United States v. Werner Bruchhausen ( 1992 )

FERNANDEZ, Circuit Judge,

concurring:

I agree with the majority that the United States was not defrauded of its property within the meaning of McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). I also agree that the right of manufacturers to make decisions based on truthful information is far too ethereal to be a property right for the purposes of the wire fraud statute. See Carpenter v. United States, 484 U.S. 19, 25, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987).

However, I do not agree that a person has not been defrauded of his property when he is induced by fraudulent representations to transfer that property to another. In reaching the contrary conclusion, the majority puts far too much weight on the fact that the defrauded companies received a monetary payment equal to the fair market value of the property.

In my opinion, at the very least ownership of a tangible object, whether it is a pen, a desk, or a piece of equipment, includes the right to retain that object and to refuse to transfer it to others. The right persists even if others are willing to pay fair market value for the object. Were it otherwise, everyone would have a private right of condemnation over the property of others; everyone could simply take another’s property at will as long as fair market value was paid. That concept is far outside our traditions. It is an acceptance of Holmes’s “bad man” theory of the law which, though realistic in some sense, should not define this area. See Oliver W. Holmes, The Path of the Law, 10 Harv. L.Rev. 457, 459-62 (1897). Perhaps a contracting party can properly consider the contract to be one to perform or pay damages, although I am dubious. Surely, however, the duty owed to a person who owns property is not merely a duty to respect that person’s rights or pay damages. In short, a person can wrongfully invade another’s property even when willing to pay fair market value. By the same token, a person can fraudulently deprive another of property even when willing to pay fair market value. The strictures an owner puts on his willingness to sell an item are not mere ephemera. When a prospective buyer lies in order to evade those strictures, a fraud has been committed upon the owner of the item just as surely as if the buyer had issued a rubber check.

This is not an exotic proposition. See, e.g., Walker v. Galt, 171 F.2d 613, 614 (5th Cir.1948) (“ ‘The vendor has the right to select the person to whom he will sell.... [Fjraud may be predicated upon misrepresentations as to the identity of the purchaser....’”) (citation omitted), cert. denied, 336 U.S. 925, 69 S.Ct. 656, 93 L.Ed. 1086 (1949). Cf, Earl v. Saks & Co., 36 Cal.2d 602, 610-13, 226 P.2d 340 (1951) (a contract can be rescinded when induced by fraud, even if no pecuniary harm has been suffered); 37 Am.Jur.2d Fraud and Deceit § 284 (1968) (“If one obtains from an owner, by a false representation of a fact which he deems material, property that he would not otherwise have parted with ... there is such an injury as will he redressed by equity.”). Also, as the majority points out, the Second Circuit agrees with the position taken in this concurrence. United States v. Schwartz, 924 F.2d 410, 420-21 (2d Cir.1991).

Here the various sellers simply refused to sell to persons like Bruchhausen who intended to export equipment from the United States without permits. Indeed, at least one of them, Watkins-Johnson Co., required a certification that the property would stay in the United States, period. If a buyer would not certify to that, the company would not sell its goods to that buyer. When Bruchhausen lied in order to evade that condition, he did commit a fraud. That fraud was the obtaining of the property of another (the equipment) by means of false representations. Thus, I cannot agree with the majority’s conclusion that Bruchhausen’s behavior could not constitute a violation of the wire fraud statute.

Nevertheless, I concur in the result reached by the majority. This case was tried before McNally and did not focus on the concept of a tangible deprivation of property, even though there was evidence to support a determination on that basis. Thus, the finding of guilt was at best based upon an undefined mixture of legal theories too ephemeral to support that finding and an essentially unarticulated legal theory which would support it. Given that, Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957), militates in favor of the majority’s determination. I say this with much hesitation because we deal here with a bench trial rather than with a jury trial. Here, however, given the fact that McNally overturned what had long been our approach to the wire fraud statute, it would be taking theory to an extreme to insist that the learned district judge who presided over this case could have been following the McNally strictures. See, e.g., United States v. Bohonus, 628 F.2d 1167, 1170-73 (9th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65 L.Ed.2d 1122 (1980). Moreover, the district judge’s comments made it rather clear that she was not following the McNally approach and that she saw the whole matter as one unified decision rather than as discreet legal elements which supplied alternate pathways to a finding of guilt.

Thus, I concur in the result.