Admissibility
3 Page4
Appellee
argues that the evidence is sufficient to support Glynn's conviction as
an aider and abettor of an attempt to evade Legatos' income tax. That
may have been the theory on which Glynn's case was submitted to the jury
as the trial court gave an instruction to the effect that, persons who
knowingly and with criminal intent aid and abet in the commission of an
act constituting an offense, or who advise and encourage its commission,
are regarded in law as principals and are equally guilty with those who
directly and actively commit the offense. The evidence was not
sufficient, however, to support conviction of Glynn as an aider and
abettor. To justify conviction on that basis, it must appear that the
offense charged was committed by someone other than Glynn. If no crime
has been committed, no one can be convicted as an aider and abettor. 13
There
is no evidence admitted against Glynn that Legatos attempted to evade
payment of his income tax.
Affirmed
as to Legatos and reversed as to Glynn.
1
The record on appeal consists of 8 volumes, aggregating 3580 printed
pages.
2
Fed. Rules Cr. Proc. rule 7(c), 18
U. S.
C. A.
3
Wong Tai v.
United States
, 273
U. S.
77; United States v. Skidmore, 7 Cir., 123 Fed. (2d) 604 [41-2
USTC ¶9716]; Maxfield v. United States, 9 Cir., 152 Fed. (2d)
593 [46-1 USTC ¶9115]; Himmelfarb v. United States, 9 Cir., 175
Fed. (2d) 924 [49-1 USTC ¶9313].
4
The voluntary disclosure policy relied upon was stated by then Secretary
of the Treasury, Fred Vinson in the Washington Post,
August 21, 19
45, as follows: "The Commissioner of Internal Revenue does not
recommend criminal prosecution in the case of any taxpayer who makes a
voluntary disclosure of omission or other misstatement in his tax
return. Monetary penalties may be imposed for delinquency, for
negligence, and for fraud, but the man who makes a disclosure before an
investigation is under way protects himself and his family from the
stigma of a felony conviction. And there is nothing complicated about
going to a Collector or other revenue officer and simply saying 'there
is something wrong with my return and I want to straighten it
out.'"
5
United States v. Lustig, 2 Cir., 163 Fed. (2d) 85 [47-2 USTC ¶9325];
Bateman v. United States, 9 Cir., 212 Fed. (2d) 61 [54-1 USTC ¶9341];
Lapides v. United States, 2 Cir., 215 Fed. (2d) 253 [54-2 USTC ¶9497];
United States v. Weisman, 78 Fed. Supp. 979 [49-2 USTC ¶9404]; In
re White, 98 Fed. Supp. 895 [51-2 USTC ¶9382]; United States v.
Levy, 99 Fed. Supp. 529 [51-2 USTC ¶9388].
6
Wharton's Criminal Evidence (11th ed.), Vol. 1, p. 486, §343;
United States
v. Sebo, 7 Cir., 101 Fed. (2d) 889; Weiss v.
United States
, 5 Cir., 122 Fed. (2d) 675; Bracey v.
United States
, D. C. Cir., 142 Fed. (2d) 85.
7
The Court's instruction was as follows: "It may be difficult for
you, when considering the case for or against any one certain defendant,
to disregard completely any evidence that was admitted only as to
another, but that is your plain duty with respect to evidence not
admitted by the Court as against a certain defendant, you must try
conscientiously to so treat such a situation."
8
26
U. S.
C. A. §41; Remmer v.
United States
, 9 Cir., 205 Fed. (2d) 277, 286 [53-1 USTC ¶9421].
9
The instruction was as follows: "Willfully in the statute, which
makes a willful attempt to evade taxes a crime, refers to the state of
mind in which the act of evasion was done. It includes several states of
mind, any one of which may be the willfulness to make up the crime.
"Willfulness
includes doing an act with a bad purpose. It includes doing an act
without a justifiable excuse. It includes doing an act without ground
for believing that the act is lawful. It also includes doing an act with
a careless disregard for whether or not one has the right so to
act."
10
As to intent and knowledge, and the meaning of "wilful", the
trial court instructed:
"Intent
is an essential element in the perpetration of the offenses charged
against the defendants in the indictment. Intent may be shown by proof
of facts and circumstances from which it may be reasonably and
satisfactorily inferred. In determining whether a defendant had such
intent, you should take into consideration all the facts and
circumstances in evidence, the acts and conduct of such defendant, and
his motives, if any, disclosed by the testimony, for doing or not doing
the act or acts charged in the indictment as shown by the evidence; and
if from all the facts and circumstances in the evidence there is no
other reasonable conclusion than that he is guilty, you should so find.
