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State v. Graziani

Decided: June 29, 1959.

THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
ERNEST GRAZIANI, ET ALS., DEFENDANTS-APPELLANTS



Goldmann, Freund and Haneman. The opinion of the court was delivered by Freund, J.A.D. Haneman, J.A.D. (dissenting).

Freund

[60 NJSuper Page 6] Eight individual and two corporate defendants appeal from a judgment of conviction entered against them in the Superior Court, Law Division, Essex County, after a jury verdict. The charge in the indictment was that between about September 1, 1955 and March 14, 1957 they unlawfully conspired to obtain money by false pretenses "from members of the general public, particularly purchasers and prospective purchasers of motor vehicles" by falsely representing to some customers that certain motor vehicles were "leftover new cars" when in fact they were used cars, contrary to the provisions of N.J.S. 2 A:98-1 and N.J.S. 2 A:98-2.

The corporate defendants are Halsey Packard, Inc., and Halsey Automobile Co. The former, which began business in February 1955, is a franchised Packard automobile dealer, and also sells new and used cars of other manufacture at its showroom in a large two-story building on Central Avenue in the City of Newark. During the period mentioned in the indictment, this corporation employed between 10 and 20 salesmen. The Halsey Automobile Co. went into business about October 1956 as an unfranchised dealer of new and used cars of various makes, operating from a lot on Springfield Avenue in Newark, a considerable distance from the Halsey Packard, Inc., location.

The defendant Ernest Graziani is president and owner of all the shares of stock of both corporations except for one share in each. He testified that his functions were to "do the advertising * * * set the policy * * * [and] the financing." His brother, the defendant James Graziani, held one share of qualifying stock in each corporation, and was secretary and a member of the board of directors of both corporations. He was a salaried employee of Halsey Packard, Inc., and the processing and preparation of automobiles for sale were under his direction and supervision. Neither Ernest Graziani nor James Graziani was a salesman of automobiles.

Included as defendants were the sales manager, Joseph Morese, and the salesmen: Harry Rellah, Michael Moore, Joseph Marcelli, Dominick Canace and Angelo Aquilino.

In the indictment, 21 were charged with the conspiracy. The trial of ten of the defendants was severed on the State's motion. One defendant, Anthony D'Urso, was acquitted by the court at the end of the case.

The theory of the State's case was that the conspiracy was established by the defendants' joint efforts on three levels: viz. , false advertisements in newspapers and over radio and television of "leftover" new automobiles for sale; the acquisition of second-hand or used cars and the rehabilitation of them to look like new automobiles; and the sales of such

used cars by the sales staff who falsely and knowingly represented them to be new automobiles. The advertising was under the direction of Ernest Graziani, and the rehabilitation of used cars was under James Graziani's supervision.

We shall deal with each of these three essential stages separately.

(1)

ADVERTISEMENTS.

It was stipulated "that the word 'leftover' as used in the advertisements of Halsey Packard, Inc., referred to new cars."

The proofs established that in the 18-month period covered by the indictment the defendant Halsey Packard, Inc., spent over $300,000 for broadcasts and for the printing of over 900 full-page advertisements in two Newark newspapers and in a chain of ten weekly newspapers distributed in Bergen County. Of the many exhibits in the record, the following are typical of frequently published advertisements in bold type:

"BUY YOUR NEW CAR FROM A RELIABLE NEW CAR DEALER HALSEY PACKARD INC."

advertising '55 Chevrolets and '55 Oldsmobiles. (Newark Star-Ledger , Sunday, September 18, 1955.) An advertisement of January 27, 1956 read:

"The LAST of the LEFTOVERS"

offering '55 Fords, Chevrolets and Plymouths, and again "BUY YOUR NEW CAR FROM A RELIABLE NEW CAR DEALER!" Another advertisement of November 11, 1956 offered "LEFTOVERS --

'56 FORDS - CHEVS - PLYMS."

followed by the admonition that the purchase be made "from a reliable new car dealer." Some advertisements carried the words "Factory Equipped" beneath "Leftover."

The defendants also advertised over television and radio stations. The cost of telecasts was shared by Packard (the manufacturer), and in these about one-half the time was devoted to Packard cars and the other half to defendants' leftovers. Radio scripts carried the same message that leftover (new) cars were offered for sale and urged that "a reliable new car dealer" be patronized.

Both Ernest Graziani and James Graziani knew that the word "leftover" in advertisements conveyed and was intended to convey to the public the idea that the cars were new.

(2)

RECONDITIONING OF USED CARS.

