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LUM CUMBEST v. STATE OF MISSISSIPPI

MAY 16, 1984

LUM CUMBEST
v.
STATE OF MISSISSIPPI



EN BANC.

HAWKINS, JUSTICE, FOR THE COURT:

Lum Cumbest and Dale Coleman were convicted in the Circuit Court of Jackson County of perpetrating a fraud upon Jackson County in violation of Miss. Code Ann. 97-11-31 and each sentenced to a term of four (4) years in the Department of Corrections, with three (3) years suspended.

Cumbest was supervisor of District Number One, and Coleman was a road foreman of that district.

 Coleman did not prosecute an appeal to this Court. Cumbest did.

 There are numerous errors assigned, which we will cover in this opinion. We affirm.

 FACTS

 Miss. Code Ann. 65-7-95 is one of the statutes governing expenditures of county funds. Originally enacted as Chapter 156, Laws of 1928, it provides the method whereby boards of supervisors construct, repair and maintain county roads and bridges. The statute first provides that the board may purchase equipment and materials and employ labor for such purposes under the direction of a competent road commissioner. The statute then provides that if, in the opinion of the board, any part of the work necessary can best be done by awarding contracts therefore, the board may do so.

 By Chapter 260, Laws of 1962, the act was supplemented by a legislative recognition county boards upon occasion rented heavy equipment for work on roads. The 1962 amendment specifically provides that before any board of supervisors may rent heavy road machinery or equipment, it must first adopt an order adjudicating the necessity for such rental, the purposes

 for which it is to be used, the type of machinery or equipment, and the reasons why the rental will promote the public interest of the county. There is then a requirement that the order direct the clerk to advertise for bids and provision is made for awarding the contract to the lowest responsible bidder.

 By Chapter 513, Laws of 1964, Miss. Code Ann. 31-7-101, et seq., the Legislature required county boards of supervisors to establish a central purchase system for equipment, supplies, and services necessary for the maintenance, repair and construction of county roads and bridges. This system requires a county purchase clerk responsible for the purchase of such equipment, supplies, and services from the successful bidders or other vendors legally authorized to make such sales.

 Under the statutory procedure, a member of the board or duly authorized employee prepares a requisition in triplicate for the product or services needed. Upon receipt of the requisition, the purchase clerk issues a purchase order in quadruplicate for the product. One copy of the purchase order is retained by the purchase clerk, one copy is delivered to the board, the original and one copy of the purchase order is delivered to the vendor.

 Upon submitting his claim for payment to the county, the vendor is required to submit one copy of the purchase order with his invoice.

 Receiving reports are also prescribed so that an accurate inventory may be maintained. The State Department of Audit is required to design forms to be used under the system. See Miss. Code Ann. 31-7-101 through 115.

 Miss. Code Ann. 65-7-95 contemplates a definite decision, before any equipment is rented, of why the equipment needs to be rented by the county, to what use it shall be put, and why the public interest is promoted by renting. This advance decision of the board is evidenced by order spread on the minutes.

 Likewise, Miss. Code Ann. 31-7-103 contemplates a requisition and purchase order before any product is purchased. These statutes, applicable only for expenditures for county roads and bridges, are given for a basic understanding of the facts of this case. There are other laws governing expenditures of county funds which will be discussed in the opinion.

 While the time of initiation is not shown in the record, there was in effect in Jackson County in 1976 a practice

 of renting heavy equipment (road graders, bulldozers, draglines, backhoes) by a member of the board simply calling and securing the services from one of the county bidders for such services. At the end of the month the supplier would invoice these supervisors' district for the number of hours each piece of equipment was used, the hourly rate, and the charge therefore.

 No prior board orders, as required by Miss. Code Ann. 65-7-95, were ever entered on the minutes of the board showing the necessity for such rental, the purposes to be used, or the promotion of the public interest by such rental.

 Jackson County adopted the central purchase system required by statute and this procedure was in effect in 1976.

 HOW CUMBEST, VAUGHAN, AND COLEMAN OPERATED

 One of the individuals who rented equipment to the county was Hal G. Vaughan (Vaughan), under the business name of H & O Materials and Equipment Rentals (H & O). He did not merely rent machines, each piece of equipment rented included an operator as part of the charge. Each month Vaughan would contact Cumbest and determine whether his charges were satisfactory, and also how Cumbest wanted him to charge the county.

 Following the discussion between the two, Vaughan would prepare an invoice on an H & O letterhead.

