State v. . Whedbee

CLARK, C. J., dissenting; HOKE, J., concurring in the dissenting opinion. This is an indictment against the defendant for cheating and defrauding W. C. Heath by means of a false and fraudulent pretense. As the case is decided upon the validity of the indictment, it will be necessary to set it out. It is as follows:

NORTH CAROLINA — Union County. Superior Court, March Term, 1909.

STATE v. T. C. WHEDBEE.

The jurors for the State upon their oath present that T. C. Whedbee, late of the county of Union, in said State, with force and arms, at and in said county of Union and State of North Carolina, with intent to cheat and defraud one W. C. Heath, did on the 29th day of May, in the year of our Lord one thousand nine hundred and eight (772) (1908), then and there unlawfully, falsely, designedly, knowingly, feloniously and fraudulently pretend to W. C. Heath, for the purpose of inducing him, the said W. C. Heath, to purchase stock in the Seminole Securities Company, a corporation; that Wylie Jones and W. A. Clark, bankers of Columbia, in the State of South Carolina, were at the head of the Seminole Securities Company, and large stockholders in said company, and directing its management; that no salaries were being paid the officers of said Seminole Securities Company; that it was not costing exceeding 10 per centum to organize the Seminole Securities Company; that said T. C. Whedbee was not receiving anything in excess of 6 per centum for his services in selling stock in said Seminole Securities Company; that the stock of the Seminole Securities Company was then being sold for the sole purpose of capitalizing with the proceeds realized from the sale of stock of the Seminole Securities Company, a corporation being created under the laws of the State of North Carolina as an accident, indemnity and employers' liability insurance company, to be known as the Sterling Casualty Company; that the 50 per centum premium at which the said T. C. Whedbee offered for sale and did sell said stock of the Seminole Securities Company was being used for the sole purpose of creating a surplus fund for the operation of the said Sterling Casualty Company; that a charter had been applied for by himself and others to the State of North Carolina for said accident, indemnity and employers' liability company to be known as the Sterling Casualty Company; that to secure the holders of stock and policies in said accident, indemnity and employers' liability insurance company, to be known as the Sterling Casualty Company, one hundred thousand dollars in securities had been deposited with James R. Young, Insurance Commissioner of North Carolina; by means of which said representations and pretenses said T. C. Whedbee unlawfully, willfully, knowingly, designedly, fraudulently and feloniously did obtain from W. C. Heath his promissory note in the sum of seven hundred and fifty dollars, of the value of seven hundred and fifty dollars, being then and there the property of the said W. C. Heath, with the intent to feloniously cheat and defraud said W. C. Heath of his moneys, goods and chattels; to the great damage of said W. C. Heath.

Whereas, in truth and in fact, Wylie Jones and W. A. Clark, bankers of Columbia, in the State of South Carolina, were not at the head of said Seminole Securities Company, and were not large stockholders in said company and were not directing its management; salaries were being paid to the officers of the said Seminole Securities Company; it was costing more than 10 per centum to organize the (773) said Seminole Securities Company; T. C. Whedbee was receiving in excess of 6 per centum for his services in selling the stock in the Seminole Securities Company; the stock in the Seminole Securities Company was not then being sold for the sole purpose of capitalizing with the proceeds realized from the sale of the stock of the Seminole Securities Company, a corporation being created under the laws of the State of North Carolina as an accident, indemnity and employers' liability company; that the 50 per centum premium at which the said T. C. Whedbee offered for sale and did sell the stock of the said Seminole Securities Company was not being used for the sole purpose of creating a surplus fund for the operation of the said Sterling Casualty Company; a charter had not been applied for by said T. C. Whedbee and others to the State of North Carolina for said accident, indemnity and employers' liability insurance company; and to secure the holders of stock and policies in said accident, indemnity and employers' liability company, to be known as the Sterling Casualty Company, one hundred thousand dollars in securities had not been deposited with James R. Young, Insurance Commissioner of North Carolina, as he, the said T. C. Whedbee, then and there well knew, contrary to the form of the statute in such cases made and provided and against the peace and dignity of the State.