James Graziani supervised the purchasing of used cars. He directed the cleaning up of the vehicles, which, beside removal of dents, spraying and replacement of slip-covers, included steam cleaning of the motor. Speedometers were turned back to zero. Ernest was familiar with the practice of the turning-back of speedometers and the steam cleaning of motors under James' direction.

(3)

SALES.

Thirteen separate fraudulent sales by the above-named salesmen to persons (in many walks of life) responding to the advertisements were proved. Eleven of these sales were made for Halsey Packard, Inc., and two for Halsey Automobile Co.

The defendant Henry Rellah made three of these sales: to Stewart M. Clippinger, Frank Williams and Dorothy Schrauth. Defendant Michael Moore sold four cars: to Peter Hughes, Andrea Frascino, Ite Hamming and John Klaymeier. Defendant Joseph Marcelli sold four automobiles: to Frank Ferrigno, Harry Jahoda, Stanley Kasmarek and Gilbert Delgado. Defendants Dominick Canace and Angelo Aquilino participated in the sale of one car to Gladys Gargalowitz,

and Canace sold another to Lillian Brown. Defendant Joseph Morese, the sales manager, was shown to have assisted the salesmen in several of the sales.

It was stipulated that "[e]ach of the cars involved in the transactions, testified to by the State's witnesses, were used cars, and the particular salesman who made the sale knew at the time he made the sale that the car was used."

Each of the above-named purchasers testified concerning his or her purchase and, while the transactions were not identical, the pattern was the same. They testified about their attraction to the defendants' premises by the advertisements; they came to buy new cars; each purchased upon the representation and under the belief that the car was a new automobile, but later ascertained through some defect in the vehicle that it was in fact a used automobile. The car sold to Williams had been involved in an accident. In the Clippinger, Williams and Brown transactions, standard new car forms of sale were used. In the Clippinger order, however, a "discount" was allowed; in the Williams order, Rellah described the car as "Demo," meaning demonstrator; and in the Brown sale, the word "used" appeared as "U Sed." In the other transactions, a used car order form was given to the purchaser. When interrogated about this, the salesmen and, in some instances, Morese, the sales manager, assured the buyer that the car was new but, because the defendant Halsey Packard, Inc., was an authorized Packard dealer, they could use only the used car form in connection with the sale of a car of another make. Mrs. Klaymeier, for example, testified as follows:

"I told Mr. Moore I wanted the car canceled because it was a used car. And he told me they used this blank because they are an authorized Packard dealer and in order to sell other type cars besides Packards they used this used car order form, but that it was a new car."

There was testimony that salesmen adopted a selling technique, referred to as "switch-sell or bait," which diverted

the interest of a prospective purchaser from a new automobile on the floor of the salesroom to one which appeared new and was represented to be new but which was in fact a used car.

Both Ernest and James Graziani participated in the adjustment of claims of some of the 13 above-named buyers; and, in the Williams case, Ernest soon recognized that this car had been involved in an accident. This was one of the cars which at the time of sale had been represented as a new car by the salesman Rellah. However, none of the salesmen was ever discharged.

The defendants on their case denied a conspiracy. They offered evidence that Halsey Packard, Inc. was an authorized Packard automobile dealer and sold other new and used cars; that during the period stated in the indictment it sold 4,332 automobiles, of which 55 were new Packards, 488 new cars of various other makes and 3,790 used cars. Defendant Halsey Automobile Co. sold new and used cars of various makes and, in the period of about six months from October 1956 to March 14, 1957, sold a total of 494 cars, of which 33 were new and 461 were used cars.

Defendants insisted that the advertisements were not misleading or untruthful; that they had new Packard cars for sale and that whenever they advertised new cars other than Packards for sale, they had such cars available for sale.

Ernest Graziani, as noted, knew about the steam cleaning of cars and the turning back of the speedometers by his brother James. James, in his testimony, explained that the company gave a 90-day or 4,000-mile guaranty, and it was for that reason that he turned the speedometers to zero.

All of the salesmen, with the exception of defendant Aquilino, who did not testify, denied a conspiracy and the fraudulent acts attributed to them. It will be recalled, however, that it had been stipulated that each of the cars involved in the 13 sales referred to were used cars and that the particular salesman who made the sale knew at the time the sale was made that the car was used.

At the close of the State's case the defendants moved for an acquittal which the court denied. Upon the conclusion of the defendants' case these motions were renewed and again denied. Appellants claim that this was erroneous. After the jury verdict of guilty, defendants moved for a new trial which the court also denied.

