Trial 141, 143-Grounds for direction of (Comp. St. Ann. Supp. 1919, § 1246).

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verdict stated.

It is the duty of the trial court to direct a verdict at the close of the evidence in two classes of cases: (1) In that class in which the evidence is undisputed; and (2) in that class in which the evidence is conflicting but is of so conclusive a character that the court, in the exercise of a sound judicial discretion, would set aside a verdict in opposition to it.

In Error to the District Court of the United States for the Western District of Oklahoma; John H. Cotteral, Judge.

Action at law by W. J. Wyer against the Atchison, Topeka & Santa Fé Railway Company. Judgment for plaintiff, and defendant brings error. Reversed and remanded, with directions.

George M. Green, of Oklahoma City, Okl. (J. R. Cottingham, E. E. McInnis, and

2. Master and servant 150 (8)-Duty of Frank G. Anderson, all of Oklahoma City,

master to warn stated.

There is no duty of an employer to warn, where he has no reason to expect the contin

gency of the servant placing himself in such position as to incur the danger, or where the servant already has sufficient knowledge of the conditions to enable him to safeguard himself. 3. Master and servant 154(1)—Master held not negligent in failing to warn servant. Plaintiff employed in the machine shop of defendant railroad company, was working in the pit under an engine, which he was helping to dismantle, when, slightly losing his balance, he grabbed hold of a heavy spring, which had been detached by plaintiff from the saddle on which it rested, and, being unstable, fell on and injured him. He had helped in such work before, and knew that the spring, when the fastenings were removed, was very easily tilted from the saddle. Held, that his injury was due to accident, and that defendant was not liable therefor on the ground of negligence in failing to warn plaintiff.

4. Master and servant 206-Risks incident to work assumed.

An employee assumes risks ordinarily incident to his employment, so far as they are not attributable to employer's negligence.

5. Master and servant 217(1)—Risks assumed by servant knowing them.

An employee assumes risks not ordinarily incident to his employment, provided he knows of them and appreciates the danger, or provid

ed they are so plainly observable that he must be presumed to know them and to appreciate the danger.

6. Master and servant 208 (1)—Servant assumes risk of changing conditions of work.

Where the risks of an employment are variable, owing to changing conditions, either in the character of the work or in the way it is performed, the employee assumes the risk of such changing conditions, and especially where the changed conditions have been brought about by himself or his fellow servants.

Okl., and Gardiner Lathrop, of Chicago, Ill., on the brief), for plaintiff in error.

H. L. Stuart, of Oklahoma City, Okl. (L. C. Barrett and F. P. Works, both of Amarillo, Tex., and Ledbetter, Stuart, Bell & Ledbetter, of Oklahoma City, Okl., on the brief), for defendant in error.

Before LEWIS and BOOTH, Circuit Judges, and PHILLIPS, District Judge.

BOOTH, Circuit Judge. Defendant in error, plaintiff below, recovered a verdict for damages on account of personal injuries claimed to have been caused by negligence of the railway company, hereafter called defendant.

Several items of negligence were alleged in the complaint, but the particular count of negligence upon which plaintiff relied at the trial was failure on the part of defendant to warn him of the danger in his work. Defendant in its answer denied negligence, and set up assumption of risk and contributory negligence on the part of the plaintiff. The main facts disclosed by the record are as follows:

At the time of the accident, plaintiff had been employed about one month in the machine shops of defendant at Clovis, N. M., as a helper in the mechanical department. He was 27 years of age; had had some experience with farm machinery and automobiles. In his application for employment, he stated that he had worked as a mechanic. While in the employ of defendant, he had helped to dismantle an engine, taking down the side rods, and removing the tires from the wheels and the wheels from the axles. On the day of the accident he was helping to dismantle

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another engine, from which the driving wheels had been removed. The engine was resting upon dollies. Beneath the engine was a pit 3 or 4 feet deep. Plaintiff had been told by his foreman to take the hangers off from the driving springs. Each of these springs rested on a saddle which spanned the frame of the locomotive. The spring weighed about 375 pounds. Projecting up from the saddle was a lug pin, which was riveted to the saddle. This lug pin engaged a hole in the bottom of the spring band. This lug pin, together with the hangers on the ends of the spring and the weight superimposed on the spring, all helped to keep the spring in its proper relative position on the saddle. In view of its function, it was not feasible to fasten the spring securely to the saddle. When the weight resting upon the spring was removed, and one or both of the hangers were also removed, the spring would tip easily; and it was then open to view that the spring was not fastened to the saddle, but could be easily toppled therefrom.