The indictment was signed by the solicitor and was duly returned into court as a true bill by the grand jury. The defendant was convicted by the jury and, judgment having been entered upon the verdict, he excepted and appealed to this Court. after stating the case: The indictment in this case is palpably defective. A criminal false pretense may be defined to be the false representation of a subsisting fact, whether by oral or written words or conduct, which is calculated to deceive, intended to deceive, and which does, in fact, deceive, and by means of which one person obtains value from another without compensation. S. v. Phifer, 65 N.C. 321. That case has been repeatedly approved by this Court in numerous subsequent decisions involving the question as to the true nature and the constituent elements of a false pretense. Among others (774) are S. v. Mangum, 116 N.C. 998; S. v. Matthews, 121 N.C. 604; S. v. Davis, 150 N.C. 851. In S. v. Matthews, supra, the present Chief Justice analyzes the offense and states its component parts with great clearness. This Court, in that case, speaking by JusticeClark, holds squarely that, in order to convict one of this crime, the State must satisfy the jury beyond a reasonable doubt, (1) that the representation was made as alleged; (2) that property or something of value was obtained by reason of the representation; (3) that the representation was false; (4) that it was made with intent to defraud; (5) that it actually did deceive and defraud the person to whom it was made. The universal rule of civil and criminal pleading requires that the facts, constituting the cause of action, the defense thereto or a crime, must be stated, leaving nothing to inference or to the imagination. The Constitution of our State requires this in the case, for it says that the accused is entitled to be informed of the accusation made against him. It is a fundamental principle of the common law, or at least of Magna Charta, and has been explicitly guaranteed to the citizen in every great reform of our jurisprudence. It is nothing but right and just, and any other rule would be clearly oppressive, if not cruel, in its operation. The indictment must be so drawn and the facts so stated therein that this Court can see upon its face that an offense has been committed, if the evidence corresponds with and supports the allegations of the bill.

Clark, in his great treatise on Criminal Procedure, at pages 153 and 154, states the law with such clearness and precision that we cannot do better than state, at least substantially, what he lays down as the correct rule. "The indictment must show on its face that if the facts alleged are true, and assuming that there is no defense, an offense has been committed. It must therefore state explicitly and directly every fact and circumstance necessary to constitute the offense, whether such fact or circumstance is an external event, or an intention or other state of mind, or a circumstance of aggravation affecting the legal character of the offense.

"Unless the indictment complies with this rule, it does not state the offense. The charge must always be sufficient to support itself. It must directly and distinctly aver every fact or circumstance that is essential, and it cannot be helped out by the evidence at the trial or be aided by argument and inference. With rare exceptions, offenses consist of more than one ingredient, and in some cases of many; and the rule is universal that every ingredient of which the offense is composed must be accurately and clearly alleged in the indictment, or the indictment will be bad, and may be quashed on motion, or the judgment may be arrested or be reversed on error. What facts (775) and circumstances are necessary to be stated must be determined by reference to the definitions and the essentials of the specified crimes. Having ascertained them, every essential fact must not only have arisen, but it must be stated in the indictment. To constitute the statutory offense of obtaining property by false pretenses, there must have been a representation by the defendant of a past or existing fact or circumstance; it must have been in fact a false representation; it must have been known by him to be false; it must have been made with intent to defraud; it must have been believed by the other party; and he must have parted with his property to the defendant because of it. If an indictment for this offense fails to state any one or more of these facts or circumstances, it fails to charge the offense, and would not support a conviction, even though every essential fact were shown by the evidence to have existed." He supports his text by citing the highest and most reliable authorities.

