Opinion
Rehearing Denied June 17, 1927.
Hearing Granted by Supreme Court July 18, 1927.
Appeal from Superior Court, City and County of San Francisco; Michael J. Roche, Judge.
Abner Doble was convicted of conspiracy to violate, and actual violation of, the Corporate Securities Act, and he appeals. Affirmed. [Copyrighted Material Omitted] COUNSEL
Carey Van Fleet, of San Francisco, for appellant.
U.S. Webb, Atty. Gen., Wm. F. Cleary and Emery J. Mitchell, Deputy Attys. Gen., for the People.
OPINION
KOFORD, P. J.
This is an appeal from a judgment of conviction upon an amendment which accused defendants in the first count of criminal conspiracy to violate the Corporate Securities Act (St. 1917, p. 673), and in six other counts of directly violating the said act by making certain sales of capital stock of the Doble Steam Motors Corporation. The appellant, Abner Doble, was the president of said corporation. Defendant F. G. Cox was the fiscal agent in charge of the sale of stock, and defendant W. E. Barnard was his stock sales manager. The other defendants were officers of the corporation. All the defendants except W. A. Doble and this appellant pleaded guilty. W. A. Doble was acquitted. The conspiracy count charged that the defendants on or about the 1st day of July, 1923, conspired to violate the Corporate Securities Act in the following manner: To offer for sale, negotiate for sale of, take subscriptions for, authorize, direct, and aid in the sale of, cause and assist in causing to be sold, and to sell shares of capital stock of Doble Steam Motors Corporation, then and there the securities of said corporation and of its own issue, without a permit so to do from the commissioner of corporations. The indictment, in conformity with Pen. Code, § § 184 and 1104, alleged certain overt acts performed by defendants in effectuating the said conspiracy: First, that they furnished and delivered to defendants Cox and Barnard chassis and vehicles known as Doble steam automobiles; second, in the months of July and August, 1923, conducted and maintained on Mission street and Powell street establishments for the purpose of displaying the said car and chassis; third, during the months of July and August, 1923, and thereafter for a period of time the exact duration of which is to the grand jury unknown, employed and directed certain named individuals as salesmen, agents, and servants to take subscriptions for, negotiate for the sale of, to offer for sale, and sell said shares of capital stock. The fourth, fifth, sixth, seventh, eighth, and ninth overt acts alleged were sales of such securities to certain named individuals, specifying the number of shares and date of each sale. The dates specified were July 11, 21, August 1, 2 and 3, 1923. The remaining six counts of the indictment charged independently of the conspiracy certain specified sales of stock without a permit. These sales are the same as those sales mentioned and described as overt acts in the conspiracy charge. Upon all theses counts the appellant was convicted with the exception of counts 3 and 7.
The facts proven were, as briefly as we are able to state them, as follows: Two permits were obtained from the California commissioner of corporations permitting the sale of the aggregate of 100,000 shares of stock of the corporation. A spirited sales campaign was conducted in the state of California by the corporation under the direction of F. G. Cox as its fiscal agent. Under these permits the stock was sold rapidly, and by June 19, 1923, the 100,000 shares permitted to be sold had been sold. At first most of the sales were made in Los Angeles, but the sales campaign in San Francisco was conducted from June 4 to August 4, 1923. An application was made to the corporation commissioner on June 23, 1923, for permission to sell 100,000 additional shares. This application did not meet with favor and remained pending until the 9th of August, 1923, at which time it was withdrawn. In the meantime (which embraces the dates of the various sales alleged in the indictment), sales of stock continued to be actively made in San Francisco and vicinity until August 4. In general, the conspiracy proven consisted of the agreement among the defendants that, notwithstanding the permit had been exhausted, sales of stock should continue. The officers, including this appellant, knowing that the permit had been exhausted, urged the fiscal agent to continue making sales; the appellant rejected the suggestion that further subscriptions should be filled by buying up stock from the public; it was the mutual understanding that sales of stock should continue, in the hope that perhaps a permit would be subsequently secured either from the then corporation commissioner or his successor, there being a rumor that the commissioner might resign. In the third application, made on June 23, it was stated that 96,132 shares of stock had been sold up to and including June 16, 1923, as shown by an audit made by certain public accountants. This application was signed and verified by the oath of appellant and others. The witness Penberthy testified that he was an auditor, accountant, and bookkeeper employed by Cox from March 23, 1923, and continued in his employment for one year. He checked, issued, and signed checks and vouchers showing weekly sales of stock by Cox and his salesmen. By these checks and vouchers attached, Mr. Cox made weekly remittances to the Doble corporation showing total amount of sales for each week. The check for the week ending June 16 showed sales of 11,736 shares. These shares, we may assume, were taken account of by the public accountants (referred to in the application above mentioned), in stating that 96,132 shares had been sold up to June 16. The other weekly checks showed the following sales of shares: For the week ending June 23, 8248 shares; week ending June 30, 8474 shares; July 7, 6898 shares; July 14, 8480 shares; July 21, 9350 shares; July 28, 8195 shares; and August 4, 13,109 shares. The evidence thus showed that, although appellant stated in his application on June 23 that 96,132 shares had been sold by June 16, on June 23 the amount sold had exceeded the 100,000 shares allowed by the permits obtained, and by August 4, had exceeded it by over 70,000 shares. We now take up an additional and further statement of facts which relate to occurrences after August 4, 1923. It