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United States v. Boneparth

decided: February 23, 1972.


Lumbard, Waterman and Feinberg, Circuit Judges.

Author: Feinberg

FEINBERG, Circuit Judge:

J. S. Boneparth & Sons, Inc. and Shepard Boneparth, sole owner of the company's common stock and its president, appeal from a judgment of conviction entered in the United States District Court for the Southern District of New York, after a trial before Judge Lloyd F. Macmahon and a jury. The company and Shepard Boneparth were convicted of violating 18 U.S.C. § 712, which prohibits anyone "engaged in the business of collecting or aiding in the collection of private debts" from using the initials "U.S." or any name or emblem conveying "the false impression that such business is a department . . . or instrumentality of the United States." The trial judge fined the company and Shepard Boneparth $1,000 each and imposed a two week jail sentence on the latter. Appellants claim that they were denied a fair trial and that the trial judge committed errors in his charge. They further claim that 18 U.S.C. § 712 cannot fairly be read to apply to them, and that if the statute is so read, it is unconstitutionally vague. Because we conclude that the statute does not apply to these defendants, we reverse their conviction and order that the indictment be dismissed.

We reach this conclusion with a heavy heart because the record reeks from the unconscionable practices of appellants. The company operated a furniture and appliance store in Harlem. Most of the sales were made on credit, so that liquidation of accounts receivable was a constant problem. The company did not use a collection agency but collected its own bills. Collections were pursued with understandable persistence. But when all else seemed to fail the company chose to resort to sheer trickery. It is that deception which this case is all about.

Certain delinquent customers received a form from the company that bore some resemblance to a check. It arrived in a plain brown envelope bearing the return address "U.S. Funds Bureau, Headquarters Building," with a post office box number. The form bore the legend "U.S. Funds Bureau" suitably inscribed in impressive lettering. "U.S. Funds Bureau" was in turn surrounded by equally august curlicues and margins and by the information that the "Headquarters" was "Washington 6, D.C.," and that the form was sent by the "Location and Re-Disbursement Dept." In the center appeared the advice that: "The Amount of . . . Dollars is Disbursable." The amount filled in roughly corresponded to the sum owed by the particular recipient, whose name and address were also typed in. Directly above appeared an imposing, screaming eagle, under which was the titillating legend: "This form not good for more than $1,000.00." The attached stub instructed the recipient to detach and retain until the amount there typed in (the same as on the main body of the form) "is disbursed in full." Both the stub and the form also prominently bore the real reason for their existence -- the advice to answer all questions on the "reverse side of this form completely and accurately." Doing so, of course, gave the company up-to-date information as to the customer's home address, bank, employer, spouse, spouse's employer, etc., so that further collection action would be simplified. There were further embellishments on the implied promise that money would be disbursed to the customer if the form were completed and returned,*fn1 and the company's name nowhere appeared on either the form, stub or envelope. But further description is unnecessary. The company never disbursed any money to a customer who returned the form; its intentions were just the reverse. Moreover, the words "U.S.," "Location and Re-Disbursement Dept.," and "Headquarters, Washington 6, D.C.," and the picture of the eagle were obviously all intended to gull a recipient into believing that the promise was coming from a governmental entity. The deceptive nature of the form is obvious and appellants no longer attempt to defend it.*fn2 What they do say is that the statute under which they were indicted does not apply to them.

That statute was enacted in 1959, after two earlier attempts had failed. It reads in full as follows (18 U.S.C. § 712):

Misuse of names by collecting agencies or private detective agencies to indicate Federal agency

Whoever, being engaged in the business of collecting or aiding in the collection of private debts or obligations, or being engaged in furnishing private police, investigation, or other private detective services, uses as part of the firm name of such business, or employs in any communication, correspondence, notice, advertisement, or circular the words "national", "Federal", or "United States", the initials "U.S.", or any emblem, insignia, or name, for the purpose of conveying and in a manner reasonably calculated to convey the false impression that such business is a department, agency, bureau, or instrumentality of the United States or in any manner represents the United States, shall be fined not more than $1,000 or imprisoned not more than one year, or both. [Emphasis added.]

Appellants claim that the statute is aimed at collection agencies*fn3 and that only such firms are "engaged in the business of collecting or aiding in the collection of private debts." Otherwise, say appellants, "every business attempting to collect its own debts would be covered by the statute" and this was not the intention of Congress.

Appellants' argument is persuasive. Everything about the statute supports their interpretation. Its caption refers to "collecting agencies," a phrase that would not ordinarily suggest businesses merely collecting their own debts. And it strains common sense to say that retail businesses such as furniture and appliance stores, which collect their debts only as a necessary adjunct to their ordinary operations, are "in the business of collecting . . . debts."*fn4 If such corporations were deemed to be "in the business of collecting . . . debts," what business entity would not be? More important, there would then be no reason for Congress to have inserted that qualifying phrase into section 712. Other statutes directed at misuse of federal government names have no such limitation.*fn5 Moreover, there is nothing in the legislative history of section 712 to suggest that its sweep was broadly conceived. The statute was apparently enacted as a response to inquiries then plaguing the United States Government from people who had returned forms similar to those used in this case but had not received money.*fn6 The Treasury Department, which apparently received most of the inquiries, clearly saw the problem as focussed on "the so-called skip-tracing firms."*fn7 Communications to both the Senate and the House Committees in charge of the bills from the Office of the Attorney-General and from the Federal Trade Commission similarly assumed that the bill covered only such firms and collection agencies.*fn8 Indeed, in the only reported case we have found involving a prosecution under section 712, the defendant was found to have "conducted a 'skip-tracing' service from an office in the District of Columbia." Wacksman v. United States, 175 A.2d 789, 790 (D.C.Mun.App.1961).

We conclude, therefore, that the statute does not reach a merchant collecting his own debts. The odd thing about this case is that the court below apparently agreed with defendants on this point. After the Government had presented its case and defendants renewed motions for dismissal of the indictment, the following colloquy took place:

The Court: Doesn't this mean that you must be in this business of collecting debts, not just an ordinary business selling furniture or selling automobiles?

Doesn't it mean that it must be a separate business, a separate --

Miss Hynes [for the Government]: Your Honor, I don't think the statute means this must be a separate business. The statute says anyone who is ...

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