Plaintiff knew this condition. He had removed one spring prior to the accident, and testified in relation thereto: "I had removed one spring once before, so I could get around without touching this spring and knock it off." One of the witnesses testified that plaintiff and his coworker had taken off two other springs. Plaintiff himself further testified that he had revolved one of the springs on the saddle; also that one of the springs had tipped sufficiently to pinch him. On crossexamination he was asked: "Now then, you could have tilted the spring at that time, and looked under there and seen how it was constructed, could you not?. A. I don't know about that. Q. Don't you know, if you had tried, you could have found out? A. If I tipped it far enough, I was liable to tip it off, so it would strike me."

negligence relied upon was failure to warn plaintiff of the danger in his work. The rule that it is the duty of a master to use ordinary care to warn an employee of danger in his work is not of unlimited application. Labatt, in his work on Master and Servant, states several limitations:

Section 209a: "Both upon principle and authority it is clear that a master cannot be deemed culpable on the ground of an omission to give warning, where the servant already possesses sufficient knowledge of the conditions to enable him to take appropriate precautions for safeguarding himself."

Section 236: "No right of action is established where, taking into consideration the nature of the work assigned to the servant, the master had no reason to expect the contingency of the servant's placing himself in such a position as to incur the danger with regard to which it is alleged that he should have been instructed."

Section 241: "Before an employer can be held liable for a failure to warn, there must be something to suggest to him that a warning is necessary. Unless this necessity was or ought to have been known to him, he is considered to be justified in acting upon the assumption that the servant understood the dangers to which he was exposed, and would take appropriate precautions to safeguard himself."

These principles have found application in many cases, among them Mississippi River Logging Co. v. Schneider, 74 F. 195, 20 C. C. A. 390; L. & N. R. Co. v. Miller, 104 F. 124, 126, 43 C. C. A. 436; King v. Morgan, 109 F. 446, 449, 48 C. C. A. 507; Lake v. Shenango Furnace Co., 160 F. 887, 892, 88 C. C. A. 69; C. B. & Q. R. Co. v. Shalstrom, 195 F. 725, 729, 115 C. C. A. 515, 45 L. R. A. (N. S.) 387; Lehigh & Wilkes-Barre Coal Co. v. Sawickas, 247 F. 432, 159 C. C. A. 486; Manley v. Minneapolis Paint Co., 76 Minn. 169, 78 N. W. 1050.

At the time of the accident plaintiff had finished taking the hangers off from three springs on one side of the engine. He was climbing down from the position he had oc- [3] Applying these principles. to the cupied in taking off the last hanger, and was facts in the case at bar, we are clearly of intending to go to the other side of the en- the opinion that the question of defendant's gine to remove the hangers from the springs negligence in failing to warn the plaintiff on that side. While climbing down, he was not for submission to the jury. The occhanged his hammer and cold chisel from his cupation was not specially hazardous. The right to his left hand. In so doing he lost machinery was not defective. The company his balance slightly, and thinking that he had the right to assume that plaintiff was was about to fall, in order to save himself, qualified to do the work. The danger of tipgrabbed hold of the spring. It tipped with ping the spring when it was freed from the him. He fell into the pit, and the spring hangers was open and apparent, and well fell upon him, causing the injuries com- known to the plaintiff. He knew that the plained of. spring could be easily removed. He had re[1,2] As before stated, the sole count of moved one and helped to remove two others.

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