became apparent that the application to the corporation commissioner for the permit to sell further shares would not be granted, and it was withdrawn on August 9, 1923. Thereupon and not before, the defendants agreed upon a further plan to enable themselves to continue selling and issuing shares of stock in the absence of a permit from the corporation commissioner. Very briefly, this plan was that the corporation would pretend to sell to Cox in Portland, Or., a quantity of shares of capital stock, and that he, Cox, would then resell the said shares to the public in the state of California either as new sales or in fulfillment of subscriptions that had theretofore been taken by him in excess of the amount allowed by the original permits granted. Some of the main documents looking to the effectuation of the plan were prepared in California at San Francisco, but were signed and delivered in Portland, Or. The appellant signed some of the documents in San Francisco. It may be stated in passing here that two of these documents were antedated, the dates used following by a few days the dates of the two permits originally granted by the corporation commissioner. The instruments were actually prepared on or about August 11-13, 1923. Immediately thereafter some of the defendants went to Portland, Or., and the plan was carried out through means of an escrow with the Portland Title & Trust Company. Certain stock certificates calling for large blocks of stock made out to Cox were left with the title company, and, upon the indorsement and order of Cox, the title company issued the stock from time to time to various purchasers and subscribers in the state of California. These shares were delivered in California by Cox and his salesmen.
In referring to the Portland sale plan above, we have used the expression, the pretended sale to Cox. The evidence shows the sale was only a wash sale. While the conspirators observed the outward forms of a real sale to Cox and then a resale by Cox as a shareholder of his own shares to various members of the public, the whole transaction was conducted in such a manner that Cox never assumed responsibility as a purchaser, never put up his own money or credit, but, by borrowing from the California subsidiary corporation money which he had previously paid in on account of the excess sales and by using other funds of the corporation in his possession, he went through the form of buying, but nevertheless the whole scheme when completed constituted a sale by the corporation through the conspirators of the corporation treasury stock to the public in California. The stock made out to Cox and placed in escrow there and from time to time by his order reissued to California purchasers in the manner the record discloses was not a bona fide sale, and constituted a violation of the Corporate Securities Act of California, as was pointed out in People v. Eiseman (Cal.App.) 248 P. 716.
The conspiracy consisted, then, of the agreement to sell without a permit made during the latter part of June or the 1st of July. The evidence lends itself to the following summary: At first it was the hope of the defendants that a permit would afterwards be obtained from the corporation commissioner, and when that hope failed on or about August 8 or 9, they found themselves in the position that they would likely be exposed for having oversold; not being able or willing to pay back the money to the subscribers and having been previously unwilling to fill the excess subscriptions by purchasing stock in the open market from previous purchasers, they now were confronted with the necessity of further action; thereupon the Portland plan was adopted.
Appellant contends that the sale to Cox in Portland was not a violation of the Corporate Securities Act of California, because it was done outside of this state, and that the subsequent sales by Cox as a shareholder of his own stock to the public were not forbidden by the act; that, the two acts being legal, there could be no criminal conspiracy to do legal acts. Error is assigned in the giving and refusing of instructions based upon the theory of the validity of the Portland plan. The court rejected certain requested instructions prepared upon the subject of whether the Portland escrow stock issues constituted violations of the statute. In giving the definition of "sale" found in the Corporate Securities Act, the instructions omitted the proviso to the effect that the delivery of one certificate in exchange for another theretofore legally issued shall not be construed to be a sale. Inasmuch as the defendants had already illegally sold and issued shares in excess of the permits before the Portland plan was made and the charge and conviction did not rest on the stock sales that passed through the Portland escrow, we do not consider appellant has been prejudiced by this omission, or by the rulings on these instructions.
While we have stated that the evidence shows that the Portland plan constituted a violation of the Corporate Securities Act, nevertheless if we should concede it to have been a lawful transaction it would not affect the validity of the judgment appealed from in this case for two reasons: First, the indictment charged certain acts at certain dates as crimes and as overt acts of the conspiracy which the evidence shows occurred before the Portland plan was either executed or planned; second, these acts were not performed in contemplation of the Portland plan, and from their nature could not become valid by reason of the Portland plan, even if done in contemplation of it. The indictment, in alleging the dates of the sales specified as specific offenses in counts 2 to 7, inclusive, and in alleging the dates of the sales specified as overt acts of the conspiracy, does not go beyond August 4. In alleging the other overt acts or those which are not the specific sales of stock but are the exhibition of automobiles, maintenance of showrooms or salesrooms, and directing of salesmen, the dates alleged are not specific, but the evidence shows that these overt acts also occurred prior to August 4. On that date the campaign in San Francisco ceased and the last of the showrooms was closed. The evidence shows that the Portland plan was not agreed upon or jointly contemplated until August 10 or 13, immediately after the application for the third permit was withdrawn on August 9.