The bill we now have under consideration is fatally defective in not stating the causal connection between the alleged false representation and the execution of the note for $750 by W. C. Heath by means of the representation. It does not show why the alleged false statements should have caused W. C. Heath to make the note, nor does it show to whom the note is payable. If we were permitted to look at the evidence, upon the defendant's motion in arrest of judgment, we would learn that the note was actually payable to his own order and indorsed in blank by him. It is not stated for what the note was given, whether for stock in either of the corporations mentioned or for something else of value to W. C. Heath. "To make a long story short" and to express the very point more tersely, it does not appear by direct or express allegation, or even by implication, what causal connection the false statements had with the note, or how W. C. Heath was induced thereby to make and indorse the note. We must see by the very indictment itself, not only that false representations were made, but, as we have already said, that they were calculated to deceive W. C. Heath, and that by the deception he was actually induced to give the note. The indictment, therefore, fails at its vital point. We are not allowed to infer that the representations induced the making of the note merely because it is so alleged in the bill, unless we can see the causal relation of the one to the other. So far as appears in the bill, the two transactions, Whedbee's representation (776) to Heath and the giving of the note, were separate and independent transactions, having no relation to each other, unless we are bound by the allegation that Heath was induced to give the note by reason of the false statements of Whedbee.

We must remember that the false representation must be "calculated to deceive," and this must be shown by the evidence. What is material to be proved, must also be alleged. It is a cardinal rule of every system of pleading that there must be "allegata" as well as "probata," and that they should, at least substantially, correspond with each other.

Where we should have had light upon an essential fact, one of the important ingredients if not the capital element of the crime, we are left entirely in darkness. If we should hold this indictment to be good, our ruling would be violative of every constitutional right of the defendant, of every principle of pleading relating to the subject and of every consideration of justice. It will not do to say in this land of freedom, where the rights of every citizen are carefully guarded and preserved, that a man should be convicted. He must be convicted, if at all, according to the law, and in that way only. We sum up on this point as follows: It is obvious, therefore, that the bill fails to show any causal connection between the representations and the giving of the note, or any logical sequence of the latter from the former. It does not appear for what the note was given or what part it played in the negotiations and dealings with respect to the organization and management of the two corporations, the "Seminole Securities Company" and the "Sterling Casualty Company."

The precedents sustaining our conclusion in this case are numerous, and we are not risking anything when we say that they are superabundant. We will refer to some of them later on.

The defendant relies upon S. v. Dickson, 88 N.C. 643. We have examined that case with the greatest care. The judge who wrote the opinion for the Court was not only one of the ablest judges who ever sat in this Court, but is entitled to be considered as having as great a knowledge of the criminal law, its principles and procedure, as any of his contemporaries, his predecessors or successors. We would, therefore, pause a long time and take our bearings before overruling anything that he had said. But it is not necessary that we should hold thatS. v. Dickson is in conflict with our decision in this case. The Court had already decided against the defendant upon other grounds, before the question we are now discussing was reached in that case, and what was said about the question now raised was merely a dictum, even if it is susceptible of the construction placed upon it. That (777) decision was the correct one upon the facts of that case. But we need not resort to any evasion of that ruling, even if it was a dictum as to the principle involved in this case, for we think there was a sufficient allegation in the indictment against Dickson to show that his false representation had induced the prosecutor to pay him the money for rafting the timber. It is almost patent upon the face of that bill that the relation of employer and employee existed between John McRae and the defendant, and that the latter had agreed to raft the timber from Davis' bridge to the mouth of Rockfish Creek, and that he had represented to McRae that he had done so, when, in truth and in fact, he had not. We affirm that decision, and add that it does not support the contention of the State in this case. But it is evident that the Court, when deciding that case, had overlooked the case of S. v.Fitzgerald, 18 N.C. 408, in which Judge Gaston delivered the opinion of the Court and asserted, as a well-established principle of criminal pleading, that it must appear in the bill, by the statement of facts sufficient for the Court to see, that there was a causal connection between the false representation and the giving of the note, and that the prosecutor was induced by that false representation to execute the note. No judge can improve upon that great jurist's statement of the law, so we will rely upon his own words and not upon our own. He said at page 411: "The indictment in this case charged that the defendant having, as a constable, levied certain executions on the property of the prosecutor, did falsely pretend that a certain paper written by him, presented to the prosecutor and William Wrathbone, was a bond for the delivery of property of the prosecutor theretofore levied on; when in truth and in fact the same was not a bond for the delivery of the said property, but a promissory note for the sum of $26.37 1/2; by means of which false affirmation the defendant did unlawfully procure to be signed and sealed by the prosecutor and the said William, and to be delivered to him, the defendant, a promissory note unsealed for the sum of $26.37 1/2, with intent to defraud the prosecutor and the said William Wrathbone. It is not necessary to inquire whether by means of such false affirmation a cheat or fraud might not be practiced under circumstances which would subject the offender to a criminal prosecution; but it seems to us essential, in a case where there is no obviousconnection between the result produced and the falsehood practiced, thatthe facts should be set forth which do connect the consequence with thedeceitful practice. It is a general rule in indictments, that ``the special manner of the whole fact ought to be set forth with such certainty that it may judicially appear to the court that the indictors (778) have gone upon insufficient premises.' Hawkins b. 2, ch. 55, sec. 57. Now, it is impossible for us to see, upon such a vague and defective statement, how a false representation by the defendant of the nature of an instrument which he had and exhibited, or presented, could have induced any person to give the defendant a bond for the payment of money."