 Vaughan would then deliver the H & O invoice to the purchase clerk, after which the purchase clerk notified Coleman to come to his office. Coleman would go to the office of the purchase clerk, and sign a prepared requisition based on the invoice. *fn1 The purchase clerk would then prepare and sign a purchase order, and Coleman would sign a prepare requisition report. The invoice and three documents usually bore the same date.

 The H & O invoices would sometimes state certain roads in the county upon which the equipment was used, but just as often they would simply state," Rental of equipment under supervision of County Road Foreman. "Coleman was a county road foreman for District 1. Each invoice would then specify the various pieces of equipment used, including the serial numbers. There would then follow a total of the hours each piece of equipment had been used that month, the hourly rate and the amount charged for the particular piece of equipment for the month. The invoice then totalled the amount due for all rental charges. There was no itemization showing date of use, or specific place of use on any date, or hours of use on any

 specific date. *fn2

 A series of over forty invoices and claims beginning in April, 1976, and ending in September, 1979, revealed monthly rental charges of a charge rate minimum of $500.00 to a maximum in excess of $18,000.00. These invoices to District 1 for this period of time exceed $240,000.00, of which virtually the entire amount was for rental of equipment. *fn3

 COLEMAN AND THE TRACTOR

 In 1974 District 1 began operating a public park consisting of approximately 33 acres, named East Central Park. In 1976 clearing was started on a 97-acre tract for a public golf course, also in District 1, which opened in 1978 and was named Jackson County Public Golf Course.

 In 1976 Coleman was the owner of a small tractor and bushhog. According to Coleman, he told Cumbest he would like the job of cutting the grass in the park, and about a week later, Cumbest told him to talk to Vaughan about doing the work, since Vaughan had a contract with the county for cutting grass. *fn4 When he talked with Vaughan, Coleman told Vaughan he would do the work for $7.50 per hour. Following this, each month Coleman would give H & O a handwritten ticket stating a certain number of hours," bushhog work, "the charge, and signed" Dale Coleman. "The tickets were also dated.

 According to Vaughan, Cumbest contacted him in 1976:

 A I rent draglines, bulldozers, loader graders, backhoes, front end loaders, dump trucks, asphalt distributors, rollers, bushhogs, lowboys.

 * * *

 A Yes, sir. I don't remember the exact date and time of it. But Mr. Cumbest called me in reference to handling a bushhog. Mr. Coleman owned a tractor and a bushhog and was doing work for the County, but he couldn't bill it to the County because he didn't have a bid with them. And Mr. Cumbest said he would like for me to handle it because I did have a bid with the County and could legally run it through my books and handle it for him.

 Q What words did Mr. Cumbest use as best you can remember about how you were going to handle it?

 A Well, Mr. Coleman would just turn in his bill to me for his work and I would take my bid price on that

 particular piece of equipment and invoice the County for it, and when I got paid I would turn around and pay Mr. Coleman.

 Q What was the agreement, Mr. Vaughan, concerning billing with the County? What was your agreement with Mr. Cumbest?

 A Well, really wasn't any agreement; I mean just he had asked me if I would be willing to do that, and I told him I would be glad to do it. And I was, because I was doing quite a bit of other work for the County anyway. I would just call up every month whatever Mr. Coleman turned in and get it approved by Mr. Cumbest.

 Q By every month; from 1976 through '79 - is that what you are talking about?

 A I do every month. If I do any work for a Supervisor, at the end of the month when it is time to turn the bills in I call him up and talk to him and ask him how he wants it invoiced; what he wants it charged to. I tell him how much was charged and what they were and everything, so he is aware of what it is. And then he tells me what to charge it to and how to handle it.

 Q For instance, in the case of Dale Coleman's bushhog and tractor, tell us how that worked in the years 1976 through '79? Each month how did that work?

 A Well, Mr. Coleman gave me the bill. I would take the hours on his bill and multiply it by my price.

 Q Was there a difference there, Mr. Vaughan? A difference between what he charged and you did?

 A Yes sir, there was. He started off around Six Dollars ($6.00) an hour; then he went to Seven and a Half ($7.50); and then he went to Nine ($9.00), and then to Ten ($10.00). My price at the time was Nine Dollars ($9.00), and he was bidding $6.00 and $7.50; that's what I was paying him. I was making Two to Two and a Half ($2.00 - $2.50) an hour above what he was making. It was worth that much to handle it - run it through my books and handle it. That was my bid price.

 Q And did Mr. Cumbest agree with you that you could charge your bid price?

 A Yes sir, that was the bid price to the county

 on all bushhog work.

