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United States v. Bushwick Mills Inc.

December 23, 1947


Author: Swan

Before SWAN, CHASE, and CLARK, Circuit Judges.

SWAN, Circuit Judge.

The appellants, Bushwick Mills, Inc., and Samuel Margolin, were convicted and sentenced upon three indictments which were consolidated for trial. Two of the indictments charged violations of the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 901 et seq., by offering for sale, selling and delivering wool knitting yarns at a price in excess of the maximum price provided in Revised Price Schedule No. 58; the third indictment charged a conspiracy to sell above the ceiling price, 18 U.S.C.A. § 88. One Berger was included as a defendant in the conspiracy indictment and in the "short" substantive indictment which contained nine counts. He pleaded guilty and testified for the government. The "long" substantive indictment contained 130 counts, of which 82 were dismissed on motion by the Government at the close of its case. The defendants offered no proof whatever. The jury convicted them on the conspiracy indictment, on all counts of the "short" indictment and on 46 counts of the long indictment; upon two counts of the latter they were acquitted. Margolin was sentenced to imprisonment for a year and a day on the conspiracy indictment and to imprisonment for one year on each of the substantive counts, all sentences to run concurrently. A joint fine of $170,000 was imposed on both appellants, being $3,000 on each of the 55 substantive counts and $5,000 on the conspiracy indictment, and Margolin is to stand committed until the fine is paid.

The question receiving most attention at the trial and underlying the main contentions on appeal relates to venue of the substantive counts, that is, whether any crime was committed within the southern district of New York, where the indictments were found and where the offering ofr sale, selling and delivering yarn at above the ceiling price were charged to have occurred. The appellants, however, had their place of business in Brooklyn, which is within the eastern district of New York, and most of their acts connected with the substantive offenses were performed there.

In general the business was transacted as follows: Bushwick Mills, Inc., was owned by Margolin, its president. Its offices and its plant for the production of knitted goods were located in Brooklyn, N.Y., and there Margolin did business. When he purchased yarn, it was delivered directly from the mills or the spinners to dyers located either in Brooklyn or in Philadelphia. When the dyers received the yarn they entered it on their records, by identifying bale and case numbers, and held it for the account of Bushwick Mills. When Margolin made a contract to sell yarn he delivered an invoice to the buyer which specified so many pounds of a stated quality and at a designated price. The buyer did not see the yarn but bought by desceiption.*fn1 Margolin appropriated specific yarn to a contract of sale by directing the dyer to transfer to the buyer bales or cases, which he identified by number, from the Bushwick Mills account. The dyer would then make the directed entries on his books, notify the buyer of the transfer, and thereafter hold the specified yarn for the buyer's account.

The sales charged in the indictments were made to buyers whose places of business were located in the southern district of New York.*fn2 Usually the buyer either saw Margolin at his brooklyn office or communicated with him there by telephone from the buyer's New York office. Margolin made the sales under various names - Bushwick Mills, MarKar Company and Cornell Company, trade names which he had registered, and Linden Sportswear, the trade name of a partnership which he formed with Berger. He also issued some invoices under the fictitious names of "Frank Corelli," "Frank Cohen" and "H. Marks." The invoices were sent to the buyer's office, usually by mail but sometimes were delivered personally by Margolin's agent Berger. Generally the price at which the yarn was sold was stated on the invoice, but in some instances the quantity of yarn was padded so that the actual price charged per pound was understated. Many of the checks received in payment from the buyers were cashed either at the banks upon which they were drawn or by a check casher. Berger, who prepared a large number of the invoices on Margolin's instructions, knew that the prices charged were above ceiling.He testified that several times he raised the question with Margolin whether it was safe to charge such prices but Margolin said it was all right so long as an invoice was made out. According to the Government's tabulation, the prices charged aggregated $360,000 in excess of ceiling, but this figure included counts withdrawn from submission to the jury. On the counts submitted the excess amounted to $117,607.11.

Section 42 of the Judicial Code, 28 U.S.C.A. § 103, provides that

"When any offense against the United States is begun in one judicial district and completed in another, it shall be deemed to have been committed in either, and may be dealt with, inquired of, tried, determined, and punished in either district, in the same manner as if it had been actually and wholly committed therein."

But the Emergency Price Control Act contains its own provision as to venue, 50 U.S.C.A.App. § 925(c):

"The district courts shall have jurisdiction of criminal proceedings for violations of section 4 of this Act (section 904 of this Appendix) * * *. Such criminal proceedings may be brought in any district in which any part of any act or transaction constituting the violation occurred."

Section 904(a) declares it to be unlawful "for any person to sell or deliver any commodity * * * in violation * * * of any price schedule * * * or to offer, solicit, attempt, or agree to do any of the foregoing." And in section 942(a) the term "sale" is defined to include "sales, dispositions, exchanges, leases, and other transfers, and contracts and offers to do any of the foregoing"; and the terms "sell," "selling," "seller," "buy" and "buyer," are to be "construed accordingly." Thus it is apparent that Congress made unlawful not merely such technical transfers of title as satisfy the local law of sales but also any acts which come within the broad statutory definition;*fn3 and venue for prosecution was extended to any district in which any part of any act constituting the violation occurred.

When the prosecution rested, defendants' counsel moved to dismiss each of the substantive counts for lack of proof of venue in the southern district. But the trial judge allowed the case to be reopened and further evidence to be introduced by the prosecutor. The question of venue was left to the jury under a charge to which no exceptions were taken by the appellants. Notwithstanding their failure to object to the charge, they now contend that the charge was so erroneous that the jury's verdict cannot be sustained.

Objections to venue may be waived by failure to make them in due season.United States v. Jones, 2 Cir., 162 F.2d 72; Mahaffey v. Hudspeth, 10 Cir., 128 F.2d 940, certiorari denied 317 U.S. 666, 63 S. Ct. 76, 87 L. Ed. 535; Hagner v. United States, 60 App.D.C. 335, 54 F.2d 446, affirmed on other grounds 285 U.S. 427, 52 S. Ct. 417, 76 L. Ed. 861. The defendants were content to let the jury pass upon their guilt under the charge as given. Only after they had taken this gamble and lost, did they question the accuracy of the ...

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