United States of America, Plaintiff-appellee, v. William J. Cudd, Hugh L. Hutton, Defendants-appellants, 499 F.2d 1239 (10th Cir. 1974)

The defendants were charged in a thirteen-count joint indictment with a series of mail-fraud transactions violative of 18 U.S.C. 1343 and resulting in unlawful transportation of property in violation of 18 U.S.C. 2314. Three of the thirteen counts were dismissed by the trial court and after a joint trial a jury returned verdicts of guilty on each of the remaining counts. The indictment did not contain a count for conspiracy but did allege a scheme in the following words, set out in Count I and incorporated by reference in the remaining counts:

Count I

1. That prior to November 3, 1967 and continuing to on or about November 22, 1967, in the District of Kansas,

HUGH L. HUTTON, WILLIAM J. CUDD

devised and intended to devise a scheme and artifice to defraud the Producers Packing Company, a Kansas corporation, and for obtaining money and property of the Producers Packing Company by means of the following false and fraudulent pretenses, representations and promises, well knowing at the time that the pretenses, representations and promises were false when made, that is, Hugh L. Hutton and William J. Cudd, individually and as representatives of Cal-Vegas Provision Company, Incorporated Las Vegas, Nevada, in order to induce the sale of large quantities of meat on credit, by Producers Packing Company, a Kansas corporation, to William J. Cudd and Cal-Vegas Provision Company, Incorporated, represented that said William J. Cudd and Cal-Vegas Provision Company, Incorporated, were financially sound and financially able to pay the purchase price of said meat; and to further induce the sale of such meat on credit Hugh L. Hutton, individually and as President of the First National Bank, Braman, Oklahoma, represented that he and the bank would assist William J. Cudd and Cal-Vegas Provision Company, Incorporated, financially and would guarantee payment of purchases of such meat, whereas, in truth and in fact, the defendants well knew that these promises, pretenses and representations were false when made. Based upon such false promises, representations and guarantees, Producers Packing Company did sell and deliver such large quantities of meat to William J. Cudd and Cal-Vegas Provision Company, Incorporated, on credit, and the sale price of such meat has not been paid in full.

The trial court, over the objection of both the government and the defendants, submitted only joint verdicts to the jury and specifically instructed that the jury must find both defendants guilty, or not guilty, as determined by its consideration of the evidence. This instruction is noted in full¹  and the question of whether the instruction is inherent error is the dispositive appellate issue.

We hold that the submission of joint verdicts and that part of the instruction requiring the jury to find both defendants guilty or both innocent to be error requiring a remand for a new trial as to each defendant. Such procedure limits appellate review to a package status and error, if there be any, cannot be isolated as to individual defendants. See C. Wright, Federal Practice and Procedure Rule 31, 513 at 368 (2d ed. 1969). So, too, we believe the procedure to be fraught with the potential for injustice and most assuredly would complicate the continuing problem of prejudice always lurking where, as here, a motion to sever has been denied.²  Guilt by association grows in likelihood.

The government concedes that the crime here charged in the joint indictment is one where one defendant can be proven guilty and a failure of proof may occur as to the other defendant. The situation is not comparable to a charge of conspiracy limited to two persons, where, as a matter of law and definition, the innocence of one precludes the guilt of the other. A joint indictment such as we here consider is but a procedural convenience and is to be considered as a separate charge against each defendant. Bartlett v. United States, 10 Cir., 166 F.2d 920, 927. The government contends, however, that the subject instruction and procedure can only amount to error favoring the defendants, citing Bartlett, supra, and Ebeling v. United States, 8 Cir., 248 F.2d 429.

We consider neither case to be persuasive that the error in the subject case should be classified as harmless. In neither of the cited cases is the exact instruction set out but apparently in Bartlett this court considered that partial reversal was sufficient to prevent injustice. In Ebeling the court restates the instruction to eliminate any possibility of prejudicial error and we must reject this rationalization as here applicable. Arguably an instruction that states that both defendants must be guilty or both innocent may be applied to unduly benefit either the defendants or the prosecution and its actual application by the jurors is purely speculative. But no matter how applied it is error. The jury must consider each case individually and return individual verdicts. Even the possibility of inconsistent verdicts does not change either the necessity or desirability of this procedure. Consistency in a verdict is not an invariable exaction of the law, Apodaca v. United States, 10 Cir., 188 F.2d 932, 940, and the power rests with the jury to arrive at its verdict 'in the teeth of both law and facts.' Horning v. District of Columbia, 254 U.S. 135, 138, 41 S. Ct. 53, 54, 65 L. Ed. 185.

The judgments are reversed and the cases remanded for a new trial.