This would seem to be all-sufficient to sustain our ruling, but the reports of the decisions in other jurisdictions are full of cases to the same effect.

In People v. Brown, 38 N.W. 916, the Court held "that an information charging the obtaining of the signature of a person to two certain promissory notes on false and fraudulent representations as to a company, of which the defendant claimed to be the agent, which does not state the consideration of the notes, to whom they were payable, and whether negotiable or not, or whether they were used in any dealings between the maker and such company, or respondent and the company, is insufficient, as not showing any causal connection between the false representations and the giving of the notes." And in People v. White,7 Cal.App. 98, the Court said: "This analysis of the information shows that there does not appear to be any natural connection between the representations charged to have been made by the defendants and the delivery of the money to the defendants. The representations were concerning a company with which it is not alleged that defendants had any connection, nor which said Furrar entered into any relations because of said representations. ``The indictment must show that the property was obtained by means of the false pretense alleged. Accordingly, when there appears to be no causal connection between the pretense and the delivery of the property, such additional facts as are necessary to show the relation must be alleged. A defect in the indictment arising from failure to show the connection between the false pretense and the obtaining is a material one, and it is not cured by verdict.' 19 Cyc., 420, and numerous authorities cited under Note 37." In S. v. Connor, 110 Ind. 469, the principle was thus stated by the Court: "An indictment for obtaining goods by false pretenses, which charged the accused with representing that his firm had commenced business with a certain capital; that, at the date of the representations, they had goods on hand and debts due to them equal to that amount; that the total indebtedness of the firm only amounted to a specified sum, and that it was doing a certain amount of business each year; and that a merchant ``relying on said representations and pretenses, and believing the same to be true, and being deceived thereby,' sold (779) a quantity of goods on credit, is insufficient if it is not averred that it was by means of such false representations that the merchants were induced to part with their goods." The Court said, at pages 455 and 456: "Counsel agree that the motion to quash the indictment was sustained upon the ground that both counts failed to show with sufficient certainty that the possession of the property referred to was retained by the firm of Connor McClellan by means of the false pretenses alleged to have been made by the appellee. To sustain a prosecution for obtaining goods under false pretenses, it must be in legal effect charged in the indictment, as well as proved at the trial, that the goods were obtained by means of the alleged false pretenses. Whart. Crim. Law, sec. 1175; 2 Bish, Cr. Law, sec. 461; Moore's Cr. Law, sec. 739; S. v.Orvis, 13 Ind. 569; Todd v. State, 31 Ind. 514; S. v. Williams,103 Ind. 235, 2 N.E. Rep., 585. The false pretenses charged must have at least entered into the transaction, and have constituted a material inducement to the transfer of the possession of the goods. Both counts of the indictment in this case averred with sufficient certainty the falsity of the representations alleged to have been made by the appellee, and that Kellogg Co. were induced to part with the possession of the goods in question. The succeeding allegation, that eighteen days after the false representations were so made and relied on, Kellogg Co. sold and delivered these goods to Connor McClellan on credit, at their (the latter's) special instance and request, failed to indicate any natural or logical connection between the false representations and the sale and delivery of the goods. The indictment must show that the property was obtained by means of the false pretense alleged. Accordingly, when there appears to be no natural connection between the pretense and the delivery of the property, such additional facts as are necessary to show the relation must be alleged." 19 Cyc., 429. We could cite authorities without number to sustain the conclusion in this case, but we will not prolong the opinion by such a course, as the cases are all collated in the excellent and exhaustive brief of defendant's counsel.