"One
of the essential elements of the proof of attempt to evade income tax or
the payment thereof is knowledge on the part of the taxpayer of the
existence of the obligation; that is, of the tax due and a specific
wrongful intent to evade the payment thereof. If you find from all the
evidence that the defendant Legatos did not have actual knowledge of the
existence of an obligation on his part to pay any income tax in addition
to the income tax reported by him in his original income tax returns,
and that said defendant did not have a specific wrongful intent to evade
such obligation, then you should find the defendant Legatos not guilty.
"Fraud
is an actual intentional wrong-doing and the intent required is a
specific mental determination or purpose to evade a tax known or
believed to be owing. Before you can convict the defendant Legatos, you
must find from the evidence beyond a reasonable doubt that any income
tax return involved in this indictment was not only false and
fraudulent, but that by such false and fraudulent return said defendant
committed an actual, intentional wrong-doing and that the filing of said
return was with the intent on his part to evade a tax owing or believed
to be owing to the United States.
"The
word 'wilful' when used in a criminal statute generally means an act
done with a bad purpose, but the word is also employed to characterize a
thing done without ground for believing it is lawful, or conduct marked
by disregard whether one has the right so to act.
"The
word 'wilfully,' as used in this Statute, means more then [sic]
intentionally or voluntarily, and includes an evil motive or bad
purpose, so that evidence of an actual bona fide misconception of the
law, such as would negative knowledge of the existence of the obligation
would, if believed by the jury, justify a verdict for a defendant. It is
for the jury to say whether a defendant had the requisite criminal
intent, that is whether he wilfully and knowingly attempted to defeat
and evade the income tax."
11
The Bateman case was not mentioned nor cited in Bloch v.
United States
.
12
Gleckman v.
United States
, 8 Cir., 80 Fed. (2d) 394, 399 [35-2 USTC ¶9645]; United States
v. Schenck, 2 Cir., 126 Fed. (2d) 702, 704 [42-1 USTC ¶9363]; Rose
v.
United States
, 10 Cir., 128 Fed. (2d) 622, 626 [42-2 USTC ¶9500]; United
States v. Rosenblum, 7 Cir., 176 Fed. (2d) 321, 329 [49-1 USTC ¶9314].
13
14 Am. Jur. 832, §93; 22 C. J. S. Criminal Law, §100, p. 171; Yenkichi
Ito v.
United States
, 9 Cir., 64 Fed. (2d) 73; Morgan v.
United States
, 10 Cir., 159 Fed. (2d) 85;
United States
v. Horton, 7 Cir., 180 Fed. (2d) 427;
United States
v. Zerbst, 111 Fed. Supp. 807.
[57-2
USTC ¶9743]
United States of America
, Appellant v. Bert G. Ashby, Appellee
(CA-5), U. S. Court of Appeals,
5th Circuit, No. 16345, 245 F2d 684, 6/14/57, Rev'g unreported Dist. Ct
[1939 Code Sec. 145(a)--similar to 1954 Code Sec. 7201]
Appeal from dismissal of indictment: Suppression of evidence:
Appellate Court's jurisdiction.--While their divorce suit was
pending, taxpayer's wife voluntarily turned over to a revenue agent the
taxpayer's business records, without his knowledge or consent. On the
basis of these records, taxpayer was indicted for failure to file
returns for 1952 and 1953. Taxpayer moved for suppression of the records
and dismissal of the indictment on the grounds that the records were
furnished by the wife out of anger and a desire to injure rather than
ascertainment of her own tax status. The District Court granted the
motions and dismissed the indictment. The Appellate Court assumes
jurisdiction of the Government's appeal, finding without merit the
taxpayer's argument that the District Court's order of dismissal was not
appealable because it was merely incidental to the ruling on the motion
to suppress. The court also upholds the right of the Government to
retain and use the records furnished by the wife, and reverses the
District Court's order of dismissal and of suppression of the evidence.
William
N. Hamilton, Assistant
United States
Attorney, Heard L. Floore,
United States
Attorney,
Fort Worth
,
Texas
, Charles K. Rice, Assistant Attorney General. Joseph M. Howard,
Department of Justice,
Washington
, D. C., for appellant. Lester L. May,
Dallas
,
Texas
, for appellee.