All the alleged overt acts and crimes, therefore, were either alleged or proven to have occurred before the Portland scheme was planned or executed. For this reason we conclude that there are no overt acts specified in the indictment referable to the Portland part of the conspiracy, and also that the Portland plan could not affect the specific stock sales alleged as public offenses committed and fully performed before that plan was devised.
No argument is suggested and we can think of none showing that sales of stock made without a permit would not be a violation of the Corporate Securities Act, even if done in the hope or expectation that a permit would afterwards be obtained. The statute requires a permit to be first obtained. Moore v. Moffatt, 188 Cal. 1, 204 P. 220, by no means holds that such a subscription is not a violation of the act.
Although a very great number of subscriptions obtained prior to August 4 were filled through the Portland escrow, it is not contended that these oversubscriptions and sales amounting by August 4 to more than 70 per cent. over the permits for 100,000 shares were accomplished in contemplation of filling them through the Portland escrow. Not only was that done before the Portland plan was agreed upon and much of the stock actually delivered, but it was treasury stock and not reissued stock. None of the purchasers specified in the indictment received their stock through the Portland escrow with the possible exception of Henry Amacher, and as to him the sale was alleged and proven as occurring July 11. His subscription and first payment were obtained on that date upon a fiscal agent’s blank, a form of contract which represented a sale by the corporation of its own stock to the subscriber. Cox continued to take subscriptions upon fiscal agent’s blanks until October, 1923. The sales campaign reached its height in July, 1923, started to drop off in August, and September cancellations exceeded subscriptions. Neither can it be argued under the evidence that these sales were sales of canceled subscriptions, as these sales occurred also before cancellations exceeded subscriptions.
Therefore, even if the Portland escrow was not a violation of the statute, the acts previously performed up to August 4, consisting of actually issuing treasury stock and taking subscriptions on behalf of the company (not brokers’ agreements for reissued stock), constituted a violation of the act as charged in the indictment. The Portland plan would not undo the statutory violations and conspiracy for that purpose which had occurred before that plan was either agreed upon or carried out. The value of the evidence of the Portland plan was in showing a continuation of the same determination with knowledge and willfulness to sell without a permit and in showing an effort on the part of the conspirators to conceal their illegal acts in having over-sold by supplying stock in this way.
Error is assigned in the admission into evidence of a summary of the books of F. G. Cox, F. G. Cox Company, and of certain of the books and records of the Doble corporation. This summary of the books was prepared to show the amount of stock sales in excess of the permits. It was made by the witness, Mr. Cummings, a certified public accountant. This summary was admissible under subdivision 5 of section 1855, Code of Civil Procedure. The books were proven to be voluminous, the record of sales going into the number of thousands. Wigmore on Evidence, § 1230; McPherson v. Milling Co., 44 Cal.App. 491, at page 495, 186 P. 803; People v. Dole, 122 Cal. 486, at page 496, 55 P. 581, 68 Am. St. Rep. 50; San Pedro Lumber Co. v. Reynolds, 121 Cal. 74, at page 86, 53 P. 410. It is not necessary that the books themselves be offered in evidence, but it is sufficient if they are available or produced in order to afford the opposite party an opportunity to inspect, cross-examine, or make a similar summary. 16 Corpus Juris, 615, § 1211. We do not understand the case of Shields v. Rancho Buena Ventura, 187 Cal. 569, 203 P. 114, to hold contrariwise, although there the books were actually put in evidence.
It is claimed that the books themselves were not admissible, sufficient foundation not having been laid, and hence that the summary was also inadmissible. As to the Cox books, the preliminary proof by bookkeepers was as follows: The witness Smith testified that while he was in Cox’s office for a time that would embrace July and August, 1923, he did not have complete charge of the books until a much later date. Mr. Penberthy testified that he was a bookkeeper and auditor for Mr. Cox and the Cox corporation; that he acted in conjunction with a Mr. Moorehouse from March until June 23, at which time he became office manager. He verified, approved, and signed the weekly checks and vouchers accounting for the sales by Cox which we have referred to above. Mr. Cox himself testified that his sales organization and bookkeepers operated under his direction and control; that they rendered reports to him upon which he acted as correct. The Cox books were admissible as a declaration of Cox, a coconspirator, so far as concerns the conspiracy count, and as a declaration of an agent so far as concerns the other counts.
