Paul C. Edwards v. The United States of America, Edwards Enterprises, Inc. v. The United States of America, 374 F.2d 24, 10th Cir. (1967)

374 F.
2d 24
Paul C. EDWARDS, Appellant,

v.
The UNITED STATES of America, Appellee.
EDWARDS ENTERPRISES, INC., Appellant,
v.
The UNITED STATES of America, Appellee.
No. 8730.
No. 8731.
United States Court of Appeals Tenth Circuit.

December 5, 1966.
Rehearing Denied April 20, 1967.
1
Joe A. Moore and Jack B. Sellers, Sapulpa, Okl. (Sellers & Woodson, Sapulpa,
Okl., and Charles A. Whitebook, Tulsa, Okl., with them on the brief), for
appellants.
Lawrence A. McSoud, Asst. U. S. Atty., and Hugh V. Schaefer, Asst. U. S.

Atty. (John M. Imel, U. S. Atty., with them on the brief), for appellee.
Before PICKETT and HICKEY, Circuit Judges, and BRATTON, District

Judge.
BRATTON, District Judge.
Paul C. Edwards and Edwards Enterprises, Inc. appeal from judgments and
sentences pursuant to guilty verdicts on each of ten counts of an indictment.
The indictment contained three counts charging violations of the anti-fraud
provisions of the Securities Act of 1933, 15 U.S.C. Sec. 77q(a), three counts
charging mail fraud, in violation of 18 U.S.C. Sec. 1341, three counts charging
use of interstate commence to sell a non-registered security in violation of 15
U.S.C. Sec. 77e(a) (2), and one count charging transportation in interstate
commerce of a security taken by fraud, in violation of 18 U.S.C. Sec. 2314.
The indictment stems from the sale by Edwards of fractional undivided working
interests in an oil and gas lease in Oklahoma. All of the counts, other than the
three charging the sale of non-registered securities, allege in essence a scheme
to defraud those who purchased the fractional undivided working interests and
use of the mails in furtherance of the fraud.
Edwards was the president of Edwards Enterprises, Inc. He and his family
owned its stock. An oil and gas lease covering lands in Oklahoma was owned
by Edwards Enterprises, Inc. Edwards arranged for the sale of 1/32nd
undivided working interests in the lease to various investors throughout the
United States. As a part of the agreement with the investors, Edwards
Enterprises, Inc. acted as the operator on the lease. It was charged that the sales
were pursuant to a scheme which embodied the making of numerous
misrepresentations and concealment of material facts from the investors about
the lease and a well on it and that the mails were used in furtherance of the
scheme and fraud.
It was further charged that the offerings of the fractional undivided working
interests were securities required to be registered with the Securities and
Exchange Commission and that assignments were sent through the mail
without a registration statement having been filed with the Commission.
Following a lengthy trial, both defendants were found guilty on each of the ten
counts of the indictment. Sentencing and this appeal followed.
10
Appellant Paul Edwards contends that the trial court unduly restricted the
evidence of good character which was tendered on his behalf. In addition, he
contends that there was error in failure of the reporter to record the side-bar
conference at the bench where this restriction was discussed among counsel
and the court.
11
Numerous side-bar conferences among court and counsel were not recorded.1
Failure to comply with the Court Reporters' Act, 28 U.S.C. 753(b) (1), is not
prejudicial error, per se. Straus v. United States, 5 Cir., 311 F.2d 926, cert. den.,
373 U.S. 910, 83 S.Ct. 1297, 10 L.Ed.2d 411; Burns v. United States, 5 Cir.,
323 F.2d 269, cert. den. 376 U.S. 907, 84 S.Ct. 659, 11 L.Ed.2d 606; Stirone v.
United States, 3 Cir., 341 F.2d 253; United States v. Taylor, 4 Cir., 303 F.2d
165, cf. United States v. Sigal, 3 Cir., 341 F.2d 837.
12
However, it constitutes error to fail to report any portion of the proceedings in a

criminal case where the unavailability of a transcript makes it impossible for
the appellate court to determine whether or not prejudicial error was committed.
Parrott v. United States, 10 Cir., 314 F.2d 46; United States v. Sigal, supra;
Fowler v. United States, 5 Cir., 310 F.2d 66, cf., Brown v. United States, 9 Cir.,
314 F.2d 293.
13
The only side-bar conference which was not reported to which specific error
and prejudice is pointed, occurred during the presentation of the character
evidence which appellant, Paul C. Edwards, claims was unduly restricted.
14
Appellant Edwards presented seven character witnesses. During the