Before
HUTCHESON, Chief Judge, and TUTTLE and JONES, Circuit Judges.
[Wife's Surrender of Husband's
Books]
JONES,
Circuit Judge:
The
appellee, Bert G. Ashby, had practiced law in
Dallas
,
Texas
. His wife was Mabel Ashby whom he married in 1949. After a rather
hectic marital career they separated in April of 1954. She sued for
divorce. In July of 1954, while the divorce suit was pending, Mrs. Ashby
voluntarily turned over to an agent of the Internal Revenue Service of
the
United States
the business records of her husband, without his knowledge or consent. A
divorce was subsequently granted. On
April 13, 19
56, an indictment was returned by the Federal grand jury of the United
States District Court for the Northern District of Texas for failing to
make income tax returns for the years 1952 and 1953. 26
U. S.
C. A.,
I.
R. C. 1939, §145(a). Ashby moved for the suppression of the records and
papers as evidence, for the return of these records and papers to him,
and for a dismissal of the indictment. A hearing was had and testimony
was offered by both Ashby and the Government. The Government contended
that Mrs. Ashby's motive in bringing the records to the Internal Revenue
Agents was to ascertain her own tax status. Ashby claimed that her
conduct was prompted by a desire to injure him.
At
the conclusion of the hearing, the Court made an oral finding that in
delivering the books and records, Mrs. Ashby was motivated by anger and
a desire to injure, and not to obtain any information about her own
liability. The district court entered a formal order finding that as a
result of the conduct of Mrs. Ashby the Internal Revenue Service
determined that Ashby should have made income tax returns, that the
evidence obtained from Mrs. Ashby was illegal and inadmissible and
should be suppressed, and the indictment based thereon should be quashed
and dismissed. By the court's order Ashby's motion was in all things
sustained and the indictment dismissed. From this order the
United States
has appealed.
[This Court's Jurisdiction]
If
we are to consider the question as to the correctness of the order of
the district court, there must be a determination that this Court has
jurisdiction. The
United States
asserts jurisdiction under 18
U. S.
C. A., §3731 which, so far as here pertinent, provides:
"An
appeal may be taken by and on behalf of the United States from the
district courts to a court of appeals in all criminal cases in the
following instances:
"From
a decision or judgment setting aside, or dismissing any indictment or
information, or any count thereof except where a direct appeal to the
Supreme Court of the
United States
is provided by this section."
The appellee, Ashby, takes the
position that an order upon his motion to suppress is not appealable. He
urges that as he made no attack upon the indictment and the dismissal
was merely incidental to the ruling on the motion to suppress, the order
dismissing was not of the kind within the purview of §3731.
The
appellee, in support of his position that the court's order is not
appealable, cites and relies upon United States v. Janitz, 3 Cir.
1947, 161 Fed. (2d) 19. Janitz and others, including Conklin, were
indicted for violating the Federal liquor laws. Conklin successfully
moved for suppression of the evidence seized on his premises and the
indictment was dismissed as to him. The case was brought on for trial
against the other defendants and they moved for a suppression as to them
of the seized evidence. The motion was granted. The district court
denied a motion for acquittal but entered an order dismissing the
indictment. An appeal by the Government was dismissed for want of
jurisdiction. In the Janitz case, however, the trial had
commenced and the defendants had been placed in jeopardy. The dismissal
of the indictment was the equivalent of an acquittal. In the case before
us there was a dismissal of the indictment and under §3731 the order
was subject to appeal. Any other conclusion would, as shown by the Court
of Appeals of the Fourth Circuit, "forever and irremediably condemn
the prosecution's case before trial."
United States
v. Ponder, 4 Cir. 1956, 238 Fed. (2d) 825, 829.
Having
reached the conclusion that an appeal is authorized under 28
U. S.
C. A. §3731, we need not consider whether a review might be had under
28
U. S.
C. A., §1291. See Cogen v. United States, 278
U. S.
221, 49 S. Ct. 118, 73 L. Ed. 275; United States v. Ponder, supra.