The following sentences were imposed: Ernest Graziani to serve 12 months in the Essex County Penitentiary; James Graziani, probation for three years and a fine of $1,000; Halsey Packard, Inc., and Halsey Automobile Co., each to pay a fine of $1,000; Joseph Morese, probation for three years and a fine of $1,000; Henry Rellah, probation for three years and a fine of $750; Michael Moore, probation for three years and a fine of $500; Dominick Canace, probation for three years and a fine of $300; and Angelo Aquilino, sentence suspended.

Three separate briefs have been filed on behalf of the defendants. The principal contention is that the court erred in denying their motions for acquittal because the State failed to present any direct evidence of a conspiracy and that the circumstantial evidence adduced did not exclude every reasonable hypothesis except that of guilt.

Defendants argue that the State's evidence may have warranted the inference that certain of the salesmen may have been guilty of a substantive criminal offense, namely, violation of the statute for obtaining money by false pretenses, N.J.S. 2 A:111-1, but that the State failed to prove the offense charged in the indictment -- conspiracy, contrary to N.J.S. 2 A:98-1.

On behalf of Ernest Graziani and James Graziani, it is contended that the State offered no evidence from which it could reasonably be inferred that they had any knowledge of the existence of a conspiracy and that even knowledge that some of their salesmen were misrepresenting cars would be insufficient to constitute participation in the conspiracy charged in the indictment. On behalf of the corporations,

it is argued that in the absence of knowledge by its officer or agent, they could not be found guilty of the offense.

Defendants emphasize that the circumstantial evidence is more consistent with legality than with any taint of illegality because the State presented proof of only 13 fraudulent sales out of a total in excess of 4,300 sales of cars.

The issue for the trial court and for us is not whether the circumstantial evidence excluded every reasonable hypothesis except that of guilt. State v. Bulna , 46 N.J. Super. 313, 317 (App. Div. 1957), affirmed 27 N.J. 93 (1958). The issue to be decided is instead whether the evidence before the trial court, viewed in its entirety, and giving the State the benefit of all legitimate inferences therefrom, was such that the jury could properly find, beyond a reasonable doubt, that the defendants had corruptly agreed to obtain money by false pretenses from purchasers and prospective purchasers of motor vehicles. This is the accepted standard by which to test the propriety of the trial court's ruling on defendants' motions. State v. Goodman , 9 N.J. 569, 581 (1952); State v. Dancyger , 29 N.J. 76, 84 (1959); State v. Hall , 55 N.J. Super. 441, 447 (App. Div. 1959).

It is well known that a conspiracy is rarely capable of proof through direct evidence. The unlawful agreement is most frequently established by inferences drawn from proof of overt acts done in pursuance of it, State v. Greenberg , 105 N.J.L. 383, 385 (E. & A. 1928), and the circumstantial evidence is often "more certain, satisfying and persuasive than direct evidence." State v. Goodman, supra , 9 N.J. , at page 581; State v. Carbone , 10 N.J. 329, 339 (1952); State v. Corby , 28 N.J. 106, 119 (1958); State v. O'Connor , 134 N.J.L. 536, 539 (Sup. Ct. 1946); 3 Underhill, Criminal Evidence (5 th ed. 1957), § 859, p. 1924. The probative value of circumstantial evidence is determined by the rules of ordinary reasoning such as govern mankind in the ordinary affairs of life. While certain actions of each of the defendants, when separated from the main circumstances and the rest of the case, may appear innocent, that is not significant

and undoubtedly appears in every case of criminal conspiracy.

"Conspiracies are concocted secretly and are proved with difficulty. Ordinarily the prosecution must rely on circumstances and inferences. But as Wharton put it:

'* * * This evidence may be such as shows that the parties acted together or in concert, in a manner, under the circumstances, warranting the belief that their acts were the result of previous understanding and agreement between them. A series of acts constituting one systematic scheme and having a natural connection is admissible.

Circumstances attending a series of criminal acts may satisfy the ordinary mind that they result from concerted and associated action, although if each circumstance was considered separately, it might not show confederation.' 1 Wharton, Criminal Evidence , (12 th ed. 1955), § 180, at p. 354; State v. Goodman , 9 N.J. 569, 581 (1952)."

State v. Yedwab , 43 N.J. Super. 367, 378-379 (App. Div.), certification denied 23 N.J. 550 (1957).