examination of the first one inquiry was made as to his knowledge of the
general reputation of Edwards as being "a good, law-abiding citizen, one who
is honest and a man of integrity." The court sustained objection to that question
as being improper. Appellant's counsel then inquired of the witness as to the
reputation of Edwards as being a law-abiding citizen following which there was
objection and the unreported side-bar conference at the bench.
15
Edwards' counsel have filed an affidavit by his trial attorneys that at the
unreported conference tender was made that each of the witnesses would testify
that the reputation of Edwards was that of a good, law-abiding citizen, one who
is honest and a man of integrity and that the court limited counsel in his further
inquiry to the defendant's reputation as a law-abiding citizen. While it is
admitted that no request was made that the conference be reported, appellants'
trial attorneys give the explanation that they did not know it was not being
reported.2
16
Subsequent to the side-bar conference, seven character witnesses for the

defendant testified without contradiction that the reputation of Edwards as "a
good, law-abiding citizen" in Tulsa was good. Accepting as correct appellants'
affidavit of the events at the unreported conference, no prejudicial error was
committed against Edwards. It is unnecessary to remand for a new trial as in
Parrott or to remand for the purpose of a hearing on possible prejudice, as in
Brown.
17
The character trait as to which evidence is admissible must be relevant to the

trait of character which is in issue, and bear analogy and reference to the nature
of the charge. Edgington v. United States, 164 U.S. 361, 17 S.Ct. 72, 41 L.Ed.
467; Keady v. United States, 10 Cir., 62 F.2d 689; Hawley v. United States, 10
Cir., 133 F.2d 966; Travis v. United States, 10 Cir., 247 F.2d 130. Edwards'
position is that the gravamen of the charges was fraud and the traits of honesty
and integrity being directly relevant thereto, it was error to refuse evidence as to
his good reputation in those respects.
18
While the traits of honesty and integrity were relevant and analogous to the
nature of the charge, they were included in the all-encompassing question asked
each witness as to Edwards' reputation as a good, law-abiding citizen. The
question and answers brought to the jury evidence of traits of good character
inconsistent with commission of the acts charged against Edwards. The court's
instruction correctly defined the purpose for which the evidence of good
character was admitted. The testimony of the seven character witnesses was
uncontradicted and unchallenged. Under these circumstances, the restriction
against amplification of the questions asked the character witnesses did not
prejudice Edwards. Hawley v. United States, supra.
19
Appellant urges that Keady v. United States, supra, directs otherwise. In Keady,
a similar restriction clearly prejudiced the defendant who had one previous
conviction and whose admitted occupation was gambling. Some witnesses were
not permitted to testify that he was a man of honesty and integrity. The
character evidence which was admitted that he was a law-abiding citizen was
thoroughly refuted and could have been of little assistance to the defendant.
Indeed, the trial judge advised the jury that he could not believe testimony that
the defendant was law-abiding in view of his admitted occupation and
conviction.
20
The limitation imposed in Keady effectively deprived the defendant of the

benefit of evidence of good character or reputation. On the contrary, Edwards
had the full benefit of substantial and uncontradicted character evidence,
broadly relevant to all of the charges against him, which evidence was
presented to the jury for its consideration under a proper instruction. He was not
prejudiced by the trial court's limitation against amplification.
21
Appellants contend that several witnesses for the Government committed

perjury. The basic thrust of the contention is that certain of the investors who
testified committed perjury relative to the amount of money they had invested
in the lease, and also as to their relationship with Edwards. This assertion was
raised on a motion for new trial and the trial court conducted an evidentiary
hearing. At the conclusion the trial judge specifically found that the challenged
witnesses did not commit perjury. A review of the extended record reveals no
reason for disagreement with that finding.
22
Appellants assert that a certain letter written to Edwards by one of his