As to the Doble books, there was the testimony of the secretary of the corporation, and the following bookkeepers and auditors, Mr. Pinska, Mrs. Lamb, Mr. Jensen, and Miss Capps-substantially the whole bookkeeping force mentioned in the evidence, with the exception of Miss Marshall, who acted directly under the secretary, and who was in West Virginia at the time of the trial. These witnesses showed as full a knowledge of the truth of the entries in the books as was reasonably possible, having regard for the fact that the knowledge of the amount of stock sales came to the Doble corporation from its fiscal agent, Cox. These bookkeepers received reports from Cox’s force, showing amount of stock sold and money receipts, verified them from time to time, and made the appropriate entries in the Doble books. This was in the regular course of business. All corporations act through their agents. These entries were made, then, from knowledge obtained from reports regularly made to the bookkeepers by another person employed in the business (Cox), whose duty it was to make the same in the regular course of business. This made the books admissible under the account book rule as restated in Chan Kiu Sing v. Gordon, 171 Cal. 31, 151 P. 657.
But the introduction of the books of the corporation here should be compared to a case where they are offered against the corporation as the acts and declarations of its agents rather than to a case where they are offered by the corporation to prove an account against a debtor. Wigmore, Evidence (2d Ed.) § 1557. While the salesmen, bookkeepers and auditors were in one sense agents of the corporation, in a true sense they were the agents of the officers of the corporation as well. Here all of the officers of the Doble corporation were defendants. It was through these officers that the sales campaign was started and carried out by the corporation. These officers employed and directed the salesmen through the corporation’s fiscal agent, Cox, and the bookkeepers and auditors were employed and directed by these same officers, the defendants. The agents acted within the scope of their employment in making the sales and in keeping a record of the sales. The corporation itself was a party to the conspiracy and statutory violations, though not charged in the indictment.
One is not permitted to set his agents about selling stock in violation of the law and then claim irresponsibility by claiming not to know that these agents have done what they were directed to do. Wigmore on Evidence (2d Ed.) vol. II, § 1078, says:
"He who sets another person to do an act in his stead as agent is chargeable by such acts as are done under that authority and so, too, properly enough, is affected by admissions made by the agent in the course of exercising that authority."
Code of Civil Procedure, § 1870, subd. 2, provides that evidence may be given of the act or declaration of the agent of a party within the scope of his agency and during its existence after proof of the agency. Wharton, Criminal Evidence (10th Ed.) § 700; 3 Wharton on Evidence, 1170, 1171, 1173, 1177, 1192, 1198; Mechem on Agency (2d Ed.) § 2007.
The declarations of the agents and employees of a coconspirator forming a part of the res gestæ have been held to be admissible against all under this principle. 16 Cor. Jur. § 1301; State v. Grant, 86 Iowa, 216, 53 N.W. 120; Patch Mfg. Co. v. Protection Lodge, etc., 77 Vt. 294, 60 A. 74, 107 Am. St. Rep. 765; Spies v. People, 122 Ill. 1, 12 N.E. 865, 17 N.E. 898, 3 Am. St. Rep. 320.
The admissibility of the declarations of a conspirator against his coconspirators and the admissibility of the declarations of an agent against his principal are both based upon the same theory-the law of agency. We need draw no distinction, therefore, under the facts in this case, between the conspiracy count and the other counts in the indictment.
The books were admissible, not only as declarations of agents, but at the very least as evidence tending to show, in connection with other testimony, the knowledge on the part of appellant of the volume of sales taking place. People v. Rowland, 12 Cal.App. 6, 106 P. 428; People v. Leonard, 106 Cal. 302, 39 P. 617. While the evidence does not show that the appellant made personal examinations of the books, it does show that he received reports of their contents from the bookkeepers, and there was considerable other evidence warranting the inference that he had knowledge of their contents in this respect quite apart from any presumption arising from his duty to know as the president of the corporation.
If the summary of the books admitted be regarded as admissible merely as tending to show notice and knowledge, and not competent to show oversubscription as a fact, there is, independently of the summary, sufficient other evidence to show the excessive issue or sale of stock. The testimony of Mr. Penberthy, bookkeeper, auditor, and office manager for Cox, showing the weekly checks and sales accounts covering the period from June 16 to August 4, taken in connection with appellant’s verified statement of the sales made to June 16, show the sales to have been over 70,000 more than permitted by the permits.
The case of People v. Blackman, 127 Cal. 248, 59 P. 573, is strongly relied on by appellant. There books were held not admissible. Inasmuch as one purpose of the offer there was to show the defendant did not keep correct books, but were falsified to enable the defendant to perpetrate and conceal the crime of embezzlement, the books were held not admissible as regular entries made in the course of business. On the other hand, the defendant’s knowledge and complicity in falsifying the books was not first shown and so the books were not admissible on either theory. But it was there said:
"If there was evidence that the entries were made by the defendant or under his direction, or with his knowledge, they would most undoubtedly be competent and important evidence against him." Page 253 (59 P. 574).