[Wife's Testifying Against Her
Husband]
Having
determined that the order is one from which an appeal can be taken to
this Court, we turn to the question of whether the district court erred
in the entry of its order. The motion assigned as grounds for the
suppression the disqualification of one spouse to testify against the
other existing at common law and under the
Texas
statutes, a violation of the search and seizure provisions of the Fourth
Amendment, and a violation of the self-incrimination provisions of the
Fifth Amendment. At the time the records were taken by Mabel Ashby and
turned over to the Internal Revenue agents she was Ashby's wife. At the
time Ashby sought the suppression and return of the records, he and
Mabel Ashby were divorced. A divorce terminates the incompetency of a
wife to testify against her husband in a criminal case, except as to
confidential matters, even though her knowledge was acquired during the
period of the marriage. Curd v. State,
Tex.
Crim. App. 217 S. W. 1043. But it does not appear that she has testified
or will testify against him. He attempted, without success, to procure
her testimony for the hearing in the proceeding which we here review.
All she did was to make available to the agents records showing or
indicating the possibility of a community tax liability of her husband
and herself. The records were in no sense a communication between
husband and wife and in no sense confidential as between them.
The
doctrines announced by the Supreme Court in Burdeau v. McDowell,
256
U. S.
465, 41 S. Ct. 574, 65 L. Ed. 1048, have put at rest the contentions of
the appellant. The representatives of a former employer of McDowell
purloined documents from his office and office safe and placed them in
the hands of the United States Attorney. McDowell petitioned for their
suppression and return, stating that it was the intention of the
Department of Justice to submit the documents to a grand jury and use
them as the basis for an indictment against him. McDowell asserted, as
does Ashby, that the use of the instruments would deprive him of rights
secured by the Fourth and Fifth Amendments to the United States
Constitution. The court upheld the right of the Government to retain and
use the papers and, among other things, said:
"The
exact question to be decided here is: May the government retain
incriminating papers, coming to it in the manner described, with a view
to their use in a subsequent investigation by a grand jury, where such
papers will be part of the evidence against the accused, and may be used
against him upon trial should an indictment be returned?
"We
know of no cnstitutional principle which requires the government to
surrender the papers under such circumstances. Had it learned that such
incriminatory papers, tending to show a violation of Federal law, were
in the hands of a person other than the accused, it having had no part
in wrongfully obtaining them, we know of no reason why a subpoena might
not issue for the production of the papers as evidence. Such production
would require no unreasonable search or seizure, nor would it amount to
compelling the accused to testify against himself.
"The
papers having come into the possession of the government without a
violation of petitioner's rights by governmental authority, we see no
reason why the fact that individuals, unconnected with the government,
may have wrongfully taken them, should prevent them from being held for
use in prosecuting an offense where the documents are of an
incriminatory character." Burdeau v. McDowell, 256
U. S.
465, 475.
Other
authorities might be but need not be cited. It follows that the judgment
of the district court is erroneous and it is REVERSED.
[55-1 USTC
¶9489]I. C. Turner and E. V. Turner, Appellants v.
United States of America
, Appellee
(CA-4), In the United States Court
of Appeals for the Fourth Circuit, No. 6954, 222 F2d 926,
May 23, 19
55
Appeals from the United States District Court for the Middle District of
North Carolina, at Greensboro.
[1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]
Tax evasion: Criminal prosecution: Unauthorized examination:
Admissibility and exclusion of evidence: Right to consolidate cases:
Jury contacts.--Taxpayers, brothers and partners in a business, were
convicted of wilful attempts to evade and defeat a large part of their
income tax by filing partnership, information and individual returns in
which the income was fraudulently understated in violation of 1939 Code
Sec. 145(b). The Appeals Court ruled against them on all of the
following assignments of error: (1) That substantially all of the
Government's evidence was inadmissible because it was obtained illegally
from taxpayers by Government agents under the pretense that only a
routine investigation of their tax liability was being made, whereas in
fact the agents were seeking leads and evidence on which to base a
prosecution for crime, (2) that the trial court improperly consolidated
the cases, (3) that certain evidence of the Government was improperly
admitted, including that of a qualified expert in tax matters, and (4)
that one of the Government attorneys who participated in the prosecution
had some personal friendly contacts with one of the jurors.
Arthur
O. Cooke and H. F. Seawell, Jr. (C. C. Frazier, Sr.; Frazier &
Frazier, and Cooke & Cooke on brief), for appellants. Dickinson
Thatcher, Special Assistant to the Attorney General, H. Brian Holland,
Assistant Attorney General, Ellis N. Slack, John H. Mitchell, Joseph M.