The case of S. v. Fitzgerald, supra, is of itself sufficient as authority in condemnation of this indictment. It was decided by a Court composed of Chief Justice Ruffin, Judge Daniel and Judge Gaston, and we are perfectly safe in relying upon what they have declared is the law. That case is not overruled by S. v. Dickson. It was not even cited in the latter case, and we have no idea that the decision in that case was intended to be considered as bad law.

There were many other exceptions taken, during the trial of (780) the case, to the rulings of the court, which, if the indictment had been good, would deserve our most serious consideration.

Without intimating, in the least, any opinion upon the law, as applied to the evidence in the case, we would suggest to the solicitor that he consider most carefully whether, upon the facts which the evidence tends to prove, he can make out a case against the defendant for criminal false pretense. This is only a suggestion and nothing more. If the defendant is guilty, he should be convicted and punished, but it is well to pause sometimes and consider whether a defendant is guilty merely because he has been indicated by the grand jury. The great and central principle in this case is that the law, not law made by us, but the law of the centuries, has required that the indictment must show a state of causation — that is, that the false representation induced the prosecutor to incur a liability or to surrender something which otherwise he would not have done. This is the crucial test.

The statute dispensing with the necessity of alleging or proving an intent to defraud any particular person has no bearing whatever upon this case, but is as foreign to the point presented as it could possibly be. It is not the general allegation or proof of an intent to defraud that is missing, but the causal relation between the alleged false pretense and the deceit, and the indictment, therefore, did not inform the defendant of the crime charged against him. It is his constitutional right to be so informed; and what power have we to ignore this plain mandate of the Constitution and deny him this invaluable privilege? If he asserts it, we must grant it, or we fail in our duty to administer justice according to the law which protects him in his rights as a citizen.

S. v. Matthews, 91 N.C. 637, and S. v. Mikle, 94 N.C. 843, and the other authorities relied on do not sustain the position of the State in this case. In all of them causal connection appeared most clearly. Thomas v.People, 34 N.Y. 351, which is specially relied on, sustains our ruling, and the text-books, when properly construed, are to the same effect. A cursory reading of them will show this to be the case.

As to S. v. Dickson, the Court manifestly overlooked the decision inS. v. Fitzgerald, wherein the law is firmly established as we say it now is, and the opinion was written by one of the greatest jurists this or any other State has produced, Judge William Gaston. He was careful and painstaking and always fortunate in stating and applying a legal principle. He had no sympathy with the law-breaker, but, great (781) magistrate as he was, discharged the duties of his high office "with the cold neutrality of the impartial judge" and according to the laws of his State as he understood them. Have we ever had a greater or more masterful intellect in this Court? By his side sat one of the greatest of our Chief Justices, Thomas Ruffin, a noted criminal lawyer, and Judge Daniel, who was also a thoroughly trained and well-equipped lawyer. His opinions deservedly rank among the very best ever delivered by this Court. S. v. Fitzgerald condemns the indictment in this case as being insufficient to inform the defendant, under the Constitution, of the offense charged against him.

Before taking leave of the case, it may be well to remark that the indictment charges the false pretense to have been made with the intention of inducing W. C. Heath to subscribe to stock in the Seminole Securities Company, whereas it is not anywhere alleged that he actually subscribed to any such stock, but that the defendant obtained a note from the said Heath, for what purpose it does not appear, nor does it appear to whom the note was payable or what connection, if any, it had with the purchase of the stock; and further, it does not appear that the Seminole Securities Company ever received even a penny from W. C. Heath for its stock or for any other consideration.

As the indictment is fatally defective, we must remand the case with directions to arrest the judgment.

Judgment arrested.