It is next argued that the defendant was compelled by the court to produce certain corporation records and thus give incriminating evidence against himself in violation of his constitutional right. Witness Jensen, who had been superintendent of the Doble factory and also treasurer and secretary of the corporation for a time, together with other witnesses who had had possession or access to the Doble books, were subpœ naed to bring the books to court. While the district attorney was examining the witness Jensen in an endeavor to explain the nature of the books, to ascertain why they had not been produced in court and where the books were last seen, the counsel for defendant interrupted and stated as follows:
"Mr. Van Fleet: As far as these witnesses are concerned, I can relieve the situation very easily and tell you all about it. The books are in my office, brought over there by Mr. Abner Doble, or most of the books. There was a whole truckload of books brought over this morning. What are they, stock certificates? A. Stock stubs and stock ledger cards.
"Mr. Van Fleet: Brought over this morning by Mr. Jensen and these other witnesses that you subpœ naed.
"Mr. Fitzgerald: Then I call upon you to produce those, under the subpœ na. They were brought over and delivered to you instead of the court.
"Mr. Van Fleet: They weren’t delivered to me.
"Mr. Fitzgerald: Where are they?
"The Witness: They are in my automobile in the Palace garage.
"Q. Why didn’t you bring them here? A. There are too many of them for me to carry, and I thought the best thing to do was to park my automobile until the court told me what to do with them.
"Mr. Van Fleet: We can have them here in 10 minutes. Of course, I want to make my objection.
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"Mr. Van Fleet: I want to apologize to the court for this delay. It was partly due to my own fault, your honor please; I told them to put the books in the garage until -"
A recess of 10 minutes was then taken and the witness excused, after which he returned, stating that he had brought the only books that he could find, that being the stock stub books and ledger cards. The witness also stated that Miss Capps could better identify the books and possibly tell where others were, and thereupon she was called. The examination continued concerning the location of the books of the company. She identified the records then in court as being the stock certificate stubs, the original binders and stubs of all stock certificates that had been issued. Later Mrs. Lamb, another bookkeeper, testified that she was in charge of the books and that the ledger and journal were mostly in her handwriting. It appeared from her testimony that some of the books had not yet been produced in court, but were in the office of counsel for defendant. The district attorney then called upon defendant’s attorney to produce the books without the formality of a subpœ na. Defendant’s counsel replied, that inasmuch as he was attorney for the defendant they were not in his custody but in theirs, and the books were confidential communications and that he could not be compelled to produce evidence against the defendants. The court then excused the jury, stating that he would take up the legal objections in the absence of the jury. After the jury was excused, the district attorney asked for an order directing defendant’s counsel to produce the books, stating that his demand was made solely for the purpose of laying the foundation for the introduction of copies if the originals were not produced. Defendant’s counsel replied, "As to the demand, to keep the record clear, I say that they are not under my control." After further argument the court stated, "Now, I will stand corrected if this is not the fact. The record discloses here that you are now in physical custody of the books." Defendant’s counsel stated, "I will say they are in my office for the purposes of the record." The court instructed defendant’s counsel to produce the books in court at the next session. At the next session Mrs. Lamb was again called to the stand and was examined concerning the books, which apparently had been produced in court at that time by some one.
At one point in the examination after the books were produced and when an objection was made upon the ground that the demand for the books was made in the presence of the jury, the court admonished the jury to draw no unfavorable inference from anything that might have been said or done in relation to the books in evidence, and to disregard any statements made in relation to the production of the books.
Appellant relies upon the following authorities: McKnight v. United States (C. C. A.) 115 F. 981; Foster v. United States (C. C. A.) 178 F. 174; State v. Hollingsworth, 191 N.C. 595, 132 S.E. 667, 669; People v. Dufur, 34 Cal.App. 644, 168 P. 590; People v. Mayen, 188 Cal. 237, 205 P. 435, 24 A. L. R. 1383.
This record does not show that defendant was compelled to give evidence against himself in violation of his constitutional rights. Subpœ nas duces tecum were apparently served on the bookkeepers having possession of the books, but instead of bringing the books to court in obedience to the subpœ na, they were left either in the office of defendant’s counsel, according to his statement, "for purposes of the record," or in an automobile, according to the testimony of the witness Jensen. The proceedings were without the presence of the jury except the demand made while the witness Jensen was being examined. These books were produced by him. The order for the remaining books was made out of the presence of the jury and for the purpose of laying the foundation for the introduction of secondary evidence. These books found their way into the control of defendant’s counsel after subpœ na duces tecum was served. We do not understand that if a witness so subpœ naed carries the books to defendant’s counsel or places them in a garage subject to his order instead of bringing them to court that they are beyond the reach of an order of the court. It the order of the court made under these circumstances was irregular the irregularity was technical and not substantial. In view of the cautionary instruction given, the irregularity was less serious than that passed in People v. Dufur, 34 Cal.App. 644, 168 P. 590, and in view of the fact that the order was made out of the presence of the jury, the proceedings compare favorably with those passed in People v. Mayen, 188 Cal. 237, 205 P. 435, 24 A. L. R. 1383.
