In the Matter of the Complaint That ) July 9, 1958 ) ILLINOIS SERVICE, ) ) at ) ) Chicago, Illinois ) H.E. Docket No. 5/151 ) and ) ) RAY STEVENS, ) ) at ) ) New York, New York. ) ) Ablard, Charles D. POST OFFICE DEPARTMENT WASHINGTON, D. C.
A complaint was issued on September 6, 1957, charging that the respondent was conducting a fraudulent scheme for obtaining remittances of money for tips on horse races through the mails by means of false and fraudulent pretenses. The Initial Decision was rendered by the Hearing Examiner on January 23, 1958. He found that the allegations in the complaint were true and recommended the issuance of an order in accordance with 39 U.S.C. 259 and 732. An appeal was made to the General Counsel under the Rules of Practice, dated May 17, 1954, and the General Counsel rendered a Departmental Decision. The matter was taken into the U.S. District Court for the District of Columbia but prior to a decision by the District Court, the Department of Justice and counsel for the respondent stipulated on May 29, 1958, to return the case to the Department for a new appeal from the Initial Decision in accordance with the new Rules of Practice, dated April 26, 1958. All pleadings made after the Hearing Examiner's Initial Decision and the decision of the General Counsel were removed from the official file of this proceeding and the parties filed new appeal briefs directed to the Judicial Officer.
The respondent filed seven exceptions to the decision of the examiner. The complainant filed a reply brief on June 30, 1958. The first exception is to the finding that there was undue and improper restriction on the cross-examination of a witness for the complainant, the Postal Inspector who investigated the case. The respondent contends that its efforts to cross-examine the
Inspector as to the interpretation of the language in the advertisement of the respondent should have been allowed. The interpretation of the advertisement is a question within the province of the Hearing Examiner and the Judicial Officer and not for the investigator. The facts in this case and the facts in Reilly v. Pinkus, 338 U.S. 269, cited by the respondent, are distinguishable for in the latter case medical testimony was elicited on direct examination and the Supreme Court held that cross-examination as to medical treatises should be permitted.
The respondent filed a supplemental memorandum on this exception citing the recent decision of the Court of Appeals of the Fourth Circuit in Linden v. U.S., 254 F.2nd 560. In that case the District Attorney had questioned certain witnesses who had been defrauded by the defendants as to the effect upon them of the material alleged to be the false and fraudulent inducement. The defendant objected to this line of questioning as invading the province of the fact finder. The Court held that the questions were proper and that the lower court did not err in admitting it. The respondent analogizes the facts of that case with the facts of the instant proceeding. The fact that it is not error to admit certain testimony does not necessarily imply that the converse is true, i.e., that it is error to exclude similar testimony. Additionally, in the instant proceeding no effort was made on direct examination to interrogate the inspector as to the interpretation he would place on the advertising. The respondent went beyond the scope of direct examination and attempted to elicit it on cross-examination. I believe that even had the respondent called the Postal Inspector as his own witness the examiner could properly have excluded his testimony on his interpretation of the advertisement. In Linden, supra at 566, the witnesses were persons who had in fact been defrauded and were only relating their own experiences; in this proceeding the witness was an inspector who was only charged with investigating the case. The examiner did not err in excluding this cross-examination. The exception is disallowed.
The second exception is to the finding that the prior decisions in other Post Office Department cases were controlling in this case. The examiner could properly take notice of these cases and the Departmental policy comparing the facts in prior proceedings with the facts in this case. Having done so, he properly concluded that the fact situations were comparable and that he would be guided by those decisions. The exception is disallowed.
The third exception is to the finding by the examiner of an intent to deceive. An intent to deceive may be inferred from all the facts surrounding the particular case. Upon an analysis of the advertising and certain facts commonly known to mankind about horseflesh, the examiner concluded that the respondent intended to
deceive. Upon a review of the evidence and the decision of the examiner, I do not believe that he erred and the exception is disallowed.
The fourth exception is to the finding that the average individual could be mislead by the respondent's references to "straight winners" and "guarantees." I do not believe that the examiner erred in so concluding. The overall picture of the advertising to persons desiring to wager on races is clear from a reading of the advertisement. The overall effect of the advertising is the criterion for consideration, Donaldson v. Read Magazine, 333 U.S. 178. The Court of Appeals in Linden, supra at 568, said,
"Deception is not necessarily confined to a direct statement of fact. Not words alone, but their arrangement, the manner of their display, and the circumstances in which they are used, may create an appearance which is false and deceptive, even though the words themselves fall short of this. Sometimes circumstances are more eloquent than words, and they impart their meaning to the words used."
The exception is disallowed.
The fifth exception is to the finding of the examiner that the respondent's advertising cannot be accepted as mere puffing. Again the examiner and the Judicial Officer must consider the advertising as a whole. This advertising is so flagrant and such a broad expanse of claims and misrepresentations that I cannot say that it is mere puffing. It is advertising calculated and intended to deceive. The exception is disallowed.
The sixth exception is to the finding that the respondent's representations are false. Evidence was introduced as to the inaccuracy of the respondent's tips. When considered with the claims made for those tips such as "straight winners" and "big profits", I conclude that the statements are false. The exception is disallowed.
The seventh exception is a general exception to the conclusion of law that the respondent violated the statute. In the light of the other exceptions and the rulings thereon, I disallow this final exception.
The Initial Decision of the Hearing Examiner is affirmed and adopted. An appropriate order will issue.