 The testimony of Vaughan, Coleman and Cumbest as to this arrangement was in material agreement. Coleman would give H & O a ticket of his charge, Vaughan would thereafter discuss with Cumbest his monthly bill for rental of equipment, as well as a charge for Coleman, and then include Coleman's bill in the H & O invoice for the monthly rental of all equipment to District 1, but at the bid charge of H & O for bushhog rental, always a higher rate than Coleman was charging H & O. Neither Vaughan nor any other person connected with H & O attempted to supervise or in any manner check upon the work Coleman did in the park. Other than perhaps seeing Coleman's tractor and bushhog on one or two occasions, Vaughan knew nothing about his equipment and he knew absolutely nothing about the work Coleman was doing.

 There was no dispute in the testimony that Vaughan would always discuss the H & O bill with Cumbest before filing the invoice with the purchase clerk.

 Over forty H & O invoices were offered into evidence for the 42-month period beginning April, 1976, and ending September, 1979. Upon several occasions, a claim by H & O would include more than one invoice, in which one of the invoices was directed to payment by District 1, and the other was directed to payment by District 2 funds.

 Of the H & O invoices paid by District 1 funds, the vast majority make no mention of bushhog rental. Vaughan testified the reason these invoices made no mention of bushhog rental was that he was instructed by Cumbest to invoice the county in this manner. Following such instruction Vaughan would thus include Coleman's charges at the hourly bid rate of H & O for bushhog rental under some charge such as dragline work, backhoe work or grader work.

 Cumbest denied he ever told Vaughan to disguise or conceal Coleman's hours or charges in any such manner. Thirty-four of the H & O invoices to the county for equipment rental to District 1 contained no notation or clue that any of the rental charges are for bushhog rental. When Coleman was shown each of these invoices by the purchase clerk, and then signed a requisition for such work, as well as a receiving report acknowledging the performance of the work as set out in the invoices, he knew that part of the invoice covering rental for work presumably done on roads and bridges in District 1 had not been performed. Somewhere in the invoice there was a concealed charge to the county for money H & O was going to pay him. Despite this, Coleman signed a requisition and a receiving

 report which each tracked the language of the services contained in the invoice. *fn5

 At the trial, Cumbest expressed astonishment that the invoices and charges to District 1 had been made in this manner. He testified that after he and Vaughan agreed on a price for the month, he never checked any of H & O's claims except the bottom line.

 The same arrangement used on the park continued on the golf course. The H & O invoices began April 22, 1976, and ended September 24, 1979.

 Because of a hurricane, Vaughan had none of the Coleman tickets prior to August 22, 1977. There were sixteen exhibits introduced at trial, evidencing claims made prior to August 22, 1977. In these sixteen exhibits, six of the H & O invoices reflected a charge for bush hog rental. *fn6

 These six exhibits showed H & O had paid Coleman $3,529.50 and had charged the county $4,609.50, a return of $1,080.00 for whatever service H & O was rendering the county.

 In the remaining ten exhibits, none of the H & O invoices mentioned bushhogging. There is no way to examine any of the H & O invoices contained in these exhibits and determine what H & O was in fact charging the county for the amount it was paying Coleman. The only thing we have is Vaughan's testimony that somewhere in the H & O invoices is buried Coleman's charge for that month's bushhog work

 The remaining 26 exhibits include the monthly ticket or tickets Coleman submitted to H & O. Eight of these remaining exhibits include two tickets from Coleman to H & O *fn7 and in each of these one of the tickets was paid from District 2 funds of Jackson County, General Recreation Fund, and the other was paid by District 1. In all H & O invoices to be paid by District 2 funds, the invoices billed for bushhog rental and showed the same number of hours shown on the Coleman ticket. On these District 2 charges, H & O paid Coleman a total of $4,365.00, and charged Jackson County $6,696.00, or a $2,331.00 service charge for its billing.

 With the exception of Exhibit 39, in the remaining 26 exhibits, which included claims paid by District 1 funds, none of the H & O invoices included any reference to bushhog rental. Again there is no way to examine any of these invoices and determine: how much represents the amount H & O was paying Coleman, how much H & O was charging the county for this billing service, and which part is genuine. The best Vaughan could

 do was testify the bill was correct, except for the amount paid Coleman, plus his billing rate (whatever that was), contained somewhere in the invoice.

 The 42 exhibits include the 42 months from April, 1976, through September, 1979. Thirty-two of these exhibits included tickets of the number of hours Coleman was charging ...


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