The appellant attacks the sufficiency of the evidence, not upon the ground that it does not prove the offenses charged, but in these two respect: First, that there was insufficient evidence outside of the acts and declarations of the coconspirators. Second, that there was not sufficient testimony outside of that of accomplices tending to connect the appellant with the commission of the crimes charged. Some of the testimony received in evidence constituted declarations and admissions of coconspirators and was admitted on that ground; the testimony, however, of which appellant complains is not to to classed as acts or declarations of conspirators. Some of the conspirators were witnesses in the case and testified at length concerning the conferences and transactions constituting the formation and execution of the conspiracy. A distinction must be drawn between the case where acts and declarations of a conspirator are offered against him and his coconspirators by the testimony of a third person (in which case the value of the testimony consists in its character as an admission) and where sworn testimony is given in court by members of the conspiracy. The testimony of a conspirator is to be regarded as sworn testimony and not as an admission or declaration. It has been directly so held in People v. Zimmerman, 3 Cal.App. 84, 84 P. 446. However, the testimony of a coconspirator given in court, while not classed as an admission or an act or declaration out of court, is nevertheless testimony of an accomplice. Eliminating all of the testimony given by the coconspirators or accomplices, there is sufficient other evidence in the record to comply with the requirements of section 1111 of the Penal Code, which requires the testimony of an accomplice to be corroborated by such other evidence as shall tend to connect the defendant with the commission of the offense.
The effect of adding the checks and vouchers accounting for weekly sales as testified to by Mr. Penberthy and the total sales reported over appellant’s verification to the corporation commission has already been mentioned as sufficient evidence of overselling the permit. Appellant testified that weekly reports were placed on his desk by his employees stating the amount of sales made by Mr. Cox and his agents. The books of the Doble corporation were proven in connection with the testimony of several of the bookkeepers of the Doble company who were not members of the conspiracy. The appellant as a witness also admitted signing in San Francisco contract options authorizing Mr. Cox to buy and sell a large quantity of stock and admitted authorizing two other contracts calling for large minimum weekly sales and remittances. The minutes of a meeting of the corporation directors, at which appellant was present and voted, were received in evidence, and these minutes showed the ratification of the said options and other like agreements. Appellant testified that he did not know the reason for antedating the contract options. He explained the difference in sale prices of stock in the two Portland contracts as being for the purpose of allowing people who first bought to receive stock at a smaller price than those who purchased afterwards. The agreements, however, called for concurrent payments and therefore simultaneous sale of the stock mentioned in each agreement. He acknowledged receiving a letter dated May 4, in which Mr. Cox stated that, "If we are going to sell stock in Oakland and San Francisco it will be necessary to have a permit to sell additional stock." He testified that he visited the Powell street salesroom almost every night in July; that he looked at the volume of sales made at the salesrom. He also testified having been present at various conferences in which the Portland plan was agreed upon. He also testified that he paid particular attention to all questions of money received and paid out by the Doble corporation, which would embrace the large amount of money paid in excess of what would be realized from the sale of 100,000 shares and would also embrace the payment of $80,000 to Cox O. K.’d by appellant, and used to draw down stock held in the Portland escrow.
The trial court sustained objections when defendant offered to prove that the Portland plan had been submitted to attorneys and to a deputy corporation commissioner. Appellant claims that this testimony should have been admitted on the issue of the intent of the accused. He relies on People v. Flanagan, 65 Cal.App. 268, 223 P. 1014, and People v. McCalla, 63 Cal.App. 783, 220 P. 436. These cases, however, distinguish between a mistake of fact and a mistake of law and point out that while an act done unintentionally may not constitute a crime, an act done intentionally is nevertheless a crime, even though the party committing the act was under a mistaken belief as to the legality of the act. No specific intent is necessary to constitute the crime of violating the Corporate Securities Act except the intent to do the acts denounced by the statute. In the McCalla Case above cited the court quotes with approval State v. Foster, 21 R.I. 251, 43 A. 66. What is there said disposes of this contention of appellant. People v. Simonsen, 64 Cal.App. 97, 220 P. 442.
The court did not instruct the jury that they could not consider the acts and declarations of the coconspirators unless and until they were convinced by evidence independently of these acts and declarations that a conspiracy had been formed. Code of Civil Procedure, § 1870, subd. 6, states that evidence may be given at the trial of acts and declarations of one conspirator against the others after proof of the conspiracy. This rule undertakes to state under what condition such evidence may be given at the trial and is a question for the court in ruling on evidence. If the evidence is properly admitted it may then be considered by the jury for all purposes, and there was no necessity in the court’s separating the evidence into two classes for the jury’s consideration.