employees since deceased should have been admitted under the Business
Records Act, 28 U.S.C.A. Sec. 1732 as a record kept in the regular course of
business. The letter related to equipment for which Edwards had not made
payment upon the grounds that it was defective. Appellants admit it was written
after a dispute had arisen with the supplier of the equipment and was for the
purpose of substantiating the claim of Edwards against the supplier. This does
not constitute a record made in the regular course of business. Palmer v.
Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645, reh. den. 318 U.S. 800, 63
S.Ct. 757, 87 L.Ed. 1163. Dilley v. Chesapeake & Ohio Railway Co., 3 Cir.,
327 F.2d 249, C.D. 379 U.S. 824, 85 S.Ct. 47, 13 L.Ed.2d 34; Cromling v.
Pittsburgh and Lake Erie R.R. Co., 3 Cir., 327 F.2d 142; Otney v. United
States, 10 Cir., 340 F.2d 696; Missouri-Pacific Railroad Co. v. Austin, 5 Cir.,
292 F.2d 415.
23
Appellants object to the instructions of the court defining reasonable doubt and
securities exempt from registration under the Securities Exchange Act.
Appellants' objection to the court's instruction on reasonable doubt is raised for
the first time in this court. No objection was made at trial and no requested
instruction in this regard was tendered. There was no plain error in the
instruction given and appellants' objection will not now be considered. Holland
v. United States, 348 U.S. 121 (140), 75 S.Ct. 127, 99 L.Ed. 150; Lopez v.
United States, 373 U.S. 427, 83 S.Ct. 1381, 10 L.Ed.2d 462; Burchinal v.
United States, 10 Cir., 342 F.2d 982; Walton v. United States, 10 Cir., 334 F.2d
343, Rule 30 Fed.R.Cr.P.; Lucas v. United States, 10 Cir., 355 F.2d 245.
24
The objection to the instruction of the court on securities which are exempt
from registration with the Securities Exchange Commission as private 3 is that
the court should have given illustrations of the determinative factors to be
considered rather than merely stating them. Their position is that the instruction
without further definition or examples was so vague, uncertain and indefinite as
to be of no assistance to the jury and was erroneous.
25
The instruction given was a concise and correct statement of the law. It was not
error to refuse amplification to include examples as tendered in the appellants'
requested instruction.4
26
There was no reversible error and the judgment is Affirmed.
Notes:
1
28 U.S.C. 753 provides: "(b) One of the reporters * * * shall record verbatim
* * * (1) all proceedings in criminal cases had in open court;"
It is well to note the mandatory requirements of 28 U.S.C. 753(b). It is the
responsibility of the court to be certain that its provisions are strictly observed,
and no request is necessary. The legislative history of the statute makes it clear
that the Court Reporters' Act was enacted for the protection of the parties and
of the court and to the end that justice may be served by having available an
adequate record, and particularly so in a criminal proceeding
3
The court's instruction in material part was:

"The principal factors to be considered in determining whether an offering of
securities is public or private are as follows:
(a) The number of prospects and their relationship to each other and to the
seller,
(b) The number of units offered,
(c) The size of the offering,
(d) The manner of the offering,
(e) Whether the particular persons affected stand in need of the protection of
registration."
One example included in the defendants' lengthy requested instruction was:

"(b) The number of units offered; if only an insubstantial number of units is
offered presumably no public offering would be involved. Ordinarily an
offering to not more than 25 persons would not be a substantial offering."
The validity of such an instruction would be doubtful. Securities Exchange
Commission v. Ralston-Purina Co., 346 U.S. 119, 73 S.Ct. 891, 97 L.Ed. 1494;
Woodward v. Wright, 10 Cir., 266 F.2d 108.

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374 F.

Paul C. EDWARDS, Appellant,

United States Court of Appeals Tenth Circuit.

Lawrence A. McSoud, Asst. U. S. Atty., and Hugh V. Schaefer, Asst. U. S.

Before PICKETT and HICKEY, Circuit Judges, and BRATTON, District

BRATTON, District Judge.

However, it constitutes error to fail to report any portion of the proceedings in a

Appellant Edwards presented seven character witnesses. During the

Subsequent to the side-bar conference, seven character witnesses for the

The character trait as to which evidence is admissible must be relevant to the

The limitation imposed in Keady effectively deprived the defendant of the

Appellants contend that several witnesses for the Government committed

Appellants assert that a certain letter written to Edwards by one of his

There was no reversible error and the judgment is Affirmed.

It is well to note the mandatory requirements of 28 U.S.C. 753(b). It is the

The court's instruction in material part was:

One example included in the defendants' lengthy requested instruction was:

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