Gordon v. United States

MURRAH, J.

These separate appeals are from judgments of convictions and sentences on an information containing four counts, three of which charged the appellants with violations of Section 601 of the Defense Production Act of 1950 . . . and Regulation W. Title 32A, Code of Federal Regulations, promulgated thereunder. . . . The fourth count charged the defendants with a conspiracy to violate the same law and regulation.

With immaterial limitations, Section 601 of the Defense Production Act of 1950, . . . empowers the Board of Governors of the Federal Reserve System to exercise consumer credit controls in accordance with, and to carry out the provisions of Executive Order No. 8843, dated August 9, 1941. . . . Section 603 of the same act, . . . provides that any person who wilfully violates any of the provisions of Section 601 or any regulation or order issued thereunder, shall upon conviction, be punished as therein specified. . . .

[Counts one and two in the information charged that the appellants, Allan Gordon and Eli Tempkin, violated the Defense Production Act of 1950 when employees at their sewing machine stores sold a sewing machine to Buean E. Colley with a down payment of less than 25%, and failed to keep proper records of the amount of the down payment.]

[Counts three and four in the information charged that appellants violated the Act when their employees sold a sewing machine to Evelyn Allen when they knew that other credit had been extended, making the total credit more than 75% of the sale price, and that appellants conpired to violate the Act by making the sale.]

. . . There is no direct or positive proof that either Gordon or Tempkin made, participated in, or had actual knowledge of either of the transactions. . . . There was no evidence of who actually made the records reflecting the transactions but they were undoubtedly made and maintained in the regular course of business and accepted in evidence as such.

But the case was not submitted to the jury on the question of whether the partners had actual notice of the transactions. Instead it was tried and submitted to the jury on the theory that . . . the knowledge and acts of the salesmen who made the sales and kept the records in counts one, two and three, while acting in the course of their employment, were imputable and chargeable to their employers Gordon and Tempkin. The effect of this instruction was to hold . . . both partners for the acts of their employee salesmen while acting in the course of their employment.

. . . We have then to consider the very perplexing question whether the partners can be held criminally liable for the knowledge and acts of their agents and employees, who the evidence shows, while acting in the course of their employment, actually made the sales without having collected the required down payment.

The appellants excepted to the instructions of the court charging . . . both partners with the knowledge and the acts of their agents and employees as 'being sufficient to supply the necessary scienter and knowledge required in a criminal case.' . . . The effect of the challenged instruction is said to apply the doctrine of respondeat superior sometimes applicable to fix civil tort liability but inapplicable to establish criminal guilt or liability.

Deeply rooted in our criminal jurisprudence is the notion that criminal guilt is personal to the accused; that wilfulness or a guilty mind is an essential ingredient of a punishable offense, and that one cannot intend an act in which he did not consciously participate, acquiesce, or have guilty knowledge. Morissette v. United States. . . . In other words, crime results 'only from concurrence of an evil-meaning mind with an evil-doing hand.'. . .

Amenable to this notion, the courts have been reluctant to hold the matter or the employer criminally responsible for the acts of his agent or employee which he did not authorize, counsel, advise, approve or ratify.

It is only in the so-called public welfare offenses usually involving police regulation of food, drink and drugs that the courts have relaxed the necessity for proof of a wilful intent. In most of those cases the legislature has deliberately eliminated wilfulness as an essential element of the offense by prohibiting and punishing the doing of the act whether by the principal or his agent. . . .

In our case wilfulness is specifically made a prerequisite to guilt. Indeed, it is the gist of the offenses charged in all of the counts in the information. And the trial court instructed the jury that in every crime or public offense there must be a 'union or joint operation of act and intent' but 'that the intent or intention is manifest by the circumstances connected with the offense as well as by direct testimony.'

What the court did in effect was to make wilfulness an essential element of the offenses charged in the information, and to charge the employers with the guilty knowledge and acts of the employees in determining the question of wilfulness. In so doing, it had recent precedent in this court. In Inland Freight Lines v. United States, . . . the defendant was charged with the wilful violation of a regulatory statute in keeping and preserving false records of which it had knowledge only through its agents and employees. In determining the question of wilfulness the defendant was charged with the knowledge of its employees, and we reversed only because the jury was permitted to infer wilfulness from mere negligence on the part of the employer in failing to investigate the integrity of records which it was charged with the duty of preparing and keeping. . . .