The court instructed the jury that the mere association of individuals with an innocent purpose or with honest intent is not a conspiracy as defined by law; that while a conspiracy cannot exist without a guilty intent in the minds of the conspirators, yet this does not mean that the parties must know that they are violating the statute; that the question was whether the defendants conspired to do the things which were in violation of the law, not whether they had any knowledge that they were violating the law; that the word "intent," as used in Penal Code, § 20, means an intent to do the acts charged and does not mean that to render the act criminal there must be an intent to violate the law; that section 14 of the Corporate Securities Act makes punishable one who knowingly authorizes, directs, or aids in the sale of securities contrary to the provisions of the act; that one who knowingly performs the acts forbidden is guilty even though he had no specific intent to violate its provisions; that the word "knowingly" imports only a knowledge that the facts exist which bring the act within the provisions of the statute; and, in another place, that the jury should consider all the facts and circumstances disclosed by the evidence in considering the intent of the defendants.
A lack of knowledge that stock had been or was to be issued in excess of the permit would constitute acts done under a mistake of fact and be a defense; but acts purposely planned and done, such as to sell beyond or without a permit, which in law amounts to a violation of the statute, would constitute guilt, even though the defendants entertained the belief that those acts being done in a certain way would not amount to a violation of the law. The instructions complained of in this regard we think fairly stated the law applicable to the case and are in consonance rather than out of harmony with People v. Eiseman (Cal.App.) 248 P. 716, and People v. Flanagan, 65 Cal.App. 268, 273, 274, 223 P. 1014. Defendant’s requested instructions 5, 6 and 7 were refused because they had the effect of stating that ignorance of the law would excuse. Instruction No. 6 contained the element of misconception or ignorance of the facts, but it was disjunctively coupled with the principle of mistake of law. The defense of mistake of fact was adequately covered by other instructions given.
Neither do we think the defendant was prejudiced by the court’s failure to instruct that the plea of guilty of certain codefendants was no evidence of guilt. The court included in its instructions the following:
"If on the other hand you answer that question in the affirmative (i. e., was there in fact a conspiracy formed as charged), you should then determine the question whether these defendants or either of them actively participated and entered into such conspiracy or scheme."
The defendants who pleaded guilty testified at the trial, and it would be far-fetched to say that their plea did what their testimony could not do. Defendant W. A. Doble was tried jointly with this defendant and was acquitted.
Defendant’s requested instructions No. 61 and No. 62 were properly refused, they being misleading in form, the one assuming that in no case can an officer of a corporation be criminally liable for the acts of the corporation’s agents, the other assuming facts which were for the jury’s determination that both Cox and Barnard must be the agents of both defendants in order to convict either defendant.
Appellant claims immunity under section 17 of the Corporate Securities Act, which provides that no person shall be prosecuted for anything concerning which he shall have been compelled to testify under oath or to produce documentary evidence. On May 21, 1924, the corporation commissioner wrote a letter to Doble Steam Motors Corporation stating:
"In order to facilitate the examination of the books of your company, it is suggested that the following books and papers be brought over to this office temporarily. (Follows a list of items.) In the event that this suggestion meets with your approval I will appreciate receiving the books and papers above described as soon as convenient to you."
The affidavit used on the motion to set aside the indictment on this ground stated that the defendants and each of them did as officers of said corporation deliver and cause to be delivered to said corporation commission the said books and papers described in the letter; that on the 31st of May the defendants were informed that the books were about to be turned over to the grand jury pursuant to a subpœ na. Thereupon the corporation served written demands for the books and papers upon the commissioner and claiming immunity on behalf of the Doble corporations and its officers. Later similar demands were made upon the grand jury. The evidence shows that the corporation commissioner’s letter was written in connection with the matter of filing an application for a further permit; that a grand jury subpœ na was served on the corporation commissioner’s deputy May 26; that the officers of the Doble corporation were never subpœ naed by the commissioner either to testify or bring the books. We think the record does not show the defendants were compelled to produce the books within the meaning of the immunity section of the act. The books went into the possession of the commissioner voluntarily pursuant to his letter of request. The demand for the return of the books, after the grand jury subpœ na had been served on the deputy corporation commissioner having possession, did not bring the transaction within the meaning of the section which is confined to cases where the accused is compelled to give oral evidence or documentary evidence. The books having been voluntarily parted with in the beginning, the service of the subpœ na should be regarded the same as though served upon any other custodian not a defendant. A different rule would have the result that admissions and incriminating statements though voluntarily given immunity was not subpœ naed, but the the continuous consent of the accused. In People v. Schwarz (Cal.App.) 248 P. 990, relied on by appellant, the defendants who were given immunity had been compelled to attend under subpœ na and give oral incriminating evidence against themselves. In United States v. Armour & Co. (D. C.) 142 F. 808, also relied on by appellant, the defendant given immunity was not subpœ naed, but the circumstances under which he was required to give documentary evidence are outlined on page 811 of the decision. From these facts and from the form of the resolution under which the investigating officer was acting, the court finds that the accused did not voluntarily give the evidence. The immunity statutes there considered were also broader in that the giving of evidence as well as being compelled to give evidence was embraced within the immunity clause.