Howard and Kinsey T. James, Special Assistants to the Attorney General,
and Edwin M. Stanley, United States Attorney, on brief), for appellee.
Before
PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.
SOPER,
Circuit Judge:
During
the years 1946 to 1950, E. V. Turner and I. C. Turner, who were brothers
and equal partners, carried on the business of designing, fabricating
and erecting outdoor advertising signs at
Greensboro
,
North Carolina
, under the name of Turner Sign Company. Their operations extended to
North and
South Carolina
,
Georgia
,
Virginia
and the
District of Columbia
. In 1953 each of the partners was separately indicted for wilful
attempts to evade and defeat a large part of his own and his wife's
federal income tax for the years 1946 to 1950 inclusive, by filing
returns in which the amount of their income was fraudulently
understated, in violation of §145(b) of the Internal Revenue Code of
1939. The cases were consolidated and after an extended trial at which
129 witnesses were examined and numerous exhibits were presented to the
jury, a verdict of guilty was returned as to each defendant on each of
the five counts in his indictment. E. V. Turner was sentenced to two
years in a reformatory and ordered to pay one-half of the court costs,
and I. C. Turner, as to whom the jury recommended mercy, was sentenced
to one year in a reformatory and ordered to pay one-half of the court
costs.
The
Government's case was based largely on evidence which showed a failure
by the partners to record the gross receipts of the business on the
partnership books, a failure on their part to report correctly the
amount of the gross sales on their partnership information return, and a
failure to disclose the correct amount of their taxable income and the
taxes due by them in their individual tax returns. Thus, for the year
1946 the partners failed to report sales in the amount of $4,685.84, and
claimed as a deduction purchases which were overstated in the sum of
$24,285.15; and for the years 1947, 1948, 1949 and 1950 the sales
reported in the partnership return fell short by the sums of $44,932.71,
$35,075.52, $38,773.47 and $21,896.49 respectively. The additional
partnership income and the income tax deficiencies of the partners for
these years are shown in the following table:
Income Tax Deficiencies
Additional
Partnership
Year Income E. V. Turner
I.
C. Turner
1946 ....... $ 24,967.87 $ 3,672.43 $ 4,030.09
1947 ....... 44,016.01 8,255.94 8,519.29
1948 ....... 32,478.01 4,860.40 4,741.58
1949 ....... 38,620.41 5,158.50 5,071.14
1950 ....... 23,287.62 2,800.50 2,381.26
$163,369.92 $24,747.77 $24,743.36
[Evidence Illegally Obtained]
The
probative force of the evidence obtained from the taxpayers' records, by
which these figures were established, is not challenged. It is conceded
in effect that the evidence was sufficient to warrant the submission of
the cases to the jury. This appeal is based in large measure on the
contention that substantially all of the Government's evidence was
inadmissible because it was obtained illegally from the defendants by
Government agents under the pretense that only a routine investigation
of their tax liability was being made, whereas in fact the agents were
seeking evidence on which to base a prosecution for crime.
The
salient facts in respect to the investigation are not disputed. It began
on
July 9, 19
51 when Daniel S. Forbes, a special agent of the Intelligence Division
of the Internal Revenue Department, went to the main office of the
business and identified himself to the two partners and told them that
their partnership and individual tax returns had been assigned to him
for examination. Investigation by a special agent may or may not lead to
a criminal prosecution, and in this case it was Forbes' duty and
doubtless his intention to report any delinquencies which he might find
to his superiors. He did not give any information on this point to the
partners and on cross examination was unable to say whether or not he
had told them that he was making a routine "check-up."
After
obtaining general information as to the background of the men, Forbes
questioned them as to their books and records and was told that they
were kept by H. B. Elliott, their bookkeeper; and Elliott was called in
and introduced. He was told the nature of the agent's visits and was
directed to produce all books and records of the business for the agent
to examine. Elliott produced and showed to the agent the books of the
business and the sales invoices for the years 1948, 1949 and 1950, which
were kept in his office. The sales invoices for the two previous years
were kept in a room upstairs. He then took the agent on a tour of the
plant and the agent noticed in the plant office in another building a
filing cabinet and was told by Elliott upon inquiry that it contained
work orders, that is, rough sketches of signs usually showing in each
instance the date, the purchaser and the cost. They were filed in
alphabetical order and covered the five tax years involved.
Facilities
were provided to enable the agent to work