The evidence in this case adequately sustains the allegations in the indictment. We agree entirely with the trial judge's denial of the motion for acquittal and the submission of the case to the jury. There was an abundance of evidence from which the jury could draw the reasonable inference that a corrupt agreement had been entered into among the defendants. The extensive advertisements under the direction of Ernest Graziani on behalf of the corporations of which he was the sole owner were intended to and did attract prospective purchasers of automobiles to the premises. The phraseology in the bold type in the press and the announcements over radio and television repeating the words "leftover cars" were intended to convey the idea of new, as distinguished from used, automobiles, and the repeated direction that dealings be conducted with a reliable new car dealer was lure to the salesrooms of the defendants. The reconditioning and rehabilitation of the used automobiles by James Graziani, including the turning back of the speedometers to zero and steam cleaning of the automobiles, were quite assuredly designed to give the prospective purchaser the impression that the automobiles were new. The admitted

misrepresentation by salesmen to prospective purchasers that the automobiles were new, and the pretext for the use of used-car order forms, constitute separate links in the chain, beginning with the advertisement and terminating with the sale. From the evidence in this case, the jury could reasonably and legitimately find beyond a reasonable doubt, as they did find, a corrupt scheme or agreement among the parties. State v. Vojacek , 49 N.J. Super. 429 (App. Div. 1958).

That Ernest Graziani's proved acts in furtherance of the conspiracy extended only to the direction of advertisements, which, because of the actual availability of new cars, were truthful standing alone, does not compel a finding that he was not a participant in the conspiracy. The overt acts in execution of the conspiracy "need not be enacted by all or any specified number of the conspirators. One will suffice." State v. Western Union Telegraph Co. , 13 N.J. Super. 172, 205 (Cty. Ct. 1951), affirmed 12 N.J. 468 (1953). The unlawful agreement becomes an indictable offense when "one of the parties to such agreement takes a step in furtherance of the execution of it." State v. Hemmendinger , 100 N.J.L. 234, 237 (Sup. Ct. 1924), affirmed 101 N.J.L. 417 (E. & A. 1925). See also N.J.S. 2 A:98-2; State v. Ellenstein , 121 N.J.L. 304, 315 (Sup. Ct. 1938).

The defendants strenuously argue that proof by the State of only 13 fraudulent sales out of sales of more than 4,000 automobiles by the defendants could hardly be called a pattern of fraudulent conduct. The fact that the State charged and proved only 13 instances wherein purchasers bought used cars in the belief that they were buying new ones because of the false representations of the salesmen does not necessarily indicate that the total number of fraudulent sales was not in excess of the 13 proved. In our judgment, sufficient evidence of the corrupt agreement was adduced by the proof of 13 fraudulent sales. The argument of the defendants could appropriately be, and probably was, made before the jury as an element in support of their claim of

innocence, but this contention would not and did not warrant the removal of the case from the consideration of the jury.

Defendant Ernest Graziani argues that the advertisements were truthful and that there were new Packard cars and other new automobiles always available for sale during the advertising campaign. Since the newspapers refused to accept "new car" advertisements before being satisfied that the dealer actually had such cars available, this point was probably true. But the truthfulness of the advertisements again does not negative the existence of an unlawful agreement. The overt act which is performed need not be criminal. See, e.g., United States v. Rabinowich , 238 U.S. 78, 35 S. Ct. 682, 59 L. Ed. 1211 (1915); State v. Aircraft Supplies, Inc. , 45 N.J. Super. 110, 115 (Cty. Ct. 1957). The jury might well have concluded that the defendants agreed to divert the attention of prospective purchasers from the new automobiles to used ones which appeared new. The defrauding of the public came not from the advertisements themselves but from the employment of the technique referred to as the "switch-sell" or "bait," and there was nothing in the case to justify a conclusion that, as a matter of law, there was no agreement to defraud the public by use of these techniques combined with the advertisements. The evidence, as already reviewed, clearly pointed in the opposite direction. State v. Vojacek, supra , 49 N.J. Super. , at page 438.

The defendants also urge that the verdict of the jury was against the clear weight of the evidence and was the product of bias, passion, prejudice, mistake or ignorance. In the absence of a clear and convincing showing that the verdict was the result of such influence, a jury verdict will not be set aside. Here no such showing has been made. From our review of the entire record, we conclude that the verdict should not be disturbed and that the ruling of the trial judge in denying the motion for a new trial was proper.

