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United States v. Renee Ice Cream Co.

decided.: March 5, 1947.


Author: Goodrich

Before BIGGS, GOODRICH, and McLAUGHLIN, Circuit Judges.

GOODRICH, Circuit Judge.

The defendants were convicted of violation of War Food Order No. 8, Part 1401, Section 1401.31, paragraph (b)(1)*fn1 promulgated pursuant to Title III of the Second War Powers Act, 1942.*fn2 The information charging violation contained fourteen counts. The jury found a verdict of guilty as to the corporate defendant and as to individual defendant Mary Starovic on counts two, three and nine; a verdict of guilty as to the individual defendant Hannah M. Levous on count nine only. All the defendants appeal. In view of this verdict our attention is limited to the questions involved in the three counts upon which the jury found against the defendants.

The various counts were based upon a charge of over-utilization of milk solids for the particular months charged in each count.Count two covers April 1943, count three involves June 1943, and count nine has to do with March 1944.

The defendants all allege error in the admission of the testimony of one Seitz, who was an auditor employed by the Government and who had made an extensive examination of the corporate defendant's books. They say that Seitz was permitted to testify as to the conclusions based upon what defendants call hearsay and, likewise, was permitted to draw conclusions on assumptions made by him. We think there is no merit in this contention. In United States v. Michener, 3 Cir. 1945, 152 F.2d 880, 883, we said that auditors who made detailed inspection of a corporation's books and records could testify in summary form as to what was contained in the voluminous documents. The books of the defendant were in evidence. Likewise, those of other concerns which had had dealings with defendants were in evidence, from which alleged facts concerning the purchase of milk products by the defendants were sought to be established. In other words, the jury had before it the basic material on which the auditor's testimony was founded. Under these circumstances there was no error in permitting him to testify as he did.*fn3

The serious question in the case is whether the Government's testimony is sufficient to sustain the conviction against one or all of the defendants. Defendants saved this point by proper motion at the close of the Government's case and again at the conclusion of all the testimony. Even without that we should be compelled to examine the point under Rule 52(b), Federal Rules of Criminal Procedure.*fn4

The case presented was about like this: Corporate defendant was and is a manufacturer of ice cream. Its books for the months in question before us, and for the months involved in the other counts as well, showed the purchase of given quantities of milk products. The corporation's reports to the Government, required under war regulations, showed the manufacture of certain quantities of ice cream products for the same month. During all of this time the amount of ice cream products which a manufacturer could lawfully make was based upon a quota drived from a base period from December 1, 1941 to November 30, 1942. In every case the records of the corporate defendant showed the manufacture of less ice cream products than it would have been entitled to make under War Food Order No. 8. If that was all there was to the story, obviously there would be no case against the corporate defendant or anybody else.

But the Government says, however, that there is more to the story. The Government says the defendant bought plastic cream, which purchase does not appear on defendant's books at all. It says, further, that the defendant bought butter and, on one occasion, bought butter under the pretense of buying cocoanut oil which was not a rationed product, but for which 150,000 ration points accompanied the payment and the ration point payment was the amount required for a butter purchase in the amount the Government claims. It appears that the defendant and all other manufacturers were required to furnish an inventory of the milk products on hand at the end of each month. Some of these are in evidence.

Now we get to the three months in question involving the three counts on which there were convictions. We take the counts in order.

A. Count two, April 1943. For this month there was evidence given by one Constans, who is a partner in the Standard Butter and Egg Company, of a sale to Renee on April 2, of 7,363 pounds of butter for $3,791.95. Standard's books also show payment by check of the same date. In this same month the books likewise show, from the same witness, evidence of the purchase of 3,402 pounds of butter on April 5, priced at $1,752.03, and paid for April 5.

The Renee Ice Cream Company's books do not show either of these purchases or payments, although there is testimony from officials of the Company that everything which they bought was recorded in their books.

We think that the testimony upon this point is sufficient to allow the jury to find the purchase by and the delivery to Renee in April 1943, of these amounts of butter, and to support all legitimate inferences to be drawn from the fact of such payments. It is not that the defendants are "bound" by what is shown on the books of a stranger. The point is that the conflict of testimony as to whether the Renee Company did get the butter, which the Government claims, is resolved by the jury's verdict. The point concerning what amount of butter fat is represented by such purchase is discussed under count three.

B. Count three, June 1943. In this month, also, testimony from the witness, Constans, shows on June 16 the sale of butter, at $.46 a pound, for $6,549.48. Standard's books show that 113,904 ration points were required for this sale. Constans testified that 112,480 ration points accompanied payment and that "the balance" of the ration points was received later on. Two cancelled checks of Renee, dated June 14 and June 20 respectively, each for $3,274.74 are in evidence. In Standard's ledger they are entered as received on June 17, and June 19. Renee's books do not record this purchase. But Renee did produce a sales slip from Standard showing the sale to Renee of cocoanut fat billed at $.23 a pound, and bearing a notation "Points 112,480". It was shown, also, in evidence, that sales of cocoanut fat did not require ration points.

In other words, there was conflicting evidence here. Renee claimed this purchase and sale was of cocoanut fat. The Government claimed, through the evidence of Constans and books of Standard, that the sale was of butter. ...

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