It is urged that defendant’s demurrer to the indictment should have been sustained upon the grounds that the facts alleged do not constitute a crime. Section 3 of the Corporate Securities Act forbids any company to sell, offer for sale, negotiate for the sale of, or take subscriptions for any security of its own issue until it shall have first secured a permit. Section 14 provides that:
"Every officer, agent, or employee of any company, and every other person, who knowingly authorizes, directs, or aids in the issue or sale of *** any security, *** contrary to the provisions of this act, *** or willfully violates or fails to comply with any of the provisions of this *** act, is guilty of a public offense," etc.
The counts of the indictment carefully follow the language of section 14, under which the defendants were charged, and instead of stopping with the language of this section which denounces subscriptions, sales, etc., contrary to the provisions of the act, go further and specify the respect in which the defendant’s participation in the subscriptions, sales, etc., were in violation of the act, and, in doing so, follow in turn the language of section 3. Fairly and plainly considered, the counts charge more than acts which would amount to a legal sale by a stockholder of his privately owned shares. The allegation is equivalent to an allegation of ownership by the corporation of the securities sold.
It is contended that the several counts of the indictment each charge more than one offense, to wit, "offer for sale, negotiate for the sale of, and take subscriptions for stock," as denounced in section 3, and the other "authorize, direct and aid in the sale of, cause and assist in causing stock to be sold," as denounced by section 14. Section 3 defines a crime by a company, section 14 a crime by an officer of a company and by other individuals. The defendants, being individuals, cannot be directly charged under the terms of section 3, but can be charged under section 14 with selling or assisting in the sale of stock in a way that causes the company to violate section 3. The counts each charge only one crime in this way and are not open to the objection urged by appellant. People v. Barnard, 63 Cal.App. 562, 219 P. 756, and People v. Plath, 166 Cal. 229, 135 P. 954, are very much dissimilar.
It appears that no stenographic reporter reported the testimony of the witnesses appearing before the grand jury at the hearings resulting in this indictment. The district attorney did not demand it for these hearings, although a stenographic reporter had been sworn generally for this grand jury and reported other cases. It is contended that if a reporter is used on any hearing before a grand jury that then, under the provisions of Penal Code, § 925, he must attend and report all hearings, and that the defendant has a right to a transcript of testimony in case he is indicted by such grand jury. The part of the section of which an interpretation is asked reads:
"The grand jury, on demand of the district attorney, whenever criminal cases are being investigated before them, must appoint a competent stenographic reporter to be sworn and to report the testimony that may be given in such causes in shorthand, and to transcribe the same in all cases where an indictment is returned. If an indictment has been found against a defendant, a copy of the testimony given in his case before the grand jury shall be served upon him," etc.
The section requires the grand jury to appoint when two conditions coexist, first the demand of the district attorney, and second "whenever criminal causes are being investigated." This latter language if given any effect at all must mean that such demand and appointment may occur at one time when criminal causes are being investigated and that at another time when other criminal causes are being investigated such demand and appointment may not occur. We understand that such has been the interpretation of the practice. At a time when this section read must the same the Supreme Court referred to it as being optional with the district attorney whether the proceedings should be reported or not. In re Kennedy, 144 Cal. 636, 78 P. 34, 67 L. R. A. 406, 103 Am. St. Rep. 117, 1 Ann. Cas. 840. People v. Delhantie, 163 Cal. 463, 125 P. 1066; People v. Arnold, 17 Cal.App. 68, 118 P. 729, is not contrary. That case holds that it is not necessary to reswear the reporter for each and every case in which he acts, but that the one general oath administered by the foreman of the grand jury for all cases coming before that body is sufficient.
The court properly sustained objections to questions put for the purpose of showing the disposition of the money derived from the sale of stock and stock subscriptions. This was not an issue in the case, and the court so instructed the jury.
We have reviewed the entire case and are convinced the appellant had a fair trial. The errors assigned are technical and not substantial. The evidence shows plainly that the appellant knowingly participated in the persistent endeavors of his fellow officers and agents to continue selling stock of the corporation to the public in California after he well knew the permits had been exhausted and that new permits were not obtainable.
The judgment and order denying a new trial are affirmed.
We concur: NOURSE, J.; STURTEVANT, J.