The contention on behalf of Halsey Packard, Inc. and Halsey Automobile Co. that they were entitled to a

judgment of acquittal because of absence of proof of knowledge or guilty intent of the corporate officers is palpably without merit. The corporations here are close corporations, and the defendant Ernest Graziani is the sole owner of all the stock of both corporations. The knowledge of the activities of his employees and associates, which the jury could have inferred he possessed, is in turn imputable to the corporation. The guilty intent of corporate officers may be imputed to a corporation to prove the corporation's guilt. New York Central & H.R.R. Co. v. United States , 212 U.S. 481, 29 S. Ct. 304, 53 L. Ed. 613 (1909); Mininsohn v. United States , 101 F.2d 477, 478 (3 Cir. 1939); State v. Western Union Telegraph Co., supra , 13 N.J. Super. , at page 221; Joseph L. Sigretto & Sons, Inc. v. State , 127 N.J.L. 578 (Sup. Ct. 1942).

The second major contention urged in behalf of the defendants concerns the trial court's refusal to make certain charges to the jury as requested. Ernest and James Graziani requested the following instruction:

"1. The defendants James Graziani and Ernest Graziani are officers of the defendant corporation. An officer of a corporation is not criminally liable for the acts of the corporation, performed through its agents or employees, unless such acts done by his authority or permission or with his knowledge and acquiescence and in the execution of a criminal purpose on his part. State v. Parker , 112 Conn. 39, 151 A. 325 (Sup. Ct. [ Err. ] 1930). Therefore, unless you are satisfied beyond a reasonable doubt that the defendants had knowledge of the transactions here involved and that they actively participated or gave their passive acquiescence therein, with a criminal purpose, then Ernest and James Graziani are not criminally responsible for such transactions an (sic) you must return a verdict of not guilty in their favor."

The substance of the first part of this request was that, except in certain circumstances, the Grazianis, as officers of the corporation, could not be held guilty for the acts of the corporation performed through other agents or employees. State v. Pincus , 41 N.J. Super. 454, 458 (App. Div. 1956). Although, as the State properly observes, such a charge was

at variance with the evidence indicating that the operation ran from the management down and not from the sales force up, the trial judge did in fact offer to charge as far as the word "part" preceding the citation. Since counsel did not respond to this offer, error may not be assigned as to this portion.

As to the balance of the request, the trial judge refused so to charge because the language seemed to require proof that the two Grazianis had knowledge of the particular transactions of the salesmen. The court was clearly correct that one conspirator need not have knowledge of, approve, or participate in every specific act of another conspirator in furtherance of the conspiracy.

Defendants Morese, Canace and Aquilino requested the court to instruct that it must be proved beyond a reasonable doubt that each accused associated with the principals "in the sense that he had a stake in the success of the venture." However, it was not disputed at the trial that each of the defendants had an interest in the increased volume of sales by the defendant corporations. There was therefore no evidence before the jury as to which the quoted phrase would have been meaningful. It is well to observe that we have found the court's charge to be lucid and fair.

Defendants' third contention is that the trial court erred in denying them the opportunity to prove misconduct on the part of the grand jury in returning the indictment. Prior to the trial below, the defendants in this case joined with others indicted for conspiracy by the same grand jury in a "Joint Petition to Dismiss and Quash Indictments." The first "grievance" alleged in the petition was that the grand jury was guilty of misconduct

"* * * for having found and returned the within indictments indifferently and openly without any evidence whatever having been received or heard by them to support the charges, and your petitioners herein allege that there was not, in fact, any evidence of any nature or kind before the said grand jury * * *. Such information as here alleged, has been furnished to your petitioners who, while they have no personal knowledge of the same at this

time, nevertheless, in their verification, herein charge and allege this occurrence upon information and belief , believing the same to be true, and they hereby request the opportunity to bring the proofs before this Honorable Court, and request the Writ of Subpoena of this court to issue for the purpose aforesaid." (Emphasis supplied)

The petition was supported by the joint affidavit of Ernest Graziani and the president of another indicted corporation charged with a like offense in the sale of automobiles to the public. Their affidavit recited that "as to those matters [in the petition] alleged upon information and belief, we believe them to be true."

On the basis of the petition and affidavit, the trial judge issued an order to the Prosecutor of Essex County to show cause why a day should not be fixed for the taking of testimony and for the introduction of such other proofs and evidence as might be submitted by the petitioners to substantiate their challenges.

The State's answer to the petition, submitted by the Prosecutor and Assistant Prosecutor, stated that "The Grand Jury voted the indictments in the above entitled cases only after having heard and considered the sworn oral testimony of complaining witnesses concerning each and every charge before it, and in addition thereto having examined and considered real evidence in support of the charges laid in the indictment." Attached thereto was the affidavit of the grand jury foreman, stating unequivocally that "real and testimonial ...


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