The effect of this is not to dispense with wilfulness or guilty knowledge as an element of the offense. It is to charge the employer with knowledge of records he is required to keep and acts he is required or forbidden to do, and which he necessarily keeps, does or omits to do by and through his agents and employees. To be sure, the knowledge with which he is charged is not direct; it is constructive. If it be called vicarious responsibility, it is nevertheless a responsibility of him on whom the law places the duty. It is permissible proof of a wilfulness which in its proper context denotes more than mere negligence but less than bad purpose or evil motive. It connotes a course of conduct which may be construed by the triers of fact as deliberate and voluntary, hence intentional; or it may be construed as negligent, inadvertent and excusable. The act or omission itself is not inexorably penalized. The ultimate question of guilt is left to the ameliorating influence of those who sit in judgment. Considered in this light, we do not think the instructions of the court fall short of the traditional standards for guilt. . . .

The judgment as to Deverich and Stone is reversed. In all other respects it is affirmed.


Judge HUXMAN (dissenting).

As stated in the majority opinion, wilfulness is an element of the offense under the applicable statute and regulations promulgated thereunder. . . . While counts one and three charged the partners, Gordon and Tempkin, . . . with having made the sale set out therein, no attempt was made to prove and there is no evidence in the record that the partners actively participated in the sales. The Government's entire effort was directed to establishing that they had guilty knowledge of the unlawful activities and acquiesced therein. If the only question before us was a sufficiency of the evidence to sustain the verdict and judgment of guilt based thereon, the answer would be simple. The evidence is sufficient to sustain a conclusion that the partners had reason to know that the regulations were being violated by their employees. But while it is important that the guilty be brought to trial and speedily punished, it is even more important to the preservation of our institutions that due process be observed in bringing that about. . . . The partners denied intent to violate the law or any knowledge that their employees were violating it. They were entitled to have their testimony weighed and evaluated under proper instructions by the court together with all other relevant evidence. They were entitled to have the jury told that they were not criminally liable for the acts of their employees, although committed within the scope of their employment, unless they directed such activities or had guilty knowledge thereof. It is a principle embedded in the English law from time immemorial that the sins of the father shall not be visited upon the son merely because the father is the agent of the son and his unlawful acts were committed within the scope of his employment, under a criminal statute making wilfulness an element of the offense when the son had no knowledge of or part in such violations.

. . . A good statement of the law is found in United States v. Cohn, C.C., . . . as follows: 'It is a rule in criminal cases that a partner is not charged by the criminal acts of his copartners, or others acting in behalf of the firm, unless he has knowledge thereof. The law in relation to partnership is that the partner agrees to be bound for all acts done in obedience to the law, to which there are attached certain civil liabilities for fraudulent acts or representations done or made by a partner or an agent for the purpose of affecting the firm's business. It is not considered that, in the absence of some special statute bearing upon the particular acts of a firm, whereby each partner is made the subject of punishment, one partner can be found guilty of a crime because his partner or agent has done acts that would justify his or their punishment.'

Strong reliance is placed upon Inland Freight Lines v. United States, . . . by this court. But that case is clearly distinguishable. There the sole defendant was the corporation charged with keeping false records and it was held that the knowledge of its agents was the knowledge of the corporation. That is the well established principle of criminal law as applied in the case of a corporation. It it, as the law recognizes, the only way a corporation can be held criminally responsible for violations of penal statutes. While a corporation is recognized as a separate legal entity, such separate entity is a pure fiction of the law. As a separate entity and aside from its agents and employees a corporation can do nothing. It has no conscience, will, or power of thought. It acts only through its agents. Their acts are the only acts it can commit and their knowledge of necessity is the only knowledge it can have.

The only cases in which a principal without actual intent or knowledge of criminal acts of wrong-doing by his employees has been held criminally responsible for such acts arose under welfare statutes such as the Pure Food and Drug Laws, Liquor Laws and Weight and Measure Acts. But under all of these acts where a principal was held guilty because of the acts of his agents without knowledge or intent on his part wilfulness was not an element of the offense and the statute made the doing of the act the offense.

Instead of telling the jury that the partner appellants would be liable for the acts of their agents committed within the scope of their employment only if they directed the same or had guilty knowledge thereof and consented thereto, the court instructed the jury that it was sufficient to establish the guilt of the partners that the agents committed these unlawful acts in the course of their employment because such acts by the agents would be the acts of the principal. . . . The court thus applied to the civil rule of liability in a criminal case. I can find no case which has applied this rule to criminal prosecutions. . . .